MAGNUS CARS ,MUMBAI vs. ITO WARD 4(1), MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER:

dated 25.06.2025 for A.Y. 2017-18. The assessee has raised following grounds

of appeal;

i. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in conforming the action of Ld. Assessing Officer (in short ‘AO’) of passing the assessment order by confirming an addition of Rs. 27,40,000/- as unexplained money under Section 69A of the Income Tax Act, 1961 w.r.t to advance received from customers as third parties have not responded to notice issued. ii. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the action of AO of passing the assessment order by stating that creditworthiness of the cash deposits cannot be justified just because the third parties to whom the notice is served have not provided response. Mere independence on replies from third parties cannot be the ground to make an addition under Section 69A. 2. Brief facts of the case are that the assesseeis a partnership firm engaged

in the business of dealing in motor vehicles, filed its return of income for AY 2017-18 on 28.12.2017 declaring income of Rs. 1,44,590/-. The case

was selected for scrutiny to verify the genuineness of high value of cash

receipt. During the assessment, the Assessing Officer (in short ‘AO’)

recorded that the assessee made cash deposit of Rs. 43,50,000/- in two

bank accounts namely Bassein Catholic Co Op Bank Ltd. and New India

Cooperative Bank Ltd. In Bassein Catholic Co Op Bank Ltd., the assessee

deposited Rs. 34,00,000/- and in New India Cooperative Bank Ltd. Rs.

9,50,000/-. The AO asked the assessee to explain its activities and

substantiate source of cash deposit. In para 5 of the assessment order

recorded that the assessee failed to explain its business activities. The

AO also compared month wise cash deposit in FY 2015-16 and FY 2016-

deposit. The assessee in response to such show cause notice filed reply

dated 27.12.2019 and contended that assessee has received cash

amount for facilitating the purchases motor cars. The assessee furnished

name of seven such person who has given amount for purchase of cars.

The AO, on perusal of details and invoices accepted the cash in respect

of two persons namely Sanajy M Kasar and JayprakashPatil Rs.

7,10,000/- and 3,00,000/- respectively aggregating of Rs. 10,10,000/-.

However, the cash deposit/receipt in respect of other persons namely

PrafulBanduRaut, Dinesh Gadge, Ratan R Sharma, Vinit Vijay Naik and

BalshiramNarsale was not accepted. The AO, accordingly, added Rs.

33,40,000/- as undisclosed cash and tax the same under Section

115BBE.

appeal before Ld. CIT(A). Before CIT(A), the assessee submitted that

assessee is a partnership firm engaged in the business of dealing in

motor vehicles of reputed car companies under the name and style of

‘Magnus Cars’. During assessment, the assessee explained the source of

cash deposit received from customer prior to demonetisation period for

booking of cars. The assessee also file with confirmation from parties. It

was stated that amounts of receipts were reported in the ITR filed by

the assessee. All details were furnished on ITD portal. Owing to the

nature of business of assessee, the assessee usually had to deposit cash

of receipt of particular day, after few days and some time in various

tranches being substantial cash involved. The AO has not examined the

explanation furnished vide reply dated 19.12.2019 and 27.12.2019

wherein party wise details were furnished. The cash deposit by assessee

was part of business proceeds. The correctness of books of account was

not disputed.

relief to the assessee in respect of cash received from the Dinesh Gadge

of Rs. 6,00,000/- and remaining amount was upheld by holding

remaining parties have not furnished documentary evidence for purchase

of motor cars through assessee. Further aggrieved, the assessee has

filed present appeal before tribunal.

AR) of the assessee and the learned senior departmental representative (Ld. Sr. DR) for the revenue.The Ld. AR of the assessee submits that the

assessee is a partnership firm engaged in the business of dealing of

sales of motor vehicles of reputed car companies. During the

assessment, the assessee explained that cash deposit in both the bank

accounts represent advances received from customers. The advances

were received prior to demonetisation period for booking of cars. To

substantiate such fact, the assessee furnished confirmation of concerned

parties. The bank accounts wherein cash was deposited is disclosed in

the return of income. The assessee filed details of cash deposits on ITD

portal being specified the cash transaction of more than two Lakhs. As

per his business model, the assessee usually deposit cash after few days

of booking. The AO failed to appreciate the explanation of assessee. The

addition confirmed by Ld. CIT(A) to the extent of Rs. 16,44,000/- is a

part of cash advances received from the customers on account of

booking of cars, which are duly supported in the entry in books of

account. The assessee has furnished copy of identification of the persons

including their PAN, confirmation and delivery of officials purchased

through assessee. The assessee has filed such detail in respect of

purchaser namely Vinit Vijay Naik, Balshiram Narsale, Praful Bandu Raut

and Dinesh Gadge. The AO has not verified such facts from the

customers. Copy of all such evidences is also placed on record.

lower authorities. The Ld. Sr. DR submits that the assessee failed to

explain the source of cash deposit. The plea raised before lower authorities that such cash deposit was part of booking of vehicles was

not furnished before lower authorities. The assessee was not authorised

to accept the cash in the form of Specified Bank Note (SBN) after

08.11.2016. Impugned cash deposits are after 8th November 2016.

through the orders of lower authorities carefully. I have also seen various

documentary evidences filed on record. I find that right from the

beginning, the assessee has taken plea that cash deposit was part of

business receipt as it was received for booking of motor cars. The

assessee never claimed that such cash was received after

demonetisation of old currency note in the form of Rs. 500 or 1000. The

claim of assessee was that the assessee has received such cash before

demonetisation and was deposited for the purpose of procuring vehicle

on behalf of their customers. The assessee furnished the name of all

such customers. The AO has not made any verification of facts from

such person or from the authorised dealer of various vehicle

manufacturing companies. The AO accepted cash deposit which was

claimed to have deposited on behalf of the Sanjay M Kasar and

Jayprakash Patil of Rs. 4,10,000/- and 3,00,0000/-. Further the Ld.

CIT(A) accepted cash deposit on behalf of the Dinesh Gadge of Rs.

6,00,000/-. Thus, dispute remains with respect to remaining cash which

was allegedly received on account of booking of vehicles from Praful

Bandu Raut, Vinit Vijay Naik, Balshiram Narsale. Before tribunal, the

assessee has filed copy of tax invoices issued by Fortpoint Automotive (Cars) Pvt. Ltd., Bhiwandi in the name of Vinit Vijay Naik wherein he has

purchased Maruti Breeza Car on 22.12.2016. Copy of PAN Card, tax

invoice is placed on record. The assessee also furnished confirmation of

account by Vinit Vijay Naik. For cash received from Balshiram Narsale,

the assessee has filed copy of PAN, tax invoices from Shivam Autozone

India Pt Ltd. in the name of Balshiram Narsale against purchase of

Maruti Dzire Car. Against the booking of Praful Bandu Raut, the assessee

has filed PAN Card, tax invoices from Excell Autovista Pvt. Ltd, Bhiwandi

from purchase of Maruti Celerio Car VXI Model. For booking of Ratan

Ramchandra Sharma, the assessee has furnished PAN Card of Ratan

Sharma, tax invoices from Shivam Autozone India Pvt. Ltd.,

Kandivali(W), Mumbai for purchase of Maruti Ciaz and confirmation of

account.

deposit. The AO made addition without verification of fact. In view of the

aforesaid factual discussion, I do not find any justification for making such

addition. Thus, I direct the AO to delete the entire addition under Section

69A of Rs. 27,40,000/-. In the result, the grounds of appeal raised by the

assessee are allowed.

Order was pronounced on 20/04/2026 in open Court.

Sd/- Pawan Singh Judicial Member

MUMBAI, Dated:20/04/2026 Zu, P.S Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai