MR. MAHENDRA DHOLAKIA,MUMBAI vs. INCOME TAX OFFICER-33(2)(2), MUMBAI

ITA 4769/MUM/2018Status: DisposedITAT Mumbai18 November 2019AY 2013-143 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 found that the lower authorities rejected the assessee's explanations without proper examination and on conjecture. The Tribunal set aside the orders and deleted the disallowance, deeming the assessee's explanation cogent.

What were the facts?

The Assessing Officer added Rs. 7,47,000/- as unexplained expenditure for cash deposits made for credit card payments. The assessee provided explanations including opening cash balance, cash loans, and withdrawals from a credit card and proprietary concern.

What were the issues?

Whether the lower authorities erred in dismissing the assessee's appeal and confirming the addition of cash deposits without considering the facts and explanations provided by the assessee.

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

CIT v. Durga Prasad More
82 ITR 540 · 1971 · SC
1,579 citing

Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

Before: Shri Shamim Yahya (AM)

For Appellant: Shri Ankush Agarwal

For Respondent: Shri Chaitanya Anjaria

Hearing: 22.08.2019Pronounced: 18.11.2019

O R D E R This appeal by the assessee is directed against the order dated 9.5.2018 and pertains to A.Y. 2013-14.

The issue raised in ground No. 1 is :- “On the facts and circumstances of the case and in law, the learned CIT (A) erred in dismissing appeal without considering the facts of the case and explanation offered relating to cash deposit made for credit card payment of Rs. 7,47,0007- which was already accounted in our books of accounts.”

In this case the assessee is an individual and proprietor of M/s. Dhanesh Construction engaged in the business of civil labour contractor. During the course of assessment the Assessing Officer inter alia made addition of Rs. 7,47,000/- being payment towards cash by use of credit card of HDFC bank held by the assessee as unexplained expenditure. The assessee has explained source of payment as under :- (1) Opening cash balance of 78,681 (2) Cash loans returned by friends Rs.1,00,000 (3) Cash withdrawn from the HDFC credit card itself and (4) Withdrawals from his proprietary concern Dhanesh Constructions.

2 Mr. Mahendra Dholakia The Assessing Officer has dismissed the above explanation and learned CIT(A) confirmed the same.

Against this order the assessee is in appeal before the ITAT.

Upon careful consideration, I note that the assessee’s explanation of availability of cash withdrawal has been dismissed by learned CIT(A) on the basis of preponderance and probability. He has found that cash of different amount at different places would not available to make payment in cash through credit card. What is the reason of learned CIT(A) to disbelieve is not specified. Similarly cash loans taken have also been rejected on the ground of preponderance of probability and this has been rejected as self serving statement without any examination. In my considered opinion without any examination rejection of explanation by simply relying upon the decision of Hon'ble Apex Court in the case of Durga Prasad More (82 ITR 540) is not at all justified. The said Hon'ble Apex Court decision never laid down that addition can be made on surmises and conjecture without inquiry. In my considered opinion explanation of the assessee in this case has been cogent.

The same has been rejected on conjecture. Hence, I set aside the orders of the authorities below and delete the disallowance.

In the result, appeal of the assessee is allowed. Order has been pronounced in the Court on 18.11.2019.

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