SHRI PRATEEK PATEL,MANSAROVAR, JAIPUR vs. INCOME TAX OFFICER, WARD-2(4), JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA Nos. 313 & 314/JP/2018 fu/kZkj.k o"kZ@Assessment Years : 2009-10 & 2010-11 cuke Prateek Patel, Income Tax Officer Vs. 92/103, Agrawal Farm, Ward-2(4), Mansarovar, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AMIPP 8526 E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (CA) jktLo dh vksj ls@ Revenue by : Shri Ram Singh (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 11/10/2018 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 12/10/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M.

These two appeals by the assessee are directed against the two

separate orders of ld. CIT(A)-I, Jaipur, both dated 04/01/2018 for the

A.Y. 2009-10 and 2010-11 respectively. For the A.Y. 2009-10, the

assessee has raised following grounds of appeal: “1. The ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 2,50,000/- U/s 69 by holding that the cash paid for purchase of agricultural land is out of the undisclosed income of the assessee ignoring the fact that the assessee had withdrawn the said amount from his proprietory business, M/s PS Patel. He has further erred in not allowing the credit of Rs. 1,51,993/- being the difference

ITA 313 & 314/JP/2018_ 2 Prateek Patel Vs ITO of the amount declared in the original return and the return filed in response to notice U/s 148 against the addition confirmed by him. 2. The assessee craves to amend, alter and modify any of the grounds of appeal. 3. The appropriate cost be awarded to the assessee.”

the name and style of M/s P.S. Patel. The assessee filed his return of

income on 09/2/2010, subsequently the Assessing Officer issued notice

U/s 148 of the Income Tax Act, 1961 (in short the Act) on 22/1/2016 and

in response to the said notice, the assessee stated vide his letter that the

original return of income filed on 09/2/2010 may be treated as return filed

in response to the notice issued U/s 148 of the Act. During the

assessment proceedings, the assessee again filed his return of income

declaring income U/s 44AD of the Act. Thus, the assessee has enhanced

his income from 1,67,025/- to Rs. 3,19,080/-. The assessee entered into

an agreement on 24/12/2007 for purchase of agricultural land measuring

8 biswa at village Nari Ka Bas, Hatoj, Jaipur from one Smt. Rekha Sharma

and Vishnu Datt Sharma for a consideration of Rs. 15,81,000/-. The

assessee made payments to the vendors as under:

Date Amount 24/12/2007 Rs. 2,51,000/- 25/07/2008 Rs. 2,50,000/- 02/01/2010 Rs. 2,50,000/-

ITA 313 & 314/JP/2018_ 3 Prateek Patel Vs ITO Thus, the payment of Rs. 2,50,000/- made on 25/7/2008 falls in the year

under consideration and the Assessing Officer has asked the assessee to

explain the source of the above payment. The assessee explained the

source of Rs. 2,50,000/- being the cash withdrawal from M/s P.S. Patel

and further the amount received back from Smt. Savita Patel, wife of the

assessee. The Assessing Officer did not accept this explanation and made

the addition of the said amount of Rs. 2,50,000/- as unexplained

investment U/s 69 of the Act.

the ld. CIT(A) but could not succeed.

assessee has produced the copy of the cash book of M/s P.S. Patel

alongwith the relevant bank statement and copy of account of Smt. Savita

Patel to show that the assessee has withdrawn the cash from the books

of M/s P.S. Patel which is verifiable from the cash book of the business

entity. Further Smt. Savita Pael is also assessed to tax and therefore, the

money received from Smt. Savita Patel is also reflected in the accounts.

In support of his contention, he has referred to the bank statement

maintained with State Bank of India of M/s P.S. Patel and pointed out the

assessee has withdrawn more than Rs. 2,50,000/- comprising of Rs.

ITA 313 & 314/JP/2018_ 4 Prateek Patel Vs ITO 75,000/- on 21/12/2009, Rs. 98,000/- on 23/12/2009, Rs. 40,000/- on

24/12/2009 and Rs. 45,000/- on 30/12/2009. The ld AR has then referred

to the ledger account of the assessee in the books of M/s P.S. Patel and

pointed out that all these entries are also reflected in the said ledger

account and hence when the assessee has produced the ledger account

as well as the bank account in support of his claim then the addition

made by the Assessing Officer and confirmed by the ld. CIT(A) are not

justified. The ld AR has also referred to the finding of the ld. CIT(A) for

the A.Y. 2007-08 and submitted that the payment of Rs. 2,51,000/- on

24/12/2007 was added by the Assessing Officer for the A.Y. 2008-09 was

deleted by the ld. CIT(A) by accepting the source as cash withdrawal of

M/s P.S. Patel whereas for the year under consideration the ld. CIT(A) has

declined to accept the source of cash payment as withdrawal from the

books of M/s P.S. Patel. Hence, the ld AR has submitted that the addition

made by the Assessing Officer may be deleted.

has filed its return of income in response to notice U/s 148 and return U/s

44AD of the Act then it is admitted case that the assessee was not

maintaining books of account, therefore, the source of withdrawal of

books of M/s P.S. Patel cannot be accepted. He has relied upon the orders

of the authorities below.

ITA 313 & 314/JP/2018_ 5 Prateek Patel Vs ITO 6. We have considered the rival submissions as well as relevant

material on record. Though, the assessee has finally offered the income

U/s 44AD in response to notice U/s 148 of the Act, however, the ledger

account of the assessee in the books of M/s P.S. Patel are very much

available on record and produced by the assessee. Further apart from the

ledger account of the assessee in the books of M/s P.S. Patel and the

assessee has also produced the bank account statement of M/s P.S. Patel

which corroborates the fact that the amounts as claimed by the assessee

withdrawn from the books of account of M/s P.S. Patel are duly matching

in the bank account of M/s P.S. Patel, therefore, once the assessee has

produced the relevant record alongwith the bank account then even

though, the income was offered U/s 44AD of the Act, the source of

payment of Rs. 2,50,000/- was duly explained by production of relevant

accounts and bank accounts of M/s P.S. Patel. We find that there are four

entries of withdrawal of cash in the ledger account of the assessee with

M/s P.S. Patel and these entries are also reflected in the bank account of

M/s P.S. Patel. Thus, it is clear that the withdrawal of cash is duly

supported and substantiated with documentary evidence which includes

the ledger account as well as bank statement. The claim of the assessee

once established by the supporting evidence then in absence of any

contrary finding that the evidence produced by the assessee is not giving

ITA 313 & 314/JP/2018_ 6 Prateek Patel Vs ITO the correct facts, the addition made by the Assessing Officer is not

justified. Even otherwise the amount shown as withdrawn from the bank

account which matches with the entries in the ledger account of the

assessee with M/s P.S. Patel has established this fact of withdrawal of

cash from the business entity. We further note that for the A.Y. 2008-09,

the ld CIT(A) has deleted an identical addition of Rs. 2,51,000/- as part

payment of purchase consideration of the land in question made on

24/12/2007. The ld. CIT(A) vide order dated 01/11/2007 has held as

under:

“3.1.2 Determination: (i) I have duly considered the submissions of the appellant, assessment order and the material placed on record. During the year under consideration, the appellant has made a cash payment of Rs. 2,51,000/- as part payment for purchase of land. During the assessment proceedings, the appellant has explained that the source of such investment was out of cash withdrawal from its proprietorship concern M/s PS Patel. However, the AO was not convinced with the reply of the appellant and has made an addition of Rs.2,51,000/- thereof by observing that the appellant was having sufficient balance in its bank account-and the appellant has tried to explain the source of such investment by referring to cash withdrawals made by it in the past six months as appearing in its cashbook. It is noted that no specific defect could be pointed out by the AO in the books of accounts of the appellant firm and these were not rejected and there is no evidence on record- which may justify the addition of Rs. 2,51,000/- made by the AO as unexplained investment. It is a choice of the appellant to make payment out of the cash available or through its bank account. The

ITA 313 & 314/JP/2018_ 7 Prateek Patel Vs ITO AO cannot dictate the appellant to make a payment in a particular manner and there is no bar at the relevant time in making cash payment for purchase of a capital -asset. Therefore, in view of the above discussion and looking to the totality of facts and circumstances of the case, it is held that the AO was not justified in making addition of Rs. 2,51,000/- to income of the appellant and hence the same is hereby deleted.”

When there is no change in the facts as recorded in the ledger account

then the denial of the explanation of the source merely on the basis that

the assessee has offered the income to tax U/s 44AD of the Act is not

sustainable. Accordingly, we delete the addition made by the Assessing

Officer.

grounds of appeal:

“1. The ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 2,50,000/- U/s 69 by holding that the cash paid for purchase of agricultural land is out of the undisclosed income of the assessee ignoring the fact that the assessee had withdrawn the said amount from his proprietory business, M/s PS Patel. He has further erred in not allowing the credit of Rs. 40,822/- being the difference of the amount declared in the original return and the return filed in response to notice U/s 148 against the addition confirmed by him. 2. The ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 1,65,749/- U/s 69B by holding that the source of amount paid for purchase of car is not explained. 3. The assessee craves to amend, alter and modify any of the grounds of appeal. 4. The appropriate cost be awarded to the assessee.”

ITA 313 & 314/JP/2018_ 8 Prateek Patel Vs ITO 8. Ground No.1 of the appeal is regarding the addition of Rs.

2,50,000/- U/s 69 of the Act as unexplained investment in the agricultural

land. We have heard the ld AR of the assessee as well as the ld DR and

considered the relevant material on record. The addition was made by the

Assessing Officer with respect to the part payment of Rs. 2,50,000/- on

02/01/2010. The assessee explained the source of Rs. 2,50,000/- as

withdrawal from the cash book of M/s P.S. Patel. The assessee has

submitted that during the year under consideration, the assessee has

withdrawn Rs. 2,58,000/- between 12/5/2008 to 12/7/2008. The said

withdrawal is also reflected in the bank statement of M/s P.S. Patel. We

have gone through the ledger account of the assessee in the books of M/s

P.S. Patel as well as the bank statement, which is placed at page Nos. 32

and 39 of the paper book. Further the assessee has also offered the

additional income of Rs. 1,51,993/- for the A.Y. 2010-11. Once the

amount of Rs. 2,58,000/- withdrawn from books of M/s P.S. Patel is

proved from the ledger account as well as bank account statement then

the disallowances made by the Assessing Officer and sustained by the ld.

CIT(A) is not justified. This issue is common as in the A.Y. 2009-10.

Accordingly, we in view of our finding in the case for A.Y. 2009-10 and

the withdrawal is supported by the evidence being the ledger account and

bank statement, we hold that the assessee has explained the source of

ITA 313 & 314/JP/2018_ 9 Prateek Patel Vs ITO payment of Rs. 2,50,000/-. Accordingly, the addition made by the

Assessing Officer is deleted.

1,65,749/- made U/s 69B of the Act in respect of the payment made for

purchase of car. The assessee has purchased a car for Rs. 8,65,749/- on

which insurance of Rs. 1,00,940/- was also paid, thus the total investment

for purchase of vehicle was made of Rs. 9,66,689/-. The assessee

explained the source of investment to the extent of Rs. 7.00 lacs as loan

taken from the bank and balance amount of Rs. 2,66,689/- as the

withdrawals from the balance amount remained with the assessee from

the withdrawals from M/s P.S. Patel and the amount received from Smt.

Savita Patel and further an additional income of Rs. 1,92,000/- for the

A.Y. 2009-10 and 2010-11. The Assessing Officer did not accept the said

explanation of the assessee and made the addition of Rs. 2,66,689/-.

insurance of Rs. 1,00,940/- is revenue expenditure covered under the

profit declared U/s 44AD of the Act and thus deleted the addition to that

extent and confirmed the remaining amount of Rs. 1,65,749/-.

assessee has explained the source of the said amount of Rs. 1,65,749/-

ITA 313 & 314/JP/2018_ 10 Prateek Patel Vs ITO paid on 22/3/2010 as out of past savings and current income of the

assessee. The ld AR has filed a cash flow statement to show that for the

A.Y. 2009-10 and 2010-11 the assessee was having a surplus cash of Rs.

1,12,653/- and Rs. 1,29,488/- total amount of Rs. 2,42,141/-, which is

sufficient as source of Rs. 1,65,749/-. Thus, it was pleaded that the

addition sustained by the ld. CIT(A) may be deleted.

is not maintaining the proper books of account then the cash available

with the assessee as per the cash flow statement cannot be accepted as a

source of investment. He has relied upon the order of the ld. CIT(A).

material on record. There is no dispute that the assessee has offered an

extra income of about Rs. 1,92,000/- for these two assessment years U/s

44AD of the Act, therefore, the said amount offered to tax will be

available for the additional investment to the extent of Rs. 1,65,749/-

towards the margin money paid by the assessee at the time of purchase

of car. The cash flow statement filed by the assessee is as under:

Particulars AY 2009-10 (in Rs.) AY 2010-11 (in Rs.) Net cash withdrawal from M/s P.S. Patel 87,598/- 1,62,700/- Repayment of amount given to Savita Patel 1,93,000/- 2,15,000/- 1,52,055/- 40,822/- Business income offered in 148 return Commission income offered in 148 return 42,366/-

ITA 313 & 314/JP/2018_ 11 Prateek Patel Vs ITO Total 4,32,653/- 4,60,888/- Less:- Household expenses of family 70,000/- (PB 12) 81,400/- (PB 27) Balance left 3,62,653/- 3,79,488/- Less:- Paid to Rekha Sharma 2,50,000/- 2,50,000/- Cash available 1,12,653/- 1,29,488/- Total cash available Rs.2,42,141/- Less:- Investment in car on 22.03.2010 Rs. 1,65,749/- Balance cash left Rs.76,392/- All the details given in the cash flow statement are also available in the

respective accounts as well as the bank account filed by the assessee.

Therefore, except the extra income offered by the assessee during these

two assessment years all other amounts of cash are taken from the

respective accounts. Accordingly, when the assessee has explained the

source of the payment of margin money for purchase of car then the said

addition confirmed by the ld. CIT(A) is not sustainable and is deleted.

Order pronounced in the open court on 12/10/2018.

Sd/- Sd/- ¼foØe flag ;kno½ ¼fot; iky jko½ (VIKRAM SINGH YADAV) (VIJAY PAL RAO) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

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