MOTIBHAI REVABHAI PRAJAPATI,AHMEDABAD vs. ITO, WARD-3(3)(5), AHMEDABAD

This is an appeal filed against the order dated 20-05- 2025 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2017-18.

The grounds of appeal

The case of the assessee was selected for scrutiny for the reason that the assessee company has unexplained credit to the tune of Rs. 11,55,000/- in its bank accounts. Statutory notices were issued to the assessee and the submissions and the details were filed before the Assessing Officer by the assessee. The Assessing Officer observed that the assessee filed return of income on 18-10-2017 declaring total income of Rs. 88,340/- for assessment year 2017-18. A survey action u/s. 133A of the Act was carried out on 14-03-2018 with registered office of Madhav Developers in order to verify the source of cash deposits during demonetization period. During the demonetization period, the firm had deposited cash of Rs. 33 lacs in its bank account. No return was filed by the firm from 2013-14 onwards. As the firm was dissolved on 12-10-2012, the assessee was one of the partners of the firm having 35% share in the firm. The Assessing Officer therefore held that the Rs. 11,55,000/- being 35% on total cash deposits belonged to the assessee and treated the same was undisclosed income u/s. 69 of the Act.

Being aggrieved by the order of the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The ld. A.R. submitted that the firm deposited cash of Rs. 33 lacs during demonetization period and the firm stood dissolved on 12-10-2012 had deposited cash of Rs. 33 lacs. The Motibhai Revabhai Prajapati, A.Y. 2017-18 amount was deposited in the account with Union Bank of India as the firm continued its bank accounts for the purpose of various accounts and also to deposit amount received from members for already sold flats/shops. The assessee was one of the partners of the firm and in his statement stated that the amount of Rs. 33 lacs were withdrawn from the same bank account with Union Bank of India on various dates between 5- 08-2015 to 11-04-2016 by the firm. The ld. A.R. submitted that partnership firm has cash deposit during demonetization period in bank of the firm from cash withdrawal from the bank of the firm. This statement was recorded during the survey and in fact the evidence to that effect was also filed by the assessee during the proceedings as well as before the CIT(A). The A.R. submitted that the firm has deposited the cash and not the assessee in his individual capacity has deposited any cash during the demonetization period.

The ld. D.R. relied upon the assessment order and the order of the CIT(A).

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that from the bank account of the assessee (as a individual) there was no cash deposit to the extent of Rs. 11,55,000- was detected by the Assessing Officer. Merely on the assumption basis that the cash deposits were made by the partnership firm which was dissolved in the year 2012-13 cannot held liable the individual for the said cash deposits. Thus, the assessee at no point of time deposited the amount and the Assessing Officer failed to take into account the said bank account of the assessee as an individual where no entry related to cash deposit during the Motibhai Revabhai Prajapati, A.Y. 2017-18 demonetization period has been recorded. Thus, the Assessing Officer was not right in making the addition.

In the result, the appeal of the assessee is allowed.