VORTEX RUBBER INDUSTRIES PRIVATE LIMITED,NEW DELHI vs. ACIT CIRCLE 26(2), NEW DELHI

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ITA 2721/DEL/2023Status: DisposedITAT Delhi13 February 2025AY 2017-18Bench: SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, SHRI VIMAL KUMAR (Judicial Member)4 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 a reasonable explanation for the cash deposits, which were sourced from withdrawals from its own bank account. The Revenue did not demonstrate that the withdrawn amount was used for any other purpose.

What were the facts?

The assessee, a trading company, deposited old currency notes of Rs. 50,05,000/- in its bank account after demonetization. The Assessing Officer (AO) made an addition of Rs. 31,96,917/- under Section 68, which the CIT(A) enhanced to Rs. 47,55,000/-.

What were the issues?

Whether the cash deposits made post-demonetization were adequately explained by the assessee, and if the addition made by the AO and enhanced by the CIT(A) was justified.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 234B,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “E”, NEW DELHI

Before: SHRI SHAMIM YAHYA, & SHRI VIMAL KUMAR

Hearing: 13.02.2025Pronounced: 13.02.2025

ORDER PER SHAMIM YAHYA, AM :

The Assessee has filed the instant Appeal against the Order of the Ld. CIT(Appeal)/NFAC, Delhi dated 15.09.2023, relating to assessment year 2017-18 on the following grounds:- That on facts and in law the order dated 15th September 1. 2023 passed by the Commissioner of Income Tax (Appeals) {herein after referred to as the “CIT(A)”} and the order of assessment dated 29th December 2019 passed by the Assessing Officer {herein after referred to as the “AO”} are bad in law and void ab initio.

That on facts and in law the impugned appellate order has 1.1 been passed by the CIT(A) in complete violation to the settled principals of natural justice i.e inter alia without providing any opportunity of being heard in person. That on facts and in law the CIT(A) has erred in enhancing 2. the total income of the appellant without any show cause and therefore violating provisions of section 251(2) of the Act. That on facts and in law the CIT(A) has erred in upholding 3. and enhancing an addition to total income of Rs. 47,55,000/- alleging that nature and source of cash deposits remains unexplained. That on facts and in law the AO / CIT(A) have erred in not 4. appreciating that nature and source of money deposited in bank account by the appellant post demonetization was fully explained and substantiated. That on facts and in law the AO / CIT(A) have erred in 5. making / upholding the impugned addition premised suspicion, conjectures and surmises. That on facts and in law the CIT(A) has erred in not 6. adjudicating upon Ground No 6 of the appeal raised by the appellant in Form 35. That on facts and in law the CIT(A) has erred in not 6.1 appreciating that the AO has erred in invoking provisions of section 115BBE of the Act. That on the facts and in law the levy of interest u/s, 234B 7. and 234D is bad in law. That the appellant prays for leave to add, alter, amend and / or vary the ground(s) of appeal at or before the time of hearing.

2.

The brief facts of the case is that Assessee is a domestic company and is engaged in the activities of trading of tyres, tubes, electronic parts and accessories and other auto related goods. For the year under consideration, assessee had achieved a turnover of Rs. 53,75,44,626/- from above business. A 2 | P a g e return of income declaring total income of Rs. 34,03,810/- was filed by the assessee on 26.10.2017. Thereafter a revised return of inome was filed on 30.6.2018 declaring s same total income however, some MAT adjustments were made. The return filed was selected for scrutiny by issuance of notice u/s. 143(2) of the Act on 22.9.2019. AO noted that after demonetization in 2016, assessee had deposited old currency notes of Rs. 50,05,000/- in bank after 08.11.2016. The AO thereafter passed the assessment order dated 29.12.2019 u/s. 143(3) of the Act assessing the total income of the assessee at Rs. 66,00,727/- after making addition u/s. 68 of the Act of Rs. 31,96,917/- (i.e. Rs. 50,505,000/- minus the average cash deposit in bank for last 6 months of Rs. 18,08,083). In appeal, Ld. CIT(A) noted that the nature and source of cash deposits remains not fully satisfactorily explained, hence, he enhanced the addition to Rs. 47,55,000/- (i.e. Rs. 50,05,000/- minus cash receipt from sundry debtors of Rs. 2,50,000/-) 3. Against the aforesaid order, Assessee is in appeal before us.

4.

We have heard the rival contentions and perused the records. Ld. Counsel for the assessee submitted that an amount of Rs. 50,65,000/- was withdrawn by the assessee from his bank account in the month of October, 2016 and from out of this amount sum of Rs. 50,05,000/- was deposited by the assessee in bank during 08.11.2016 to 30.12.2016. The details of withdrawal shows that Rs. 24.65 lacs was withdrawn from Union Bank of India operated by Head Office of the asessee and Rs. 26 lacs was withdrawn from Union Bank of India operated by Branch Office of assessee. However these submissions were not accepted by the authorities below and addition was made. Ld. Counsel for the assessee further submitted that it is clearly shows that withdrawal of money was made from the own account of the assessee, which was deposited during the aforesaid period. Hence, he submitted that explanation is reasonable and no addition is warranted in this case.

5.

Per contra, Ld. DR relied upon the orders of the authorities below.

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