HAFEEJ,VARANASI vs. INCOME TAX OFFICER 3 (1), VARANASI

I.T.A. No.215/VNS/2024 Assessment Year:2017-18 1

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH (SMC), VARANASI BEFORE SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.215/VNS/2024 Assessment Year:2017-18 Hafeej Vs. Income Tax Officer 3(1) 3/180, Panchwati, Sultanpur, Varanasi. Rattapur, Ram Nagar, Varanasi- Uttar Pradesh-221008. PAN:AIXPH0312F (Appellant) (Respondent) Appellant by None Respondent by Shri Sunil Kumar Rajvanshi, Sr. D.R. O R D E R

(A) This appeal vide I.T.A. No.215/VNS/2024 has been filed by the assessee for assessment year 2017-18 against impugned appellate order dated 14.10.2024 (DIN & Order No.ITBA/APL/S/250/2024- 25/1069655278(1) of Ld. Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. The grounds of appeal are as under: -

“1. Because on the facts and in the prevailing circumstances of the case and in law, the respected CIT(A) erred in confirming the addition made by the learned AO on the basis of invalid reasons without considering the documents submitted by the assessee. Hence, the addition of Rs. 11,00,000 being bad in law may please be deleted. 2. Because the learned AO as well as learned CIT(A) has grossly erred in law and to the facts of the case that the Rs. 8,00,000/- had been received to the assessee in cash out of sale proceeds of an agricultural land , which the appellant had declared in his return of income and had paid the Tax as urban land. The supporting evidence had already being furnished before both the lower authority and Rs. 3,00,000/- out of saving of himself and all his family members 3. Because learned CIT(A) erred in confirming the addition made of Rs. 11,00,000 towards cash deposited in bank account without appreciating that the appellant had duly discharged the onus by proving the source of cash

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deposit in the bank accounts by filing The proof of receipt of cash of Rs. 8,00,000/- out of Sale of Land and Rs. 3,00,000/- out of his and his family member saving . the ^addition confirmed of Rs. 11,00,000/- is without any justification and liable to be deleted 4. Because that on the facts and in the circumstances of the case and in law, the learned CIT(A)has erred in confirming the addition of Rs. 11,00,000/-under s. 69A of the IT Act 1961 particularly when the source of generation of cash of Rs. 8,00,000/- cash was reasonably explained before both the lower authorities and evidence was also filed 5. Because on the facts and in prevailing circumstances Ld CIT (A) neither pointed any allegation in the entire order, that cash receipt on account of sale proceeds of land had not true been used any where other than the deposit in bank account. 6. Because CIT (A) had grossly erred by taking the view that as per IT Act, no person can put the cash in residence or putting the cash at Residence rather than banking system is and offence and against the merit of the case. 7. Because CIT (A) has grossly erred in disbelieving the evidence as submitted by the assessee without pointing out any defects in such evidence, such confirming of adhoc addition by the A.O is highly unjustifiable is the eye of law. On the basis of his presumptions and guess work, without the support of any material either collected or placed upon record. 8. Because the Hon’ble CIT (A) had erred an acted illegally in applying the provision of Sec. 69 A of the IT Act, 1961 only on light of imagination and Idiosyncrasies. 9. Because on the facts and circumstances Hon’ble CIT (A) had grossly erred in confirming the application of Sec. 115BBE on the alleged addition. 10. Because on the facts and circumstances Hon’ble CIT (A) had grossly erred in confirming the application of interest u/s 234 A on the alleged addition 11. Because in any view of the matter the appellant put craves the leave to add alter and/or modify the grounds of appeal at the time of hearing.

(B) In this case, assessment order dated 21.11.2019 was passed by the Assessing Officer (“AO”, for short) whereby the assessee’s total income was determined at Rs.13,11,460/- as against returned income of Rs.2,11,460/-. In the aforesaid assessment order, an addition of Rs.11,00,000/- was made u/s 69A of the Income Tax Act, 1961 (“Act”, for short), on account of cash deposited in bank. The assessee’s appeal against the assessment order was dismissed by the Ld. CIT(A) vide impugned order dated 14.10.2024.

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(B.1) The present appeal has been filed by the assessee against impugned appellate order dated 14.10.2024 of the Ld. CIT(A). The appeal memo filed by the assessee in Form-36 is accompanied by a statement of fact relevant portion of which is reproduced below, for the ease of reference: -

“That the appellant is engaged in the business of repairing of cycle like puncture and other repairing related to the bicycle. He is doing the business at very small place. His livelihood earning is very low and poor. At the time of demonetization he was aged about 66 years and he is working as labourer and doing such work since his age of 15 years. The assess is a illiterate person and his sons are also illiterate, due to his age factor he is facing problem of signature, this is the basic reason for non-operation of banking facilities He has three sons and one daughter. His sons are unemployed and depend on the labour work which is occasional in nature. The Fact is that out of his personal saving the appellant had purchased an agricultural land for Rs. 1,74,960/- at Gram Mannapur in the year 2007 in the name of his wife Smt. Chanda Begum. The aforesaid agricultural land was sold out on 20.05.2015 which was registered in Bahi No.1 Zild No.5786 Page No. 123 to 140 SI No. 6149 for Rs. 8,00,000/- which was received to her wife in cash and the same was lying in the residence. Though it was an agricultural land (at the time of purchase and as well as also at the time of sale) even then the appellant had paid the tax of Rs. 77,470/- as on Capital Gain tax treated its as urban land. The aforesaid purchase and sale papers had already submitted before both the authorities and Hon'ble CIT (A) had also narrated the same at page (8) and (9) of his order. On the date of deposit of cash in the bank and also before demonetization the appellant had already available cash with him and his family including the aforesaid cash of Rs.8,00,000/- which was received on the sale of agricultural land and lying in the home. The reason for non deposit of cash in bank after the sale proceeds and lying with him had already been given to the assessing officer as well as before honourable CIT (A). The cash was lying at the home after sale of land as his daughter is at Marriage able age. The earning from income from interest is impious in his caste as well as he is not very well aware and regular in banking with any bank. Further to that as the work of the appellant is very small, hence in the morning goes to his small shop and worked up to 8.00 pm to eam his livelihood and maintain his family. This is also a reason for non doing the routine transaction in bank due to which the same can not be deposited into the bank. Due to demonetization of currency of Rs. 500/- and Rs. 1000/- he had to deposit the same in to Bank. All these Facts and evidence had already being submitted before Assessing Officer as well as Hon'ble CIT (A) but no heal was given. Sir, Hon'ble CIT (A) had given his finding in Para (8) and mentioned that the source of deposit of Rs. 11,00,000/- Le an amount of Rs. 2,00,000/- was deposited on 11.11.2016 and amount of Rs. 9,00,000/- was deposited on 02.12.2016, was on account of sale proceeds received in lieu of agricultural land. The assessee had already submitted registered sale deed for Rs. 8,00,000/- before Hon'ble CIT (A) as well as A.O, without denying the content of registered sale deed had confirmed the addition u/s 69A. Hon'ble CIT (A) had given in para 8 (h) which was reproduced as under:

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"it is worthwhile to mention here that religious beliefs and practices are an individual's personal priorities. They can be, in no way, placed above the law and order of the land. The Income Tax Act, being empowered by the constitution along with other Act advise the citizens to prefer banking channels in order to curb the menance of cash-based economy. Time and again, laws and rules have been formulated by the legislature to minimize the use of cash and promote digital and paperless economy. But, some individuals including the instant appellant/assessee remain reluctant and avoid banking channels and attribute their such actions to religious beliefs and practices. Here, it is pertinent to mention that every Islamic country of the world has banking system in place. Had the use of banking system against the principles of Islam or any other religious belief, banking system would have been abolished in Islamic nations as well. But, this is not the case, Rather, one can notice that several topnotch banking institutions originate from Islamic countries, So, the plea taken by the appellant/assessee regarding his religious beliefs and practice not to use banking system for his income is totally devoid of merit and credibility." In this regard, we beg to state that. More or less Hon'ble CIT (A) had rightly stated that religious belief and practice are an individual's personal priorities but also neither the constitution of India nor Income Tax Act deprive any person for keeping the cash in his house for holding the same for any period of time. The only fault of the assessee is that he is not using his earning through banking channel. The reason is that to meet out his day to day expenses on his maintenance of his family he engaged himself in doing the Puncture/cycle repairing work, it does not require to do the business through Banking Channel. But documentary evidence for source of deposit of Rs. 8,00,000/- had already been filed by the appellant to the both lower authorities. Further that Neither the assessing officer nor Ld CIT (A) did not show that above cash was not available in the hands of the assessee or have been spend on any other purposes. Merely because there was a time gaps between deposit of cash with the collection of cash, the contention of the assessee regarding deposit of cash could not be rejected and addition on account of cash deposit could not be made particularly when there was no finding recorded by Assessing Officer or the CIT (A) that a part from depositing this cash into bank as explained by the assessee, there was any other purposes, it is used by the assessee of these amounts. And other finding of the Hon'ble CIT (A) is that the assessee had not submitted any concrete reliable and justifiable evidence / documents to Justify the claim for source of money of Rs. 11,00,000/-. In this regard, the appellant beg to submit that he had already submitted the evidence for Rs. 8,00,000/- The assessee resides along with his wife and childrens. The messing in common one and in house Rs. 3,00,000/- collectively being on saving of him, his wife and children and of no one had any bank account other than this account. The assessee had deposited the same in bank account, which was deposited in to the Bank as demonetization of the currency of 500/- and 1000/-. Furthermore, both the lower authority had never found that the assessee had indulged in anything of sort of tax evasion and any sort of black money. Sir, It is crystal clear from the above points that the order passed by the Ld. A.O as well as Ld. CIT (A) are against the facts of the case and is not

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Judicious and highly unjustified. Under these circumstances the appellant is being the appeal.” (B.2) At the time of hearing, there was no representation from the assessee’s side. In the absence of any representation from the assessee’s side, the Ld. Departmental Representative was heard. He placed reliance on the impugned order of the Ld. CIT(A). The relevant portion of which has been reproduced in foregoing paragraph (B) of this order. (B.2.1) On perusal of the statement of fact reproduced in foregoing paragraph (B.1) of this order, the assessee’s explanation regarding cash deposited in bank is found to be reasonable and acceptable. The only reason why the assessee’s explanation has not been accepted by the Ld. CIT(A) is that there was a time gap between collection of cash from sale of land and its deposit in the bank. The Assessing Officer and the Ld. CIT(A) seem to have been overwhelmed with the fact that the deposit was made by the assessee in the bank during the demonetization period. The assessee was left with no chose to deposit cash it had, in bank, during demonetization period because the cash the assessee had ceased to be legal currency after announcement of demonetization. This fact in itself, however, cannot be used against the assessee, when the assessee has explained to the Assessing Officer and to the Ld. CIT(A) that the cash kept with the assessee was out of sale of land (sale consideration being Rs.8,00,000/-) and evidence out of collective savings of himself and family members (amounting to a total of Rs.3,00,000/-). No material has been brought by Revenue to contradict the explanation furnished by the assessee. The mere fact that there was some delay in receipt of cash from sale of land and its deposit in bank is not sufficient in itself to hold that money was unexplained. Further, the explanation that a sum of Rs.3,00,000/- represented the accumulated savings of the assessee and his family members also appears to be reasonable and plausible. The explanation of the assessee as contained in statement of fact, relevant

I.T.A. No.215/VNS/2024 Assessment Year:2017-18 6 portion of which has been reproduced in the foregoing paragraph (B.1) of this order is found to be acceptable. In view of the aforesaid facts and circumstances, the aforesaid addition of Rs.11,00,000/- is directed to be deleted. All grounds of appeal are treated as disposed of in accordance with the aforesaid directions. (D) In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 09.07.2026 in open court, in virtual mode.

Sd/. (ANADEE NATH MISSHRA) Accountant Member Dated: 09.07.2026 Vijay Pal Singh, (Sr. PS)

Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT(A) 4. CIT 5. D.R., I.T.A.T.