SHREE BALAJI ASSOCIATES,NAVSARI V. ITO, WARD 5, NAVSARI

ITA 995/SRT/2024

AI Insights

The case involves Shree Balaji Associates, a firm engaged in real estate, appealing against the order of the National Faceless Appeal Centre (NFAC)/Commissioner of Income Tax (Appeals), which confirmed an addition of Rs. 7,54,000 as unexplained cash credit under section 68 and unexplained money under section 69A of the Income Tax Act, 1961. The additions were initially made by the Assessing Officer following the demonetization period, suspecting that unexplained money was deposited into the firm's bank accounts. The Tribunal considered the explanations and evidence provided by the assessee, including substantial cash withdrawals and receipts from sales, and decided to partially sustain the additions while rejecting the application of the enhanced tax rate under section 115BBE for the relevant assessment year.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472204 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: Sreelekha Banerjee Vs CIT, Samir Shantilal Mehta Vs ACIT, Arjunsinh Harisinh Thakor vs ITO, Jitendra Nemichand Gupta Vs ITO, DCIT vs Punjab Retail Pvt. Ltd, ACIT vs Sandesh Kumar Jain
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: SUJESH C. SURATWALA
• Keywords: Unexplained cash credit
• Section: 143(3); 68; 69A

Judgement Text

" आयकर अपीलीय अिधकरण, सूरत Ɋायपीठ, सूरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 995/SRT/2024 (AY 2017-18) (Hybrid processing hearing) Shree Balaji Associates 1, Shree Balaji Residency, Panchal Samajwadi, Gohar Baug, Bilimora- 396 321 [PAN : ACBFS 4052 R] बनाम Vs Income Tax Officer, Ward-5, Navsari, Income Tax Office, Near Char Pool Police Chowki, Navsari- 396 445 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri Sujesh C. Suratwala, CA राजˢ की ओर से /Revenue by Shri Mukesh Jain– Sr-DR अपील पंजीकरण/Appeal instituted on 25.09.2024 सुनवाई की तारीख/Date of hearing 30.12.2024 उद ्घोषणा की तारीख/Date of pronouncement 30.12.2024 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi/Commissioner of Income tax (Appeals) [for short to as “NFAC/Ld.CIT(A)] dated 13.08.2024 for assessment year (AY) 2017-18, which in turn arises out of assessment order passed by Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) 26.12.2019. The assessee has raised following grounds of appeal: “1. The learned AO has erred in making addition of Rs.7,54,000/- u/s 68 of the Act as “unexplained cash credit” towards cash deposited for into bank accounts whereas the cash deposit is out of opening balance of cash as well as withdrawal of current year. Hence, requires to be deleted. ITA No.995/SRT/2024 (A.Y.17-18) Shree Balaji Associates 2 2.The learned CIT(A)/NFAC has erred in making addition of Rs.7,54,000/- u/s 69A of the Act as “unexplained money” towards cash deposited for into bank accounts whereas the cash deposit is out of opening balance of cash as well as withdrawal of current year. Hence requires to be deleted. 3. On the facts, circumstances of the case and in law, Learned CIT(A) has taken contrary view as compare to AO in a manner that learned AO while passing the order treating Rs.7,54,000/- cash deposited in to bank account as “unexplained cash credit” u/s 68 of the Act whereas learned CIT(A) has considered Rs.7,54,000/- as cash deposited into bank account as “unexplained money” us/ 69A of the Act which is not permissible under the law hence addition confirmed by CIT(A) should be quashed. 4. The appellant craved leaves to add, alter, delete, amend or modify any portion of appeal with the prior permission of CIT(A).” 2. Rival submission of both the parties heard and record perused. The Ld. Authorized Representative (Ld.AR) for the assessee submits that assessee- firm is engaged in business of real estate. The assessee filed its return of income for assessment year 2017-18 on 18.01.2028 declaring income of Rs.5,44,520/-. The Assessing Officer while passing the assessment order made addition of Rs.7,54,000/- under section 68 of the Act on account of unexplained cash credit. The Assessing Officer made addition by taking view that during demonetization period, assessee deposited unexplained money in its bank account. The Ld. AR of the assessee submits that there is no unexplained money, the assessee has sufficient withdrawals from bank as has been recorded in para-5.2 of the assessment order. The assessee has explained that during the relevant financial period, there were total cash withdrawals from bank was of Rs.29,45,000/-. The Assessing Officer has only given credit of Rs.12,00,000/-, which was withdrawn on 07.11.2016 and Rs.9,46,000/- which was received from various persons against sales of row ITA No.995/SRT/2024 (A.Y.17-18) Shree Balaji Associates 3 house, has been recorded in para 5.1 of the assessment order. Rest of the amount was treated as unexplained money. The assessee is engaged in business activities of real estate and was having sufficient cash available with them for depositing of declaring on demonetization. The Assessing Officer simply disregarded the submission of assessee without bringing any adverse material on recorded. The Assessing Officer also treated such addition as unexplained money. The Ld. AR of the assessee submits that such addition is liable to be sustained. In alternative and without prejudiced submission, Ld. AR of the assessee submits that to avoid long drawn litigation, a token disallowance may be made which should not be exceeded @ 25% of addition sustained by Assessing Officer. 3. On the other hand, Ld. Senior Departmental Representative (Ld. Sr-DR) for the Revenue submits that Assessing Officer has passed very reasoned order allowing credit amount which was explained by assessee, which includes the amount of Rs.12.00 lacs which was withdrawn just one day before demonetization and Rs.9,46,00/- received from various persons against sales of row house. Other cash deposits by assessee was not accepted as assessee has shown withdrawal about 3/4 months prior to demonetization period. Keeping such huge cash amount of Rs. 29.00 lacs are beyond human probability. The assessee is engaged in real estate business and withdrawal from bank is made only in such circumstances when no cash is left in hand of assessee. The Ld. Sr-DR for the Revenue submits that assessee has already allowed sufficient relief by Assessing Officer and does not deserve any further relief. ITA No.995/SRT/2024 (A.Y.17-18) Shree Balaji Associates 4 4. We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We find that during assessment, Assessing Officer noted that during demonetization period, assessee-firm had deposited Rs.29,00,000/- in the Gandevi Peoples’ Co-Operative Bank Ltd. On issuing show cause notice, assessee explained that they have sufficient cash withdrawal from bank. The assessee furnished the details of cash withdrawal of Rs. 29.45 Lacs during the period of 08.05.2016 to 07.11.2026. The assessee also explained that they have received Rs.9,46,000/- from four persons, details of which are record in para-5.1 & 5.2 of assessment order. We find that assessee explained various cash withdrawn aggregating of Rs.29.45 lacs. However, Assessing Officer accepted only Rs.12.00 lacs which was within just one day before demonetization period declared and Rs. 9.46 lacs received from their customers and rest of amount was not accepted by Assessing Office. The Assessing Officer treated the remaining amount as unexplained cash credit and taxed the same under section 115BBE of the Act as recorded in para-5.17 of the assessment order. We find that entire cash deposited which was not accepted. The Hon'ble Apex Court in Sreelekha Banerjee Vs CIT (1963) 49 ITR 112 (SC) while considering the issue related with demonetized currency held that in cases of high denomination notes, where the business and the state of accounts and dealings of the assessee justify a reasonable inference that he might have for convenience kept the whole or a part of a particular sum in high denomination notes, the assessee prima facie discharged his initial burden when he proved the balance and that it might reasonably have been kept in high denomination notes. Thus, considering the ITA No.995/SRT/2024 (A.Y.17-18) Shree Balaji Associates 5 nature of business of assessee and the facts that substantial part of cash deposits is accepted by the department and only Rs. 7.54 lacs are treated as unexplained cash credit, thus, in our view to avoid the possibility of revenue leakage a reasonable percentage of disallowance would be sufficient to meet the end of justice. Hence, the Assessing Officer is directed to disallow 25% (Rs. 1,88,500/-) of Rs. 7.54 lacs as unexplained deposits and remaining of Rs. 5,65,500/- is upheld. So far as So far as taxing the addition at the enhanced rate of tax under section 115BBE is concerned, we find that Divisions Bench as well as SMC Bench of this Tribunal in a series of case has held that enhance rate prescribed under section 115BBE is not applicable for AY 2017-18, reference is made in case of Samir Shantilal Mehta Vs ACIT ITA No. 42/Srt/2022 (Surat Trib), Arjunsinh Harisinh Thakor vs ITO in ITA No. 245/Srt/2021 and in Jitendra Nemichand Gupta Vs ITO ITA No. 211/Srt/2021 and Indore Bench in DCIT vs Punjab Retail Pvt. Ltd 677/Ind/2019 (Indore Trib) and Jabalpur Bench in ACIT vs Sandesh Kumar Jain in ITA No. 41/Jab/2020. In the result, ground No. 1 to 3 of appeal raised by the assessee are allowed. 5. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 30/12/2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) लेखा सद˟/Accountant Member Ɋाियक सद˟/Judicial Member सूरत / Surat Dated: 30/12/2024 Dkp Outsourcing Sr.P.S* ITA No.995/SRT/2024 (A.Y.17-18) Shree Balaji Associates 6 आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to :  अपीलाथŎ/ The Appellant  ŮȑथŎ/ The Respondent  आयकर आयुƅ/ CIT  िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT  गाडŊ फाईल/ Guard File // True Copy // By order/आदेश से, सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत "