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Facts
The assessee, a taxi operator, filed his ITR declaring Rs.1,30,000/-. Subsequently, AIR information revealed cash deposits of Rs. 13,01,500/- in his savings bank account. The assessee contended these funds were deposited by a visa consultant, Shri Siraj Lakdawala, into a joint account solely to demonstrate financial capacity for his son's UK student visa, and were later withdrawn by the consultant. The AO and CIT(A) treated the deposits as unexplained income under Section 69A, relying on the consultant's statement denying ownership of the funds.
Held
The ITAT found merit in the assessee's explanation, supported by documentary evidence such as pay-in slips with the consultant's PAN, a joint account opened and closed for the specific visa purpose, and withdrawals by the consultant. The tribunal held that the consultant's denial of ownership on oath could not override objective contemporaneous documentary evidence. Citing a similar case, the ITAT concluded that the addition under Section 69A was unjustified.
Key Issues
1. Validity of reassessment proceedings under Section 147/148. 2. Justification of addition for unexplained cash deposits under Section 69A of the Income Tax Act.
Sections Cited
143(3), 147, 148, 131, 69A, 69, 271(1)(c)
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI MAKARAND V.MAHADEOKAR
This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals), Addl./JCIT (A)-4, Mumbai [hereinafter referred to as “the CIT(A)”], dated 26.06.2025, arising out of the order passed by the Assessing Officer, Income-tax Officer, Ward-1(3)(1), Vadodara [hereinafter referred to as “the AO”], under section 143(3) read with section 147 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] dated 01.12.2017, for the assessment year 2010-11.
2.1 The brief background of the case is that the assessee, an individual engaged in the business of operating a single taxi, filed his return of income for the assessment year under consideration on 29.07.2010 declaring total income of Rs.1,30,000/-. The return was processed. Subsequently, based on the Annual Information Return (AIR) information, it came to the notice of the Department that cash aggregating to Rs. 13,01,500/- had been deposited in the savings bank account of the assessee during the relevant previous year. The AO, being of the prima facie view that income chargeable to tax had escaped assessment, recorded reasons and issued notice under section 148 of the Act on 14.03.2017.
2.2 In response, the assessee contended that the said deposits were not his income but represented an arrangement with one Shri Siraj Lakdawala, a Visa Consultant associated with M/s. Vibrant International, who had deposited funds in a joint bank account opened in the names of the assessee, his family members and the said consultant, to demonstrate sufficient balance for the purpose of obtaining student visa and dependent visa for the assessee’s son and daughter-in-law for studies in the United Kingdom. It was explained that the amount of Rs. 13,01,000/- was deposited by the consultant himself, subsequently withdrawn, and also that interest of Rs.1,95,000/- was allegedly paid by the assessee for the short-term use of these funds.
2.3 The AO, however, did not accept the explanation. For verification, summons under section 131 of the Act were issued to Shri Siraj Lakdawala, who appeared, and his statement was recorded on oath on 25.07.2017. In the said statement, Shri Lakdawala 3 confirmed that he was engaged in arranging student visas and immigration formalities but categorically denied having advanced any loan or cash to the assessee. On the contrary, he affirmed that the cash deposits aggregating to Rs. 13,01,000/- were brought in by the assessee and his wife, which were deposited into the said joint bank account in his presence. In cross-examination conducted at the request of the assessee, Shri Lakdawala reiterated his stand and maintained that the deposits belonged to the assessee. The AO noted that the assessee failed to produce any corroborative evidence such as agreements, confirmations, or repayment proof to establish that the funds belonged to the consultant.
2.4 The AO, therefore, concluded that the cash deposits of Rs.13,01,000/- represented unexplained money of the assessee and treated the same as income under section 69A of the Act. The total income of the assessee was accordingly assessed at Rs.14,31,000/- as against the returned income of Rs.1,30,000/-. The AO also initiated penalty proceedings under section 271(1)(c) for concealment of income.
2.5 The assessee carried the matter in appeal before the CIT(A). It was contended before the CIT(A) that the reopening itself was invalid, as there was no tangible material available with the AO to form a belief that income had escaped assessment, and that mere AIR information could not constitute valid “reason to believe”. It was further submitted that the addition of Rs.13,01,000/- was wholly unjustified, inasmuch as documentary evidence in the form of bank account statements, pay-in slips, and PAN details of the consultant had been furnished to demonstrate that the deposits were made by the consultant himself for visa documentation purposes. The assessee also contended that 2.6 The CIT(A) was not impressed with the submissions of the assessee. He noted that the reopening was based on specific and credible AIR information of large cash deposits and that at the stage of initiation of proceedings under section 147, what is required is “reason to believe” and not conclusive proof, placing reliance on the judgment of the Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd. v. ITO (236 ITR 34). He further observed that the assessee had failed to substantiate the claim of loan/temporary arrangement with any cogent documentary evidence. On the contrary, the statement of Shri Lakdawala recorded on oath clearly denied having advanced any funds to the assessee and attributed the deposits to the assessee himself. The CIT(A) held that mere assertion or self-serving statements could not displace the statutory presumption under section 69A in the absence of corroboration. He also placed reliance on Smt. Amiya Bala Paul v. CIT (262 ITR 407) (SC) and a recent decision of ITAT Rajkot Bench in Kantilal Lallubhai Shah v. ITO [2024] 151 taxmann.com 230, wherein similar addition of cash deposits was upheld. Consequently, the CIT(A) confirmed the addition of Rs. 13,01,000/- made by the AO and dismissed the appeal.
2.7 Aggrieved by the order of CIT(A), the assessee is in further appeal before us raising following grounds of appeal:
1. That the learned Assessing Officer erred in law and on facts in initiating proceedings under section 148 and completing the assessment under section 147 of the Income-tax Act, 1961, and the learned Commissioner of Income-tax (Appeals) further erred in upholding such reassessment. The appellant submits that there was no tangible material or valid reason to believe that income had escaped assessment and that the conditions precedent in my case for invoking jurisdiction under section 147 were not satisfied. The reassessment is therefore bad in law and liable to be quashed.
The learned Assessing Officer erred in law and on facts in making an addition of Rs.13,01,000/- as income from undisclosed sources under section 69 of the Income Tax Act, 1961, being cash deposits in the bank account, and the learned Commissioner of Income-tax (Appeals) erred in confirming the same. The appellant submits that the addition is unjustified, arbitrary, and without proper appreciation of the facts and evidence on record. The addition may kindly be deleted.
3. Your appellant craves leave to add to, alter, amend or delete any of the grounds of appeal.
During the course of hearing, the learned Authorised Representative (AR) reiterated the detailed submissions filed in writing. It was submitted that the reopening of assessment under section 147 is without jurisdiction, as there was no tangible material to form a valid “reason to believe” that income chargeable to tax had escaped assessment. The sole basis of reopening was the AIR information relating to cash deposits, which by itself could not constitute sufficient reason. It was urged that “reason to suspect” cannot be equated with “reason to believe”.
3.1 On the merits, it was submitted that the addition of Rs.13,01,000/- under section 69 is wholly unsustainable. The learned AR contended that the assessee had not made any investment. The deposits were made and withdrawn by the travel agent, Shri Siraj Lakdawala, for the limited purpose of visa documentation. To substantiate this, the assessee furnished documentary trail including pay-in slips signed by the travel agent, copy of his PAN card, and bank records confirming the depositor’s signature. Copies of account opening forms, withdrawal vouchers, and related correspondence were also placed on record. It was emphasised that the account was not the assessee’s regular account but was opened jointly with the travel agent solely for temporary visa 6 requirements. It was submitted that the entire sequence of transactions namely, deposit of cash by the travel agent in November– December 2009, withdrawal in May 2010, and closure of account in June 2010, clearly established that the funds never belonged to the assessee. The denial of ownership by the travel agent when examined, it was argued, was not sufficient to dislodge the objective documentary evidences showing his involvement.
3.2 The learned Authorised Representative further relied upon the judgment of the Hon’ble Supreme Court in CIT v. P.K. Noorjahan (237 ITR 570, SC), for the proposition that rejection of explanation does not automatically justify addition under section 69/69A, as the provision is enabling and discretionary. Particular reliance was placed on the order of the Co-ordinate Bench in Ashwani Kumar v. ITO (ITA No. 81/Asr/2018, order dated 24.12.2021). In that case also, the assessee had opened and operated a bank account under the control of a travel agent for the purpose of obtaining a visa, wherein substantial cash deposits were made and withdrawn by the agent. The Assessing Officer made addition of unexplained cash deposits, and the CIT(A) upheld the same by rejecting the assessee’s affidavit and explanation. The Co-ordinate Bench, however, observed that such matters must be considered in the totality of facts, including the financial capacity of the assessee and the prevalent practices followed in connection with visa applications. It was held that the explanation supported by circumstantial evidence cannot be brushed aside merely on the ground that the travel agent did not admit ownership.
On the other hand, the learned Departmental Representative (DR) placed strong reliance on the orders of the lower authorities.
7 5. We have heard the rival submissions and perused the material placed on record. The facts are largely undisputed. The assessee, engaged in the business of running a taxi, filed his return of income declaring Rs.1,30,000/-. The reassessment was initiated on the basis of AIR information showing cash deposits of Rs. 13,01,000/- in a savings bank account. The Assessing Officer treated the said deposits as unexplained income under section 69A, and the CIT(A) confirmed the same.
5.1 At the outset, we note that though a ground relating to validity of reopening was raised in the appeal, during the course of hearing the learned Authorised Representative did not advance any specific arguments on this issue. The learned CIT(A) has, in his appellate order, dealt with the aspect of reopening in detail. In the absence of any specific submissions before us challenging the findings of the first appellate authority on this issue, we are not adjudicating upon Ground No. 1 relating to validity of reassessment.
5.2 Coming to the merits of the addition, the assessee’s consistent case has been that the impugned deposits did not represent his income but were arranged and deposited by a travel agent, Shri Siraj Lakdawala, for the limited purpose of demonstrating funds for visa processing of the assessee’s son and daughter-in-law. In support of this explanation, the assessee has placed on record cogent corroborative material, which includes:
Copies of pay-in slips evidencing the cash deposits, to which the i. PAN copy of Shri Siraj Lakdawala was attached.
Bank statement showing that the account was a joint account, ii. opened on 03.11.2009, in which the assessee’s wife was the first
The fact that immediately after the issuance of the visa, an iii. amount of Rs. 13,07,341/- was withdrawn from the said account, through a cheque signed jointly by the assessee’s wife and Shri Siraj Lakdawala, thereby showing that the operation of the account and control over withdrawals was with the travel agent.
Copy of the account closure letter dated 18.06.2010, also signed iv. by Shri Siraj Lakdawala, evidencing that the account itself was opened for the limited purpose of visa processing and was closed once the objective was achieved.
5.3 The above evidences clearly establish the nexus of the travel agent with the impugned deposits and withdrawals and significantly dilute the Revenue’s case that the cash belonged to the assessee. It is not in dispute that the assessee had declared a small income of Rs.1,30,000/- only and had no demonstrated financial capacity to deposit Rs.13,01,000/-.
5.4 We find merit in the submission of the assessee that the denial by the travel agent, when examined on oath, cannot override the objective evidences emanating from contemporaneous bank documents which bear his signatures and PAN details.
5.5 In this context, reliance placed by the assessee on the decision of the Co-ordinate Bench in Ashwani Kumar v. ITO (ITA No. 81/Asr/2018, order dated 24.12.2021) is apposite. In that case also, substantial cash deposits were made in the assessee’s bank account under the control of a travel agent for visa purposes. The Co-ordinate Bench held that such explanation, though unusual, cannot be 9 brushed aside merely because the travel agent does not come forward to admit ownership. The Co-ordinate Bench emphasised that the totality of facts, the financial capacity of the assessee, and the prevailing practices in visa matters must be considered, and that the assessee’s explanation supported by circumstantial evidence should not be summarily rejected.
5.6 Applying the ratio of the aforesaid decision, the learned Authorised Representative submitted that the facts of the present case are on a stronger footing. Unlike in Ashwani Kumar where only an affidavit was filed, here the assessee has produced a complete documentary trail from the bank showing the depositor’s signature, PAN card of the travel agent, and transaction vouchers evidencing his direct role in the deposits and withdrawals. The Revenue has not brought any contrary material to show that the impugned cash deposits represented the assessee’s own unaccounted money. In such circumstances, the addition made by the AO and sustained by the CIT(A) cannot be upheld.
5.7 Accordingly, we delete the addition of Rs.13,01,000/- made under section 69A of the Act. The assessee thus succeeds on merits. 6. In the result, Ground No. 1 relating to reopening is not adjudicated, and Ground No. 2 is allowed. The appeal of the assessee is accordingly allowed on merits.
Order pronounced in the Court on 29th September, 2025 at Ahmedabad.