SHIVRAM S. SHETTY ,MUMBAI V. INCOME TAX OFFICER WARD 2(1), THANE

ITA 5651/MUM/2024

AI Insights

The case involves Shivram S. Shetty, the appellant, who contested an addition of Rs. 1,34,66,110 to his income for the Assessment Year 2016-17, as confirmed by the National Faceless Appeal Centre (NFAC), Delhi. The addition was made under section 68 of the Income Tax Act, 1961, due to unexplained cash deposits in the assessee's bank accounts, which exceeded the sales reported in his Profit & Loss account. The Tribunal found that the documentary evidence provided by the assessee was not considered by the NFAC, leading to the decision to remand the case back to the AO for a thorough examination of the evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473749 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: BHANGEPATIL PUSHKARAJ RAMESH
• Assessee Lawyers: VASUDEV GINDE; KUMAR KALE; ADVOCATES
• Keywords: Business income; Opportunity of being heard

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VP AND SHRI N.K. BILLAIYA, AM ITA No.5651/Mum/2024 (Assessment Year: 2016-17) Shivram S. Shetty, Gala No.36, Rajashree Shopping Centre, Mira Road (E), Dist. Thane Vs. Income Tax Officer, Ward-2(1), Thane (Appellant) : (Respondent) PAN/GIR No. AKYPS 7065D Appellant by : Shri Vasudev Ginde & Shri Kumar Kale, Advocates Respondent by : Shri Bhangepatil Pushkaraj Ramesh, Sr. AR Date of Hearing : 25.02.2025 Date of Pronouncement : 25.02.2025 O R D E R Per Saktijit Dey, VP: This is an appeal by the assessee against order dated 03.09.2024 passed by National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2016-17. 2. The solitary ground raised by the assessee reads as under: “1. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 1,34,66,110/- made by the Ld. AO u/s. 68 of the Act. The appellant, therefore, prays that the aforesaid addition be deleted.” 3. Briefly stated, assessee, a resident individual, is stated to be engaged in the business of trading in wines through his proprietary concern M/s Delta Wines. For the 2 ITA No.5651/Mum/2024 A.Y. 2016-17 Shivram S. Shetty assessment under dispute, assessee filed his return of income on 27.02.2018, declaring income of Rs.4,07,420/-. 4. In course of assessment proceeding, while verifying the bank statements of the assessee, the Assessing Officer (AO) noticed that in the previous year relevant to the assessment year under dispute the assessee had deposited cash in various bank accounts standing in his name. On a query being made, the assessee stated that the cash deposits were out of sales effected during the year. On verifying the Profit & Loss account, the AO observed that the total sales reflected therein amounted to Rs.3,24,53,740/- as against the cash deposited of Rs.4,59,19,850/- in the bank accounts. Therefore, he called upon the assessee to explain the source of excess cash deposits. Alleging that the assessee could not explain the source of excess cash deposits in the bank account despite being given sufficient opportunity, the AO added back the excess cash deposits of Rs.1,34,66,110/- to the income of the assessee. Though, the assessee contested the aforesaid addition before learned First Appellate Authority, however, he was unsuccessful. 5. Before us, the primary grievance of the assessee is to the effect that prior to transfer of the appeal to the NFAC, in course of proceeding before the First appellate Authority, the assessee had furnished voluminous documents to explain the source of cash deposits. He submitted, after the appeal was transferred to NFAC, those documentary evidences were totally ignored and addition has been sustained. In support of his contention regarding furnishing of documentary evidences, the assessee placed reliance on the factual paper book submitted before us. Thus, he submitted, the matter 3 ITA No.5651/Mum/2024 A.Y. 2016-17 Shivram S. Shetty may be restored back to the AO for consideration of the evidences explaining the source of cash deposit and deciding the matter afresh. 6. Per contra, learned Departmental Representative (DR) strongly relied upon the observations of the AO and First Appellate Authority 7. We have considered rival submissions and perused the materials on record. On careful examination of facts and materials on record including the order of the First Appellate Authority, we observed that in course proceeding before the First Appellate Authority, the assessee had furnished various documentary evidences. In fact, in paragraph-5 of the impugned order, the First Appellate Authority has partially accepted the aforesaid factual position. However, on examination of materials placed in the factual paper book, it is observed that voluminous documents furnished by the assessee in course of proceeding before the First Appellate Authority prior to transfer of appeal to NFAC have not at all being considered while deciding the appeal. The acceptability or otherwise of evidences furnished by the assessee can only be decided after verifying the nature of evidences. Without at all looking at the evidences assessee’s explanation regarding the source of cash deposit cannot be rejected. In the facts of the present case, we are convinced that the evidences furnished by the assessee should have been looked into either by the First Appellate Authority or he could have directed the AO to examine them and furnish a report. The aforesaid exercise having not been done while deciding the appeal, we are inclined to restore the issue arising in the appeal to the AO for fresh adjudication after verifying the evidences furnished by the assessee. While deciding the issue, the AO must provide due and reasonable opportunity of being heard to the assessee. Ground is allowed for statistical purposes. 4 ITA No.5651/Mum/2024 A.Y. 2016-17 Shivram S. Shetty 8. In the result, appeal is allowed for statistical purposes. Order pronounced in the open court on 25/ 02/2025 Sd/- Sd/- (N.K. Billaiya) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 28/02.2025 Aks/- Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "