JAYA HARESH LALWANI ,MUMBAI vs. ITO WARD 3(5), KALYAN

ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 06.06.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:

2.1 During the course of course of assessment proceedings, the Assessing assessment proceedings, the Assessing Officer noticed credits aggregating to ₹53,87,500/- in the assessee’s Officer noticed credits aggregating to in the assessee’s bank account maintained with Axis bank, which included cash account maintained with Axis bank, which included cash account maintained with Axis bank, which included cash deposits of ₹15,00,000/ 15,00,000/- made during the demonetisation period made during the demonetisation period (from 09.11.2016 to 30.11.2016). In explanation, the assessee (from 09.11.2016 to 30.11.2016). In explanation, the assessee (from 09.11.2016 to 30.11.2016). In explanation, the assessee submitted that she had received certain amounts through RTGS submitted that she had received certain amounts through RTGS submitted that she had received certain amounts through RTGS from Wadhwa Buildcon LLP towards supply of building material in ldcon LLP towards supply of building material in ldcon LLP towards supply of building material in period prior to demonetization period prior to demonetization period. It was submitted she had . It was submitted she had withdrawn the said amounts in cash. As part of the building withdrawn the said amounts in cash. As part of the building withdrawn the said amounts in cash. As part of the building material could not ultimately be supplied; and therefore, the cash material could not ultimately be supplied; and therefore, the cash material could not ultimately be supplied; and therefore, the cash so withdrawn was partly re partly re-deposited and part payment of around part payment of around Rs.15,00,000/-was returned to Wadhwa Buildcon LLP. returned to Wadhwa Buildcon LLP. returned to Wadhwa Buildcon LLP.

2.2 The Assessing Officer rejected the explanation mainly on the The Assessing Officer rejected the explanation mainly on the The Assessing Officer rejected the explanation mainly on the grounds that (i) there was an unexplained and substantial time gap grounds that (i) there was an unexplained and substantial time gap grounds that (i) there was an unexplained and substantial time gap between the withdrawals (May to August 2016) and the subsequent between the withdrawals (May to August 2016) and the subsequent between the withdrawals (May to August 2016) and the subsequent cash deposits (November 2016), and (ii) the assessee failed to cash deposits (November 2016), and (ii) the assessee failed to cash deposits (November 2016), and (ii) the assessee failed to substantiate the existence or conduct of any business activity, substantiate the existence or conduct of any business activity, substantiate the existence or conduct of any business activity, apart from declaring presumptive income under section 44AD. The apart from declaring presumptive income under section 44AD. The apart from declaring presumptive income under section 44AD. The Assessing Officer accordingly treated the cash deposits of ssessing Officer accordingly treated the cash deposits of ssessing Officer accordingly treated the cash deposits of ₹15,00,000/- and the remaining credit entries aggregating to and the remaining credit entries aggregating to and the remaining credit entries aggregating to ₹38,87,500/- appearing in bank account appearing in bank account as unexplained and made as unexplained and made additions.

5.1 Before us, the learned counsel for the assessee filed a Paper Before us, the learned counsel for the assessee filed a Paper Before us, the learned counsel for the assessee filed a Paper Book containing pages Book containing pages 1 to 54, including the relevant Axis Bank 1 to 54, including the relevant Axis Bank statements. The assessee reiterated her contention that the cash statements. The assessee reiterated her contention that the cash statements. The assessee reiterated her contention that the cash deposits made during the demonetisation window were sourced deposits made during the demonetisation window were sourced deposits made during the demonetisation window were sourced from earlier cash withdrawals made out of RTGS receipts from from earlier cash withdrawals made out of RTGS receipts from from earlier cash withdrawals made out of RTGS receipts from Wadhwa Buildcon LLP. It was Wadhwa Buildcon LLP. It was again submitted that since a part of again submitted that since a part of the supply order could not be fulfilled, the amounts earlier the supply order could not be fulfilled, the amounts earlier the supply order could not be fulfilled, the amounts earlier withdrawn in cash were re withdrawn in cash were re-deposited and thereafter deposited and thereafter around Rs.15,00,000/- was was returned to Wadhwa Buildcon LLP. returned to Wadhwa Buildcon LLP. The relevant chart supplied by the assessee supplied by the assessee with statement of parties statement of parties from whom money was received and money was returned has been from whom money was received and money was returned has been from whom money was received and money was returned has been reproduced by the Assessing Officer in para reproduced by the Assessing Officer in paragraph 4 of the impugned 4 of the impugned assessment order. For ready reference, said table containing assessment order. For ready reference, said table containing assessment order. For ready reference, said table containing narration of the credit and debit entry into narration of the credit and debit entry into bank account is bank account is reproduced as under: reproduced as under:

Date Amount Remarks Date of Transfer Amount Remarks Remarks Received Transfer 23/05/2016 400000 24/05/2016 399000 Tr. to Wadhwa Builcon LLp Received from Wadhwa Received from Wadhwa Buildcon LLp( Rec.WBLLP) Buildcon LLp( Rec.WBLLP) 28/06/2016 500000 Rec.WBLLP 30/06/2016 499000 Cash withdrawl Rec.WBLLP Date Amount (INR) Transaction Transaction Date Amount (INR) Transaction Type/Description Type/Description Type/Description 05/07/2016 450000 Rec. WBLLP Rec. WBLLP 05/07/2016 500000 Cash withdrawal 11/07/2016 280000 Rec. WBLLP Rec. WBLLP 11/07/2016 280000 Cash withdrawal 20/07/2016 690000 Rec. WBLLP Rec. WBLLP 21/07/2016 690000 Cash withdrawal 10/08/2016 250000 Rec. WBLLP Rec. WBLLP 10/08/2016 100000 Cash withdrawal - - - 11/08/2016 150000 Cash withdrawal 02/11/2016 340000 Rec. WBLLP Rec. WBLLP - - - 11/11/2016 500000 Cash Cash 12/11/2016 500000 Tr. to Wadhwa Builcon LLP 15/11/2016 500000 Cash Cash 13/11/2016 339445 Tr. to Wadhwa Builcon LLP 22/11/2016 500000 Cash Cash 23/11/2016 935000 Tr. to Wadhwa Builcon LLP 13/02/2017 100000 Received from Yuvraj Received from Yuvraj 14/02/2017 200000 Wadhwa Buildcon LLP Patil Patil 20/02/2017 95000 Received from Yuvraj Received from Yuvraj 20/02/2017 95000 Wadhwa Buildcon LLP Patil Patil 04/03/2017 500000 Parking A/c /For Parking A/c /For 04/03/2017 500000 Wadhwa Buildcon LLP /Wadhwa /Wadhwa 5.2 Before us, the assessee has also filed detail of bank statement Before us, the assessee has also filed detail of bank statement Before us, the assessee has also filed detail of bank statement of current account maintained with the current account maintained with the Axis Bank Axis Bank, which is available on Paper Book page 36 to 39. available on Paper Book page 36 to 39.

6.1 Similarly, while the assessee claimed that cash deposits were Similarly, while the assessee claimed that cash deposits were Similarly, while the assessee claimed that cash deposits were subsequently transferred back to Wadhwa Build subsequently transferred back to Wadhwa Buildcon LLP, the bank con LLP, the bank statements only reflect transfer entries without identifying the statements only reflect transfer entries without identifying the statements only reflect transfer entries without identifying the recipient of such transfers. The assessee has not produced any recipient of such transfers. The assessee has not produced any recipient of such transfers. The assessee has not produced any confirmation from Wadhwa Buildcon LLP, nor any documentary confirmation from Wadhwa Buildcon LLP, nor any documentary confirmation from Wadhwa Buildcon LLP, nor any documentary evidence of having received an order for supply of evidence of having received an order for supply of building material, building material, nor any evidence of cancellation of such order. nor any evidence of cancellation of such order.

6.2 The assessee has not filed The assessee has not filed any certificate from the bank certificate from the bank regarding the parties from whom the sum was received and parties regarding the parties from whom the sum was received and regarding the parties from whom the sum was received and to whom sum were transferred. The pattern of immediate cash The pattern of immediate cash withdrawals upon receipt of RTGS credits, after retaining a small hdrawals upon receipt of RTGS credits, after retaining a small hdrawals upon receipt of RTGS credits, after retaining a small balance, prima facie resembles cheque balance, prima facie resembles cheque-discounting activity, rather discounting activity, rather than than than a a a business business business transaction transaction transaction supported supported supported by by by commercial commercial commercial documentation. In the absence of primary evidence, the claim that documentation. In the absence of primary evidence, the claim that documentation. In the absence of primary evidence, the claim that the cash deposits during the demonetisation period were sourced deposits during the demonetisation period were sourced deposits during the demonetisation period were sourced from earlier withdrawals remains unverified. from earlier withdrawals remains unverified.

6.3 In these circumstances, the legal authorities cited by the In these circumstances, the legal authorities cited by the In these circumstances, the legal authorities cited by the assessee cannot assist her case unless assessee cannot assist her case unless the foundational facts the foundational facts asserted, namely, the actual business transaction with Wadhwa namely, the actual business transaction with Wadhwa namely, the actual business transaction with Wadhwa Buildcon LLP and the nexus between earlier Buildcon LLP and the nexus between earlier withdrawals and later withdrawals and later deposits are first established through credible evidence. are first established through credible evidence. are first established through credible evidence.

6.4 Having regard to the factual deficiencies and in the larger Having regard to the factual deficiencies and in the larger Having regard to the factual deficiencies and in the larger interest of justice, we consider it appropriate to set aside the order ce, we consider it appropriate to set aside the order ce, we consider it appropriate to set aside the order of ld CIT(A) and remand the matter of ld CIT(A) and remand the matter back to the file of the Assessing of the Assessing Officer for de-novo verification. The assessee shall be at liberty to verification. The assessee shall be at liberty to verification. The assessee shall be at liberty to file all relevant evidence, including confirmations from Wadhwa file all relevant evidence, including confirmations from Wadhwa file all relevant evidence, including confirmations from Wadhwa Buildcon LLP, documentary proof of orders placed, reasons for non- Buildcon LLP, documentary proof of orders placed, reasons for non Buildcon LLP, documentary proof of orders placed, reasons for non supply, and authenticated bank supply, and authenticated bank-statement clarifications from the statement clarifications from the concerned bank. The Assessing Officer shall also be free to conduct concerned bank. The Assessing Officer shall also be free to conduct concerned bank. The Assessing Officer shall also be free to conduct such inquiries as may be necessary. Adequate opportunity of such inquiries as may be necessary. Adequate opportunity such inquiries as may be necessary. Adequate opportunity hearing shall be afforded to the assessee, including the opportunity hearing shall be afforded to the assessee, including the opportunity hearing shall be afforded to the assessee, including the opportunity to rebut any adverse material proposed to be used against her. to rebut any adverse material proposed to be used against her. to rebut any adverse material proposed to be used against her.

6.5 The grounds of appeal of the assessee are accordingly allowed The grounds of appeal of the assessee are accordingly allowed The grounds of appeal of the assessee are accordingly allowed for statistical purposes. for statistical purposes.