ASSISSTANT COMMISSIONER OF INCOME TAX CIRCLE-58(1), NEW DELHI, DELHI vs. KAMALJEET SINGH DHILLON, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, C: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.- 4626/Del/2024 [Assessment Year: 2011-12] Assistant Commissioner of Income Kamaljeet Singh Dhillon, Tax, D-112, Vivek Vihar, Room No. 218, 2nd floor, D Block, Vs Delhi 110095 / Vikas Bhawan, Dhillon Estate, Ward No.-13, New Delhi-110002. Samrala, Ludhiana-141114. PAN- ABLPS7734D Revenue Assessee ITA No.- 4596/Del/2024 [Assessment Year: 2011-12] Assistant Commissioner of Income Kamaljeet Singh Dhillon, Tax, D-112, Vivek Vihar, Room No. 218, 2nd floor, D Block, Vs Delhi 110095 / Vikas Bhawan, Dhillon Estate, Ward No.-13, New Delhi-110002. Samrala, Ludhiana-141114. PAN- ABLPS7734D Revenue Assessee

Revenue by Shri Om Parkash, Sr. DR Assessee by Shri Rakesh Dubey, Adv. & Shri Sanjeev Saini, Adv. Date of Hearing 03.02.2026 Date of Pronouncement 24.04.2026

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon ORDER PER BRAJESH KUMAR SINGH, AM,

These two appeals by the Revenue are against the two separate orders of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘Ld. CIT(A)] both dated 12.08.2024 arising out of the assessment order dated 30.12.2018 passed under section 143(3) /144 of the Income Tax Act, 1961 (hereinafter referred to as the ‘the Act’) by the ACIT, Circle-57(1), New Delhi, (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (AY) 2011-12 and penalty order dated 30.09.2019 under Section 271D of the Act by the JCIT, Range-55 Delhi, respectively. Since these two appeals relate to the same assessee for the same AYs, the same were heard together and are being disposed of by way of this common order for the sake of convenience and brevity. 2. First, we take up the quantum appeal in ITA No. 4626/Del/2024 for Assessment Year 2011-12. 2.1 During the year, the assessee was doing the business as a Wine Contractor. The return of income for the AY 2011-12 was e-filed on 30.09.2011 vide e-filing acknowledgement no.302607171300911. Later the assessee revised his ITR on 27.12.2011 vide e-filing acknowledgement no. 326386351271211 declaring total income of Rs 23,49,290/-. The return was processed u/s 143(1) of the Act on 31.05.2012. Later the case was selected for scrutiny through CASS u/s 143(3) and 2

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon was assessed at Rs. 26,00,570/-. Subsequently, the case was re-opened u/s 148 of the Act, 1961 vide notice dated 29.03.2018, on the basis of information regarding huge cash deposits in the bank account of the assessee as per the information received from DDIT (investigation)-I, Chandigarh, stating that :

“1. Information was received in this office from the office of the DDIT (Inv)-I, Chandigarh vide letter F.NO. DDIT(INV.)-1/C/D/2017-18/1148, dated: 16/03/2018, stating that a STR No. 1000023741 was received in his office on 23/02/2011, whose dissemination note read as “Saving bank account no. 65034008906 opened in the name of Sh. Kamaljit Singh on 10.03.2008. The account shows heavy deposits and withdrawals in cash. The account holder has withdrawn Rs. 2 crores in cash and deposited cash Rs. 55 lacs on 29.07.2010. The total debit turnover from 01.04.2010 is Rs. 5.43. Crores from a personal account is unusual." 2. Information was received from DDIT (INV.), Chandigarh. Panchkula vide F.NO.DDIT/CHD/2017-18/1623-1626, dated: 26/03/2018 regarding the huge cash withdrawals from state bank of Patiala Ale No.65027393009 belonging to M/s Hanumant Builders & Land developers." (emphasis supplied by us)

2.2 The AO noted that during the year, the assessee was a partner / member in the below mentioned concerns.

S. No. Name of Concern PAN Designation 1. Dhuri Wines AAHFD0310M Partner 2. Akash Enterprises AANFA7188F Member of AOP 3. Dhillon Distributors AAAAD3879K Member of AOP 4. Hanumant Builders & Land AACFF5970E Partner Developers 5. Manjinder Singh & Co. AAHFM7750Q Member of AOP

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon 2.3 The AO noted that the first information was related to unexplained cash deposits amounting to Rs 5,09,75,000/- and the latter was regarding withdrawal of Rs 4,00,00,000/- from the account of M/S Hanumant builders & Land Developers in which the assessee was a partner owning 17% of the shares.

2.4. The AO further noted that no one appeared in the case before 26/12/2018 despite numerous attempts to contact them and thus, keeping the paucity of time and the limitation of time barring in proceedings, the assessee was issued a show cause notice on 27/12/2018 by the AO calling for the following details:

"The first information was related to unexplained cash deposits amounting to Rs 5,09,75,000/- and the latter is regarding withdrawal of Rs 4,00,00,000/- from the account of M/S Hanumant builders & Land Developers in which you are a partner owning 17% of the shares. For the cash deposit made into your SBOP Bank a/c, supporting documents, bank account statements and production of parties/confirmations from parties haven't been submitted to this office. No of documentary proof has been provided regarding utilization of the same. In the event of above-mentioned amount remaining unexplained, the same in the opinion of under signed will be added to the income of assessee. (iii) For the cash withdrawn from bank a/e number 65027393009 with State Bank of Patiala held in the name of M/S Hanumant builders & Land Developers, the assessee hasn't been able to produce any documents regarding utilization of above mentioned funds. Similarly capital account hasn't been submitted by the assessee to show that the said amount is the capital withdrawn by the assessee. In absence of any explanation the same will be added to the income of assessee. (iv) You are hereby show caused as to why the total receipts of Rs. 9,09,75,000/- may not be treated as your undisclosed income and added back to your total taxable income for the Assessment Year.”

2.5 The AO noted that the detailed reply was filed by the assessee against the above show-cause notice which was placed on record. On its perusal, the AO was

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon not satisfied with the reply of the assessee and made an addition of Rs. 5,09,75,000/- as undisclosed income of the assessee. The relevant extract of the order of the assessment order is reproduced as under:

“9. In the show cause notice issued to the assessee, he was asked to explain the nature of cash deposits, the source of funds, utilization of fund, identity of the parties, copies of bank account statements. He was asked to bring the confirmation of the parties and produce them wherever applicable. The AR submitted copies of bank account statements with few narration regarding transactions. On perusal of the supporting documents can be found that mere narration of a particular transaction doesn't establish the genuineness of the same. Neither confirmations from the parties nor PAN or address of the parties whose names have been mentioned in the submissions was provided let alone production of the same. This only establishes the information given by the DDIT(Inv)1 that books of accounts are being manipulated to create bogus source of cash transactions. From the submission of AR and documents placed on record, it was gathered that funds were withdrawn from M/S Dhillon Distributors (1,45,75,000/-) and M/S Aakash Enterprises by M/S Manjinder Singh & Co. and was deposited into the bank a/c of Sh. Kamaljeet Singh for banking purposes to participate in mining related auctions. AR submitted Cash book and Ledger Account of these firms to establish trails of fund transfer. Similarly, he cash was withdrawn from the bank a/c of Sh Kamaljeet Singh and deposited into Akash Enterprises and Dhillon Distributors on behalf of M/S Manjinder Singh & Co. However, the assessee failed to produce any substantial proof like bank account statements of firms/AOP and the utilization of abovementioned funds. No documentary evidence regarding participation in mining auctions was provided. Since the procedure of auctions is public and a fully transparent exercise, lack of evidence in this regard is suspicious. The scrutiny of books and documents placed on record revealed following discrepancies: The AR submitted ledger account of Sh Kamaljit Singh in the books of Manjinder Singh & Co. The documents on record already contained two the ledger account of assessee which the AR had submitted to DDIT (inv)-1 Chandigarh. The ledger accounts weren't same as the balance ledger amount as on 20.04.2010 stands at 1,11,54,689/- and Rs. 95,66,689/- respectively. Hence, the two different ledger accounts of Sh. Kamajeet Singh in the books of Manjit Singh & Co. for the same period as submitted by the assessee and having altogether difference figures cannot be relied upon. Further, the documents placed on record contained capital account of Kamljit singh in the books of Akash Enterprises wherein total opening capital of Kamaljit Singh stands

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon at Rs. 3,11,52,969/- as on 31.03.2010 for F.Y. 2010-11. The Balance Sheet of same entity reveals the capital of assessee as Rs. 14972905(Negative figure) as on 31.03.2010 …………………xxx……………………… The above discrepancies clearly show that the books of accounts submitted by the assessee as supporting documents cannot be relied upon since books of accounts are found to be manipulate to give colour to bogus source of cash deposits. The nature of transaction being cash gives assessee elbow room to manipulate a story that can’t be backed by supporting documents. Hence, the source of cash deposits in the bank a/c of assessee Sh. Kamaljeet Singh remains unexplained. The cash deposits are therefore found fit to be added as undisclosed cash credits u/s 68 of the Income Tax based on following grounds:  Assessee couldn't establish genuineness of the transaction vis-a-vis narration as no corroborative proof evidence was provided. Thus in absence of evidence, narrations clearly seems to be an afterthought.  Assessee couldn't establish, identity of the parties through whom transaction was made. No PAN or address of the parties was provided.  Assessee couldn't establish creditworthiness regarding the parties whose names were mentioned for cash deposits. No confirmation accounts or ITR was submitted by the assessee  To top them all, the documents provided by assessee as mentioned earlier were full of discrepancies and thus can't be relied upon

Due to paucity of time, appearance of AR towards the fag end of December 2018 and the limitation of time barring date; as the identity, genuineness and creditworthiness vis-à-vis cash deposits and subsequent utilization couldn't be established: Hence, the same amount is treated as undisclosed income of the assessee, and is added back to the income of the assessee.” (Addition: Rs. 5,09,75,000/-) (emphasis supplied by us)

“5.2 The appellant has raised legal as well as grounds on merit. Grounds on merits are being adjudicated first:

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon Ground no 2 to 4:- These grounds have been raised against the action of the A.O in making addition of Rs. 5,09,75,000/- u/s 68 of the Act on account of unexplained cash deposits in the bank account being undisclosed income of the appellant. 5.2.1 The appellant during the course of the assessment proceedings and appellate proceedings has contended that the cash was deposited which was withdrawn from the partner's capital account lying in its partnership firms and has deposited the same in his bank accounts. The appellant furnished the summary of cash deposit and withdrawals as under: -

Further, the assessee has also submitted the cash book along with the bank account statement highlighting the same. The appellant has also contended that the scrutiny assessment was already made u/s 143(3) of the Act earlier at Rs. 26,00,570/-after taking into cognizance of all bank account as well as books of accounts and no such addition was made by the Ld. AO. The appellant has contended that he has filed entire details about the deposit into Bank and explained that entire money relates to drawing/withdrawal from partnership firm, wherein the appellant is one of the partners. The appellant contended that when money has been withdrawn from own partnership firms, then how the questions of the identity, genuineness and creditworthiness arise. The appellant has also mentioned that the AO has not raised any doubt on the source of cash of the partnership firm. 5.2.3 The appellant has also stated that the cash withdrawn by the appellant from the Partnership Firms have already been declared as cash sales in the hands of said Partnership Firms. Therefore, taxing the same again would tantamount to double taxation and it has been held in several judgements that making double addition of the same amount is not permissible. 5.2.4 The appellant has also placed on record following evidences: - Cash Book of the appellant wherein the source of cash withdrawn and cash deposited has been shown

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon Bank statements of the appellant. Partner's Capital Account

The appellant has also mentioned that that the sources of cash reflected in the cash book of the Partnership firms are out of the regular cash sales of liquor made by the said Firms and which had accordingly been disclosed in their books of accounts. It is submitted that even though the appellant has furnished the relevant extract of cash books of the above-mentioned Partnership Firms, no adverse inference with regard to the credit and debit transactions has been drawn by the AO. As per the appellant, the genuineness of the sources of the cash of the Partnership firm cannot be doubted, as the corresponding entries are also reflected in Capital Accounts filed as above. 5.2.5 It is also submitted that the partnership firms, wherein the appellant is a partner maintain liquor vends in various cities and it is a general practice that the majority of the sales are made in cash. As per the appellant, generally only 2 to 4% of the total sales of the appellant or all concerns engaged in the same line of business are made through banking channels. Therefore, the majority of the sales were made in cash, which have been reflected in the sales register and cash book. As per the appellant all Partnership firm are assessed to Income Tax and assessee has filed the complete accounts of all firms before the AO to confirm the transactions. However, the AO had not considered the same. 5.2.6 During the appellate proceedings, the appellant has placed reliance on various judicial precedents; few of which are discussed hereinunder: The Hon'ble ITAT Ahmedabad has held in the case of M/s. Ashapura Petrochem Marketing Pvt. Ltd vs ITO (ITA No. 511/Ahd/2020):- "The addition has been made by the A.O. u/s. 68 of IT Act, 1961. The provisions u/s. 68 have been carefully examined. I am of the view that the conditions to invoke provisions u/s. 68 are not prevailing in this case. Once cash deposits in bank account are explained to have originated from sales, I am not sure about applicability of provisions u/s 68 in this case. In my opinion, the addition u/s. 68 of Rs. 1,24,59,500/- is unjustified, therefore, cannot be sustained as per provisions of IT Act, 1961. Hence, the additions of Rs. 1,24,59,500/- is hereby deleted. Ground no. 2 is allowed."

5.2.7 The Hon'ble ITAT in the case of Arun Garg vs ITO 2022 TAXSCAN (ITAT) 1257 mentioned as under:- "The Income Tax Appellate Tribunal (ITAT), Chandigarh bench held that addition in respect of unexplained cash credit under sections 68 and 69A of the Income Tax Act, 1961 cannot be made when documents and books of account submitted by assessee accepted by Assessing Officer (AO) in respect of cash credits during demonetization period. The Bench consisting of NK Saini, Vice President, and Sudhanshu Srivastava, Judicial Member observed that "the opening stock, purchases, sales and closing stock 8

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon in the hands of the assessee have been accepted by the Assessing Officer and the books of accounts of the assessee have also not been rejected u/s 145(3) of the Act and as such the entries relating to the related parties in effect stand accepted"

5.2.8 The Hon'ble ITAT in the case of Income Tax Officer Vinod Chadha 73 taxmann.com 118 (Delhi - Trib.) held as under:- "Section 69A of the Income-tax Act, 1961 Unexplained moneys (Bank deposits - Assessment year 2009-10. Whether where cash deposited in assessee's saving bank account was sales of partnership firm in which assessee was partner and same was duly explained with help of sales receipt recorded in books of account a/ partnership firm, sold amount could not be added in assessee's hands as unexplained money -Held, yes [Paras 7 and 8) (In favour of assessee)"

5.2.9 The Hon'ble Supreme Court has held in the case of CIT vs Devi Prasad Vishwnath Prasad (1969) 72 ITR 194 (SC) It is for the assessee to prove that even if the cash credit represents income, it is income from a source, which has already been taxed. The assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again". 5.2.10 It is seen that the appellant has maintained books of accounts along with cashbook etc. Although the AO has pointed certain discrepancies in books of account furnished, but he has not rejected it as per the provisions of section 145(3) of the Act. It is also noteworthy that the accounts have been audited by the Tax Auditor u/s Section 44AB of the Act, and no adverse opinion has been given by the auditors. Apparently, the AO has made the addition without properly considering the documents and books of account submitted by the appellant due to paucity of time. The AO has added the entire cash deposited by the appellant in his Bank Accounts without considering the fact that the same has already been accounted for in the books of account of the Partnership Firm and the said cash was nothing but the capital withdrawal made by the assessee in the normal course of business. Moreover, I am of the considered view that the appellant has withdrawn cash from his Partners Capital account lying with its partnership firms and has deposited the same in his bank account which does not requires any specific requirement to prove the identity and genuineness of the partnership firm, though which was also provided by the appellant. Hence, the addition made on the presumption that the assessee has not proved the source of cash deposit and the identity, creditworthiness and genuineness cannot be sustained. 5.2.11 In the light of the above, it is clear that the in the instant case, the appellant has duly submitted all the evid7ential documents in order to prove the genuineness of the deposits in bank accounts. Hence after perusal of the submission made and taking into account the entire conspectus of this case including the various judicial pronouncements, I see no reason to uphold with the findings of the assessing officer

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon of addition on account u/s 68 of Rs. 5,09,75,000/-. Hence, grounds of appeal on merits are Allowed.”

“1. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made with regard to the cash deposit of Rs.5.09.75,000/- in the bank account alleging the same to be made addition u/s 68 of the Act. 2. Whether on facts and circumstance of the case. the Ld. CIT(A) has erred in deleting the addition made u/s 68 of the 1.T. Act by admitting the additional evidence from the assessee without providing any opportunity to the AO and without seeking any report from the AO on the additional evidences submitted by the assessee. 3.3 Whether on facts and circumstances of the case, the Ld. CTT(A) has erred in accepting the submission made by the assessee that the cash deposited by the assessee in his bank account was nothing but the capital withdrawal made by the assessee in normal course of business from his partners capital Account lying with its partnership firms which does not require any specific requirement to prove the identity and genuineness of the partnership firm 4. That the grounds of appeal are without prejudice to each other. 5. That the appellant craves leave to add, alter or demand any/all of the grounds of appeal before or during the course of the hearing of the appeal.”

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon / evidences filed before him accepted the claim of the assessee without calling for a remand report from the AO, which has been contested by the Revenue in Ground no. 2 of the appeal and requested that the order of the Ld. CIT(A) be set aside and the matter be restored to the file of the AO for the examination of the details / evidences filed before the Ld. CIT(A). In this regard, the Ld. Sr. DR filed a written submission and the relevant extract of the submission is reproduced as under:

“With regard to the above point No.2 During the assessment proceedings, assessee or his AR did not attend or make personal appearance before AO's until last week of December 2018 despite of regular notices were issued and served to him. The addition was based on the STR information and the assessee was also given reasonable opportunity to substantiate the cash deposit in the bank account but assessee failed to do so. …………..xxx…………….. During the assessment proceedings, the assessee has submitted that the fund were withdrawn from M/s Dhillon Distributor & M/s Akash Enterprises by M/s Manjinder Singh && co and was deposited into bank account of Sh. Kamaljeet Singh for banking purpose to participation in Mining relate auction. But during assessment proceeding, assessee failed to submit any documentary evidence regarding participation in any mining auction despite the fact that any such auction is fully a transparent process and assessee during assessment proceeding failed to produce any documentary for the same before AO. During the assessment proceedings, the assessee was asked to explain the nature of cash deposits, the source of funds, utilization of fund, identity of the parties, copies of bank account statements and to bring the confirmation of the parties and produce them wherever applicable. However, the AR has not provided confirmation from the parties nor PAN or address of the parties whose name have been mentioned in the submission and only submitted the copies of bank account statements with few narration regarding transactions which didn't establish the genuineness of the same. In Para 5.2.10 of CIT (A) order, the decision of the CIT(A) regarding reject of books as per provision u/s 145(3) is compulsory required before making such addition is not acceptable as assessee has only failed to prove the genuineness of the transaction with any supporting evidences and hence the addition was made without rejecting the books of account of the assessee. During the assessment proceedings the assessee was unable to establish the genuineness of the transaction by not producing the corroborate documentary evidences. 11

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon The finding of the CIT(A) in Para 5.2.11 that assessee has submitted all evidential documental to prove the genuineness is not acceptable during the assessment proceedings as the same documents were not submitted by the assessee despite of giving reasonable opportunity by issuing various notices. The assessee intentionally avoid the notices issued during assessment proceedings and filed reply only at the vague of time barring date. The assessee had only first time submitted the evidential discussed only before the CIT(A) and CIT(A) relied upon the documents filed by the assessee without giving any opportunity to AO оr by calling any remand report in this case.” (emphasis supplied by us)

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon accepted the plea of the assessee that the source of cash deposits in the bank account of the assessee was out of cash withdrawals made by the assessee from its partnership firm but did not give any specific co-relation of the claim of said cash withdrawals from its partnership firm and deposit in his bank account. Moreover, the Ld. CIT(A) did not give any opportunity to the AO by calling for a remand report in this matter and we, therefore, are in agreement with ground no. 2 of the appeal filed by the Revenue. The finding of the Ld. CIT(A) that although the AO has pointed certain discrepancies in books of account furnished, but he has not rejected it as per the provisions of section 145(3) of the Act and in the absence of same, the addition of cash deposits could not have been made by the AO is not acceptable in the present facts of the case. In fact, in this case the dispute is regarding the claim of the assessee that source of cash deposit in his bank account was out of withdrawal of cash deposit from his partnership firm, which has been disputed by the AO and which could not also be demonstrated before us during the course of hearing by any supporting documents by the assessee. Therefore, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO for de novo assessment.

7.1 Further, the assessee will be at liberty to file any details / evidences in support of his claim.

7.2 In the result, the appeal of the Revenue (ITA No. 4626/Del/2024) is allowed for statistical purposes. 13

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon 8. Now, we take ITA No.- 4596/Del/2024 for A.Y. 2011-12 for adjudication.

8.1 The JCIT R-55, Delhi noted in his penalty order u/s 271D of the Act that reference was received from ACIT Circle 55(1), New Delhi vide Note Sheet entry dated 19/02/2019, that during the course of assessment proceedings in the case of Shri Kamaljeet Singh (PAN: ABLPS7734D) for AY 2011-12, on perusal of the ledger account of the assessee it was found that there were 2 entries dated 24.07.2010 and 14.10.2010 where money amounting to Rs. 50,00,000/- and Rs. 6,00,00,000/- respectively was withdrawn by the assessee and the narration given in ledger account for the said debit entries also mentions, "BEING CASH PAID" against those transactions.

8.2. Accordingly, the penalty proceedings under section 271D were initiated on 23.03.2019 by the Range JCIT fixing the hearing for 29.03.2019 and was sent by Speed Post and e-mail at e-mail account hg64sam@gmail.com on 23.03.2019. In response to the notice AR of the assessee, the JCIT, noted that Shri Sanjeev Kumar Saini appeared and filed reply on 29.03.2019 submitting that the appeal against the assessment order has been filed before Ld. CIT (A), Delhi-19 and as the initiation of penalty u/s 269SS/271D, has been mentioned therein and was part of the quantum appeal and therefore, requested for keeping the penalty proceedings in abeyance till the finalization of said appeal.

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon 8.3. Another notice dated 19.09.2019 was issued by the JCIT R-55, Delhi, fixing for hearing on 23.09.2019, but according to him none attended. Again, another opportunity was provided by the sending an e-mail on 24.09.2019 at e-mail account hq64san@gmail.com as available from ITR of the assessee showing duly delivered to the assessee, but yet no one appeared nor any reply was submitted.

8.4. The Ld. JCIT R-55, noted that in absence of any explanation on the part of the assessee he decided the matter as per material available on record. The relevant extracts of the penalty order u/s 271D of the Act is reproduced as under:

“ 7. As no explanation was submitted by the assessee or by his AR, I have no option but to decide the matter as per material available on record. 8. In the light of above and the fact it is clear that the assessee's ledger account maintained by M/s Hanumant Builders & Land Developers had two entries dated 24.07.2010 and 14.10.2010 where money amounting to Rs. 50,00,000/- and Rs. 6,00,00,000/-respectively were given by the firm to one of the partner, Sh. Kamljeet Singh (As per Partnership Deed available on record). The entries are showing that amount in cash has been given on both occasions. As no explanation has been furnished by the assessee that how this amount has been utilized and hence it is to be presumed that it is in nature of Loan/Advance given to a Partner (i.e, the assessee) by the firm (i.e. M/s Hanumant Builders & Land Developers). 9. Further, it is evident that the assessee Sh. Kamaljeet Singh Returned the same in CASH to M/s Hanumant Builders & Land Developers on different dates as per following details available from Ledger account of the firm, M/s Hanumant Builders & Land Developers for F.Y. 2010-11 relevant to Α.Υ. 2011-12:

Entry date Cash Amount received Cash Amount returned by assessee from the by the assessee to the firm. (Dr. entry) firm (Cr. Entry) 24.07.2010 50,00,000/- 14.10.2010 6,00,00,000/- 16.11.2010 1,00,00,000/- 24.11.2010 50,00,000/- 13.12.2010 75,00,000/- 15

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon 07.01.2010 75,00,000/- 23.03.2011 3,00,00,000/- Total 6,50,00,000/- 6,00,00,000/- 10. Copy of Ledger Account of M/s Hanumant Builders & Land Developer in respect of assessee Sh. Kamaljit Singh for F.Y. 2010-11 is enclosed with this order as evidence. 11. From the above it is clear that the assessee received cash amounting to Rs. 6,50,00,000/- as Loan/Advance from the firm M/s Hanumant Builders & Land Developer and the same was returned in cash on different dates during the same F.Y. It is thus established that these transactions violated the provisions of section 269SS, hence penal provisions of 271D are attracted .12. In view of the above mentioned facts and circumstances, it is evident that the assessee/person has violated provisions of section 269SS of the Income Tax Act, 1961 by accepting the Loan/Advance of Rs. 6,50,00,000/- from the firm M/s Hanumant Builders & Land Developer as Loan/Advance in cash and through a mode other than by way of an account payee cheque/bank draft or electronic clearing system and as such is liable for penalty u/s 271D r.w.s. 269 SS of the I.T. Act, 1961. 13. 1, therefore impose a penalty amounting to Rs. 6,50,00,000/- u/s 271D of the Income Tax Act 1961 for violation of provisions of Section 269SS of the Income Tax Act 1961.”

“6. Decision: The statement of facts, grounds of appeal, penalty order passed u/s. 271D of the Act dated 30.09.2019and submission made by the appellant have been perused carefully. Brief facts of the case are that the assessee filed the return of income for AY 2011-12 on 30.09.2011 showing total income of Rs. 23,49,290/-, which was assessed u/s 143(3) of the Act at total income of Rs.26,00,570/-. Later on, the case was reopened with issue of notice u/s 148 of the Act on 29.03.2018 and assessment order dated 30.12.2018 was passed after making additions of Rs. 5,09,75,000/-. After the said assessment order, Ld. JCIT imposed penalty u/s 271D of the Act amounting to Rs. 6,50,00,000/-, vide order dated 30.09.2019 on alleged contravention of section 269SS of the Act Aggrieved by the same, the assessee filed the present appeal. 6.2 The various grounds of appeal are adjudicated upon as below: -

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon Ground No 1&2areagainst the JCIT order of penalty under section 271 D of the Act, levying penalty of Rs. 6,50,00,000/- 6.2.2 The appellant during the course of the assessment proceedings contended that the cash was withdrawn from the partner's capital account lying in his own partnership firms and has deposited the same in his bank accounts. The appellant furnished the summary of cash deposit and withdrawals and also submitted the partners' capital account. On perusal of partner's capital account, it is seen that the capital balance of appellant as on 01.04.2010 was a credit balance of Rs 3,11,05,846/- , which was further increased by FY 2010-11 profit share (post tax) of Rs. 4,06,59,394/. It is evident that the assessee had enough balance to withdraw money from his partner capital account. 6.2.3 Section 269SS of the Act deals with loans or deposits Apparently, the amount withdrawn from own fund of partners capital account can neither be categorized as loan nor as deposit. It is actually, withdrawal from the capital account of the partner. The appellant has quoted judicial pronouncements emphasizing that t e transaction between the firm and the partners cannot be brought within the ambit of section 269SS. 6.2.4 In a similar case, Hon'ble Rajasthan High Court in the case of Lokpat Film Exchange (Cinema) (supra) relying on the decision of Hon'ble Supreme Court in the case of CIT v. R.M. Chidamram Pillai 106 ITR 292 has held that the firm and partners cannot be considered to be separate entity. It was also observed that the assessee had acted on bona fide belief that transactions between the partners and the firm were not governed by the provisions of section269SS of the Act and there was no legal requirement according to which they had to adhere to the requirement of conducting transaction through bank only. In view of these facts, the Hon'ble Rajasthan High Court deleted the penalty imposed u/s 271D of the Act. 6.2.5 In light of the foregoing discussion, relying on the above judicial decision and the submission filed, it is held that the withdrawal from the capital account of the partner cannot be treated as loan or deposit. Accordingly, in my considered opinion, no penalty u/s 271D imposable. AO is therefore, directed to delete the penalty-imposed u/s 271D of the Act. Accordingly, the Grounds of Appeal 1 &2 are Allowed.”

“1 1. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting levying the penalty of Rs. 6,50,00,000/- under section 271D of the Income Tax Act, 1961. 2. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty stating the facts that assessee has withdrawn cash from own fund lying in the partnership Account, however the facts are not the same as at the time of withdrawal the assessee is heavy debit balance in his partnership capital account. 17

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon 3. The appellant craves leave to add/alter/delete/modify any/all the grounds of appeal before or during the course of hearing of the appeal.”

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon 14. We have heard both the parties and perused the material available on record. In this present appeal also, similar fact of non- appearance by the assessee before the JCIT, Range-55, Delhi, during the penalty proceedings u/s 271D of the Act was observed. The said penalty order was again deleted by the Ld. CIT(A) by admitting evidences / details filed before him without calling for a remand report from the AO. Therefore, in the present appeal also, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the JCIT / Additional CIT, Range -55 or the Range Head having jurisdiction over the assessee for de novo passing of penalty order.

14.1 The assessee will be at liberty to file any details / evidences in support of his claim.

14.2 In the result, appeal of the Revenue (ITA No. 4596/Del/2024) is allowed for statistical purposes.

Order pronounced in the open court on 24th April, 2026.

Sd/- Sd/- [VIKAS AWASTHY] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated- 24.04.2026. Pooja.

ITA No.- 4626 and 4596/Del/2024- Kamaljeet Singh Dhillon