UMALOK CHARITABLE TRUST,MEERUT V. DCIT,CENTRAL CIRCLE, MEERUT

ITA 4841/DEL/2024

AI Insights

The case involves Agro Fresh Fruits & Vegetables, a partnership firm engaged in the retail and wholesale trading of fresh fruits, vegetables, and flowers, appealing against an order from the National Faceless Appeal Centre (NFAC), which confirmed an addition of Rs. 32,35,000 to their income for the Assessment Year 2017-18. The addition was initially made by the Income Tax Officer (ITO) under section 144 of the Income Tax Act, 1961, during a scrutiny under Operation Clean Money. The Tribunal's decision to allow the appeal was based on the incorrect application of facts regarding cash deposits during the demonetization period and the failure to issue a mandatory notice under section 143(2) before making the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312951 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: PRINCE MOHAN SINHA
• Section: 144; 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’: NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No.5656/Del/2024 (ASSESSMENT YEAR 2017-18) Agro Fresh Fruits & Vegetables, 108-109 Parmesh Business Centre-I, Plot No.20, Community Centre, Karkardooma, Delhi-110092. PAN-AAZFA7727P Vs. Income Tax Officer Ward-34(4), Delhi. (Appellant) (Respondent) Assessee by Shri Prince Mohan Sinha, Adv. Department by Shri Sanjay Kumar, Sr. DR Date of Hearing 08/04/2025 Date of Pronouncement 30 /04/2025 O R D E R PER MADHUMITA ROY, JM: The instant appeal filed by the assessee is directed against the order dated 18/06/2024 passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the Ld. CIT(A)] arising out of the assessment order dated 23.12.2019 passed by the ITO, Ward-34(4), Delhi u/s 144 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) for Assessment Year 2017-18. 2 ITA No.5656/Del/2024 Agro Fresh Fruits & Vegetable vs. ITO 2. The brief facts leading to the case are that the assessee is a partnership firm name and styled as M/s Agro Fresh Fruits and Vegetables and is engaged in the business of Retail and Wholesale trading of Fresh Fruits Vegetables and Flowers. Notice u/s 142(1) dated 01.08.2019 was issued to the assessee whereupon the assessee filed its return of income on 05.09.2019 claiming loss of business at Rs.2,17,935/. The case of the assessee was taken up for scrutiny through Operation Clean Money. Notice u/s 142(1) of the Income Tax Act, 1961 was issued along with questionnaire to the assessee which was responded by the assessee time to time. The Assessing Officer finalized the assessment upon making addition of Rs.32,35,000/- which was further confirmed by the First Appellate Authority. Hence, the instant appeal before us. 3. In fact, the appellant imported flowers in the month of September and October during the festival seasons from one M/s FIRST BIZ CO LTD., a Thiland based Company payments whereof was made from the bank account lying with ICICI Bank. The items were sold during the year on cash basis and the same was deposited in the current account for making payments against import goods and custom duty. Relevant to mention that payments of custom duty which was paid by the appellant was verified from ICEGATE site of Customs justifying the genuine purchases from the Thiland based company. It is the case of the assessee that all the documents in support of such purchase being purchase bills from Thailand along with bill of entry custom duty payment were duly produced before 3 ITA No.5656/Del/2024 Agro Fresh Fruits & Vegetable vs. ITO the Assessing Officer which were not considered in its proper prospective and addition was made u/s 144 of the Act. 4. At the time of hearing of the matter, the Ld. Counsel for the assessee submitted that the assessment has been made on the basis of incorrect facts of deposits made by the assessee to the tune of Rs.32,35,000/- during the demonetization period commencing from 9th November, 2016 to 30th December, 2016 which was sought to be verified on the pretext that the assessee has not filed its return of income for Assessment Year 2017-18 which is mentioned in the very first paragraph of the assessment order dated 23.12.2019. In fact, the assessee filed its return of income declaring loss of Rs.2,17,935/. It has also been contended by the ld. AR that no notice u/s 143(2) was issued by the Department before making addition which has not been able to be controverted by the Ld. DR. Neither it is evident from the order passed by the Assessing Officer that the notice was issued u/s 143(2) of the Act as is mandatory before making addition against the assessee. Furthermore, time and again it is mentioned by the Assessing Officer that the assessee had never complied with the notice issued u/s 142(1) of the Act but assessee duly complied with the same and furnished the relevant documents along with explanation and/or reply regarding the source of cash deposits and other credits appearing in the bank statements for 2016-17. In this regard, he has drawn to our attention to the documents duly placed before the authorities below as appearing from page 3 to 15 of PB filed before us including financial statements of the assessee. It was 4 ITA No.5656/Del/2024 Agro Fresh Fruits & Vegetable vs. ITO further pointed out by the Ld. AR that taking into consideration the turnover of the assessee to the tune of Rs.56,10,150/-, as the assessee has not filed ITR, 8% of the same has been added to the total income of the assessee treating the same as undisclosed income, which establishes the fact of necessary documents included financial statements of the assessee were duly filed before the Ld. AO. In that view of the matter the entire addition made by the Assessing Officer is total non-application of mind, erroneous and thus, liable to be deleted. Such submissions made by the Ld. AR has not been able to be controverted by the Ld. DR. However, he relied upon the orders passed by the authorities below. 5. Having heard the Ld. Counsels appearing for the parties and having regard to the facts and circumstances of the case particular the fact of return of income being filed by the assessee which has wrongly recorded otherwise by the AO and furthermore, no notice u/s 143(2) of the Act being served upon the assessee and the addition of 8% of the turnover by the assessee annually on the basis of the documents so furnished before the said authorities though alleging non filing of any supporting document in support of the cash deposits made in the ICICI Bank, is found to be erroneous, total non- application of mind, bad in law and, thus, liable to be deleted. With the aforesaid observations, the addition made by the Ld. AO confirmed by the First Appellate Authority is, thus, deleted. 5 ITA No.5656/Del/2024 Agro Fresh Fruits & Vegetable vs. ITO 6. In the result, the appeal filed by the assessee is allowed. Order pronounced on 30/4/2025. Sd/- (MADHUMITA ROY) JUDICIAL MEMBER Dated:30/04/2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "