ASHUTOSH DESHPANDE,NAGPUR vs. ACIT/DCIT CIRCLE -5, NAGPUR
Facts
The assessee, a travel agency, did not file an Income Tax Return for A.Y. 2017-18 but deposited Rs. 13,28,000/- cash during the demonetization period (F.Y. 2016-17), claiming these were receipts from customers. The Assessing Officer added this amount under Section 69A as unexplained money and estimated income at 8% on other deposits, which the CIT(A) upheld.
Held
The Income Tax Appellate Tribunal (ITAT) set aside the CIT(A)'s order, noting the assessee's claim that the CIT(A) failed to consider the business nature of the deposits. The matter was remanded back to the jurisdictional Assessing Officer for fresh adjudication on merits, requiring the assessee to be given a proper opportunity of hearing and to cooperate with the submission of information.
Key Issues
Whether the CIT(A) was justified in sustaining the additions made under Section 69A and Section 144 without adequately considering the assessee's claim of business receipts, and whether sufficient opportunity of hearing was provided.
Sections Cited
144, 250, 142(1), 133(6), 69A, 251(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, NAGPUR
Before: SHRI PAVAN KUMAR GADALE
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, NAGPUR BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA no.493/NAG/2025 (Assessment Year : 2017–18) Ashutosh sudhakar Deshpande, Plot no.5, Gandhi Nagar, Nagpur 440 010, ……………. Appellant Maharashtra. PAN–AAVPD0098E v/s ACIT Circle–5, ……………. Respondent Nagpur-440006, Maharashtra. Assessee by: Shri.Ashutosh Sudhakar Despande. Revenue by : Shri.Surjit Kumar Saha.Sr.DR
Date of Hearing –16/10/2025 Date of Order – 17/10/2025
O R D E R The assessee has filed the appeal against the order passed by the CIT(A)/National Faceless Appeal Centre(NFAC), Delhi, u/sec 144 and u/sec 250 of the Income Tax Act, 1961 (for short "the Act") for the A.Y. 2014–15. The assessee has raised the grounds of appeal:–
“1. The order passed by Hon'ble CIT(A) is illegal invalid and bad in law. The Hon'ble CIT(A) erred in sustaining the action of the Ld. AO on total additions of Rs. 13,28,500/- is incorrect, unjustifiable, excessive and should be quashed. That CIT(A) instead of dismissing the appeal without appreciating the facts & circumstances correct, he could have set aside the case as per provision of section 251(1)(a) of the Income Tax Act, 1961. Without prejudice to above the assessment framed by the Ld. ACIT/DCIT is in violation of CBDT Instruction No. 1/2011 [F. NO. 187/12/2010-IT(A-1)], dated 31-1-2011 2.The Hon'ble CIT(A) erred in sustaining the action of Ld. AO towards addition of cash deposit of Rs. 13,28,500/- during the demonetization period as Unexplained Money u/s. 69A while charging only profit element for the rest of the cash deposit. The Ld. AO & CIT(A) could instead of
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making entire amount as addition should have treated the deposits as business receipt and only profit must be added. 3.The above grounds of appeal are without prejudice and notwithstanding each other. Any consequential relief, to which the appellant may be entitled under the law in pursuance of the aforesaid grounds of appeal, or otherwise, may thus be granted. The appellant craves leave to add to or alter, by deletion, substitution or otherwise, any or all of the above grounds of appeal and the factual and legal arguments against the addition by the Ld. CIT (A)/Ld. AO at the time or before the course of appellate proceedings in the interest of natural justice.”. 2. The brief facts of the case are that, the assessee has not filed return of income for the A.Y. 2017–18 and as per the information available with the ITD System, the assessee has deposited cash aggregating to Rs.10,20,000/–in Punjab National Bank, Dharampeth Branch, Nagpur, and similarly Rs.3,08,000/– cash was deposited in State Bank of India, Ambazhari Branch, Nagpur, during the F.Y.2016-17. The Assessing Officer has issued notice u/sec 142(1) of the Act to explain the source of cash deposits. Since there was no proper compliance by the assessee to the notice, the Assessing Officer has also issued show cause notice to treat the total deposits as income of the assessee. Further notice u/sec 133(6) of the Act was issued to the Banks and the Assessing Officer has obtained the bank statements. On a perusal of the facts and the written submissions filed by the assessee in the course of assessment proceedings, the assessee was engaged in the business of Travel Agency and was taking a group of people to the different places in the country. The assessee has explained that the cash belongs to the customers who have paid to the Travel Agency. The Assessing Officer has also issued notice as final opportunity to the assessee to substantiate the cash
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deposits with evidence. Since there was no proper compliance to the notice, the Assessing Officer has made addition of Rs.13,28,000/– u/sec69A of the Act. Similarly, in respect of cash deposited after demonetization period, the Assessing Officer on the total credits of Rs.17,03,785/– has treated the same as turnover and estimated the income @8% which worked out to Rs.1,36,302/– and assessed the total income of Rs.14,64,800/- and passed the order u/sec144 of the Act dated 22/12/2019. Aggrieved by the order, the assessee has filed the appeal before the CIT(A).
In appellate proceedings, the CIT(A) has considered the grounds of appeal, statement of facts, findings of the Assessing Officer and submissions of the assessee but has confirmed the additions made by the Assessing Officer and dismissed the appeal of the assessee. Aggrieved by the order of the CIT(A), the assessee has filed appeal before the Hon’ble Tribunal.
At the time of hearing, the assessee appeared in person and explained that the CIT(A) has not considered the facts that the assessee is engaged in the business of Travel Agency and dealing in group tours with clients in Kerala and the cash was deposited in the account by touring members/customers for the services availed during the tour. The CIT(A) has also not considered the fact that the assessee is a small-time tour operator and the profit margin is very meager and prayed for an opportunity to substantiate the cash deposits with evidences and details
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before the lower authorities. Per–contra, the Ld.DR supported the order of the CIT(A).
Heard the rival submissions and perused the material available on record. The sole disputed issue envisaged by the assessee in the course of hearing that the CIT(A) has not considered the fact that the assessee is a tour operator and cash was deposited by the touring customers. On a perusal of the grounds of appeal raised by the assessee in ground no.1, the assessee has prayed for setting aside of the order of the CIT(A), as there were no proper compliance and the order passed u/sec144 of the Act by the Assessing Officer. Hence, considering the facts, circumstances, submissions and to meet the ends of justice, the assessee should be provided with one more opportunity of hearing. Accordingly, the order of the CIT(A) is set aside and restore the disputed issues to the file of the jurisdictional assessing officer to adjudicate issues afresh on merits and evidences. Further the assessee should be provided adequate opportunity of hearing and the assessee should co–operate in submitting the information. And the grounds of appeals of the assessee are allowed for statistical purposes
In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 17/10/2025 as per rule 34(5) of the ITAT Rules 1963
Sd/- Sd/- (PAVAN KUMAR GADALE) JUDICIAL MEMBER
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Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur
