NAMAN HEMANTBHAI SHAH,AHMEDABAD vs. THE ITO, WARD-5(3)(2), AHMEDABAD
Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHAAssessment Year: 2017-18
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”) dated 17.01.2025 for the Assessment Year (A.Y.) 2017-18 in the proceedings under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. The brief facts of the case are that the assessee had filed return of income for the A.Y. 2017-18 on 29.03.2018 declaring total income of Rs.3,74,880/-. The case was selected for limited scrutiny to examine the Naman Hemantbhai Shah vs. ITO Page 2 of 5
cash deposits made during demonetisation period. The Assessing Officer found that the assessee had made cash deposits of Rs.12,46,000/- in his bank accounts during the period of 09.11.2016 to 30.12.2016. As the Assessing Officer was not satisfied with the explanation of the assessee regarding the source of cash deposits, the entire cash deposit of Rs.12,46,000/- during the above period was treated as unexplained money under Section 69A of the Act. The assessment was completed under Section 143(3) on 27.12.2019 at a total income of Rs.16,20,880/-
Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.
The assessee is now in second appeal before us. The following grounds have been taken in this appeal: -
“1. The Learned Commissioner of Income tax (Appeals) NFAC, Delhi has erred in facts and in law and confirmed the addition made by Assessing
Officer Amt. of Rs.12.46,000/- u/s.69A of I.T. Act as an unexplained cash credit for cash deposited in demonization period for the A.Y. 2017-18
The Assessment made is bad in law, Invalid and illegal. It be so held now and the same be quashed.
Direction to charge interest u/s. 234 A, B, C & & D without application of mind is unjustified. It be so held now.
That the appellant craves leave to add, to alter, to amend, to modify, to substitute, delete and/or rescind all or any of the GROUNDS OF APPEALS on or before the final hearing, if necessary so arises.”
Shri D.K. Parikh, Ld. AR of the assessee submitted that the assessee has duly explained the source of cash deposits made during the Naman Hemantbhai Shah vs. ITO Page 3 of 5
demonetisation period which was not considered in right perspective. He explained that source of deposits was the withdrawal made from capital account of the assessee in the partnership firm namely M/s. Vijay
Associates. He further submitted that the cash withdrawals were regularly made by the assessee from his capital account in the partnership firm, which were deposited in the bank account. Therefore, the Assessing
Officer was not correct in treating cash deposits made during the demonetisation period as unexplained, while accepting the cash deposits made during the earlier period as explained.
Per contra, Ms. Urvashi Mandhan, Ld. Sr. DR submitted that during the year the assessee had income from Short Term Capital Gain and income from other sources only. Therefore, the Assessing Officer had rightly rejected the explanation cash deposits being out of cash balance of the earlier period. She, therefore, strongly supported the orders of the lower authorities on this issue.
We have considered the rival submissions. A copy of the bank account in which the cash deposits were made has been brought on record in the paper-book filed by the assessee. It is found therefrom that there were regular cash deposits in the bank account during the period prior to demonetisation as well. The total cash deposits in the bank account during the entire F.Y. 2016-17 was Rs.22,45,000/-. In fact, the assessee had made cash deposits of Rs.9,99,000/- during the period from 01.04.2016 to 08.11.2016, which was not doubted by the Assessing Officer and was treated as explained. Only the cash deposit of Rs.12,46,000/- made during the period from 08.11.2016 to 31.03.2017 was Rs.33,84,007/- and the cash-in-hand available as on 08.11.2016 was Rs.23,71,007/-. The Assessing Officer did not give any reason to reject the cash book or the cash balance as disclosed by the assessee in its books of account. The Assessing Officer also did not dispute the submission of the assessee that remuneration and profit received by the assessee from the partnership firm was to the extent of Rs.28 lakhs in the preceding A.Y. 2016-17. Considering the facts as brought on record by the assessee, the Assessing Officer was not correct in accepting the source of cash deposit of Rs.9,99,000/- made during the period from 01.04.2016 to 08.11.2016 and in rejecting the source of cash deposits of Rs.12,46,000/- during the period from 08.11.2016 to 31.03.2017. Since the assessee had duly explained the source of entire cash deposits, which was not controverted by the Revenue, the addition made by the Assessing Officer cannot be held as proper and justified. Therefore, the addition of Rs.12,46,000/- on account of unexplained cash deposits, is deleted. The ground no.1 as taken by the assessee is allowed.
Ground nos. 2 & 3 are only consequential grounds and are dismissed. 9. In the result, the appeal of the assessee is partly allowed. PBN/*
Copies to: (1)
The appellant
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The respondent
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The PCIT
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The CIT(A)
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Departmental Representative
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