SHRI GANESH MADHUKAR KAMTHE,PUNE V. ITO, WARD-14(4), PUNE, PUNE

ITA 2416/PUN/2024

AI Insights

The case involves Shri Ganesh Madhukar Kamthe, who appealed against the order of the CIT(A) / NFAC, which upheld the addition of Rs.35,39,600 to his income for the assessment year 2013-14. The addition was initially made by the Assessing Officer under section 143(3) read with section 147 of the Income Tax Act, 1961, due to the assessee's failure to file a return of income and the subsequent discovery of substantial financial transactions. The Tribunal examined the details of the transactions and found that many of the amounts considered as income by the Assessing Officer were actually loans and not taxable business receipts. The Tribunal's decision was based on the assessee's declaration of income under the Income Tax Declaration Scheme, 2016, and the nature of the transactions in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126392 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P MURKUNDE
• Assessee Lawyers: S B C MALAKAR; YUVRAJ CHAVAN
• Keywords: Set aside; Business income; Business expenditure; Competent authority
• Section: 147; 148; 142(1); 143(2); 44AD

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.2416/PUN/2024 Assessment year : 2013-14 Shri Ganesh Madhukar Kamthe Tarwadi, PO : Fursungi, Pune-Solapur Road, Haveli, Pune – 411007 Vs. ITO, Ward 14(4), Pune PAN: AYVPK2134Q (Appellant) (Respondent) Assessee by : S/Shri B C Malakar & Yuvraj Chavan Department by : Shri Ramnath P Murkunde Date of hearing : 09-04-2025 Date of pronouncement : 21-04-2025 O R D E R PER R. K. PANDA, VP : This appeal filed by the assessee is directed against the order dated 24.09.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2013-14. 2. Facts of the case, in brief, are that the assessee is an individual and has not filed his return of income. The Assessing Officer observed from the information available with the department that the assessee has received commission / brokerage from Shri Sandeep Baburao Kamthe of Rs.44,81,237/- and purchased an immovable property for Rs.35 lakhs and also has made certain term deposits with Bank of Maharashtra. Since no income was offered by the assessee for the impugned assessment year, the Assessing Officer reopened the assessment by invoking the provisions of section 147 of the Income Tax Act, 1961 (hereinafter 2 ITA No.2416/PUN/2024 referred to as ‘the Act’) after taking prior approval of the competent authority. He accordingly issued a notice u/s 148 of the Act to the assessee on 22.03.2019 which was duly served upon him. Since there was no response from the side of the assessee, the Assessing Officer issued another notice. The assessee thereafter filed his return of income on 10.08.2019 declaring total income of Rs.17,59,641/-. The Assessing Officer thereafter issued notices u/s 143(2) and 142(1) of the Act to the assessee, in response to which the assessee filed certain details. 3. The Assessing Officer analyzed the bank account of the assessee for the entire year and noted that the assessee has made fixed deposit of Rs.13 lakhs, repaid loan of Rs.5,07,619/-, paid insurance amounting to Rs.12,655/-, drawn DD for purchase of land of Rs.23,09,047/- and made payments for purchase of car at Rs.1135,276/-, all totaling to Rs.52,64,597/-. Apart from the above, the assessee has also paid Rs.12 lakhs in cash for purchase of land as per assessee’s own submission. He further noted from the details furnished by the assessee that as against total receipt of Rs.71,23,071/- the assessee has withdrawn an amount of Rs.34,18,900/-. After considering an amount of Rs.2 lakhs towards household expenses and after considering the fact that the assessee has paid Rs.12 lakhs in cash for purchase of land, the Assessing Officer determined the total amount available with the assessee for meeting his business expenses at Rs.20,18,900/-. He, therefore, deducted this available cash of Rs.20,18,900/- from the total receipt of Rs.71,23,071/- and determined the income / profit from the activities other than the interest income at Rs.51,04,171/-. Since the assessee had already declared 3 ITA No.2416/PUN/2024 income from the partnership firm at Rs.1,00,319/- and income from business at Rs.14,64,252/- both totaling to Rs.15,64,571/-, he made addition of Rs.35,39,600/- being the difference between Rs.51,04,171,/- and Rs.15,64,571/-. 4. In appeal, the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer on the ground that the assessee failed to furnish any substantial documents to substantiate his claim during the assessment proceedings as well as in appeal proceedings. 5. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds: 1. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeals Centre (NFAC), Delhi erred in dismissing the appeal of the appellant contesting the appeal filed by the appellant against the assessment order passed u/s.143(3) r.w.s. 147 of the I T Act, 1961 dated 23/12/2019 by the Ld. Assessing Officer making addition of Rs.35,39,600/- with the total income thereby assessing the total income at Rs.52,99,240/-, as against the income declared by the assessee in the return of income filed u/s.148 of the said Act on 10/08/2019 of Rs.17,59,641/-. The variation in assessment so made thereby making addition of Rs.35,39,600/- being arbitrary, illegal and bad- in-law be deleted. 2. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeals Centre (NFAC), Delhi erred in dismissing the appeal of the appellant thereby confirming the addition made by the Ld. Assessing Officer in the assessment order passed u/s.143(3) r.w.s. 147 of the I.T. Act, 1961 dated 23/12/2019 of Rs.35,39,600/- ignoring and without appreciating the facts that the Ld. Assessing Officer had totally ignored or had not duly appreciated the submission and contention of the appellant along with details submitted before him on 17/09/2019 vide submission dated 12/09/2019 during the assessment proceedings wherein the appellant had explained the details of income earned by him and also the expenses incurred in connection with earning of such income. The addition therefore so made by the Ld. Assessing Officer duly confirmed by the Ld. CIT(A) being arbitrary, illegal and bad in law, such addition be deleted. 4 ITA No.2416/PUN/2024 3. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeals Centre (NFAC), Delhi erred in dismissing the appeal of the appellant thereby confirming the addition made by the Ld. Assessing Officer ignoring and without appreciating the facts that the amount of Rs.35,39,600/- added to the total income included the estimated household expenses of Rs.2,00,000/- and also the total expenses of Rs.20,18,900/- having no basis and further wrongly holding total receipts of Rs.71,23,071/- in the credits in bank account for this year were not only the commission/brokerage income and interest income but were also the loans/advances received by the appellant by cheques and also the maturity value of the fixed deposits credited therein. Therefore, both the estimation of expenses by the Ld. Assessing Officer of Rs. 20,18,900/- and also consideration of income/receipts of Rs. 71,23,071/- being arbitrary, illegal and bad in law, the addition made of Rs.35,39,600/- be deleted. 4. The Appellant craves leave to add, alter, modify, substitute, and rescind any or all ground of appeal as above before or during the appellate proceedings. 6. The Ld. Counsel for the assessee strongly challenged the order of the Ld. CIT(A) / NFAC in confirming the addition made by the Assessing Officer. He submitted that the assessee had opted his income u/s 44AD of the Act. Further, the assessee has declared income under the Income Tax Declaration Scheme, 2016 for the assessment year 2013-14 at Rs.14,45,309/- and had also paid the taxes on this amount, copy of which is placed at pages 1 to 11 of the paper book. The Ld. Counsel for the assessee referring to page 12 of the paper book drew the attention of the Bench to the total receipts of Rs.71,23,071/-, the breakup of which is as under: Sr No Particulars Amount (Rs) 1 Loan taken from Bank of Maharashtra against FD 9,00,000 2 Unsecured loan from Uttam Kamathe 7,00,000 3 Receipts from sale of Milk 34,500 4 Business receipt 17,07,334 5 Commission received 37,81,237 Total Receipt 71,23,071 5 ITA No.2416/PUN/2024 7. He submitted that the Assessing Officer has included the amount of loan taken from Bank of Maharashtra against FD at Rs.9 lakhs and unsecured loan from Uttam Kamathe at Rs.7 lakhs as the receipts of the assessee which is not correct. Referring to pages 14 and 15 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the loan confirmation from Uttam Baburao Kamthe along with his bank statement. Similarly, referring to page 16 of the paper book, he submitted that the assessee has taken loan against FD. He submitted that this being an old appeal relating to assessment year 2013-14 and since the assessee had declared income under the Income Tax Declaration Scheme, 2016 amounting to Rs.14,45,309/-, has taken as unsecured loan of Rs.7 lakhs, taken loan against FD of Rs.9 lakhs and declared income u/s 44AD of the Act, therefore, the Assessing Officer was not justified in bringing to tax the amount of Rs.35,39,600/-. Similarly, the Ld. CIT(A) / NFAC was also not justified in upholding the same. He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) / NFAC be deleted. 8. The Ld. DR on the other hand while supporting the order of the Ld. CIT(A) / NFAC submitted that the assessee had not filed any documentary evidence before the Ld. CIT(A) / NFAC for which he has confirmed the addition made by the Assessing Officer. He submitted that the bank statement and confirmation letter of Uttam Baburao Kamthe were never produced either before the Assessing Officer or before the Ld. CIT(A) / NFAC. Further, the assessee had never produced the statement containing the loan against the FD before the Assessing Officer or before 6 ITA No.2416/PUN/2024 the Ld. CIT(A) / NFAC. Therefore, he has no objection if the matter is restored to the file of the Assessing Officer for fresh adjudication. 9. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.35,39,600/- on the ground that as against the total withdrawal of Rs.34,18,900/- from the bank account, after considering the household expenses of Rs.2 lakhs and the amount paid for purchase of land of Rs.12 lakhs, the total cash available with the assessee is only Rs.20,18,900/- which is available for meeting his business expenses from the total receipt of Rs.71,23,071/-. Therefore, after deducting the amount already shown by the assessee in the return of income the Assessing Officer made the addition of Rs.35,39,600/-. A perusal of the details furnished by the assessee shows that he has declared an amount of Rs.14,45,309/- as undisclosed income for assessment year 2013-14 on which he has paid the taxes. The challans and certificate issued by the department are already available on record. Similarly, the assessee has also enclosed the bank statement of Shri Uttam Baburao Kamthe which clearly shows that an amount of Rs.7 lakhs has been received on 05.01.2013. Similarly, the assessee has also furnished a certificate from the bank towards loan against FD of Rs.9 lakhs on 05.01.2013. A perusal of the bank statement of the assessee placed in the paper book clearly shows that the assessee has received an amount of Rs.7 lakhs from Uttam Baburao Kamthe, Rs.7 7 ITA No.2416/PUN/2024 lakhs from Shri Sandeep Baburao Kamthe and Rs.9 lakhs from Shri Ganesh Madhukar Kamthe i.e. the assessee (against FD) on 05.01.2013. For the sake of clarity the copy of the bank statement for the month of January, 2013, copy of which is placed at paper book page No.26 is reproduced as under: 10. Therefore, these amounts in our opinion cannot be considered as business receipts. Since the assessee in the instant case has opted his income u/s 44AD of the Act, has declared income under the Income Tax Declaration Scheme, 2016 at Rs.14,45,309/- for assessment year 2013-14, therefore, we find some force in the arguments of the Ld. Counsel for the assessee that the Assessing Officer was not justified in making the addition and the Ld. CIT(A) / NFAC is not justified in sustaining the addition. We find in the instant case when the Assessing Officer is analyzing the bank account of each deposit and the withdrawal, it is not understood 8 ITA No.2416/PUN/2024 as to how he has made the addition of Rs.9 lakhs received from the assessee himself. As stated earlier, the assessee has already declared the income under the Income Tax Declaration Scheme, 2016 for assessment year 2013-14 at Rs.14,45,309/-. Further, the amount of Rs.9 lakhs received by the assessee from himself from loan against FD cannot be considered as business income. The assessee has declared his income u/s 44AD of the Act by estimating the same and this being a very old appeal relating to assessment year 2013-14, we are of the considered opinion that there is no point in restoring the issue to the file of the Assessing Officer for adjudication of the issue afresh as argued by the Ld. DR since the figures are crystal clear from the bank statement filed by the assessee in the paper book. Under these circumstances, the addition made by the Assessing Officer in our opinion is not justified. Accordingly, the order of the Ld. CIT(A) / NFAC is set aside and the Assessing Officer is directed to delete the addition. The grounds raised by the assessee are accordingly allowed. 11. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 21st April, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 21st April, 2025 GCVSR 9 ITA No.2416/PUN/2024 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 09.04.2025 Sr. PS/PS 2 Draft placed before author 11.04.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "