SHRI GUN NIDHAN SINGH,JAIPUR vs. ITO, WARD-2(3), JAIPUR

ORDER PER: SANDEEP GOSAIN, J.M. This is the appeal filed by the assessee against the order of the ld. CIT(A)-I, Jaipur dated 05/08/2019 for the A.Y. 2014-15. The grounds taken by the assessee are as under:

2. The ld. CIT(A) erred in law as well as on the facts of the case in confirming the addition of Rs. 18,45,060/- made by the AO as unexplained income u/s 69A of the Act on account of the cash deposit in bank a/c. The addition so made and confirmed, being 2 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO contrary to the provisions of law and facts on the record and hence, the same kindly be deleted in full.

3. The ld. AO further erred in law as well as on the facts of the case in charging interest u/s 234A, 234B, 234C and 234D of the Act and as also in withdrawing interest u/s 244A of the Act. The appellant totally denies its liability of charging and withdrawal of any such interest. The interest so charged/withdrawn, being contrary to the provisions of law and facts, kindly be deleted in full.

4. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.”

2. The hearing of the appeal and C.O. were concluded through video conference in view of the prevailing situation of Covid-19 Pandemic.

4. Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who after considering the case of both the parties, deleted the additions on account of agricultural income which was 3 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO treated by the A.O. as “income from other sources”. However, the ld. CIT(A) has confirmed the addition of Rs. 18,45,060/- made on account of unexplained income. Against the said order of the ld. CIT(A), the assessee has preferred the present appeal before the ITAT on the grounds mentioned above.

6. The solitary effective ground raised

by the assessee relates to challenging the order of the ld. CIT(A) in confirming the addition of Rs. 18,45,060/- made by the A.O. on account of unexplained income. In this regard, the ld AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied upon the written submissions filed before the Bench and the same is reproduced below: “Source of cash deposits fully established beyond all doubts:

1. A bare reading of the ld. CIT(A) order (Pr-iv Pg 14-15) makes it evidently clear that he proceeded mere on suspicion than to make a fair estimation of undisclosed income (if any) based on the relevant material on record. His findings are highly perverse as and being demonstrated.

4 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO 1.1 His first contention that AO has already given credit of agriculture income of Rs. 25,17,195/-, meaning thereby no further relief is required, is highly unjustified and perverse. The AO did not do any charity to the assessee while accepting huge agriculture income as also rental income which was established on record and accepted by the AO himself. Merely on this basis the assessee could not be denied, the benefit of availability of cash. 1.2 Availability of cash fully Established: On the contrary, this huge income declared this year by itself, implies that in the past also the assessee was in receipt of substantial amount of agriculture and rental income as well and the assessee really did so in as much as a chart (PB 28) starting from A.Y. 2011-12 onward, was submitted before the ld. CIT(A) (compiling the information based on the bank statement and other details already available on record.) and also reproduced by him at Pg-14 in Pr-III. The chart was prepared in a systematic and scientific method fairly taking into considerations all the receipts and outgoings on a reasonable basis. The assessee considered the agriculture income along with other income of each year and after reducing the utilization thereof in the cash deposits and also household expenses, left substantial amount of cash in hand in each year and in any case in the subjected year, the total availability of cash, this way, was Rs.50.49 Lakhs out of which the subjected cash deposits of Rs. 43,62,255/- (Rs.43,12,255/- + Rs.50,000/-) were made or could have been made and after further utilization of household withdrawals of Rs.4,52,265/-. The assessee was still left with cash in hand of Rs.2.34 Lakhs (PB 28, CIT(A) Pg-14). However, the authorities is below completely failed to rebut or disprove the facts narrated in the chart. Even the ld. CIT(A) did not make any adverse comment on the contents of the chart (except making a doubt that such a huge cash-in-hand could not be kept at residence).

5 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO 1.3 Mere Suspicion: The ld. CIT(A) as also the ld. AO though could not deny fact of the earning of the substantial huge agriculture income but merely proceeded on suspicion by saying that keeping of cash was against the human probability. The law is well settled that a suspicion cannot take place of the reality as held in the case of Dhakeshwari Cotton Mills (1954) 26 ITR 775 (SC). Hence, the onus was upon the person who alleged so. The ld. CIT(A) though doubted keeping of cash but has not established and also did not provide any answer as to where such cash generated from the admitted income, though was available has gone. Such a finding, firstly, was against the settled law that where the availability of cash is established and admitted, its claimed utilization cannot be denied unless the authorities below have established the utilization thereof for the other purpose than the claimed one. Reliance is placed on the case laws cited in para 5 of this w/s.

7 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO “1. Source full explained and established: At the outset the facts are not denied that the assessee was in receipts of a huge amounts of income from agriculture, basically being very old farmer. In this very year, the assessee has declared a huge agriculture income at Rs.25.17 Lakhs and in the preceding year also, huge amounts were declared. Kindly refer our submissions towards the earlier grounds of appeal s No.

2. Notably, the AO himself has admitted the availability of the cash accumulated out of the agriculture income though to the extent of Rs.18,00,000/- only and not the entire Rs.25.17 Lakhs (which is already under dispute vide GOA- 2). Thus, in principle having accepting the generation and availability of cash in hand because of the agriculture income this year, there appears no reason why he should have completely ignored the agriculture income earned and the availability thereof in the preceding years. Surprisingly he has not whispered a single word on this aspect. Therefore, based on availability of cash, a cash flow statement was prepared (PB-28) which shows sufficient availability of cash in hand in this year of Rs. 50,48,966/- out of which, the subjected amount of cash deposits of Rs. 43,62,255/- were made. In view of these facts, there was no scope for the AO to have made any addition on account of the cash deposit in the bank.

2. Utilization of Income earned not established by the AO: It is very pertinent to note that the AO, on one hand has not only admitted that there was agricultural income in the current year as also in the past but even assessed the same and also admitted that the assessee was in receipt of funds therefrom and also from the rental income in the current year as also in the past. However surprisingly, he ignored and rather avoided giving credit of availability of cash therefrom towards the subjected bank deposits.

8 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO It is not the case of the AO that the assesse earned the agriculture income long time back which might not have been available. Nor he has alleged that the cash so generated from the income of the earlier years, stood utilized elsewhere and was not available with the assessee in the current year for onward deposit in the bank. The law is well settled that unless the AO has established the utilization of the cash generated from the income admitted and assessed, the availability of the same cannot be denied unless the AO has fully establish the utilization of the same elsewhere. On the contrary, in this case the AO himself has admitted the availability of the income in the current year but wrongly ignored the availability of the income though admitted and assessed of the preceding years.”

5. Supporting Case Laws: (i) CIT v/s P.V. Bhoopathy (2006) 205 CTR 495 (Mad) held (ii) CIT vs Kulwant Rai (2007) 210 CTR 380 (Delhi) para 16-17 (iii) Anand Prakash Soni v/s DCIT (2006) 101 TTJ 97 (Jd) para 5-6 (iv) Shivcharan Dass vs. CIT (1980) 126 ITR 0263 (P&H) 6. The various case laws cited before the ld. CIT(A) strongly and directly supporting the case of the appellant, were completely ignored by the ld. CIT(A) in as much as he is not whispered a single word thereon. The cited decisions were mostly of Hon’ble High Court and the ld. CIT(A) was supposed to have applied his mind on the principle propounded therein and the application thereof on the facts of the present case and not being so, he acted utter disregard of the doctrine of judicial rule of precedence and also acted perversely while denying the benefit of cash availability and in accepting a justified explanation furnished before him.”

9 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO 8. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. During the course of assessment proceedings, it was noticed by the A.O. that the assessee made cash deposits of Rs. 43,12,255/- in the bank account No. 913010019544021 maintained with Axix bank, Tonk Road Branch, Jaipur on different dates and Rs. 50,000/- was deposited in UCO bank on 30/09/2013 totalling to Rs. 43,62,255/-. In reply thereof, the assessee categorically stated that the same was sourced out of the agriculture and other income of the current year as also the accumulation/past savings of the preceding year. However, the A.O. after considering the current’s year income being Rs. 25,17,195/- restricted the addition to Rs. 18,45,060/- (Rs. 43,62,255 - 25,17,195). From the record, we also noticed that the assessee was continuously holding a huge chunk of land for last many years and the assessee had also filed the chart of agriculture income disclosing the same in the return of income for last few years as under: A.Y. Agriculture Gross Less: Net ITR filed & Land holding Agriculture Expenses Agriculture assessed (Area) Income Income 2011-12 128.44 Bigha 41,77,522/- 2,32,369/- 29,45,153/- Yes 2012-13 128.44 Bigha 7,92,508/- 2,34,582/- 5,57,926/- Yes 2013-14 128.44 Bigha 24,33,462/- 7,30,038/- 17.03,424/- Yes 2014-15 128.44 Bigha 35,95,993/- 10,78,798/- 25,17,195/- Yes

10 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO Apart from this, during the appellate proceedings before the ld. CIT(A), the assessee has also contended that the cash was deposited out of current year agriculture income as well as past savings from agriculture income and in order to support this contention, the assessee also filed cash flow statement which is reproduced below:

Financial Opening Agriculture Rent Total Cash Cash Total cash Closing Year Cash Income Generation Deposited utilized cash Balance Utilized balance 2010-11 3,14,548 29,45,153 12,0000 3,379,701 1,248,450 12,48,450 21,31,251 2011-12 2,131,251 5,57,926 18,0000 28,69,177 11,52,680 11,52,680 17,16,497 2012-13 17,16,497 17,03,424 18,0000 35,99,921 13,08,150 13,08,150 22,91,771 2013-14 22,91,771 25,17,195 24,0000 50,48,966 48,14,520 48,14,520 2,34,446 From the cumulative consideration of both the charts i.e. chart containing agriculture income disclosing the return of income and also the chart containing cash flow statement, we noticed that the department had given benefit of the current year’s agricultural income to the tune of Rs. 25,17,195/-. However, from the cash flow statement, it was reflected that during the year under consideration, total cash generation was Rs. 50,48,966/- and the opening cash balance for the year under consideration was Rs. 22,91,771/-, therefore, under such circumstances, the explanation put forth by the assessee that the cash deposited by the assessee was from the agricultural and other income as well as from the accumulative past savings of the preceding years appears to be reasonable. Moreover, the department had also accepted the generation and availability of cash because of agricultural income for the year under 11 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO consideration, therefore, there was no reason for ignoring the availability of cash with the assessee due to accumulative/past savings of the preceding years. On this proposition, we draw strength from the decision of Hon’ble Madras High Court in the case of CIT v/s P.V. Bhoopathy (2006) 205 CTR 495 (Mad) wherein it was held as under: “Appeal (High Court)—Substantial question of law—Income from undisclosed sources—AO did not accept various sources of income explained by the assessee and made additions under ss. 68 and 69 in respect of difference between the investments and the sources accepted by him—Tribunal accepted the explanation of the assessee vis-a-vis availability of funds with the assessee from the sale proceeds of jewellery belonging to his mother-in-law, receipt from a party and also the amount of opening balance and savings from earlier years and deleted all the additions—Findings recorded by the Tribunal are purely findings of fact—There is no reason to interfere with the same—No substantial question of law arises—CIT vs. Pradeep Shantaram Padgaonkar (1983) 143 ITR 785 (MP) relied on” In the case of CIT vs Kulwant Rai (2007) 210 CTR 380 (Delhi), the Hon’ble Delhi High Court has held as under:

Read held “Search and seizure—Block assessment—Computation of undisclosed income—Cash found during search—Assessee had withdrawn Rs. 2 lakh from bank some time back and there is no material with the Department to show that this money had been spent and was not available with the assessee—Tribunal has found that the withdrawals shown by the assessee are far in excess of cash found during the course of search—In the absence of any material to support the view that the entire cash withdrawals must have been spent by the assessee, Tribunal was justified in holding that the addition was not sustainable—Order of the Tribunal does not give rise to a substantial question of law” In this case, cash was found on search carried out on 04.02.2001 and was explained to be out of the cash withdrawal in Dec-2000.

12 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO The Coordinate Bench of Jodhpur ITAT in the case of Anand Prakash Soni v/s DCIT (2006) 101 TTJ 97 (Jd) has held as under:

“Search and seizure—Block assessment—Computation of undisclosed income—Cash found during search—Assessee is entitled to furnish cash flow statement to explain the transactions when no books of account are maintained—In such circumstances it becomes the duty of the AO to verify the balance sheet and cash flow statement with the necessary material including the details already filed along with the returns in the past—Assessee explained that the cash found at the time of search was withdrawn from the bank some time back which was partly used for purchasing gold and part of the amount was given by the assessee to his wife—There is nothing to suggest the utilization of the withdrawal amount elsewhere—Said withdrawal is duly reflected in the cash flow statement and closing cash balance is more than the amount found at the time of search—Thus, addition cannot be sustained” The Hon’ble Punjab & Haryana High Court in the case of Shivcharan Dass vs. CIT (1980) 126 ITR 0263 (P&H) has held as under: "Income from undisclosed sources—Unexplained investment—Amount disclosed by HUF under Voluntary Disclosure Scheme—Thereafter kept lying in assessee's house with his wife till her death—ITO questioning its source after the same had subsequently been deposited with a bank in the names of assessee's then major daughters—In the absence of any evidence to the effect that the said sum was utilized by the assessee in any other manner, the Department was not justified in unreasonably rejecting a good explanation and adding the amount as income from undisclosed sources—Further, the addition, if at all possible, could have been made only in the daughters' hands—There was no provision in 1922 Act analogous to s. 69 of 1961 Act" Considering the above facts and circumstances, judicial pronouncements referred above as well as discussions made above, we direct to delete the addition sustained by the ld. CIT(A) qua this issue.

13 ITA 1251/JP/2019 _ Shri Gun Nidhan Singh Vs ITO 9. Ground No. 3 raised by the assessee relates to charging of interest U/s 234A, 234B, 234C and 234D of the Act. Since, we delete the addition made and sustained on account of unexplained income, therefore, this ground of appeal needs no adjudication.

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