VORTEX RUBBER INDUSTRIES PRIVATE LIMITED,NEW DELHI V. ACIT CIRCLE 26(2), NEW DELHI

ITA 2721/DEL/2023

AI Insights

Vortex Rubber Industries Private Limited appealed against the orders of the Commissioner of Income Tax (Appeals) and the Assessing Officer, which involved an addition of Rs. 47,55,000 to its income for the assessment year 2017-18. The addition was based on unexplained cash deposits post-demonetization. The Tribunal examined the facts, including the assessee's claim that the deposits were from its own withdrawals, and found the explanation reasonable, leading to the decision to allow the appeal and remove the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31617 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH
• Assessee Lawyers: TARANDEEP SINGH
• Keywords: Opportunity of being heard; Revised return; Principle of natural justice
• Section: 143(3); 68; 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA NO. 2721/Del/2023 A.YR. : 2017-18 Vortex Rubber Industries Private Limited, 1557-1558, Mezzanine Floor, Church Road, Chandni Chowk, New Delhi – 6 (PAN: AAECV3496N) VS. ACIT CIRCLE 26(2), NEW DELHI (APPELLANT) (RESPONDENT) Appellant by : Sh. Tarandeep Singh, Adv. Respondent by : Sh. Amit Katoch, Sr. DR. Date of hearing : 13.02.2025 Date of pronouncement : 13.02.2025 ORDER PER SHAMIM YAHYA, AM : The Assessee has filed the instant Appeal against the Order of the Ld. CIT(Appeal)/NFAC, Delhi dated 15.09.2023, relating to assessment year 2017-18 on the following grounds:- 1. That on facts and in law the order dated 15th September 2023 passed by the Commissioner of Income Tax (Appeals) {herein after referred to as the “CIT(A)”} and the order of assessment dated 29th December 2019 passed by the Assessing Officer {herein after referred to as the “AO”} are bad in law and void ab initio. 2 | P a g e 1.1 That on facts and in law the impugned appellate order has been passed by the CIT(A) in complete violation to the settled principals of natural justice i.e inter alia without providing any opportunity of being heard in person. 2. That on facts and in law the CIT(A) has erred in enhancing the total income of the appellant without any show cause and therefore violating provisions of section 251(2) of the Act. 3. That on facts and in law the CIT(A) has erred in upholding and enhancing an addition to total income of Rs. 47,55,000/- alleging that nature and source of cash deposits remains unexplained. 4. That on facts and in law the AO / CIT(A) have erred in not appreciating that nature and source of money deposited in bank account by the appellant post demonetization was fully explained and substantiated. 5. That on facts and in law the AO / CIT(A) have erred in making / upholding the impugned addition premised suspicion, conjectures and surmises. 6. That on facts and in law the CIT(A) has erred in not adjudicating upon Ground No 6 of the appeal raised by the appellant in Form 35. 6.1 That on facts and in law the CIT(A) has erred in not appreciating that the AO has erred in invoking provisions of section 115BBE of the Act. 7. That on the facts and in law the levy of interest u/s, 234B and 234D is bad in law. That the appellant prays for leave to add, alter, amend and / or vary the ground(s) of appeal at or before the time of hearing. 2. The brief facts of the case is that Assessee is a domestic company and is engaged in the activities of trading of tyres, tubes, electronic parts and accessories and other auto related goods. For the year under consideration, assessee had achieved a turnover of Rs. 53,75,44,626/- from above business. A 3 | P a g e return of income declaring total income of Rs. 34,03,810/- was filed by the assessee on 26.10.2017. Thereafter a revised return of inome was filed on 30.6.2018 declaring s same total income however, some MAT adjustments were made. The return filed was selected for scrutiny by issuance of notice u/s. 143(2) of the Act on 22.9.2019. AO noted that after demonetization in 2016, assessee had deposited old currency notes of Rs. 50,05,000/- in bank after 08.11.2016. The AO thereafter passed the assessment order dated 29.12.2019 u/s. 143(3) of the Act assessing the total income of the assessee at Rs. 66,00,727/- after making addition u/s. 68 of the Act of Rs. 31,96,917/- (i.e. Rs. 50,505,000/- minus the average cash deposit in bank for last 6 months of Rs. 18,08,083). In appeal, Ld. CIT(A) noted that the nature and source of cash deposits remains not fully satisfactorily explained, hence, he enhanced the addition to Rs. 47,55,000/- (i.e. Rs. 50,05,000/- minus cash receipt from sundry debtors of Rs. 2,50,000/-) 3. Against the aforesaid order, Assessee is in appeal before us. 4. We have heard the rival contentions and perused the records. Ld. Counsel for the assessee submitted that an amount of Rs. 50,65,000/- was withdrawn by the assessee from his bank account in the month of October, 2016 and from out of this amount sum of Rs. 50,05,000/- was deposited by the assessee in bank during 08.11.2016 to 30.12.2016. The details of withdrawal shows that Rs. 24.65 lacs was withdrawn from Union Bank of India operated by Head Office of the asessee and Rs. 26 lacs was withdrawn from Union Bank of India operated by Branch Office of assessee. However these submissions were not accepted by the authorities below and addition was made. Ld. Counsel for the assessee further submitted that it is clearly shows that withdrawal of money was made from the own account of the assessee, which was deposited during the aforesaid period. Hence, he submitted that explanation is reasonable and no addition is warranted in this case. 4 | P a g e 5. Per contra, Ld. DR relied upon the orders of the authorities below. 6. Upon careful consideration, we find that assessee has duly given the source of cash deposits which was withdrawal from assessee’s own bank account. No case has been made out by the Revenue that the said amount was withdrawn for any other purpose. In this view of the matter, we find that assessee’s explanation is cogent and therefore, direct the AO to delete the addition in this regard. We direct accordingly. 7. In the result, the Assessee’s appeal is allowed in the aforesaid manner. Order pronounced in the Open Court on 13/02/2025. Sd.- (VIMAL KUMAR) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBHATNAGAR Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "