ACIT, CENTRAL CIRCLE-3, JODHPUR vs. BHANWAR SINGH RATHORE , PALI

आदेश / O R D E R

Manoj Kumar Aggarwal (Accountant Member): - 1.1 The revenue is under appeal for Assessment Year [in short referred to as ‘AY’] 2012-13 against the order of Ld. Commissioner of Income-Tax (Appeals)-1, Jodhpur, [‘CIT(A)’], Appeal No.56/2015- 16 dated 10/07/2019, on following effective grounds :- 1. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A), erred in deleting the addition of Rs.2,61,50,000/- on account of cash deposits in Punjab National Bank account which were not satisfactory explained by the assessee. 2. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A), erred in deleting addition of undisclosed income of Rs.51,56,263/- which was not found to be agricultural income on inquiry, as claimed by the assessee . The Assessee, upon receipt of notice, has filed cross-objections on following grounds: - 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in sustaining addition of Rs.19,06,200/- in respect of cash deposits in bank account. 2. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in not considering the explanation and supporting evidence which proves beyond doubts that cash deposits in bank account out of earlier withdrawals of bank account. 3. That on the facts and in the circumstances of the case, the Ld. CIT (A) ought to have deleted the addition as cash deposits in bank accounts are duly verifiable from cash book and cash flow statement furnished by assessee.

As evident, the revenue is aggrieved by deletion of certain additions as made by Ld. Assessing Officer (AO) on account of cash deposits and undisclosed investments. The assessee is similarly aggrieved by partial confirmation of cash deposits.

3 Shri Bhanwar Singh Rathore Assessment Year: 2012-13 1.2 The registry has noted a delay of 254 days in assessee’s cross-objections, the condonation of which has been sought by the assessee. The delay has been attributed to adverse medical conditions being faced by the assessee and in view of extraordinary circumstances arising out of Covid-19 pandemic. After going through the condonation petition, we are inclined to condone the delay and proceed with the disposal of appeals as well as cross- objection on merits. 1.3 We have carefully heard the rival submissions and perused relevant material on record including written submissions and documents placed in the paper book. The judicial precedents as relied upon during the course of hearing have duly been deliberated upon. Our adjudication to the subject matter would be as given in succeeding paragraphs. 2. Facts on record would reveal that assessee being resident individual is stated to be engaged as cable operator, Bajri Dealer, Agriculturist etc. An assessment was framed for the year under consideration u/s 143(3) on 27/03/2015 wherein returned income of Rs.22.33 Lacs e-filed by the assessee on 31/03/2013 was assessed at Rs.357.65 Lacs after certain additions. The assessee had also reflected agricultural income of Rs.58.32 Lacs which has been reduced to Rs.6.75 Lacs and the balance Rs.51.56 Lacs has been assessed as Income from other sources. The following additions are the subject matter of cross-appeal before us: - No. Particulars Amt. (Rs.) 1. Large Cash Deposit in Bank Account 261.50 Lacs

4 Shri Bhanwar Singh Rathore Assessment Year: 2012-13 2. Agricultural income treated as Income 51.56 Lacs from other sources 3. Cash Deposit in ICICI Bank 19.06 Lacs

The revenue is aggrieved by deletion of item Nos.1 & 2 whereas the assessee is aggrieved by confirmation of item No.3 in the impugned order. The same are dealt with in the following paragraphs: - 3. Large Cash Deposit in Bank Account 3.1 It transpired that the assessee deposited cash of Rs.261.50 Lacs on various dates in one of the account maintained with Punjab National Bank. The details of the same have been tabulated in para-3.1 of the assessment order. Accordingly, the assessee was required to explain the source thereof. The assessee, vide submissions dated 21/01/2015, submitted partial explanation. The cash was stated to be sourced out of receipts from (i) Faruque Bhai (stated to be appointed by assessee for doing business activities and collection of business receipts); (ii) Hari Om Transport / Raju Bhai Agarwal (Loan taken for purchase of agricultural land); (iii) Earlier Withdrawals made from the Bank; (iv) Sohan Lal Sankhla (collection of Bajri Contract receipts); (v) Jabbar Singh (transacted for agricultural activities); & (vi) Agricultural Income. 3.2 However, the submissions made by assessee were found to be unsatisfactory since the explanation was not based on any corroborative evidences / documents. The affidavit of Shri Faruque Bhai confirmed only partial cash deposit entries and there was huge difference in amount recorded in affidavit as well as the submissions of the assessee. Mr. Surendra Agarwal for Hari Om Transport Co. denied having carried out any cash transactions with

Shri Bhanwar Singh Rathore Assessment Year: 2012-13 the assessee. No ledger account was submitted in support of the transactions. Factual errors were noted in the affidavit submitted by the assessee with respect to this party. In support of deposit by Shri Sohan Lal Sankhla, no documentary evidences were furnished. It was noted that Bajri Contract was withdrawn on 31/12/2010. Regarding self cash deposit, it was noted that cash book was not properly maintained and the claim of agricultural income was not completely genuine. The cash stated to be deposited by Jabbar Singh remained unsubstantiated. In view of the foregoing, the sum of Rs.261.50 Lacs was brought to tax u/s 68. 3.3 During appellate proceedings, the assessee submitted additional evidences in the shape of Affidavit of Shri Raju Bhai, TDS certificates issued by the Sales Tax Department, Girdawari Jamabandi, sales bills of agricultural produce and bank statements etc. These were admitted u/r 46A and were subjected to remand proceedings. The remand report was confronted to the assessee who assailed the stand of Ld.AO. 3.4 The Ld. CIT(A), after due consideration of material on record, remand report & assessee’s submissions as well as documentary evidences rendered a factual finding that the assessee could explain the source of these deposits. The relevant observations were as under: - ……Further, I find that the cash deposits in appellant's bank account were his business receipts, agricultural receipts and his earlier withdrawals. The details of his cash transactions are as under:- 1. Receipts from cable Business:- Rs. 35,00,000/- Sh. Farooq Bhai on behalf of assessee collected receipts from cable business and deposited total cash receipts of Rs.15,00,000/- on 11.05.2011 and Rs.20,00,000/- on 22.10.2011 into the bank account of the assessee. The

Shri Bhanwar Singh Rathore Assessment Year: 2012-13 claim of the appellant seems to be correct as the appellant had shown total receipts from cable business at Rs. 45,55,000/- in his return of income. 2. Bajri cess collection contract receipts: - Rs. 26,00,000/- The appellant collected Bajri cess receipts and deposited Rs.11,00,000/- on 26.07.2011, Rs. 10,00,000/- on 28.10.2011 and Rs. 5,00,000/- on 05.12.2011. The claim of the appellant is found to be correct as the appellant had shown other income at Rs.60,46,500/- in the return of income and Deputy Commissioner(Administration) Sales Tax Circle-Pali, had deducted TDS of Rs. 35000/- on such contract work. 3. Loan/Advances from Raju Bhai Agarwal (Rajendra Kumar) Prop. Hariom Transport:-Rs. 25,00,000/- The assessee took advance of Rs.25,00,000/- from Raju Bhai Agarwal (Rajendra Kumar) Prop. Hariom Transport who had deposited Rs.10,00,000/- and Rs.15,00,000/- on 02.06.2011 and 03.06.2011 into the bank account of the assessee. To substantiate this claim, the appellant produced affidavit of Shri Raju Bhai who had been assessed to tax regularly. The appellant had established the identity of creditor, his creditworthiness and genuineness of transactions within the meaning of section 68 of the Act. 4. Agricultural income:-Rs. 44,00,000/- : The appellant claimed that the cash transaction of Rs.13,50,000/- on 21.05.2011, Rs.5,50,000/- on 03.09.2011, 4,00,000/- on 24.10.2011, 9,00,000/- on 25.10.2011, 2,00,000/- on 09.11.2011 and 6,00,000/- on 12.11.2011 was his agricultural receipts. Before me, the appellant furnished the copies of the Jamabandi, Girdavari report, lease agreement of agricultural land and various sales bills which are available in record. The appellant had shown agricultural income at Rs.58,32,223/- in return of income which had not been accepted by the AO and made a separate addition of Rs.51,56,263/- treating agricultural income as income from other sources. The appellant's claim of agricultural income at Rs.58,32,223/- is found justified which is elaborately discussed while adjudication of relevant ground in the present appeal. Here, the source of cash credit on various dates amounting to Rs.44,00,000/- had established. 5. Cash deposits from earlier withdrawals:- The appellant had produced bank statement before me, On perusal of the same I find that the appellant had withdrawn cash on various dates, amounting to Rs.3,33,65,200/-, out of which Rs.1,44,50,000/- was re- deposited to his account on various dates. The appellant had established the source of cash deposits in his Punjab National Bank Account. However, the AO had not considered this fact at all and simply brushed it aside during the course of assessment proceedings and in his report dated 10.04.2019. As regards the appellant's claim that amount of his earlier withdrawn from the bank account, was re-deposited in the same bank account, I find that bank statement furnished before me duly established that the date on which the cash were withdrawn in the appellant's bank and date of deposit in account of assessee have chronologically progressive linkage of events, which duly established the appellant's claim that amount so withdrawn were utilized in re-depositing the same in the same bank. It appears that details of cash transaction were brought to the knowledge of the AO, but instead of considering the veracity of assessee's explanation, the AO

Shri Bhanwar Singh Rathore Assessment Year: 2012-13 treated the same as unexplained and made addition u/s 68 of the Act. The appellant before me, duly discharged his onus of proving the source of the cash deposits. 4.2.1. Further, I find that the decisions relied upon by the appellant are relevant to the issue on hand. The Hon'ble Rajasthan High Court in the case of Sind Medical Stores v/s CIT reported in 117 DTR (Raj) 78 held as under- "Court in the case of Commissioner of Income Tax Vs. Tyaryamal Balchand V (supra), after relying on several judgments, also upheld the finding about peak credit theory. This Court in CIT Vs. Ishwardas Mutha (2004) 270 ITR 597 (Raj.) also accepted the contention to take into account, the peak credit. When any amount is paid, later withdrawn from the books, would be available for recycling and rotation, unless otherwise established as invested elsewhere by the Revenue, We hold the assessee ' was entitled to the benefit of peak credit which ought to have been allowed instead of making separate addition of entire amount. However, we may observe that the Assessing Officer has to come to a definite finding that the amount withdrawn was used by the assessee in any other expenditure or investment If the Assessing Officer comes to a finding that withdrawn amount was used or spent by the assessee for any other investment or expenditure ' than the benefit of peak of such credit, in such circumstances, may not be available," - 4.2.2. The Hon'ble ITAT, Jodhpur Bench in the case of R.K. Dave v/s I.T.O. reported in 94 TTJ 19 held as under:- "The assessee had placed cash flow statement before the authorities below. It is also not in dispute that the assessee had withdrawn an amount of Rs, 45,000 on 9th July, 1990 and 10th July, 1990. It is not the case of the Revenue that the amounts so withdrawn were utilized elsewhere. Mere fact that the assessee could not explain the time gap between the amount withdrawn and the investment in NSCs or where the amount was kept would not itself justify the addition. The claim of the assessee could have been rejected only if the source of balance in the bank account was not established or it could have been demonstrated that the amount so withdrawn was utilized elsewhere. This is not the case here. Therefore, there is justification for sustaining the impugned addition." Considering the facts of the case and evidences brought on record by the appellant, I find that in the instant case, the appellant has duly discharged his onus by filing all possible evidences / details to prove the source of the deposits. Accordingly, it is held that the Assessing Officer was not justified in treating the cash deposit of Rs.2,61,50,000/- as unexplained. The addition made by the Assessing Officer at Rs.2,61,50,000/- is deleted. The present ground of appeal is allowed.

Aggrieved, the revenue is in further appeal before us.

8 Shri Bhanwar Singh Rathore Assessment Year: 2012-13 4. Upon careful consideration of factual matrix as enumerated in the preceding paragraphs, we find that the assessee produced additional evidences during appellate proceedings which were subjected to remand proceedings. The Ld. CIT(A), after due consideration of remand report as well as assessee’s submissions and documentary evidences rendered factual finding under each of the head separately. The cash was sourced out of receipts from cable business, Bajri cess collections, loans etc. as supported by documentary evidences and affidavit of the lender. The finding that the assessee had withdrawn cash from the bank which was quite more than subsequent cash deposit, remain uncontroverted before us. The ld. CIT(A) also rendered a finding that that the date on which the cash was withdrawn from the appellant's bank and date of deposit in account of assessee have chronologically progressive linkage of events which would establish that earlier withdrawals were used to re-deposit the same in the bank account. There is no contrary material on record to deviate from the findings of Ld. CIT(A). Therefore, concurring with the view taken in the impugned order, we dismiss this grounds raised by the revenue. 5. Agricultural Income 5.1 The assessee had disclosed agricultural income of Rs.58.32 Lacs. The assessee was stated to have 348.20 Bigha of agricultural land for crop production. However, upon perusal of relevant material including Girdawari Report of Tehsildar and statement of Patwari, Mandi Khurd, Ld. AO opined that lesser land was available with the assessee which could yield agricultural income only for

Shri Bhanwar Singh Rathore Assessment Year: 2012-13 Rs.10.07 Lacs. Against the said receipts, 1/3rd expenditure was estimated and therefore, the net agricultural income was accepted only to the extent of Rs.6.75 Lacs and the balance Rs.51.56 Lacs was treated as Income from Other Sources. 5.2 However, Ld. CIT(A), in the light of assessee’s submissions, chose to delete the same by observing as under:- 8.2. I have carefully considered the assessment order, facts of the case and the submissions of the appellant and I find that the AO has made addition of Rs.51,56,263/- after noticing some discrepancies in claim of agricultural income considering it as income from other sources. The AO however, disbelieved the version of assessee and restricted the claim of agricultural income to the extent of Rs.6,75,960/- and remaining amount of Rs. 51,56,263/- added as income from other sources on the ground that the assessee could not establish genuineness of agricultural income to have claimed towards agricultural activity by producing documentary evidence like proper bills & vouchers etc. During appellate proceedings, appellant vehemently contested the Assessing Officer's action in disallowing the assessee's claim of agricultural income. In this regard, I have carefully considered appellant's additional evidences (supra), oral and written submissions, various documents and papers submitted in support of his claim of agricultural income. The AO the basis of statements of Patwari found that the Sh.Jagat Singh from whom the appellant claimed to have been taken land on lease, had no land in the village Mandali as per land records of year 2057 to 2060. Similarly, the AO found the lease agreement with Sh. Krishan Kumar Singh, incorrect as the same was entered on simple paper without signature of witnesses. Therefore, the AO had not considered the agricultural produce on the land measuring 17.62 Bigha and calculated the agricultural receipts on the basis report of Deputy Director of Agriculture and information available on internet. Before me, the appellant had produced lease agreement alongwith affidavits of Sh. Krishan Kumar Singh and Sh. Jagat Singh whereby it is established that the land was taken on lease. Further, the appellant furnished the copies of the Jamabandi and Girdavari report of his own land and pieces of land which were taken on lease. These evidence shows that "Raida", "Til" etc. was grown on those pieces of land. The appellant produced the sale bills of agricultural produce which were sold at Sumerpur Krishi Mandi through broker M/s Vinayak Traders, Ronak Traders & others. All the information such as quantity measurement, price, types of crops, payment details, etc. was clearly mentioned in the bills. When One of the broker namely M/s Vinayak Traders was summoned by the AO, they admitted to have purchased agricultural produce from the appellant. The appellant had been doing agricultural activities for the years and disclosing more or less agricultural income in his return of income which were accepted

Shri Bhanwar Singh Rathore Assessment Year: 2012-13 by the AO. The details of his agricultural income from A.Y. 2008-09 to 2013- 14 are as under:-

2008-09 23,15,611 /- 143(1) 2009-10 30,25,225/- 143(1) 2010-11 35,76,450/- Accepted u/s 143(3) 2011-12 15,77,940/- 143(1) 2012-13 58,32,223/- Under consideration 2013-14 65,11,095/-

After considering the facts of the case and documentary evidences produced, I find that there was no reason to disbelieve the claim of the assessee having earned income from the agricultural activity. Thus, it is held that the AO was not justified in disallowing the appellant's claim of agricultural income of Rs. 51,56,263/- and treating it as income from other source. The addition made at Rs. 51,56,263/- is deleted. The ground No. 5 raised by the appellant regarding this issue is, hereby, allowed.

Aggrieved, the revenue is in further appeal before us. 6. After perusal of impugned order, on this issue, we find that the assessee was successful in establishing the fact that certain pieces of land were taken on lease. The Jamabandi and Girdavari report supported the case of the assessee. The agricultural produce was sold in the market through broker which was duly admitted. Importantly, the agricultural income as shown in other years was duly accepted by revenue. Therefore, the assessee’s claim was to be accepted and the stand of Ld. CIT(A) was to be confirmed. We order so. 7. Cash deposit in ICICI Bank

Shri Bhanwar Singh Rathore Assessment Year: 2012-13 7.1 The assessee was found to have deposited aggregate cash of Rs.19.06 Lacs in 2 Bank accounts maintained with ICICI Bank. The same were stated to be sourced out of personal drawings. However, in the absence of documentary evidences, the plea was rejected and the amount was added to the income of the assessee. 7.2 During appellate proceedings, the assessee sought to explain the source of deposit, however, the same could not find favor with Ld. CIT(A) who confirmed the additions by observing as under: - 5.2. I have considered the assessment order, appellant's submissions and documents on record. The AR of the appellant stated that the cash deposit was actually the amount which had been withdrawn by the appellant regularly from his bank account. On perusal of bank statements filed by the appellant, it is observed that the assessee had not withdrawn any identical amount which was re-deposited to bank account. In some instances, it is apparent from the bank statement that the appellant had been crediting his account by way of transfer, on the same date or on following dates, some amounts were being withdrawn by him in cash. It is way beyond comprehension as to why the appellant being a prudent businessman, would transfer the amounts to his account and then; withdraw the same amount; keep that amount at home for crediting the same again by way of cash ! No plausible link, whatsoever, could be established between the cash withdrawn and the cash deposited. The appellant had been depositing cash being receipts from cable business, cess collection and agricultural activities to the bank account maintained with Punjab National Bank. Therefore the cash deposited by the appellant in the ICICI bank could not be either his business receipts or agricultural receipts. Further, the appellant failed to establish the date on which the amounts were withdrawn from the appellant's ICICI bank account and date of deposit in same account of assessee have chronologically progressive linkage of events. In absence of this, the appellant's claim is found incorrect that amount so withdrawn were utilized in re-depositing in the same bank. Thus, the source of cash deposited by the appellant remains unexplained. Therefore, the AO's action of treating cash deposit within the definition of unexplained cash deposited in the bank account is hereby upheld. Accordingly, it is held that the AO rightly added Rs.19,06,200/- u/s 68 of the IT. Act,1961. The appellant fails on this ground. The ground raised by the appellant regarding this issue is, hereby, dismissed. Aggrieved, the assessee is in further appeal before us. 8. After perusal of impugned order as extracted in preceding paragraph, we find that the assessee miserably failed to prove the

12 Shri Bhanwar Singh Rathore Assessment Year: 2012-13 source of deposit in this bank account. No plausible link, whatsoever, could be established between the cash withdrawn and the cash deposited. All the business transactions were being carried out through other bank and the assessee failed to establish chronologically progressive linkage of events. There is no plausible material on record to disturb these factual findings. Therefore, the impugned order, on this issue, would not warrant any interference on our part. The ground thus raised by the assessee stand dismissed. Conclusion 9. The appeal as well as cross-objection stand dismissed.

Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.

Sd/- Sd/- (Sandeep Gosain) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member

मुंबई Mumbai; िदनांकDated : 21/12/2020 Sr.PS:-Jaisy Varghese आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, जोधपुर / DR, ITAT, Jodhpur 5. गाड�फाईल / Guard File 6. आदेशानुसार/ BY ORDER,

Shri Bhanwar Singh Rathore Assessment Year: 2012-13

उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, जोधपुर / ITAT, Jodhpur.