SHRINIWAS NARAYAN GADGONIWAR,CHANDRAPUR V. DCIT CIRCLE CHANDRAPUR, CHANDRAPUR

ITA 104/NAG/2024

AI Insights

The case involves Shriniwas Narayan Gadgoniwar, a proprietor engaged in the business of selling liquor, who appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal was related to the assessment year 2017-18, where the Assessing Officer made several additions to the assessee's income, including a significant addition of Rs. 1,54,62,395 for cash deposited during the demonetization period under section 68 of the Income Tax Act, 1961. The assessee argued that the case should be remanded back for proper verification, which the CIT(A) denied, stating he lacked the power to remand. The Tribunal agreed that further verification was necessary, especially concerning the cash sales reported corresponding to the cash deposits during the demonetization period.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474388 (ITAT-NAGPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY Y. MARATHE
• Assessee Lawyers: MAHAVIR ATAL
• Keywords: Opportunity of being heard; Additional evidence
• Section: 68; 69A; 234B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI K.M. ROY, ACCOUNTANT, MEMBER ITA no.104/Nag./2024 (Assessment Year : 2017–18) Shriniwas Narayan Gadgoniwar Gadgoniwar House, At Chunala Rajura, Chandrapur 442 905 PAN – AFMPG8187M ……………. Appellant v/s Dy. Commissioner of Income Tax Amravati Circle, Amravati ……………. Respondent Assessee by : Shri Mahavir Atal Revenue by : Shri Abhay Y. Marathe Date of Hearing – 13/02/2025 Date of Order – 21/03/2025 O R D E R PER V. DURGA RAO, J.M. This appeal by the assessee is emanating from the impugned order dated 19/01/2025, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2017–18. 2. The assessee has raised following grounds:– “1. Whether on the facts and circumstances of the case, learned Commissioner of Income Tax (Appeals) was justified in affirming the addition made by the Assessing officer to the tune of Rs. 1,54,62,395/ under section 68 of the Income Tax Act, 1961. 2. Whether on the facts and circumstances of the case, learned Commissioner of Income Tax (Appeals) was justified in affirming the addition made by the 2 Shriniwas Narayan Gadgoniwar ITA no.104/Nag./2024 Assessing officer to the tune of Rs. 1,22,830/ under section 69A of the Income Tax Act, 1961. 3. Whether on the facts and circumstances of the case, learned Commissioner of Income Tax (Appeals) was justified in affirming the addition made by the Assessing officer to the tune of Rs. 1,75,981 under section 69A of the Income Tax Act, 1961. 4. Whether on the facts and circumstances of the case, learned Commissioner of Income Tax (Appeals) was justified in affirming the addition made by the Assessing officer to the tune of Rs. 3,75,738/- as per the provisions of section 40(a)(ia) of the Income Tax Act, 1961. 5. Whether on the facts and circumstances of the case, learned Commissioner of Income Tax (Appeals) was justified in affirming the ad hoc disallowance of 10% of the expenses made by the Assessing officer. 6. Whether on the facts and circumstances of the case, learned Commissioner of Income Tax (Appeals) was justified in affirming the interest levied by the Assessing officer under section 234A and 234B of the Income Tax Act, 1961.” 3. The assessee is a proprietor engaged in the business of sale of liquor under the name and style of M/s. Laxmi Narayan Swami Wines. For the year under consideration, the assessee filed its return of income on 29/03/2022, disclosing total income of ` 34,85,880. During the assessment proceedings, the assessee did not comply with the directions of the Assessing Officer comprehensively. The Assessing Officer in turn has made various additions, majorly, on account of the cash deposited by the assessee during the demonetization period of ` 1,54,62,395. The assessee was not able to substantiate the cash deposited with supporting and/or corroborative documentary evidence. However, certain bank statements along with audit report and return of income were on furnished by the assessee during the assessment proceedings. Since the assessee was unable to submit comprehensive documentation before the Assessing Officer, it was the assessee’s plea before the learned CIT(A) that the case may be remitted back to the file of the Assessing Officer for proper verification. The learned CIT(A) 3 Shriniwas Narayan Gadgoniwar ITA no.104/Nag./2024 dismissed the appeal of the assessee stating that he was not bestowed with power to remand back and no additional evidences have been relied upon. 4. We have heard the arguments of rival parties, perused the material available on record and gone through the orders of the authorities below. In our considered opinion, even though the assessee has not been able to make comprehensive compliance before the Assessing Officer, the fact remains that the cash deposited during the demonetization period formed part of the audited books of accounts of the assessee. Moreover, the assessee has also reported cash sale corresponding to such cash deposit as well as for other cash deposited in other months in the Profit and Loss Account for the year under consideration. Thus, the action of the Assessing Officer, wherein, he has added the entire amount of cash deposited during the demonetization period when the same formed part of the turnover as per books of the assessee is baseless. There is no rejection of books of account under section 145(3) of the Act. The Assessing Officer has also made certain observations with regard to entries appearing in the books of account. We find that this is a case where proper verification is required especially with regard to the cash sale reported by the assessee corresponding to cash deposited by him during the demonization period as well as intricate analysis of books of account. Thus, being a case where such proper verification is required, we deem it fit and appropriate to remand the matter back to the file of the Jurisdictional Assessing Officer and direct him to make proper examination and direct denovo assessment after providing reasonable opportunity of being heard to 4 Shriniwas Narayan Gadgoniwar ITA no.104/Nag./2024 the assessee. The assessee is directed to be vigilant and co–operative and should be ready with all evidences. 5. In the result, assessee’s appeal stands allowed for statistical purpose. Order pronounced in the open Court on 21/03/2025 Sd/- K.M. ROY ACCOUNTANT MEMBER Sd/- V. DURGA RAO JUDICIAL MEMBER NAGPUR, DATED: 21/03/2025 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur "