MADAN SINGH BAGHEL,GWALIOR vs. INCOME TAX OFFICER, WARD 3(2), GWALIOR, GWALIOR

The appeal in ITA No. 235/AGR/2026 for AY 2009-10, arises out of the order of the ADD/JCIT(A)-1, Jaipur [hereinafter referred to as ‘ld. JCIT(A)’, in short] dated 24.12.2025 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 27.12.2011 by the Assessing Officer, ITO, Ward-3(2), Agra (hereinafter referred to as ‘ld. AO’).

At the outset, I find there is delay in filing of appeal by the assessee before this Tribunal by 18 days. Considering the reasons adduced in the condonation petition, I hold that assessee was prevented from sufficient cause in not filing the appeal in time. In the interest of substantial justice, I am inclined to condone the delay and admit the appeal of the assessee for adjudication.

Ground Nos. 3 and 4 raised by the assessee are general in nature and does not require any specific adjudication. Page | 1

Ground No. 1 raised by the assessee is challenging the confirmation of addition of Rs. 17,74,120/- on account of alleged unexplained cash deposits.

I have heard the rival submissions and perused the material available on record. The assessee is an individual coming primarily from a rural background. The assessee is working as an insurance as agent with LIC. Gwalior since 2003. Previously, he was working as an assistant to a doctor in a private clinic. The assessee owns agricultural land of 12 bighas located in village Sonpura and Adhupura, District Bhind. The return of income for AY 2009-10 was filed by the assessee on 25.05.2009 declaring total income of Rs. 1,47,028/-. There was some cash deposits made in Axis bank account during the year under consideration totaling to Rs. 19,16,867/-, which was sought to be explained by the assessee as under.: –

The assessee also submitted that he had purchased a house in Gwalior during the year out of deposits in the bank account. The ld AO however, did not heed to the contentions of the assessee and proceeded to make an addition of entire cash deposits of Rs. 19,16,867/- as unexplained and completed the assessment u/s 143(3) of the Act on 27.12.2011 on the ground that no details were filed by the assessee. It is a fact that before ld AO, the assessee had furnished the complete details of bank accounts held with IDBI Bank and Corporation Bank. The details of bank account with Axis Bank could not be furnished by the assessee before the ld AO as the said Bank account was not in existence as on the date of query raised by the ld AO in view of the fact that the side bank account was closed way back on 01.12.2009. The copy of bank statement was later furnished before the ld CIT(A) together with the evidence of closure of bank account. The same was furnished as additional evidences. The assessee gave the complete details of each withdrawals and each deposit made in the said Axis Bank Account vide written submission dated 02.07.2013. The assessee explained the source of cash deposits by facts and figures as under:-

The assessee also enclosed an affidavit of Shri Har Narayan Singh Baghel(uncle of the assessee), Shri Kalyan Singh Baghel (uncle of the assessee), Shri Ram Kumar Singh Gujjar (insurance client of the assessee) and Shri Jagdish Singh Baghel (insurance client of the assessee) , a letter from City Financials and an affidavit of Shri Sobran Singh Baghel (father of the assessee) along with written submission dated 02.07.2013. The assessee also gave the details of taxable income disclosed in the returns for earlier assessment years as under:-

It is not in dispute that the family members of the assessee had given monies to the assessee during the year. These parties have duly filed a sworn affidavit before the lower authorities. These parties were even examined on oath by the AO in the remand proceedings, wherein they had duly confirmed the fact of advancing monies together with the purpose of making payment to the assessee. Further, the insurance clients of the assessee had also confirmed on oath before the ld AO that they had paid monies on account of insurance premium to the assessee. The evidences in this regard are enclosed in pages 31-44, 118 to 125 of the paper book.

From the details enclosed in tabular column by the assessee in pages 25 to 30 of the paper book containing the date wise transactions of all the bank accounts, I find that assessee was able to explain the source of cash deposits beyond reasonable doubt. All these transactions are duly supported by documentary evidences also. Further, a Panchnama was drawn in the presence of Sarpanch to evidence the family partition, mentioning the name of the family members who would be beneficiary of the partition. The evidence in this is enclosed in page 50 of the paper book. Khasra and Khatoni for evidencing the agricultural activities are enclosed in pages 53 to 71 of the paper book.

In view of the above facts, I hold that the entire cash deposits made in the sum of Rs. 19,16,867/- stand fully explained. Accordingly, the ground No. 1 raised by the assessee is allowed.

Ground No. 2 raised by the assessee is challenging the ad hoc disallowance of expenses of Rs. 80,778/- against the insurance business income.

I have heard the rival submissions and perused the material available on record. The assessee has claimed expenses of Rs. 80,778/- out of gross receipts of Rs. 2,56,103/- from LIC commission, which works out to 31.54% of the receipt. The said expenses were disallowed by the ld AO on the ground that no bills or vouchers were submitted, which was confirmed by the ld CIT(A). The fact that assessee is a authorised LIC agent and deriving LIC commission thereon is not in dispute. The assessee has been showing the insurance commission income in his ITRs in the past. The assessee had claimed expenses only to the extent of ₹31.54 % which is very just and fair and the net income from insurance business shown by the assessee is at consonance with the income declared by the assessee in the earlier four years. Further, the net income declared during the year is more than the earlier four years. Considering all these facts, I hold that the disallowance of expenses made by the ld AO cannot be sustained. Accordingly, ground No. 2 raised by the assessee is allowed.

In the result, the appeal of the assessee is allowed.