MANPHOOL SINGH,CHURU vs. CENTRAL CIRCLE 4 JAIPUR, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “B” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SH. KULDIP SINGH, JUDICIAL MEMBER ITA Nos. 1214 and 1215/JPR/2025 (Assessment Year: 2019-20) Manphool Singh Vs. Central Circle 4 Village KhejraUttarada Jaipur Post Khejra, Tehsil Sardarshahar Dist Churu Rajasthan �थायीलेखासं./जीआइआरसं./PAN/GIR No: CDOPB 1784 M Appellant .. Respondent Appellant by : None Respondent by : Sh. Shravan Kumar Meena, CIT Date of Hearing 19.08.2026 Date of Pronouncement 31.08.2026 O R D E R Per Annapurna Gupta, AM:- Both the present appeals have been filed by the assessee against the separate orders passed by the Office of the Commissioner of Income Tax, Appeal CIT(Appeals), Jaipur 05(hereinafter referred to as “Ld. CIT(A)”), dated 30.06.2025under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) confirming the addition made by the AO to the income of the assessee in order passed u/s 153A

P a g e | 2 ITA No.1214 & 1215/JPR/2025 Manphool Singh of the Act and confirming the levy of penalty thereon by the AO u/s 271AAB of the Act. 2. Since the issues raised are interlinked both the appeals were taken up together for hearing and are being disposed of by this common , consolidated order. 3. None has appeared on behalf of the assessee. We have noted this to be 10th occasion when the matter was listed for hearing and on all previous occasions, the assessee, we have noted has remained unrepresented, except on one occasion, when the assessee has been noted to be represented by Sh. Nitin Marothiya, Adv. of the assessee. Therefore, it is abundantly clear, that on all the occasions when the matter has been listed for hearing, the assessee has remained unrepresented throughout. All notices of hearing have been issued at the address stated in Form No.36 of the appeal filed before us, and we have noted that the same have not returned un-served. It is abundantly clear that the assessee is not interested in pursuing its appeal. The present appeal, therefore was heard ex parte the assessee with the assistance of the Ld. DR. 4. We shall first take up assesses appeal in quantum proceedings in ITA No. 1214/JPR/2025 pertaining to AY 2019-20.Theassessee in this appeal has taken following grounds of appeal:- 1.That the learned Appellate Authority was wrongly confirmed the amount of addition of Rs. 2500000/-towards unexplained cash of Assessee u/s 69A while Section 69A casts an initial burden on the assessce to offer an explanation regarding the nature and source of the money. However, once the assessee furnishes a prima facie plausible explanation with the identity of the source, the burden shifts to the department to investigate and disprove the explanation. CIT v. P.K. Noorjahan (1999) 237 ITR 570 (SC)-The Supreme

P a g e | 3 ITA No.1214 & 1215/JPR/2025 Manphool Singh Court held that addition u/s 69A is discretionary, and the AO must consider surrounding circumstances and not make automatic additions solely because the explanation is not supported by documents.

CIT v. Daulat Ram Rawatmull (1973) 87 ITR 349 (SC)-Mere possession of cash does not justify the inference that it is undisclosed income; the onus is on the Revenue to prove it belongs to the assessee.

PCIT v. Meeta Gutgutia (2018) 96 taxmann.com 468 (Del HC) Once assessee discloses the source with identity, the AO is duty-bound to verify before making an addition.

In the present case, the appellant disclosed the identity of the source (M/s Touchwood Entertainment Ltd.),the capacity (corporate entity), and the purpose (business advance). The AO made no attempt to verify these facts through statutory powers.

CIT v. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC) When the assessee provides names and addresses of creditors, the onus shifts to the department to pursue the matter.

v. CIT Kishinchand Chellaram (1980) 125 ITR 713 (SC) Evidence collected behind the assessee's back cannot be used without confrontation; similarly, non-collection of evidence from a disclosed source cannot be a ground to make an addition.

Addl. CIT v. Hanuman Agarwal (1985) 151 ITR 150 (Pat HC) In certain trades, holding cash in hand for immediate business needs is common; explanation must be viewed in light of business practices.

Here, the appellant's turnover was about 30-40 lakhs annually, and cash was often needed to close deals quickly in the mandi.

Section 115BBE applies only where the addition u/s 69A is legally sustainable. If the addition fails due to incomplete enquiry or acceptance of a plausible explanation, the consequential levy under 115BBE must also fail.

P a g e | 4 ITA No.1214 & 1215/JPR/2025 Manphool Singh CIT v. Smt. P.K. Noorjahan (supra) If the addition is not mandatory under 69A, 115BBE cannot apply automatically. 5. Violation of Natural Justice The AO/CIT(A) did not confront the appellant with any adverse material or outcome of enquiries, nor attempt to verify the lender's details despite being on record. This violates the principles of natural justice. Andaman Timber Industries v. CCE (2015) 281 CTR 241 (SC) - Non-grant of opportunity to rebut evidence amounts to a breach of natural justice. 6.The Assessee craves to add,amend, alter, delete all or any of the grounds of appeal before its disposal. 5. Briefly stated the present case involves a search and seizure action conducted u/s 132A of the Income Tax Act, 1961, on 05-02- 2019 by the DDIT (Investigation) Unit-5(4) , New Delhi on Sh. Mahavir Prasad Bohara and Sh. Sahab Ram.The action was based on information received from the SHO of P.S. Sarojini Nagar, New Delhi , regarding possession of unaccounted cash amounting to Rs. 25 lakhs during a physical search conducted by Delhi Police. In their statements recorded u/s. 132(4) of the Act, both individuals admitted that the cash belonged to their employer, Shri Manphool Singh, the assessee before us &Proprietor of M/s. BSM Traders, but failed to furnish any documentary evidence regarding origin or purpose of the cash. Consequently, the entire amount was seized u/s. 132 of the Act. Subsequently the assessee filed his return of income for the impugned AY 2019-20 declaring an income of Rs. 3,55,000/-, all income from other sources. Case of the assessee was taken up for scrutiny assessment and the assessee was specifically asked to explain the

P a g e | 5 ITA No.1214 & 1215/JPR/2025 Manphool Singh source of the seized cash of Rs. 25 lakhs. The assessee was pointed out that it had previously accepted ownership of the cash during his statement recorded u/s. 131(1A) of the Act on the date of search and claimed it to be a loan from M/s. Touchwood Entertainment Ltd for business purposes. However, despite repeated opportunities given to the assessee, no documentary proof substantiating the explanation of the source of cash seized was furnished by the assesses. The AO accordingly treated the entire amount of cash seized as unexplained money u/s. 69A of the Act and added the same to the income of the assessee. The said addition was subjected to tax @ 60 % as per section 115BBE of the Act. 6. Aggrieved by the same, the assessee carried the matter in appeal raising grounds on the illegality of proceedings u/s 132(A) of the Act, lack of opportunity for explanation of the seized cash, on the completion of assessment ex-party u/s 144 of the Act, on the addition made u/s 69A of the Act and on the taxation of the same u/s 115BBE of the Act. All the grounds raised by the assessee were dismissed by the Ld. CIT(A) as under; 5. Ground 1: On Illegality of Proceedings u/s 132A The assessee has contended that the proceedings under Section 132A were illegal and unjustified. This contention is devoid of merit. The requisition was made after receipt of credible information from the SHO. P.S. Sarojini Nagar, New Delhi, regarding seizure of unaccounted cash of Rs.25,00,000 from two persons, who in their sworn statements recorded under Section 132(4), stated that the cash belonged to the assessee, their employer. Further, the assessee also confirmed in his statement recorded u/s 131(1A) that the cash was his and related to business purposes. The requisite satisfaction was recorded by the

P a g e | 6 ITA No.1214 & 1215/JPR/2025 Manphool Singh DDIT (Inv.), and the legal procedure was followed The cash was seized following due process under law Therefore, this ground is found to be without basis and Dismissed

The assessee has argued that ample opportunity was not given to explain the source of cash. This is factually incorrect. Multiple statutory notices were issued questionnaires and show cause notices on record. Despite this, the assessee failed to furnish u/s 142(1) along with any documentary evidence in support of the explanation that the cash was sourced as a business loan from M/s Touchwood Entertainment Ltd.

No confirmation, bank statement, loan agreement, ledger, or even basic cash book entries were furnished at any stage of proceedings. Mere oral submissions or statements without supporting evidence cannot be considered sufficient explanation, especially for a large cash amount of Rs.25 lakhs.

Thus, the assessee was given adequate opportunity but chose not to comply meaningfully. This ground is accordingly Dismissed

The assessee has alleged that the assessment was completed without granting a proper opportunity. However, the records clearly show that multiple notices were issued, including four appellate notices (as acknowledged by the assessee himself), and there was no meaningful response Further, the assessee did not produce any books of account or cash book during the assessment proceedings.

The assessee claimed mental illness as a reason for non-compliance, but only submitted OPD slips, not any medical certificate from a qualified or specialized medical practitioner stating the nature, duration, or severity of the illness. In the absence of proper medical evidence, this submissions does not justify non-compliance with statutory proceedings. Accordingly, the assessment was rightly completed on a best judgment basis u/s 144. This ground is therefore not tenable and stands Dismissed.

The assessee's explanation that the cash belonged to his business is unsupported by any evidence. He did not produce any cash book, ledger, or income-expenditure statement showing such cash on hand. Further, no explanation was provided on how the funds were recorded in the books of account, which were never furnished at any stage.

Section 69A clearly provides that where an assessee is found to be the owner of money not recorded in the books and fails to explain the nature and source, it shall be deemed to

P a g e | 7 ITA No.1214 & 1215/JPR/2025 Manphool Singh be his income. The ownership of the cash was accepted by the assessee himself in his statement and was confirmed by his employees.

Thus, in the absence of any corroborative evidence, the explanation is unsubstantiated, and the addition of Rs.25,00,000 under Section 69A is justified and confirmed.

Once the addition was validly made u/s 69A, the income automatically attracts the special rate of taxation u/s 115BBE. The provision mandates that such unexplained income shall be taxed at 60%, and no deductions or set-off shall be allowed.

The assessee's argument that the addition was not valid under Section 69A has already been addressed above and found untenable. Accordingly, the application of Section 115BBE is in accordance with law, and this ground is Dismissed

The charging of interest u/s 2348 is mandatory under the Income Tax Act for default in payment of advance tax. The assessee, despite having unaccounted cash, failed to declare or offer the income for taxation in his original return and failed to pay appropriate advance tax

As the liability arose during the financial year itself, the interest u/s 2348 is automatically attracted and is not discretionary. Hence, this ground is also Dismissed.

In view of the facts discussed above the grounds raised by the assessee are found to be devoid of merit and are Dismissed. The assessment completed under Section 144 and the addition of Rs.25,00.000 under Section 69A of the Act, along with taxation under Section 115BBE and interest under Section 2348, are hereby confirmed

Following the above discussion, I uphold the additions made by the AO. Thus, grounds of appeal 1 to 6 are hereby dismissed. ………

P a g e | 8 ITA No.1214 & 1215/JPR/2025 Manphool Singh and the burden shifted to the department to investigate and disprove the explanation. 8. We have noted that the Ld. CIT(A) has found the assessee’s explanation to be unsupported by any evidence. He noted that the assessee did not produce any cash book, ledger or income expenditure statement showing such cash in hand. Finding so, he rejected assessee’s explanation. In the absence of any assistance from the assessee before us, the findings of the Ld. CIT(A) that the assessee’s explanation of the source of cash was unsubstantiated, remains uncontroverted. In the light of the same, we concur with the Ld. CIT(A) that such unsubstantiated explanation is unacceptable. The assessee’s contention therefore of the onus being on the department to controvert its explanation, merits no consideration in the absence of a valid and duly substantiated explanation offered by the assessee. Further, the Ld. CIT(A) has held the application of special rate of tax u/s. 115BBE of the Act to be in accordance with law. In the absence of any assistance from the assessee to controvert the same, we see no reason to disagree with the Ld. CIT(A) on the application of section 115BBE of the Act in the facts of the present case. 9. In the light of the above, all the grounds raised by the assessee are dismissed. 10. In effect the appeal of the assessee is dismissed. 11. Since we have upheld the order of the Ld. CIT(A) confirming the addition made to the income of the assessee of Rs. 25 lakhs u/s. 69A of the Act and in the absence of any assistance from the assessee, we see

P a g e | 9 ITA No.1214 & 1215/JPR/2025 Manphool Singh no reason to interfere in the order of the Ld. CIT(A) confirming the levy of penalty on the addition so made to the income of the assessee u/s. 271AAB(1A)(b) of the Act of Rs. 15 lakhs. The appeal of the assessee challenging the levy of penalty u/s. 271AA(B) of the Act in ITA No. 1215/JPR/2025 is accordingly dismissed. 12. In the result, both the appeals of the assessee are dismissed.

Order pronounced in the Open Court on 31.08.2026

Sd/- Sd/- (Kuldip Singh) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated.08.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur