Magnus Cars Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal, Mumbai Bench, in Magnus Cars vs ITO, deleted the addition of ₹27.40 lakh made under Section 69A, holding that cash deposits were duly explained as advances received from customers for booking motor vehicles.
The assessee, a partnership firm engaged in car dealing, had deposited ₹43.50 lakh in cash across bank accounts. The Assessing Officer treated a major portion as unexplained money on the ground that some customers did not respond to notices, despite partial acceptance of certain deposits. The CIT(A) granted limited relief but upheld the balance addition.
Before the Tribunal, the assessee substantiated that the cash represented booking advances received prior to demonetisation and furnished confirmations, PAN details, and supporting purchase invoices of vehicles delivered to customers. It was also highlighted that such receipts were recorded in the books and formed part of regular business transactions.
The Tribunal observed that the assessee had consistently explained the nature and source of deposits, and the Revenue failed to conduct proper verification from customers or dealers. It held that mere non-response from third parties cannot justify addition when documentary evidence supports the claim.
Accordingly, the ITAT directed deletion of the entire addition under Section 69A and allowed the appeal in favour of the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
