SHASHI KUMAR MEHTA,SONIPAT V. ITO WARD 4, SONIPAT

ITA 2135/DEL/2024

AI Insights

The case involves Shashi Kumar Mehta, who appealed against the order of the CIT(A)/NFAC, Delhi, which confirmed the additions made by the Assessing Officer for the Assessment Year 2017-18. The primary issues were the additions made on account of unexplained cash deposits and sundry creditors in the assessee's books. The Assessing Officer had added these amounts as unexplained, leading to the appeal. The Tribunal found the assessee's explanations regarding the sundry creditors satisfactory and deleted that addition. However, regarding the cash deposits, while the assessee provided a plausible explanation, the Tribunal deemed a partial addition reasonable, citing the need to cover some unexplained elements.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792040 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Appeal Filed On: 02-05-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: RANO JAIN
• Keywords: Business income; Bogus
• Section: 68; 40A(3)

Judgement Text

"Page 1 of 7 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘G’ BENCH, NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 2135/DEL/2024 [A.Y 2017-18] Shri Shashi Kumar Mehta Vs. The I.T.O. Luxmi Nagar, Baroda Road Ward - 4 Gohana, Sonepat, Haryana Sonipat PAN: AJIPM 1513 B (Appellant) (Respondent) Assessee By : Ms. Rano Jain, Adv Shri Tanishq Ahuja, Adv Department By : Shri Manish Gupta, Sr. DR Date of Hearing : 04.11.2025 Date of Pronouncement : 04.11.2025 ORDER PER NAVEEN CHANDRA, AM :- This appeal by the assessee is directed against the order of the ld. CIT(A)/NFAC, Delhi dated 07.03.2024 pertaining to A.Y 2017-18. 2. The assessee has raised the following grounds of appeal: Printed from counselvise.com ITA No. 2135/DEL/2024 [A.Y 2017-18] Shashi Kumar Mehta Vs ITO Page 2 of 7 “1. On the facts and circumstances of the case, the order passed by the Hon'ble National Faceless Appeal Centre (NFAC) is bad, both in the eye of law and on the facts. 2. (i) On the facts and circumstances of the case, the Hon'ble NFAC has erred both on facts and in law in confirming the addition of Rs.80,82,763/- made by Ld Assessing Officer (AO) on account of cash deposited in the bank account. (ii) That the addition has been confirmed arbitrarily rejecting the explanation and evidences brought on record by the assessee. 3. (i) On the facts and circumstances of the case, the Hon'ble NFAC has erred both on facts and in law in confirming the addition of Rs. 17,71,879/- made by Ld AO on account of sundry creditors appearing in the balance sheet in assessee's own name. (ii) That the above addition has been confirmed rejecting the contention of the assessee that due to an inadvertent error the creditor was shown in assessee's own name instead of crediting the same to the capital account of the assessee at the time of conversion of partnership firm into proprietorship concern. (iii) That in any case the error does not result in any tax incidence. 4. The applicant craves leave to add, amend, or alter any of the grounds of appeal.” 3. Briefly stated, the facts of the case are that the assessee e-filed his return of income for the A.Y under consideration on 17.03.2018, declaring an income of Rs. 3,14,160/- plus agricultural income of Rs. 2,00,000/-. The case of the assessee was selected for scrutiny Printed from counselvise.com ITA No. 2135/DEL/2024 [A.Y 2017-18] Shashi Kumar Mehta Vs ITO Page 3 of 7 assessment through CASS and accordingly, statutory notices u/s 143(2) of the Act were issued along with a questionnaire. In response to the notices issued, the assessee filed reply which were examined on test check basis. 4. During the assessment proceedings, the Assessing Officer noticed that the assessee has shown business income amounting to Rs. 4,545/- in his ITR filed for the AY 2017-18 on a huge turnover amounting to Rs. 6 crore including Rs. 81 lakhs cash deposited during the demonetization period and the assessee has not got his accounts audited. Assessee has shown himself as sundry creditor at Rs. 17,71,879/- in his books of account furnished during assessment proceedings. 5. The Assessing Officer further noticed that the assessee has deposited in bank cash of Rs. 81 lakhs and on the other hand he has cash in hand for Rs. 80,82,763/-. The Assessing Officer further observed that assessee has CC limit account (cash credit account) and interest amounting to Rs.6,56,639/- has been paid but assessee has not shown any interest expense debited in his P& L account furnished for the year under consideration. Assessee has not followed section 40A(3) of the Act. 6. The assessee explained that the assessee has agriculture land from which the income of Rs.2,00,000/- has been shown in computation of Printed from counselvise.com ITA No. 2135/DEL/2024 [A.Y 2017-18] Shashi Kumar Mehta Vs ITO Page 4 of 7 income furnished earlier. The balance outstanding in the name of Shashi Kumar Mehta pertains to agriculture products sold by Shashi Kumar Mehta, individual, to Mange Ram Kewal Kishan,firm. The assessee filed the copy of account in the name of Shashi Kumar Mehta, Farmer a/c. The assessee explained that earlier the constitution of Firm was partnership with PAN AATFM9882B and the firm was dissolved on 31.03.2015. The copy of dissolution deed was furnished on record. After dissolution of the firm, the business was carried on by Shri Shashi Kumar Mehta,individual as proprietorship concern. The ledger of Shashi Kumar Mehta farmer a/c was opened in the books of partnership firm, which was carried on in the firm Mange Ram Kewal Kishan (Proprietorship w.e.f. 01.04.2015). 7. The Assessing Officer held that as the firm was dissolved on 31.03.2015, the assessee cannot be the sundry creditor of his proprietorship concern and added the amount of Rs. 17,71,879/- considering the same as bogus/unexplained sundry creditors u/s 68 of the Act. 8. Aggrieved, the assessee went in appeal before the ld. CIT(A) who confirmed the addition made by the Assessing Officer. 9. Now the assessee is in appeal before us. Printed from counselvise.com ITA No. 2135/DEL/2024 [A.Y 2017-18] Shashi Kumar Mehta Vs ITO Page 5 of 7 10. Before us, the ld. counsel for the assessee vehemently stated that it was due to inadvertent error, the creditor was shown in his own name instead of crediting the same to the capital account of the assessee at the time of conversion of partnership firm into proprietorship concern. 11. Per contra, the ld. DR relied upon the orders of the ld. CIT(A). 12. We have heard the rival submissions and have perused the relevant material on record. At the very outset, we find the explanation of the assessee to be plausible and satisfactory. We, therefore, are of the considered view that the addition on account of sundry creditor made by the Assessing Officer and confirmed by the ld. CIT(A) needs to be deleted. We order accordingly. Ground 3 on this count is allowed. 13. Regarding the addition of Rs. 80,82,783/- made by the Assessing Officer on account of cash deposited in the bank account, we find that the assessee has attempted to prove the entire source of cash deposit during demonetization as cash in hand required to provide advance to the farmers in his Katcha Arahtia business of commission agent. Although the assessee, prima facie, appears to have discharged its onus of explaining source of cash deposit, it’s contentions to prove the source, hardly deserves to be accepted in entirety especially when the AO found the assessee drawing cash from banks when he had sufficient cash in hand. On the other hand, the Revenue’s endeavour to disbelieve the Printed from counselvise.com ITA No. 2135/DEL/2024 [A.Y 2017-18] Shashi Kumar Mehta Vs ITO Page 6 of 7 assessee’s contention that cash deposit has been made out of cash in hand, cannot be fully justified. In this factual matrix, there is some element of failure to explain some of the cash deposit, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of ₹ 5 lakh only would be just and proper with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The ground of appeal no 2 is partly allowed. 14. In the result, appeal of assessee in ITA No. 2135/DEL/2024 is partly allowed. Order pronounced in open court on 04.11.2025. Sd/- Sd/- [SATBEER SINGH GODARA] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 09th December, 2025. VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi Printed from counselvise.com ITA No. 2135/DEL/2024 [A.Y 2017-18] Shashi Kumar Mehta Vs ITO Page 7 of 7 l No. PARTICULARS DATES 1. Date of dictation of Tribunal Order 2. Date on which the typed draft order is placed before the Dictating Member 3. Date on which the typed draft order is placed before the other Member [in case of DB] 4. Date on which the approved draft order comes to the Sr. P.S./P.S. 5. Date on which the fair Order is placed before the Dictating Member for sign 6. Date on which the fair order is placed before the other Member for sign [in case of DB] 7. Date on which the Order comes back to the Sr. P.S./P.S for uploading on ITAT website 8. Date of uploading, inf not, reason for not uploading 9. Date on which the file goes to the Bench Clerk 10. Date on which the file goes for Xerox 11. Date on which the file goes for endorsement 12. The date on which the file goes to the Superintendent for checking 13. Date on which the file goes to the Assistant Registrar for signature on the order 14. Date on which the file goes to the dispatch section for dispatch the Tribunal order 15. Date of Dispatch of the Order 16. Date on which the file goes to the Record Room after dispatch the order Printed from counselvise.com "