DY. COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION), JAIPUR, HIGHCOURT CIRCLE, JAIPUR vs. LATE VANDANA AGARWAL THROUGH LEGAL HEIR SH. NISHIT AGARWAL, JAIPUR

(ii) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in allowing the appeal of the assessee without considering the fact that assessee found it safe to keep huge cash at home and lose the opportunity of earning interest income for around eight months?

(iii) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in allowing the appeal of the assessee by considering the cash withdrawal of Rs. 3.48 crores for proposed engagement/marriage ceremony of her daughter which could not be materialized without considering the fact that assessee failed to produce the copy of passport regarding visit of her daughter to India for such function?

(iv) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in allowing the appeal of the assessee by considering the cash withdrawal of Rs. 3.48 crores for proposed engagement/marriage ceremony of her daughter without considering the fact that assessee failed to produce the evidence of bookings and advance payment (including cash advance) made regarding necessary arrangements for engagement ceremony?

(v) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in allowing the appeal of the DCIT vs. Sh. Nishit Agarwal assessee by considering the cash withdrawal of Rs. 3.48 crores for proposed engagement/marriage ceremony of her daughter without considering the fact that assessee failed to prove the nexus of cash withdrawal with purpose of same for engagement ceremony and cash deposition of same withdrawn amount in NRO bank account and thus failed to explain the source of cash deposition?

(vi) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in allowing the appeal of the assessee without considering the fact that despite residing in India for the period 20.07.2016 to 04.08.2016 and 17.11.2016 to 26.11.2016, the assessee failed to deposit such huge cash in the bank?

(vii) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in allowing the appeal of the assessee without considering the fact that assessee withdrew the huge cash for engagement ceremony of her daughter but used the same for investment purposes?

(viii) The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appellant proceedings.”

3. Succinctly, the fact as culled out from the records is that the assessee filed her return of income in ITR-1 on 11/12/2017 declaring total income of Rs. 3,99,729/- through e-filing vide Acknowledgement No. 330467190111217. Thereafter the case of the assessee was selected for "Limited Scrutiny" under CASS (Computer Aided Scrutiny Selection) on the issue of "Cash deposit during demonetization period, cash deposit during the year". Accordingly, notice u/s 143(2) of the Income Tax Act, 1961 was issued on 08/08/2018 vide ITBA Notice No.ITBA/AST/S/143(2)/2018- 19/1010840310(1) which was duly served upon the assessee through 27/08/2018 was received asking for the details required for completion of the assessment. Notice U/s 142(1) of the Act along with questionnaire was issued on 28/08/2019 vide ITBA Notice No.ITBA/AST/F/142(1)/2019- 20/1017636677(1) fixing the case for 03/09/2019. On 24/09/2019 a reply was filed in which the A/R submitted that the assessee has passed away on 06/06/2019 in Germany. Thereafter the assessment proceedings were continued in the name of Shri Neel Kamal (Husband and L/H of Smt.

Vandana Agarwal, the assessee). During the year under consideration, the assessee was residing in Germany and derived income from other sources.

3.1 During the course of assessment proceedings, on perusal of bank statements of IDBI Bank which is placed on record, it has been noticed that during the demonetization period, the assessee has deposited cash of Rs. 3,41,64,000/- in bank account maintained with IDBI Bank (A/c No.0013104000416351). The cash amounting to Rs. 1,42,26,000/- was deposited on 28/12/2016, Rs. 99,79,600/- was deposited on 29/12/2016 and Rs. 99,59,000/- was deposited on 30/12/2016 by the assessee. As certified by the Authorized Signatory of IDBI vide letter No.CIN- L65190MH2004GO1148838 dated 23-9-2019 that this NRO Account was opened on 26-12-2016. Further it was gathered that there was zero cash that the entire cash deposit was out of cash withdrawals. After considering the reply of the assessee ld. AO raised the following queries to the assessee;

1. "Please explain where the cash withdrawn was kept for 8 months when you left for Germany? Please give detail along-with supporting evidences.

2. Please also explain why there was need to pay in cash (in crores) for any kind of arrangement for Germany when the payments can be easily made through phone/online etc.

3. Please provide the computation of income.

4. Please provide the source of income in India and outside India."

3.2 The assessee did not respond to the above notice. Therefore, a show cause notice dated 26.11.2019 was issued to the assessee and in response a reply was filed dated 02.12.2019 wherein the assessee contended that the deposit of cash was out of withdrawal made. It was also contended by the assessee that the issue was raised by the investigation wing and there also the assessee contended that the deposit of cash was out of earlier withdrawal made by the assessee. The assessee in support of claim of source file of foreign income filed ITR, Passport and bank statement wherein the withdrawal was made. It was also made clear the explained her source of income as well as of her Husband.

3.3 Considering the reply of the assessee ld. AO raised further query asking the assessee to give details of the property transaction done, details of payment made to Kailash Hotel and source of cash deposit vide letter dated 12.12.2019.

3.4 The assessee filed reply vide letter dated 16.12.2019 ld. AO considered the reply but was not found acceptable on the following reasons:

4. In response to the query regarding the mode of cash payments for the engagement ceremony the assessee has submitted that most expenses on marriages had to be incurred in cash as the petty vendors insisted on cash payments. This contention of assessee is also not acceptable as the assessee has not provided any documentary proof in support of his claim. No details of payments made have been provided. Generally for the preparation of ceremonial functions certain advance payments are done. But the assessee has not submitted any such evidence. Moreover, no details of passport have been provided by the assessee regarding the visit of her daughter to India for some kind of engagement ceremony in April 2016. In the absence of any sufficient explanation, it is clear that the assessee has no cogent reasons for depositing the cash in the above bank accounts. Further, the assessee has not furnished bills/ vouchers or any documentary evidence in respect of his version regarding any engagement/wedding ceremony. It is unbelievable that a prudent man can keep such huge cash at his residence which also strengthens from the entries reflected in the bank accounts that the assesseejust after depositing cash made FDRs out of it.

6. Further on perusal of the details of the assessee's arrival in India and departure from India, it has been observed that the assessee stayed in India during the period from 20/07/2016 to 04/08/2016 and also during the period from 17/11/2016 to 26/11/2016 1.e. for around 25 days. It is not understandable that why the assessee did not deposit the cash in bank accounts during these days.

3.5 Since, the assessee has not substantiated her claim that entire cash deposits are out of withdrawals from HDFC Bank Account, it can be concluded that in the absence of any proof, cash deposits represent unexplained money of the assessee within the meaning of section 69A of the Act. There is a possibility that the amount of cash withdrawn from HDFC Bank was utilized by her and after the declaration of demonetization the assessee is taking benefit of withdrawal entry in her bank account for depositing unexplained cash. In view of the above, it is well established that Rs.3,41,64,000/-is remained as unexplained money. From the above it is crystal clear that the assessee has received Rs. 3,41,64,000/- from her unexplained/undisclosed sources and thereafter deposited in the bank account maintained with IDBI. Accordingly, the cash deposits in her IDBI bank account amounting to Rs. 3,41,64,000/- was considered as unexplained money as per provision of section 69A of the Act.

4. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:

“6. I have carefully considered the facts of the case, assessment order passed u/s 143(3) of the IT Act, 1961, paper-book, written submissions, and arguments of the AR.

8. In Ground no. 2 the appellant has challenged the assessment order as according to him the appellant had duly informed about the demise of the assessee Ms. Vandana Agarwal and Shri Neel Kamal Agarwal as her legal heir but the AO did not acknowledge this fact and passed the order in the name of Ms. Vandana Agarwal. I have perused the assessment order and the written submissions of the appellant in this regard. The appellant in his contention has stated that during the course of assessment proceedings the appellant's counsel informed the AO about the death of the appellant vide letter dated 24.09.2018/19 but inspite of the above intimation, subsequently, the AO issued notices in the name of the appellant.

DCIT vs. Sh. Nishit Agarwal 11. Further, the appellant in his written submissions has stated that, the husband of the Late appellant had intimated the Assessing Officer of the death of the appellant vide letter dated 24.09.2018/19 placed on page 1 of the PB. Despite the due intimation notices and other communication was made by the AO in the name of Vandana Agarwal, LH of Vandana Agarwal OR Vandana Agrawal Shri Neel Kamla L/H of Vandana Agarwal and the assessment came to be completed in the name of Vandana Agarwal as can be seen from the perusal of the assessment order. Therefore, all thenotices have been issued in the name of Vandana Agarwal and only for communication the name "Neel Kamal, L/H of Vandana Agarwal has been used. This fact is further fortified from the perusal of pg. 1 of the assessment order. The name of the assessee has been mentioned as "Vandana Agarwal" and it is only for the purpose of communicating the aforesaid order that in the address column Shri Neel Kamal LH of Vandana Agarwal has been mentioned. The appellant has mentioned that the notices and the assessment order were issued and passed respectively in the name of Vandana Agarwal and for communication name mentioned is"Neel Kamal, L/H of Vandana Agarwal", it is important to note here that the name of Shri Neel Kamal Agarwal has been mentioned as Legal Heir not for the purpose of communicating the order but it has been mentioned for making it clear that the order is being passed in the name of the Legal Heir of Vandana Agarwal that is Shri Neel Kamal Agarwal. When the AO has mentioned the name of Shri Neel Kamal Agarwal as L/H of Ms. Vandana Agarwal, to argue that the order has been passed in the name of a deceased person is without any merit. It appears that the appellant is not able to appreciate that the mention of name of the husband of the assessee as L/H makes it significantly clear that the assessment has been passed and notices have issued in the name of Neel Kamal, L/H of Vandana Agarwal. This conclusion is further strengthened on perusal of the assessment order. The para 2 of the assessment order makes it clear that the AO was well aware of the fact of the demise of the assessee Ms. Vandana Agarwal. The relevant portion of the assessment order, para 2, Is reproduced as under:

"In response to the said notice, online response on 27.08.2018 was received asking for the details required for completion of the assessment. Notice U/s 142(1) of the Act along with questionnaire was issued on 28.08.2019 fixing the case for 03.09.2019. In response to the said notice, on 03.09.2019 Sh. Manish Tatiwala, CA & the A/R of the assessee on ITBA requested for one week time to submit reply. On 24.09.2019 a reply was filed in which the A/R submitted that the assessee has passed away on 06.06.2019 in Germany. Thereafter the assessment proceedings were continued in the name of Sh. Neel Kamal (Husband and L/H of Smt. Vandana Agarwal, the assessee)"

11.1 It is clear from the details appearing on the first page of the assessment order that the assessment has been made in the name of the representative of Ms. Vandana Agarwal, that is, Shri Neel Kamal Agarwal as legal Heir of Ms. Vandana Agarwal. Therefore, the appellant has failed to appreciate that the AO has passed the assessment order in the name of the representative of Ms. Vandana Agarwal. Further,as has been stated above, it has been clearly mentioned in para 2 of the assessment order that after the intimation by the AR of the appellant about the death of Ms. Vandana Agarwal, the assessment proceedings were continued in the name of Sh. Neel Kamal (Husband and L/H of Smt. Vandana Agarwal, the assessee). Therefore, it is beyond doubt that the AO was having knowledge of the death of the appellant and hence has issued the notices and subsequently passed the order in the name of the representative assessee Shri Neel Kamal Agarwal. Based on the above facts, the contention of the appellant is devoid of merit, hence, ground no. 2 raised by the appellant is dismissed.

13.1. The appellant in his submissions during the course of assessment proceedings has stated that Sh. Neelkamal Agrawal and his wife Vandana Agrawal are engaged in jewellery trade, and are persons of Indian origin, and have acquired German nationality as they are settled in Germany for the last 30 years. Their only daughter, Nikita, about 30 years of age, is a senior architect in a reputed firm of UK. The appellant has submitted that for the purpose offinalizing a proposal of marriage for their daughter with a reputed Indian family in Nepal and forperforming the engagement ceremony both the parents came to India in April, 2016. The appellant has further stated that he belonged to the Vaish Community where engagement/marriage ceremonies are performed with rich customs, practices and tradition and involves pomp and show. The appellant has further stated that for this purpose, they withdrew cash from their respective NRE/NRO accounts in HDFC bank. Sh. Neelkamal withdrew Rs. 94,38,500/- from his NRO A/c Number 15851010000077 in C-Scheme, Jaipur branch of HDFC bank. His wife Vandana Agarwal, the assessee, also withdrew Rs. 2,20,90,000/- on 22th April 2016, from her NRO A/c Number 15851510000021 in HDFC Bank, C- Scheme, Jaipur. She further withdrew Rs.1,23,50,000/- from her NRE Account Number 15851560000063 in the same bank. Thus, both of them withdrew a total of Rs. 4,38,78,500/- from their respective NRO/NRE accounts. The appellant has stated that the deposits in the NRO/NRE accounts have been sourced from their earnings from the business of Jewelry trade in Germany.

13.2. The appellant has further stated that subsequently, the negotiations between the appellant's family and the bride groom's family broke down and as a result the Rokka/Engagement could not take place and the cash which was DCIT vs. Sh. Nishit Agarwal withdrawn from the bank could not be utilized for the said purpose. The appellant has stated that as the assessee and her husband were hopeful for finalization of some otherproposal in near future, they did not deposit the said amount in their respective bank accounts. Subsequently, when demonetization was announced by the Government in November, 2016, the assessee decided to return to India, in November, 2016, to deposit the above-mentioned cash but could not do so due to initial rush in the banks to deposit the old currency notes. It has been further stated that the assessee and her husband once again came to India on 21st December 2016 to deposit the cash which they withdrew in April 2016 but could not deposit the same in their bank account in the HDFC bank, C-Scheme, Jaipur as the bank manager was reluctant for deposit of the high value cash owing to the enormous work of depositing of old currency notes due to demonetization.

13.3 It has further been submitted thatas the assessee and her husband had to return to Germany for taking care of their business, they opened a new account in IDBI bank, C-Scheme, Jaipur. Sh. Neelkamal Agarwal deposited his earlier withdrawal of old currency of Rs. 94,38,500/- on the 27th December 2016 in his IDBI Bank account no. 0013104000416368. The earlier withdrawn old currency notes of Vandana Agarwal were deposited in her IDBI bank account number 0013104000416351 as Rs. 1,42,26,000/- on 28.12.2016, Rs. 99,79,600/- on 29.12.2016 and Rs. 99,59,000/- on 30.12.2016. Her deposits were staggered on three days, on account of reservation of the bank in depositing bulk cash of the assessee in one go. During the course of assessment proceedings, the appellant had enclosed complete copy of their passports showing their arrival at IGIAirport, New Delhi on 20th April, 2016 and departure from New Delhi on 26 th April 2016 and their arrival in New Delhi later on 21th December, 2016 and departure from New Delhi on 4th January, 2017. The appellant has further stated that this amount withdrawn from NRE/ NRO account was kept at their Jaipur residence till it was deposited after demonetization in IDBI Bank in December, 2016 when the appellant returned to India. It has been further stated that the time for depositing old notes in respect of NRIs was till 31.03.2017.

13.4. The AO in the assessment order has raised doubts on the contention of the appellant that the cash withdrawal of Rs. 2,20,90,000/- and Rs. 1,27,40,000/- made on 22.04.2016 from HDFC Bank (NRO) account and HDFC Bank (NRE) account respectively was kept in the residential portion in the occupation of the assessee in the family house at Gangwal Park, Jaipur. The AO has stated that as per normal human behavior no prudent person will keep huge cash amounting to Rs. 3.4 Cr. at his residence on account of secunty issues. The AO has further stated that it is also not clear as to why such huge cash was not re deposited in DCIT vs. Sh. Nishit Agarwal the bank account as such cash would fetch a good amount of interest for the appellant. Secondly, the AO has stated that the appellant has not clarified that when she had an existing NRO account than why a new account was opened for depositing the cash.

13.5. Thirdly, the AO has also doubted the explanation given by the appellant that a portion of the cash which was deposited in the IDBI Bank account, December, 2016 was advanced to a company owned by brother-in-law of Ms. Vandana Agarwal. The AO has stated that the reply of the appellant is very vague as no purpose of giving loan has been provided by the appellant. Fourthly, the AO has stated that with respect to payments for engagement ceremony by the appellant, it has been stated by the appellant that expenses in a marriage or an engagement are incurred in the form of cash to the vendors. This contention has not been accepted by the AO as according to her the major payments are done through banks and the appellant has not submitted any proof/evidence with respect to the said payments in this regard.

13.6. Fifthly, the AO has stated that as per the explanation given by the appellant, the cash of Rs. 3.4 Cr. was withdrawn for use in the engagement ceremony of appellant's daughter. In this regard the appellant has not provided the evidences for example copy of passport of her daughter showing her visit to India for the purpose of her engagement in April 2016. The AO has further stated that the appellant has not furnished bills/vouchers or any documentary evidence in respect of his version regarding any engagement/wedding ceremony. Sixthly, the AO has contended that on perusal of the details of the assessee's arrival in India and departure from India, it has been observed that the assessee stayed in India during the period from 20/07/2016 to 04/08/2016 and also during the period from 17/11/2016 to 26/11/2016 i.e. for around 25 days. The AO has further opined that it is not understandable that why the assessee did not deposit the cash in bank accounts during these days.

13.7. Lastly, the AO has concluded by stating that as the assessee has not substantiated her claim that entire cash deposits are out of withdrawals from HDFC Bank Account, it can be concluded that in the absence of any proof, cash deposits represent unexplained money of the assessee within the meaning of section 69A of the Act. The AO has further opined that there is a possibility that the amount of cash withdrawn from HDFC Bank was ütilized by her and after the declaration of demonetization the assessee is taking benefit of withdrawal entry in her bank account for depositing unexplained cash.

DCIT vs. Sh. Nishit Agarwal 14. I have carefully examined the assessment order and the written submissions filed by the appellant. During the course of appellate proceedings, the appellant has stated that the cash amounting to Rs. 3.41 crores deposited in the bank account of Ms. Vandana Agarwal, in December, 2016, that is, during the demonetization period was withdrawn by her in April 2016 for the purpose of expenses related to the proposed Rokka/engagement ceremony of her daughter. In support of her claim the appellant has submitted a letter written by her to HDFC bank on 22.04.2016 stating the reason of the withdrawal of the said money. The relevant portion of the self-declaration given to the bank manager isas under. "I am an NRI and live in Germany and I am having a SB NRE A/c 15851560000063 in your branch and the money which is lying in my account is earned by me with my efforts and sources. Now I have fixed the marriage of my daughter that's why I need the money, so you are requested to please arrange the cash withdrawal of amount of Rs. 1,23,50,000/- to me from my SB NRE Account. Another withdrawal of Rs. 2,20,90,000/- was made vide self cheque number 084428 dated 22.04.2016 from her SB NRO A/c number 15851560000021. In support of her contention the appellant has filed copy of a similar letter written to the HDFC Bank along with copy of the self cheque.

14.1 During the course of appellate proceeding, appellant has produced complete detail with respect to the source of the amount withdrawn, in April, 2016, from NRE Account No. 15851560000063 and NRO Account No. 15851510000021maintained with HDFC Bank Ltd Kamal Kunj Branch, Jaipur stating that the said amount was already lying in the appellant's accounts. The opening balance in NRE account no. 15851560000063 as on 1.4.2016 of Rs.44,15,470.24 and amount of Rs.79,48,858.99 was credited from FD redemption on 18.04.2016 and an amount of Rs.1,23,50,000/-was withdrawn on 22.4.2016 out of total balance in this account of Rs. 1,23,64,329.23, Further, the opening balance in NRO Account No 15851510000021 as on 01.04.2016 was Rs. 1,81,75,143.74 and an amount of Rs.38,58,976.75 and Rs. 83,427.22 were credited from FD redemption on 18.4.2016 and an amount of Rs. 2,20,90,000/- was withdrawn on 22.04.2016 out of total balance of Rs. 2,21,17,551.31 available in the NRO Account No 15851510000021.

14.2 The appellant in his submission has stated that all the abovementionedFDs have been made before 1.4.2012, in support of the same the appellant has submitted copy of Form No 26AS for AY 2011-12, AY 2012-13, AY 2013-14, AY 2014-15, AY 2015-16 and AY 2016-17 along with copy of income tax return for AY 2011-12, AY 2012-13, AY 2013-14, AY 2015-16 and AY 2016-17. Appellant has also furnished the copy of the respective bank statements for the relevant DCIT vs. Sh. Nishit Agarwal period. The amounts appearing in credit side of the bank statements are from Interest received from bank on FDR or on account of savings bank interest or maturity of FDR's and from that new FDR has been made, however in NRO Account No 15851510000021 there are three credits totaling Rs. 1,48,50,000/- which was received from Sale of Property situated in Jaipur during FY 2015-16 (sold for Rs 1,50,00,000/-less TDS Rs 1,50,000/-) and the same has been disclosed in return of Income filled for AY 2016-17 on 23.7.2016, the copy of computation of Income and copy of ITR-V has been enclosed by the appellant.

14.3 The appellant has also stated that as Sh. Neelkamal Agarwal, spouse of the appellant is engaged in the business of Jewelry in Germany, the FDs were made by the appellant before 01.04.2012 from the rental income earned from assets in Germany and the money received from her husband. Further, during the course appellate proceedings the appellant has submitted copies of two self-declarations which were submitted by Ms. Vandana Agarwal on 21.12.2016, at the time of opening of new account in the IDBI bank, for deposition of Rs. 3.41 crore, in December, 2016, during the demonetization period. In the said declaration the appellant has stated that / solemnlydeclare that I have withdrawn from my NRE Account no. 15851560000063 on date 22.04.2016 Rs. 1,23,50,000 for the purpose of my daughter's marriage which was fixed in Delhi in the month of June but unfortunately it was cancelled, after that I rushed for Germany and I kept the said amount in my locker. Now I visited to Jaipur in the month of November and I tried but at that time bank was very busy and they required lot of documents, for all these things one week was passed and I couldn't deposit the amount in the bank and now I arrived in India on 21.12.2016 and I want to deposit the same in the bank. Similarly, the appellant has also furnished another self-declaration, of similar language, issued to IDBI, Bank with respect to Rs.2,20,90,000/- withdrawn from her NRO Account No. 15851510000021, for the deposit of the said cash in the new IDBI bank account. The appellant has further submitted that his daughter finally got married on 09th May,2021 and has submitted a copy of the marriage certificate issued by ADM-IV Jaipur on 13.07.2021. 14.4. In reply to the contentions raised by the AO in his assessment order, which have been discussed in detail above in para 13.4 to para 13.7, the appellanthas presented very specific and to the point arguments duly strengthened by supporting documents as discussed in para 14 to para 14.3above and has also strongly relied on relevant judicial pronouncements which are discussed below. The appellant in his reply has stated that the contention of the AO that 'no prudent person will keep such huge cash at his residence on account of security issues and on account of loss of interest income', as per the appellant this is a presumption of the AO and the same is not supported by any evidence or other DCIT vs. Sh. Nishit Agarwal material on record. It has been stated that, how to manage the financial affairs/where should the money be kept is the decision of the assessee and the AO cannot comment on the decisions made by the appellant without bringing any material on record by which it can be established beyond doubt that the contentions of the appellant are untrue or false. The appellant has further submitted that the AO has not given any tangible reasons as to why the explanation given by the assessee is not acceptable.

14.5. In support of his argument the appellant has relied upon various judicial pronouncements to put across his contention which state that it is the personal decision of the appellant as to where he should keep the cash withdrawn, which do not affect taxability. The appellant has relied upon two case laws, in the case ofCIT V/s Walchand & Co. (P) Ltd. (196765 ITR 381 (SC) the court has said that In applying the test of commercial expediency for determining whether the expenditure was wholly and exclusively laid out for the purpose of the business, reasonableness of the expenditure has to be adjudged from the point of view of the businessman and not of the revenue. In the case of CIT v Rockman Cycle Industries Pvt. Ltd. (2011) 331 ITR 401 (P&H) the court has ruled that the tax authorities must not look at the matter from their own viewpoint but that of a prudent businessman. The appellant while relying on the above judicial decisions has stated that the law is very well settled that how to manage financial affairs is the prerogative of the assessee.

DCIT vs. Sh. Nishit Agarwal 16. On the contention of the AO that by not placing such amounts in bank opportunity of earning income from interest had been lost which no prudent businessman would undertake, the appellant has stated that it is an accepted fact that no interest has been received. The appellant has stated that the AO has merely questioned the prudence of the appellant of not generating interest income when alternative opportunity was available which is not within the scope of his discharge of duty as an AO. In this regard the appellant has placed reliance on two case laws namely, CIT v/sA.Raman& Co. (1968) 67 ITR 11 (SC) and India Finance & Construction Co. (P) Ltd. v/s DCIT (1993) 200 ITR 710 (Bom.).

DCIT vs. Sh. Nishit Agarwal 22. Lastly, the AO has concluded that the said cash deposited in the bank account is being treated as unexplained money as it is not sourced from the withdrawals made earlier. The AO has also stated that there was a possibility of such amount having been utilized by her and subsequent to declaration of demonetization, the appellant is taking benefit of the withdrawal entryfor depositing her unexplained cash. The appellant has stated that these are only assumption of the AO which are not supported by any credible evidence, nothing has been brought on record to discredit the contentions and material placed by the appellant in support of the cash deposited in the bank account. The appellant has placed reliance on some case laws as under: ACIT v. Baldev Raj Chakra (2009) 121 TTJ 366 (Delhi) x x x x Balijit Singh vs. ITO (2019) 178 ITD 12 (Chd.) x x x x Sudhirbhai Pravinkant Thanker vs. ITO (2017) 88 taxmann.com 382 (Ahd.) x x x x Jaspal Singh Sehgal vs. ITO (2017) 83 taxmann.com 246 (Mumbai) x x x x

22.1 Appellant in his latest reply has relied on the case of Delhi ITAT in case of Laxmi Narain Vs ITO ITA-195/Del/2023 order dated 31.3.2023 for AY 2017-18 held that whatever was withdrawn by appellant from bank account has been deposited. It implies that no cash transaction was done by the appellant in the period. That withdrawal of cash is normal action of the father, for the wedding of son and after demonetization he had no option but to re deposit the same to his bank account. Fact of the case laws are as under: - "6. In the present case also, there is no dispute regarding the fact the assessee deposited Rs. 10,49,000/- in cash on 18.11.2016 during demonetization period and the AO picked up said amount for making addition in the hands of assessee uls. 69A of the Act. From the copies of the order of authorities below I clearly note that the Ld. CITIA) in para 5.6 examined the explanation given by the assessee and noted that the claim of assessee that whatever was withdrawn by the appellant from his bank account had been deposited wholly implies that no cash transaction has been done by the assessee during the period of six months which is beyond probability. At that same time, I am of the view that the assessee is a senior citizen having family including Shri Amit Bhardwaj as a son bom on 26.01.1988 and his marriage was solemnized on 25.04.2017 with Smt. Riddhi Bhardwaj. On the occasion of weeding of son, it is obvious that renovation of house and DCIT vs. Sh. Nishit Agarwal other expenses are incurred by the parents and in such a situation withdrawal of cash is a normal action of a father. So far as allegation of Ld. CIT(A) that entire amount of withdrawal was re-deposited is a fact of beyond probability is concemed I am not in agreement with such allegation as when the purpose of renovation of house and marriage of son is deferred and the assessee was having cash amount withdrawn from his bank then after declaration of demonetization, he had no option but to re-deposit the same to his bank account. This conduct is a normal conduct of a man ordinary prudent which cannot be doubted unless revenue authonites bring on record positive or adverse material to establish that the amount withdrawn by the assessee from his bank account was utilized or deposited somewhere else and the impugned amount of cash deposited by the assessee during demonetization was not the same which weis withdrawn by the assessee from his bank account during pre-demonetization period. No such findings have been recorded by the authorities below in this case. Therefore, I am inclined to hold that the explanation offered by the assessee explaining the source of cash deposit to his bank account is property explained and no addition uls. 69A of the Act or any other provision of the Act is required to be made in the hands of assessee on this count. Accordingly, grounds of assessee are allowed and AO is directed to delete the addition"

28.1 On perusal from the assessment order, it is seen that first statutory notice was issued to the assessee on 08.08.2018 and assessment order has been passed on 26.12.2019 i.e. the AO was having sufficient time to make enquiries and investigation in the case of the assessee and gather necessary material evidence and relevant documents to prove his above-mentioned contentions. But on perusal of the assessment order, it is observed that the AO has arrived at the conclusion which appear as mere assertions not having any support from findings in this regard. The AO could have made requisite enquiries as per her observation with the HDFC bank, IDBI bank, she may have made enquiries/recorded statements of individuals related to the transactions undertaken by the appellant, to prove her contention but she has not made any enquiry in this regard and not given any such finding in the assessment order. As has been reiterated in various case laws relied upon by the appellant the onus, to prove that the assessee may have used the cash in another activity and that the cash deposited is unexplained, is upon the Assessing Officer. The Courts have further held that it is imperative for the AO to give clearcut finding based on evidences while making such additions with respect to cash deposits. The operative portions of some relevant case laws relied upon by the appellant are as under.

DCIT vs. Sh. Nishit Agarwal 28.2 In the case of ACIT v Baldev Raj Chakra (2009) 121 TTJ 366 (Delhi) the Tribunal has emphatically stated that the explanation of the assessee cannot be rejected merely because there is a time gap between withdrawal of cash and deposit of cash, further addition of cash deposit could not be made particularly when there was no finding recorded by the Assessing Officer or by the Commissioner (Appeals) that apart from depositing these cash into bank as explained by the assessee, there was any other use by the assessee of these amounts.

28.3 In the case of Baljit Singh v/s ITO (2019) 178 ITD 12 (Chd.) the AO asked the source of cash deposits, assessee explained that he had withdrawn said funds from his bank account four months ago and since a transaction relating to purchase of property did not materialize, he re-deposited funds in question in his bank account. The AO rejected the contention of the assessee. It was noted by the Tribunal that there was no instance, reference, argument or evidence to suggest that funds were not available with assessee. Moreover, there could be no blanket period which could be judicially considered to be a a reasonable reasonable time time for re-depositing funds in bank account.

28.4 In the case of Sudhirbhai Pravinkant Thaker v/s ITO (2017) 88 taxman.com 382 (Ahd.), the Tribunal has held that there is no dispute that the amount which was withdrawn by the assessee on various dates during the year 2006 was available with him for making deposits. When the assessee has demonstrated that he had withdrawn cash from the bank and there is no finding by the authorities below that this cash available with the assessee was invested or utilized for any other purpose, in that event, it is not open to the authority to make the addition on the basis that the assessee failed to explain the Source of deposits.

28.5 In the case of Jaspal Singh Sehgal v/s ITO (2017) 83 taxman.com 246 (Mumbai) the Assessing Officer made addition of a sum on account of cash deposit in bank account. While doing so, the Assessing Officer refused to give benefit of cash withdrawn from the bank on the ground that the assessee could not establish that the cash withdrawn had not been used anywhere else. Held that the assessee has submitted detailed cash summary showing inflow and outflow of the cash for the entire year. The assessee cannot be directed to prove the negative. It is a burden upon the Assessing Officer to prove that cash has been utilized elsewhere by the assessee before he rejects the claim of the assessee. Unless any such contrary material is brought on record by him to prove that cash has been utilized elsewhere by the assessee, he should give benefit of cash DCIT vs. Sh. Nishit Agarwal withdrawn by the assessee from the bank account against the amount of cash deposit into the bank account of the assessee, especially when the cash has been withdrawn and deposited in the same financial year, even if the bank from where cash was withdrawn and bank where the cash was deposited are different.

28.6 In the case of Laxmi Narain Vs ITO ITA-195/Del/2023 order dated 31.3.2023 for AY 2017-18,before the Delhi ITAT, the facts are that the assessee deposited cash amounting to Rs. 10,49,000/- on 18.11.2016, that is, demonetization period. On the occasion of weeding of son, it is obvious that renovation of house and other expenses are incurred by the parents and in such a situation withdrawal of cash is a normal action of a father. So far as allegation of Ld. CIT(A) that entire amount of withdrawal was re-deposited is a fact of beyond probability is concerned I am not in agreement with such allegation as when the purpose of renovation of house and marriage of son is deferred and the assessee was having cash amount withdrawn from his bank then after declaration of demonetization, he had no option but to re-deposit the same to his bank account. This conduct is a normal conduct of a man ordinary prudent which cannot be doubted unless revenue authorities bring on record positive or adverse material to establish that the amount withdrawn by the assessee from his bank account was utilized or deposited somewhere else and the impugned amount of cash deposited by the assessee during demonetization was not the same which was withdrawn by the assessee from his bank account during pre-demonetization period. No such findings have been recorded by the authorities below In this case. Therefore, I am inclined to hold that the explanation offered by the assessee explaining the source of cash deposit to his bank account is properly explained and no addition u/s.69A of the Act or any other provision of the Act is required to be made in the hands of assessee on this count. Accordingly, grounds of assessee are allowed and AO is directed to delete the addition".

5. The ld. DR is heard who relied on the findings recorded in the order of the assessing officer. He vehemently argued that the assessee failed to prove that the money so withdrawn from the HDFC is the only money deposited in the IDBI Bank. The ld. DR also filed a status report of the ld. AO dated 17.02.2025 on the status of the legal heirs placed on record. He also stated that the reasons advanced by the assessee lacks any supporting evidence and therefore, the action of the ld. CIT(A) in deleting the addition is not correct and thereby he prayed that the order of the ld. CIT(A) be set aside and that of the ld. AO be restored.

CIT(A) who has after considering the contention of the ld. AO and that of the submission of the assessee allowed the appeal of the assessee. In further to the order of the ld. CIT(A) he also filed the following submission in support of the order of the ld. CIT(A) which reads as under :

“Background A. The assessee Vandana, was a Person of Indian Origin (PIO), resident in Germany for over 20 years. She made Cash deposits, in tranches, totaling of Rs. 3,41,64,000/- in her IDBI Bank NRO account in Jaipur, opened on 26.12.2016. The case was selected for scrutiny under CASS for "Cash deposit during the demonetization period." The investigation wing made enquires, and the AO also issued multiple notices. In the assessment order, the reply of file before investigation wing and before the AO were reproduced, as also the queries raised by the AO, particularly vide notice dated 12.12.2019, which was replied on 16.12.2019. The AO did not accept the explanation for reasons stated in para 7/8 of the order and made addition of Rs. 3,41,64,000/-, u/s 69A of the Act. B. In her replies, it was explain that the assessee and her husband had made withdrawals from their NRO/NRE accounts in HDFC Bank, C-Scheme, Jaipur, in April 2016, in anticipation of their daughter's engagement/marriage in India. The proposal for marriage did not materialize and was called off, for the time being and the couple returned to Germany, leaving the withdrawn cash at their Jaipur residence. After demonetization was announced on 08.11.2016, they returned to India on 21st December 2016 to deposit the old currency notes. Due to reluctance and lack of clarity at HDFC Bank, they had to open new NRO accounts at IDBI Bank and deposited the cash there. C. In assessment proceeding Bank statements HDFC Bank / IDBI Bank, showing withdrawals and deposits, letter from assessee, to HDFC Bank explaining the purpose of cash withdrawal (daughter's marriage), copies of passport showing travel dates to and from India, replies to the Investigation Wing etc. were submitted. The reply dated 16.12.2019, in answer to the queries of the AO dated 12.12.2019, was obliquely referred by the Assessing Officer in para 7 of her order.

DCIT vs. Sh. Nishit Agarwal D. The cash deposit was fully documented and supported by evidence yet, the Assessing Officer (AO) rejected the explanation primarily on the grounds that it was not "prudent" to keep large sums of cash at home and not earn interest thereon, (ii) that the cash could have been used elsewhere. (iii) No reasons to opened new NRO Account (iv) No purpose stated for given loan to her brother in law Shri Kailash (v) No details of payments for expenses on marriage (vi) No reason why cash not deposited in bank though the assessee was in India for about 25 days between 20th July 2016 to 26th November 2016. The AO however, did not bring any evidence to show that the withdrawn cash was used for any other purpose. The AO rejected the explanation for the opening of new account and ignored the fact that the proposed engagement/marriage of the daughter did not take place and so the expenses were not incurred thereon.

2. The source of the deposit of Rs. 3,41,64,000/-, in IDBI Bank in December 2016, was explained with evidence, as pointed out in sub-para C of para 1.

DCIT vs. Sh. Nishit Agarwal These principles have been settled in the decisions such as (i) CIT Vs. Walchand & Co. (P) Ltd., 65 ITR 381 (SC), (ii) CIT Vs. Rockman Cycle Industries Pvt. Ltd., 331 ITR 401 (P&H), (iii) S.R. Vekataratnam Vs. CIT, 127 ITR 807 (Karnataka) (iv) CIT Vs. A Raman & Co., 67 ITR 11 (SC), held “the law does not oblige a trader to make maximum profit that he can out of his trading transactions”. Further, “income which he could have, but has not earned is not made taxable as income accrued to him”.

7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee the finding of the ld. CIT(A) is based on the submission made by the assessee on factual aspect of the matter which was already available with the ld. AO but he did not appreciate the facts and made the addition based on the surmises and conjectures and therefore, the order of the ld. CIT(A) is based on the been differentiated by found be incorrect even by the ld.AO through ld. DR while taking the present appeal before this tribunal and therefore, the order of the ld. CIT(A) be sustained. The ld. AR of the assessee also serviced the decision of the apex court in the case of Here Cycles P. Ltd. Vs. Commissioner of Income Tax (Central) Ludhiana [ 63 taxmann.com 308(SC) ] wherein the court observed that “revenue cannot justifiably claim to put itself in the arm-chair of the businessmen”. Here since the assessee has proved the source of withdrawal and the redeposit of money not being used re-deposited cannot be considered the income and therefore supported the finding of the ld. CIT(A).

The balance seven grounds deal with the various grievances of the revenue i.e. ld. CIT(A) has considered the cash withdrawal of Rs. 3.48 crores made during April, 2016 as source of huge cash deposit 3,41,64,000/- made during end of December 2016 without appreciating the fact that the assessee kept the huge cash amount of Rs. 3.48 crores at details of the person who looked after the huge cash for eight months in absence of assessee. What prompted the assessee to keep such a huge cash on hand. The assessee stated to have withdrawn the cash from her bank account but failed to sustain that purpose itself and failed to support the contention without placing any corroborative evidence. The assessee also failed to support the contention as to even though the assessee was in India for the period 20.07.2016 to 04.08.2016 and 17.11.2016 to 26.11.2016, the assessee failed to deposit such huge cash in the bank.

Record reveals to the fact that in the assessment proceeding ld. AO made the addition of Rs.3,41,64,000/- being the cash deposits treating the same as unexplained money u/s 69A of the Act, when the matter carried before the ld. CIT(A) deleted the addition and the revenue preferred the appeal before us raising various grounds as discussed herein above on the factual aspect of the matter.

The brief facts related to the issue is that the appellant Late Mrs.

Vandana Agarwal wife of Shri Neelkamal Agarwal was Indian origin and after her marriage she was settled in Germany. She was settled there for more than last 30 years, and has also as a German Citizenship. The assessee was having the income under the head interest income from her her part time occupation of teaching English in Germany. The appellant filed her return of income for A.Y.2017-18 on 11.12.2017 declaring total income of Rs.3,99,729/-. For the year under consideration the assessee deposited cash in her IDBI Bank A/c No. 0012104000416351 on different dates such as Rs. 1,42,26,000/- were deposited on 28.12.2016, Rs. 99,79,600/- were deposited on 29.12.2016 and Rs. 99,59,000/-were deposited on 30.12.2016 by the assessee. The AO has mentioned in the assessment order that it is seen that a new account in the IDBI bank was opened by the assessee - appellant on 26.12.2016 i.e. 03 days before the cash was deposited in to the said bank account and that was also last three days of depositing the demonetized currency into the bank account. The Assessing Officer was not satisfied with the reply/ justification filed by the appellant, that the cash deposited during the demonetization period was sourced from the earlier withdrawn. The purpose of the withdrawal was said to be the marriage of her daughter. It is not under dispute that the withdrawal so made by the assessee was the income earned by the assessee outside India and thereby there is no dispute about the withdrawal of amount of Rs. 2,20,90,000/- on 22.04.2016 from HDFC Bank NRo A/c no. 015851510000021 and Rs. 1,27,40,000/- on 22.04.2016 NRE withdrawal assessee re-deposited cash of Rs. 3,41,64,000/- on account of demonetization on three different dates on as detailed here in below

Date of deposit Amount Rs. 28.12.2016 1,42,26,000/- 29.12.2016 99,79,000/- 30.12.2016 99,59,000/- ------------------- 3,41,64,000/- As is evident from the above facts that the cash deposit was in December 2016 and withdrawal was in the month of April 2016. Though the contention of the assessee is that the withdrawal is sufficient to cover up the cash deposit and the said basic facts have not been disputed by the revenue. But the revenue dispute that the purpose was for her daughter’s marriage but that contention lacks with the single proof in the form of her daughter travelling to India supported by the passport. The assessee if that contention being correct she must have travelled to India and that can be established with the passport of her daughter or airline ticket which even though asked were not submitted. That contention was not even placed before us by the assessee and therefore, in this appeal the contention of the revenue has force that the relevant proof to support that contention was not filed and even though the ld. CIT(A) has allowed the appeal of the assessee based on the oral evidence. The assessee maintained the bank with the IDBI Bank and just before the deadline of deposit of cash into the bank account. That act of the assessee to open the new bank account with IDBI Bank and deposit cash on 28.12.2016, 29.12.2016 & 30.12.2016 for an amount of Rs. 3,41,64,000/- creates a valid reason for the suspicion raised on the activity of having withdrawn huge cash and sitting that money 8 months without any proof on the contention raised and that too on two occasion the assessee remained in India. Thus, we find force in the arguments of the ld. DR that the assessee must support the contention with the corroborative evidence as the purpose of withdrawal. Having accepted the same by the ld. CIT(A) he must call or discuss the single piece of evidence based upon which the oral arguments were accepted by him. We also find force in the arguments of the ld. DR that out of withdrawal of Rs.

3,48,30,000/- the assessee has re-deposited cash of Rs. 3,41,64,000/- leaving only 6,66,000/- when the assessee contends to expand huge expenditure and sitting on a cash of Rs. 3,48,30,000/- and has spent on the activity of the marriage for Rs. 6,66,000/- only does not seem to be logical.

Thus, the arguments of the ld. AR of the assessee that the amount withdrawn was redeposited is not found supported with single evidence.

However, the Bench is of the view that lis between the parties has to be case is of the revenue because the assessee could not advance the details regarding the marriage of her daughter being arranged and thereby the assessee failed to establish that pertinent details with any supporting evidence as discussed in the grounds or that of in the order of the assessment. The bench also noted from the arguments of the ld. DR that if the assessee has to investment in the FDR and in the Kailesh Hotel and Resort after depositing the cash into the bank account the same could have been done with the proposal of her daughter did not get materialized and even on two occasion the assessee came to India. Thus, we considered all the grounds of the revenue which remained unanswered in the finding of the ld. CIT(A) and therefore, the matter is restored to the file of the ld. AO to decide it afresh by providing one more opportunity of hearing to the assessee to support their averments made before the ld. CIT(A) and thereby without any supporting evidence we find force in the arguments of the revenue and thereby we restore the matter to the file of the ld. AO to decide afresh after affording sufficient opportunity of being heard to the assessee. Thus, the appeal of the revenue is allowed for statistical purposes. purpose.

Order pronounced in the open court on 16/07/2025.

Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 16/07/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- DCIT, Circle (International Taxation), Jaipur 2. izR;FkhZ@ The Respondent- Late Ms. Vandana Agarwal through Legal Heir, Sh. Nishit Agarwal vk;dj vk;qDr@ The ld CIT 3. 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत xkMZ QkbZy@ Guard File (ITA No. 1237/JP/2024) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत