VIJAYA PRAKASH GHOSALKAR,MUMBAI V. COMMISSIONER OF INCOME-TAX (APPEALS), MUMBAI

ITA 5050/MUM/2025

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The case involves Vijay Prakash Ghosalkar, who appealed against the order of the Commissioner of Income Tax (Appeals) which sustained an adhoc addition of Rs.4,30,000 to her income for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer (AO) due to unexplained cash deposits totaling Rs.43,00,000 in her bank accounts. The CIT(A) partially relieved the assessee by deleting the majority of the additions but sustained the adhoc amount. The Tribunal, after reviewing the submissions and evidence, including agricultural and business income, directed the deletion of the adhoc addition, emphasizing that the overall sources of income were accepted and the lack of specific matching did not justify the addition under section 69A.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 777903 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 14-08-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAGNATH PASALE
• Assessee Lawyers: SIDDHARTH VORA
• Keywords: Business income
• Section: 148; 142(1); 68; 234B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SMT BEENA PILLAI, JM & MS PADMAVATHY S, AM I.T.A. No. 5050/Mum/2025 (Assessment Year: 2017-18) Vijay Prakash Ghosalkar, 188/7052, B Wing, Kannamvar Nagar-2, Vikrolie, Mumbai-400083. PAN: BJVPG8922N Vs. ITO Ward-41(2)(5), 216, 2nd Floor, Kautaliya Bhavan, G Block, BKC, Bandra East, Mumbai-400051. Appellant) : Respondent) Assessee / Appellant by : Shri Siddharth Vora, AR Revenue / Respondent by : Shri Nagnath Pasale, Sr. DR Date of Hearing : 01.10.2025 Date of Pronouncement : 09.10.2025 O R D E R Per Padmavathy S, AM: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 20.06.2025 for Assessment Years (AY) 2017-18. The assessee raised the following grounds of appeal: “1. Honorable Commissioner of Income Tax Appeal have erred in making an addition on AD-HOC basis @ 10% which is really not justified keeping in mind in Printed from counselvise.com 2 ITA No. 5050/Mum/2025 Vijay Prakash Ghosalkar principle the sources of the cash deposits are matching and accepted by the learned Hon.CIT(A) 2. The appellant prays that the addition of AD-HOC amount of Rs.4,30,000 may be deleted in totality as it attracts the heavy tax u/s 115BBE along with surcharge @25% on tax and the attracting an interest u/s 234 A as well as 234B which in totality demanded at Rs.9,15,330/- The assessee is a lady and after the expiry of her husband facing a difficulties and may be considered appropriately to DLEETE the said additions made without any justification and give a relief under the law.” 2. The assessee is an individual and did not file the return of income for AY 2017-18. The Assessing Officer (AO) received information that the assessee has following financial transactions during the Financial Year (FY) relevant to AY 2017-18. (i) Received interest from State Bank of India & HDFC Bank Ltd. (ii) Purchase time deposits at SBI and HDFC Bank Ltd. (ii) Made cash deposit of Rs. 42,50,000/- in HDFC Bank Ltd. (iii) Purchase mutual funds to the tune of Rs. 30,00,000/- from HDFC Mutual Fund. 3. Since the assessee did not file the return of income the AO issued a notice u/s 148 of the Act in response to which the assessee filed the return of income on 30.03.2024 declaring a total income of Rs. 9,22,640/-. The AO issued notice u/s 143(2) and 142(1) calling the assessee to file the details. From the bank statements submitted by the assessee, the AO noticed that there are total credits of Rs. 63,94,988/- in the Bank A/c with SBI and HDFC Bank Ltd. The AO also noticed that the assessee has declared an income from Business to the tune of Rs. 4,55,000/- and interest income of Rs. 2,13,084/-. The assessee submitted copies of the invoices and other relevant documents before the AO. After perusing the details submitted by the assessee the AO held that cash deposit to the tune of Rs. 43,00,000/- is not properly substantiated by the assessee and accordingly treated Printed from counselvise.com 3 ITA No. 5050/Mum/2025 Vijay Prakash Ghosalkar the same as unexplained. Aggrieved the assessee filed the further appeal before the CIT(A). The CIT(A) gave partial relief to the assessee by holding that “05. Analysis and decision:- 5(a). I have carefully considered the facts and circumstances of the case. I have also considered the assessee's submissions. The main bone of contention in the case is the cash deposits made by the assessee in her bank accounts. The assessee made cash deposits of Rs.40,00,000 & Rs.2,50,000/- in her bank a/c no.50100098203076 in HDFC Bank Ltd on 16.07.2016 & 12.11.2016 respectively. The assessee also made cash deposits of Rs.50,000/- & other credits of Rs. 10,76,572/- in her bank a/c no.30335783180 in SBI. With regard to all the transactions, the assessee had already offered business turnover of Rs.45,55,000/-and offered total income of Rs.9,22,640/- on presumptive basis. In this regard, the assessee made detailed submissions that cash deposits & credits were mainly from sale of agriculture produce and business receipts. Further, the assessee also submitted she has business receipts from her business of event management at the banquet HD Goankar AC Hall, Plot no.89, Borivalli(E), Mumbai. Accordingly, the assessee submits that she had, during the FY 2016-17, agricultural income of Rs. 15,79,655/-, business income of Rs.8.37.700/- and of past savings from business & agricultural income of Rs. 18,82,645/. The assessee also filed necessary bills before the AO and the AO also acknowledged, in the assessment order, that a bill of Rs. 15,65,100/- was already produced. However, the AO was reluctant to give any credit to these bills. From assessee's submission, it is understood that sufficient sources for cash deposits in HDFC Bank Ltd. & SBI were explained during the assessment proceedings whereas the AO did not give any sufficient credit to the details submitted by the assessee. Thus addition made by the AO of Rs.43,95,776/-is not fully justified. However, it is not possible to make one to one correlation of cash deposits with reference to sources provided by the assessee. Therefore 10% of cash deposits ie., of Rs.4,30,000/- are hereby treated as from unexplained sources and the balance demand is hereby deleted. The grounds of the assessee are hereby partly allowed.” 4. The ld. AR submitted that the assessee is deriving income from agricultural activities and in this regard submitted a statement containing the receipt of sale of agricultural produce. The ld. AR further submitted that the business turnover of the assessee has been accepted by the CIT(A) and therefore he is not correct in making the adhoc disallowance at the rate of 10%. The ld. AR also submitted that when Printed from counselvise.com 4 ITA No. 5050/Mum/2025 Vijay Prakash Ghosalkar the source of income is acknowledged then the addition cannot be made u/s. 68 of the Act. 5. The ld. DR on the other hand supported the order of the lower authorities. 6. We heard the parties and perused the material on record. The assessment of the assessee was reopened for the reason that the assessee is having several transactions in the bank account and has not filed the return of income. The assessee in response to notice under section 148 filed the return of income declaring income from business, interest income. Before the CIT(A) the assessee submitted that he had agricultural income to the tune of Rs. 15,79,655 and the ld AR before us submitted a statement containing the details of agricultural income earned over a period of time. From the perusal of the findings of the AO we notice that the assessee has submitted various invoices raised and that the AO has considered only one invoice as a source for cash deposit since the same is prior to the date of deposit of cash. We further notice from the order of the CIT(A) that the assessee has submitted the following details explaining as the source for cash deposit (i) Agricultural income – Rs. 15,79,655 (Gross receipts Rs.45,13,300 less 65% as expenses (ii) Business Income – Rs.8,37,700 (Gross receipts Rs.45,55,000 & income offered @ 8% under section 44AD) (iii) Past savings from business and agricultural income – Rs.18,82,645 7. The CIT(A) in the appellate order has not disputed the above submission with regard to source by the assessee. However, the CIT(A) has sustained adhoc addition to the tune of Rs.4,30,000 on the ground that there is no one to one matching of the source with cash deposit. In our considered view, when the explanation at overall level towards source is accepted then treating an adhoc Printed from counselvise.com 5 ITA No. 5050/Mum/2025 Vijay Prakash Ghosalkar amount out of the said source as unexplained under section 69A of the Act is not tenable. Section 69A provides that where in any financial year the assessee is found to be the owner of any money is not recorded in the books of account, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money may be deemed to be the income of the assessee for such financial year. In assessee's case, as already stated, the source for the amount deposited has been accepted by the CIT(A) and therefore we hold that the CIT(A) is not correct in sustaining an adhoc amount towards addition under section 69A for the only reason that there is no one to one correlation between the source and the amount deposited. Accordingly we direct that the addition made in this regard be deleted. 8. In result, appeal of the assessee is partly allowed. Order pronounced in the open court on 09-10-2025. Sd/- Sd/- (BEENA PILLAI) (PADMAVATHY S) Judicial Member Accountant Member *SK, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "