SHARWAN KUMAR PRAJAPAT,BUNDI vs. ITO WARD BUNDI, BUNDI

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI T. R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No. 1535/JPR/2025 (Assessment Year: 2023-24)

Sharwan Kumar Prajapat Vs. ITO 350, Behind Gas Godam, Ward Bundi Old Matunda Road Indra Colony Bundi �थायीलेखासं./जीआइआरसं./PAN/GIR No: AJPPP 2059 N Appellant .. Respondent Appellant by : Sh. Shrawan Kumar Gupta, Adv Respondent by : Mrs. Aarti Rawat, Addl. CIT Date of Hearing 06.07.2026 Date of Pronouncement 21.07.2026 O R D E R Per Annapurna Gupta, AM:- The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”), dated 08.09.2025 u/s 250 of the Income Tax Act, 1961, (hereinafter referred to as “the Act”). 2. The grounds raised by the assessee are as follows:-

P a g e | 2 ITA No. 1535/JPR/2025 Shrawan Kumar Prajapat 1. The impugned assessment order u/s 144 RWS 144B dated 12.03.2025 as well as the notice issued are bad in law and on facts of the case, for want of jurisdiction, barred by limitation, without proper approval or satisfaction and various other reasons and hence the same may kindly be quashed. 2. Rs.10,90,100/-: The Id. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs. 10,90,100/-made by the Id. AO on account payment made against the purchase via credit card as alleged unexplained money u/s 69A. The Ld. AO and CIT(A) both have also erred in not considering the vital facts and material available on record in their true perspective and sense. Hence the addition so made by the Id. AO and confirmed by the Id. CIT(A) is also being contrary to the real facts of the case and not according to the provision of law, hence the same may kindly be deleted in full. 3. The Id. AO has also grossly erred in law as well as on the facts of the case invoking the provisions of Sec. 115BBE for taxing the income at the higher rate, without issue any show cause notice and also not applicable in the present case. The Ld. AO has also erred in not considering the vital facts and material available on record in their true perspective and sense. Hence the provisions of Sec. 115BBE so invoked are also being contrary to the real facts of the case and not according to the provision of law, hence the same is illegal, bad in law, against the principle of natural justice the same may kindly be deleted in full. 4. The Id. AO has grossly erred in law as well as on the facts of the case in charging the interest u/s 234A, B,C. The interest so charged is being totally contrary to the provision of law and on facts of the case and hence same may kindly be deleted in full. 5. That 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. 3. The short issue in the present appeal pertains to, addition made to the income of the assessee on account of the source of cash payments made for clearing credit card dues not being adequately explained. The assessee was noted to have made payment of Rs.10,90,100/-, towards credit card dues, the details of which find mention at page 7 of the assessment order. The assessee had explained the source of the same as withdrawals from his Bank Account in cash and had furnished copy of the Bank account to evidence the same. The AO was not satisfied with

P a g e | 3 ITA No. 1535/JPR/2025 Shrawan Kumar Prajapat the assessee’s explanation, stating that, assessee had not correlated the withdrawals made in cash from the Bank account with the cash payments made. 4. The matter was carried in appeal before Ld. CIT(A), who confirmed the order of the AO, reiterating the findings of the AO, that the assessee had failed to file reconciliation of the cash withdrawals, and cash payment for credit card purchases. He further, rejected the assessee’s contention that, the cash withdrawals emanate from business of contract income from, which he had returned on presumptive basis u/s 44AD of the Act. The Ld. CIT(A) stated that, the assessee had filed no evidence to prove that he was a Contractor carrying on business and having returned his income from the same u/s 44AD of the Act. The assessee had also argued before him, that taxing the cash payments made for credit card purchases of Rs.10,90,100/- amounted to double taxation, since the withdrawals were sourced from his contract business income, from which was already taxed as returned by the assessee in his return of income. This contention of the assessee, was also rejected by the Ld. CIT(A), stating that both the amounts were separately considered for taxation. The findings of the Ld. CIT(A) in this regard had contained at para 6 and 6.1 of his order as under:- 6. Decision 6.1 The present appeal has been preferred against the assessment order dated 12.03.2025 passed u/s 144 r.w.s. 144B of the Income-tax Act, 1961 in the case of the appellant for A.Y. 2023-24. The brief facts of the case are that the appellant, an individual, filed his return of income on 31.07.2023 declaring a total income of Rs.4,94,760/-. The case was selected for scrutiny under CASS for the reason that large cash payments were found to have been made for credit card purchases. Statutory notices u/s 143(2) and 142(1) were issued requiring the appellant to explain the source

P a g e | 4 ITA No. 1535/JPR/2025 Shrawan Kumar Prajapat of such cash payments. The appellant made partial compliance but failed to furnish complete details and reconciliation. After considering the submissions on record, the Assessing Officer completed the assessment u/s 144 r.w.s. 144B on 12.03.2025 at an assessed income of Rs.15,84,860/-, making an addition of Rs. 10,90,100/- u/s 69A of the Act, treating the cash payments towards credit cards as unexplained money.

Aggrieved by the above addition, the appellant has filed the present appeal raising grounds that the Assessing Officer erred in not considering cash withdrawals from SBI Bank amounting to Rs.28,02,000/- which were allegedly available for making the credit card payments; that the computation of tax involved double taxation; that the appellant being a contractor under section 44AD was not obliged to maintain books of account and therefore penalty notices were wrongly issued, and that penalty u/s 271AAC was also wrongly initiated.

I have carefully considered the grounds of appeal, the written submission, and the assessment order. The primary issue is whether the appellant has satisfactorily explained the nature and source of the cash payments of Rs.10,90,100/- made towards his credit cards during the year. The appellant has taken shelter under the plea that he had withdrawn Rs.28,02,000/- in cash from his SBI bank account, and therefore sufficient cash was available to make such payments. However, on a careful scrutiny of the records, it is evident that the appellant has not furnished any date-wise reconciliation of withdrawals vis-à-vis the impugned credit card payments. The Assessing Officer had specifically called upon the appellant to furnish such reconciliation along with supporting evidences to show that the cash withdrawn was indeed utilized for the said purpose. No such reconciliation has been furnished, and no material has been placed even during the appellate proceedings to substantiate this claim. Mere withdrawal of cash from bank, without establishing its subsequent utilization, cannot be accepted as a satisfactory explanation under section 69A.

Further, it is also significant to note that the appellant has claimed to be a contractor filing return u/s 44AD of the Act. However, apart from making this assertion in the return of income, no document has been produced to substantiate that any such business was actually carried on. No contract agreement, work order, bills raised, TDS certificates, or confirmations from parties have been filed. Even the alleged withdrawals from the bank do not bear any demonstrable connection with contract receipts. Thus, the claim of being a contractor carrying on business under section 44AD is not supported by any contemporaneous evidence. In the absence of such documents, the plea that the impugned cash payments emanated from business withdrawals remains unsubstantiated and devoid of merit

The appellant has also argued that there has been double taxation inasmuch as the returned income of Rs.4,94,760/- and the addition of Rs. 10,90,100/- were both considered. This contention is factually incorrect. The computation of income clearly shows that the returned income has been considered separately and the addition of Rs.

P a g e | 5 ITA No. 1535/JPR/2025 Shrawan Kumar Prajapat 10,90,100/- u/s 69A has been made over and above the returned income. This is the correct method of computation, and there is no question of double addition or double taxation as alleged. The grievance regarding issuance of penalty notices u/s 272A(1)(d) and 271AAC is also not relevant at this stage. It is a settled position that initiation of penalty is a separate proceeding independent of the quantum assessment. The fact remains that the appellant did not comply fully with the statutory notices u/s 142(1), which led to ex parte completion u/s 144. Similarly, once the addition u/s 69A was made, initiation of penalty u/s 271AAC was consequential and within the framework of law. These issues do not in any way dilute the merits of the addition made. On an overall appreciation of the facts, it is seen that the appellant has failed to discharge the burden cast upon him under section 69A to satisfactorily explain the source of the cash payments of Rs. 10,90,100/- made towards his credit cards. The explanation based on general availability of cash withdrawals is not supported by any reconciliation, documentary proof, or evidence of actual utilization. No document has been furnished to show that he was carrying on any business as claimed, and therefore the plea of availability of business receipts also falls to the ground. In these circumstances, the Assessing Officer was fully justified in treating the amount as unexplained money and bringing it to tax u/s 69A of the Act. Accordingly, the addition of Rs. 10,90,100/- is upheld in full. 5. We have heard the rival contentions and have gone through the orders of the Authorities below. We do not find any merit in the addition made in the hands of the assessee on account of, the source of cash payment made for credit card dues, being not allegedly explained by the assessee amounting to Rs.10,90,100/-. Admittedly, the assessee’s assertion regarding the source of the same was that, it was made out of cash withdrawals from Bank. The copy of the Bank statement was also furnished to the AO. Copy of the same was also placed before us at paper book page No.11-13.It is not the case of the Revenue that sufficient cash withdrawals were not reflected in the Bank account of the assessee to cover the cash deposits. Further, we have perused the Bank statement, and we find that there are frequent cash

P a g e | 6 ITA No. 1535/JPR/2025 Shrawan Kumar Prajapat withdrawals made in the bank account of the assessee. The only reason for confirming the addition is that, the assessee has not correlated the cash payment made for credit card dues with the cash withdrawals. 6. We see no substance in this reasoning of the Revenue Authorities. All the facts and details relating to both the cash payment made for credit card dues, and the cash withdrawals made by the assessee from bank account were available with the AO. It was for the Revenue Authorities to point out any anomaly in the explanation of the assessee, with regard to the cash withdrawals not correlating with the cash payments. Without pointing out any such specific anomaly, the assessee cannot be held to have not discharged his onus of explaining the source of cash payments made for the credit card dues. It appears to be a generalised and sweeping statement of the Revenue Authorities. Even otherwise, as long as, there are sufficient cash withdrawals made by the assessee, and there is no finding by the Revenue Authorities of the cash withdrawn having been utilised for some other purposes, it can be safely presumed that the cash withdrawals whenever made during the entire year, were utilised for payment of credit card dues by the assessee at any point during the year. It can be safely presumed, that the cash withdrawn was retained by the assessee as cash in hand and utilised for the payment of credit card dues. We find no need for direct correlation between the cash withdrawn used for paying off credit card dues. 7. Therefore, we have no hesitation in holding that, the source of cash payment for credit card dues by the assessee amounting to

P a g e | 7 ITA No. 1535/JPR/2025 Shrawan Kumar Prajapat Rs.10,90,100/- stand sufficiently explained by the assessee as from cash withdrawals made from his bank account. 8. Further, we do not find any merit in the findings of the Ld. CIT(A), rejecting assessee’s explanation of cash withdrawn as out of his business receipts of contract work. The ld. CIT(A) has rejected the same stating that, the assessee did not substantiate his claim of carrying out contract work. Admittedly, the assessee had returned income from his business on presumptive basis u/s 44AD of the Act. This return of income filed by the assessee reflecting income of Rs.4,94,760/- was accepted by the Revenue Authorities. Having accepted the income returned by the assessee u/s 44AD of the Act, the Ld. CIT(A) could not have taken a contrary stand, stating that, the assessee had not established being a Contractor, therefore, rejecting the assessee’s explanation of the credits in the Bank account, which were withdrawn in cash, being attributable to his contract income. The. Ld. CIT(A), we hold, is not justified in holding so. 9. Further, the rejection of the assessee’s argument that the addition of cash payment made for credit card dues of Rs.10,90,100/- paid in cash, would tantamount to double taxation by the Ld. CIT(A), we hold is also incorrect. Since the assessee, we have held has sufficiently demonstrated the source of the cash payment made to be out of withdrawals from his Bank account, and we have noted the assessee to have returned to tax income from contract business on presumptive basis u/s 44AD of the Act, it can be safely presumed that the credits in his Bank account were in relation to his contract business. Since the

P a g e | 8 ITA No. 1535/JPR/2025 Shrawan Kumar Prajapat income from his business has already been taxed the withdrawals made out of the business income credited in the Bank account of the assessee, we hold would definitely tantamount to double taxation. 10. In the light of the above, we delete the addition of Rs.10,90,100/- made in the hands of the assessee u/s 69A of the Act. 11. In effect, the appeal of the assessee stands allowed in above terms. Order pronounced in the open court on 21.07.2026

Sd/- Sd/- (T.R. Senthil Kumar) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 21.07.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur