SHRIKANT RATILAL PATEL,MUMBAI vs. CIT, PUNE-11, THANE

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ITA 3042/MUM/2022Status: DisposedITAT Mumbai26 April 2023AY 2020-215 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had provided prima facie evidence for the source of Rs. 12,88,220/- of the seized cash. The remaining amount was presumed to be accumulated profits from his business. Since the sales were already included in his profit and loss account and offered to tax, the addition under Section 69 was not warranted.

What were the facts?

During a search of the assessee's locker, cash of Rs. 13,93,000/- was seized. The assessee claimed the cash was accumulated from his American Diamond trading business and intended for his daughter's marriage expenses. He provided a cash book and sales invoices as evidence.

What were the issues?

Whether the cash found in the locker could be treated as unexplained money when the assessee provided evidence of its source from business and intended use for marriage expenses?

Which sections of the Income-tax Act were involved?

Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SHRI ABY T. VARKEY, JM & SHRI OM PRAKASH KANT, AM

For Appellant: Shri Vimal Punmiya
Hearing: 24/01/2023Pronounced: 26/04/2023

स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AHKPP2076Q (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee by: Shri Vimal Punmiya Revenue by: Shri Sanjeev Ranjan (Sr. AR) सुनवाई की तारीख / Date of Hearing: 24/01/2023 घोषणा की तारीख /Date of Pronouncement: 26/04/2023 आदेश/ORDER

PER ABY T. VARKEY, JM:

1.

This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax Appeal/NFAC dated 31.10.2022 for AY 2020-21.

2.

The main grievance of the assessee is against the action of the Ld.CIT(A) in confirming the addition made by AO of Rs. 13,93,000/- as unexplained money u/s 69 of the Income Tax Act, 1961 (herein after “the Act”). 3. Brief facts are that the assessee is proprietor of M/s Cosmos Trading Company, which is into business of trading in Precious, and Semi-Precious Stone. He had a locker No. 960 at M/s Shri Mumbadevi Safe Deposit Vault at 127/129, Bhagat Building, 3rd Agiary Lane, Jhaveri Bazar, Mumbai which was searched by the department on 17.10.2019 and cash of Rs. 13,93,000/- was retrieved/seized. At the . Shrikant Ratilal Patel time of search, the investigation team had recorded the statement of the assessee, which has been reproduced, which is as under:- Q.12 on opening the locker No. 960 which is in the name of Shrikant R. Patel (Yourself), located of M/s Shree Mumbadevi Safe Deposit Vault at 127/129, Bhagat Building, 3rd Agiary Lane, Zaveri Bazar, Mumbai, Cash of Rs, 13,93,000/- has been found. Pleased confirm the same and provide the details of owner of cash. Ans. Sir, I confirm the same that an opening of locker No. 960 which is in the name of me i.e. Shrikant R. Patel located of M/s Shree Mumbadevi Safe Deposit vault at 127/129, Bhagat Building, 3rd Agiary Lane, Zaveri Bazar, Mumbai, Cash of Rs. 13,93,000/- has been found. Sir, this cash belongs to me and has been accumulated from my trading business of American Diamond. Q.13 Please explain the source of cash of Rs. 13,93,000/- and reconcile the same with supporting documents. Ans. Sir, this cash is generated through my trading business of American Diamond through my company Cosmos Trading Company. Supporting documents for the same are not readily available with me. I will provide the same in due course of time.

4.

Thereafter, the AO notes that he issued notice u/s 143(2) of the Act; and show caused assessee as to why this amount should not be treated as the un-explained income in his hands. According to the AO, the assessee vide submission dated on 11.11.2019 produced the cashbook and sales book of M/s Cosmos Trading Company, from which it revealed that huge cash sales were made in the previous six (6) months before seizure of cash as compared to its regular business.

. Shrikant Ratilal Patel And the AO noted that the cash sale bills produced by the assessee do not contain the Name, Pan, Address, GSTN and Mobile Numbers of the parties to whom sales were made as recorded in cash book. According to him, such bills were only created to prove the source of cash and he did not accept the explanation of the assessee and made the addition of Rs.13,93,000/- u/s 69A of the Act. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who was pleased to dismiss the same.

5.

Aggrieved, the assessee is before us.

6.

We have heard both the parties and perused the records. We note that the assessee is in the business of trading in Semi-Precious Stone and Synthetic Stone. During the year under consideration, the assessee has sold part of his stock of Semi-Precious Stones to various customers. During search of his locker on 17.10.2019, cash of Rs. 13,93,000/- was found and seized and the search team asked the assessee to explain the source of the cash and to reconcile the same with supporting documents. Pursuant to which, [the assessee at the time of search itself] has submitted that the cash has been generated through trading/business of American Diamond through his concern viz Cosmos Trading Company and also said that supporting documents for the same are not readily available but will be provided in the due course before the AO. In this regard, the Ld.AR brought to our notice the reason for keeping such an amount in locker. According to him, the marriage of assessee’s daughter was fixed/scheduled on 25.11.2019 (search on 17.10.2019) and the assessee had kept the sale consideration from the trading, in the locker for purpose of the meeting

. Shrikant Ratilal Patel the expenditure for conducting the marriage. As proof of the marriage of her daughter on 25.11.2019, assessee had filed marriage invitation card which is found placed at page no. 58 to 59 of the Paper book; and the assessee has filed the cash book which is found placed at page no. 112 of the Paper book which is noted to be cash book from 1st Sep, 2019 to 17th Oct, 2019 (date of search) from which it is discerned that the assessee had an opening balance of Rs. 47,507/- on 01.09.2019 and on 17.10.2019 he had closing balance of Rs.12,88,220/-. Thus assessee has been able to show that assessee has cash to the tune of Rs. 12,88,220/- on the date of search. Assessee in order to show that the cash was generated from the sales of diamonds has filed vouchers which is found placed at page no. 118 to 129 (sale invoices) which has been reflected in the cashbook. We note that the assessee has remitted GST on the purchases of American diamonds; and from a perusal of invoices it is noted from page no 130 to 143 of the PB that the assessee has given the details of sales; and the details of purchase parties are found placed from page no.115-116 of the PB. Thus the assessee has been able to bring prima facie evidence to show the source of the cash to the extent of Rs. 12,88,220/- [ out of Rs. 13,93,000/- seized on the date of search]. It was also brought to our notice that even though the daughter of assessee was supposed to get married on 25.11.2019 i.e. [after a month from the date of search] un-fortunately marriage could not take place because cash which had been kept for the marriage, had been seized by the department. According to us, the assessee has explained source of Rs. 12,88,220/- and the balance amount of Rs. 1,04,780/- can be persumed to have been accumulated by the assessee . Shrikant Ratilal Patel from the profits which assessee had been dealing from business of the trading in diamonds for the last 10 months. It is further noted that the assessee has included the sale of Rs. 13,93,000/- in its profit and loss account and it has become part of the turnover and has offered the same to tax while returning an income of Rs. 10,75,040/-. Therefore, we are of the view that in the facts and circumstances discussed (supra) the addition of the u/s 69 of the Act was not warranted in the facts and circumstances discussed supra. Therefore, the addition made by the AO stands deleted.

7.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on this 26/04/2023.

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