SATYA NARAIN AGARWAL,JAIPUR vs. ACIT CIRCLE 5, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR

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BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 565/JP/2025
fu/kZkj.k o"kZ@Assessment Year : 2015-16
Circle-05,
Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABYPA7902J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Tanuj Agarwal, Adv.
jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@ Date of Hearing

: 25/06/2025
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 30/06/2025

vkns'k@ ORDER

PER: RATHOD KAMLESH JAYANTBHAI, AM

By way of present appeal, the assessee challenges the order of the Commissioner of Income Tax (Appeals)-02, Gurugram [ for short CIT(A) ]
dated 25/03/2025 for assessment year 2015-16. The said order of the ld.
CIT(A) arise as against the order dated 18.12.2017 passed under section 143(3) of the Income Tax Act, 1961 [ for short Act] by ACIT, Circle-05,
Jaipur [ for short AO ].

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2. In this appeal, the assessee has raised following grounds: -
“1. That on the facts and circumstances of the case and in law, the learned
Commissioner of Income Tax (Appeals) grossly erred in sustaining an addition of Rs. 4,86,143/- u/s 69A of the Income-tax Act, 1961, as unexplained cash deposits in bank account thereby ignoring the material evidences on record.

The statutory notice u/s 143(2) was issued on 28.07.2016 which was duly served upon the assessee. Thereafter, notice u/s 142(1) with questionnaire was issued on 06.04.2017. The assessee is individual and derives income from Real estate, Long term capital gain and interest income. In response the notice the AR of the Assessee appeared and filed written submission.

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During the course of assessment proceedings it was gathered that, assessee has deposited cash amounting to Rs. 64,52,500/- saving bank account по. 1939000100722332 maintained with Punjab National Bank. In order to verify the source of cash deposit in bank account(s), assessee vide questionnaire dated 06.04.2017 was asked to furnish copy of saving bank account and to explain source of the cash deposited with documentary evidences. In response to which assessee vide written submission dated submitted as under:-
"the source of cash deposited in bank accounts is from sale proceeds of immovable property. We are enclosing herewith Xerox-copies of Bank Pass Books of UCO & PNB along with copy of Cash Book for the period 01.04.2014 to 31.03.2015."

The details and documents furnished by the assessee were examined and it was noticed that, assessee has deposited/paid excess cash of Rs.
4,86,143/- then available in his cash book and accordingly ld. AO made that solitary addition and completed the assessment proceeding by way of order dated 18.12.2017. 4. Aggrieved from the order of 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:

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“6.3
I have gone through the reply submitted by appellant, impugned assessment order u/s 143(3) of the Act and remand report submitted by the AO, it is revealed that the contention of appellant is not found prima facie to be acceptable. As the appellant had submitted vide his letter dated 23.11.2017 that he had received cash of Rs. 4,80,000/- from the following persons as an advance against the plots sold to them as per details given below:-

(i) Rs. 2,80,000/- from Sh. Raj Kumar against plot no. A-1, A-2 on 25.05.2014. (ii) Rs. 80,000/- from Sh. Pradeep against plot no. C-22 on 29.05.2014. (iii) Rs. 2,00,000/- from Sh. Om Prakash Yogi against plot no. B-2, B-3 on 01.06.2014. The appellant further submitted that the advances received from the above 03
persons was returned back to these parties as the agreement of sale property with them could not be materialized. Even though nowhere in the sale agreement mentioned any reason of the cancellation of the agreement of sale of the properties as well as no mention about the total sale consideration for which sale agreement was to be made. On the basis of the above facts the A.O had not found tenable the contention of assessee. Now during the appellate proceedings,
Appellant has submitted that a sum of Rs. 5,25,000/- was received in cash on various dates prior to 12.08.2014 by way of sale of immovable properties through registered sale deed. These sale proceeds have not been included in the cash book of appellant due to mistake on the part of the accountant of the Satya
Narain Agrawal, however, these sale proceeds were appearing in another cash book of Shree Balaji Market.

On the basis of the above narrated facts it is proved that appellant has stated his contention in two mode. First appellant had relied upon the sale agreement during the assessment proceedings and secondly sale deed & cash book of Shree Balaji
Market & S.N.Agarwal. On going through the cash book of Satyanarain Agarwal &
Shree Balaji Market it is revealed that appellant has shown on 12.06.2014 in the cash book of Shree Balaji Market on the credit side payment of Rs. 1,50,000/- to S N Agarwal but the same is not showing in the cash book of Satya Narain
Agarwal on debit side. Thus, on 26.06.2014 in the cash book of Shree Balaji
Market two entries of Rs. 75,000/- & 2,25,000/- respectively were mentioned on credit side for payment by S.N. Agarwal, but in the cash book of Satya Narain
6.4 Remaining ground of appeal is general in nature and do not require adjudication. Accordingly, this ground of appeal is rejected/dismissed.

During assessment proceedings the learned Assessing Officer asked query regarding source of cash deposits of Rs.64,52,500/- in saving bank account no.
1939000100722332 maintained with Punjab National Bank to which the appellant replied that the source of cash deposit is mainly sale proceeds of immovable properties and submitted copy of bank statements/pass books and abstract cash

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Satya Narain Agarwal vs. ACIT book from 01.04.2014 to 31.03.2015 (paper book page no. 8 to 10). (para 5 & 5.1
at page no. 2 of the assessment order).

The learned Assessing Officer concluded that Rs.4,86,143/- was short balance as per cash book submitted by the assessee and finalized the assessment by making an addition of Rs.4,86,143/- u/s 69A of the Income-tax Act. 1961, as unexplained cash deposits in bank account. However, no opportunity was provided by the learned AO to the assessee by issuing a show cause notice before making the impugned addition which is also evident from the assessment order. (para 5.2, 5.3 & 6 at page no. 2 & 3 of the assessment order).

On appeal to the learned CIT(A), the appellant submitted as under:-
1. Firstly that the immovable properties sold in cash through registered sale deeds were not considered while working out the balance of Rs.4,86,143/-.
2. Secondly that the opening cash balance as at 01.04.2014 of the assessee of Rs.8,00,404/- which is verifiable from the income-tax return efiled for the immediately preceding assessment year 2014-15 (paper book page no. 11 to 25, relevant page no. 25) was not considered to the extent of Rs.2,80,000/- while making the impugned addition.
3. Thirdly that the ld. A.O. erred in making the impugned addition without making a specific query or show cause regarding short balance of cash of Rs.4,86,143/- on 12.08.2014 otherwise the appellant could have specifically explained the source of cash deposit and linked it with the sale of immovable properties. In this respect, Ground No. 3 was specifically taken by the appellant in Form No. 35 for not providing sufficient opportunity of being heard which is against the principles of natural justice. An application under Rule 46A for admission of additional evidence of another cash book of business u/s 44AD alongwith copies of registered sale deeds were filed (paper book page no. 67, 26
to 66).
The learned CIT(A) called for the remand report from the AO. The learned submitted remand report dated 31.01.2020 which is placed at paper book page no. 68 to 71. The learned AO in his remand report did not at all controvert the three main contentions of the appellant as under:-
A)
Opening cash balance not properly considered
B)
Cash received from above five registered sale deeds not considered
C)
No specific query or show cause was raised/issued in respect of the alleged amount of Rs.4,86,143/- on 12.08.2014. Instead, the AO who submitted the remand report got confused about some of the cancelled agreements which was not even mentioned in the assessment order by the then AO who framed the assessment. The learned CIT(A), NFAC also got confused by the remand report and the abstract cash book and the dismissed the appeal by holding that the assessee tried to adjust the unaccounted cash by false and fabricated documents (page no. 10 of the CIT(A) order).

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Appellant’s Humble Submissions: It is most respectfully submitted that both the lower authorities grossly erred in not properly appreciating the facts as well as the provisions of law. The appellant derives business income as partner from his partnership firms and has also developed and sold immovable properties as “Shree Balaji Market Avenue” scheme, the income from which was declared on presumptive basis under section 44AD of the Income-tax Act, 1961. Source of deposit of cash in bank account was from opening cash balance (Paper Book page no. 11 to 25) and sale of immovable properties through registered sale deeds (paper book page no. 43 to 66). Following documents are submitted herewith :-
S.No.
Particulars
Paper Book Page
No.
1
Return of income and computation of total income
1 to 5
2
Profit & Loss A/c, Balance Sheet u/s 44AD
6 to 7
3
Abstract of cash book of Satya Narain Agrawal submitted before ld. A.O.
8 to 10
4
Return of income & return form filed for A.Y. 2014-15
showing cash balance as at 01.04.2014
at Rs.8,00,404/- i.e. opening cash balance for the year under consideration
11 to 25
5
Copy of registered sale deeds of immovable properties at Shree Balaji Market Avenue Scheme
43 to 66
6
Copy of abstract of cash book of Shree Balaji Market
Avenue Scheme for the year under consideration
26 to 42

It is humbly submitted that the ld. A.O. grossly erred in making the impugned addition thereby ignoring the submissions of the appellant that the source of cash deposit in bank account is mainly from sale of immovable property which is also evident from para no. 5.1 at page no. 2 of the assessment order. The ld. A.O.
further erred in making the impugned addition without making a specific query or show cause regarding short balance of cash of Rs.4,86,143/- on 12.08.2014
otherwise the appellant could have specifically explained the source of cash deposit and linked it with the sale of immovable properties. Admittedly, the appellant also erred during the assessment proceedings in properly linking the cash receipts from sale of immovable properties to the cash deposits in bank account. The short cash balance of Rs.4,86,143/- is because of the following reasons :-

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1. Firstly from the opening cash balance as the opening cash balance as at 01.04.2014 of the assessee was Rs.8,00,404/- which is verifiable from the income- tax return efiled for the immediately preceding assessment year 2014-15 (paper book page no. 11 to 25, relevant page no. 25). This opening balance of Rs.8,00,404/- is shown by the appellant in its two cash books (first of Mr. Satya
Narain Agrawal and the second of Shree Balaji Market Scheme, the income the income of which is declared u/s 44AD) as under :-

S.No.
Particulars
Paper Book
Page No.
1
Rs.5,20,404/- opening balance of cash book of Satya Narain
Agrawal
8 to 10
2
Rs.2,80,000/- opening balance of cash book of Shree Balaji
Avenue u/s 44AD
26 to 42

Total Rs.8,00,404/-

Hence from the above, it is amply evident that the appellant had additional cash balance to the extent of Rs.2,80,000/- in addition to Rs.5,25,000/- as sale proceeds from immovable properties (explained in detail at s.no. 2 below), total amounting to Rs.8,05,000/- which is more than sufficient to cover short cash balance computed by the ld. A.O. at Rs.4,86,143/- which was added as unexplained cash deposits.
The learned CIT(A) forwarded the Rule 46A application of the appellant (paper book page no. 67) alongwith written submissions and paper book of the appellant to the AO against which the learned AO furnished remand report dated (paper book page no. 68 to 71) but the AO didn’t contradict the availability of cash to the extent of Rs.2,80,000/- from opening balance. Even the learned CIT(A) didn’t consider this vital issue while dismissing the appeal instead arbitrarily concluded that the appellant gave fabricated evidence thereby ignoring that how can an income tax return of preceding assessment year e-filed on the income-tax portal be fabricated.

Total Rs.5,25,000/-
43 to 66

43 to 47

48 to 52

53 to 56

57 to 61

62 to 66

From the above, it is amply evident that a sum of Rs.5,25,000/- was received by the appellant in cash on various dates prior to 12.08.2014 in respect of sale of immovable properties through registered sale deed.

These sale proceeds have not been included in the cash book of Mr. Satya
Narain Agrawal submitted to the ld. A.O. due to mistake on the part of the accountant of the appellant. These sale proceeds are however appearing in another cash book of Shree Balaji Market which has been furnished at paper book page no. 26 to 42. Even otherwise the appellant is not required to maintain books of account neither for personal transaction nor for presumptive business income u/s 44AD. Whatever the appellant has maintained is an abstract of cash book not otherwise required to maintained under law as books of account are neither required to maintained for personal transactions nor for transactions u/s 44AD.
It is further submitted that Article 265 of the Constitution of India states that “No tax shall be levied or collected except by the authority of law.” Departmental authorities must not take advantage of the ignorance of the assessee and it is their duty to assist the taxpayer in every reasonable way particularly in the matter of claiming and securing reliefs. Reliance is being placed on CBDT circular No.14
of 1955 dated 11.04.1955. As evident from the remand report, the present A.O. grossly failed in appreciating the facts as well as contentions of the appellant. He has nothing to say on the crux of the appellant’s submissions with regard to opening cash balance as per preceding year income tax return filed and cash received from sale of properties

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A.O. in his remand report did not at all controvert the three main contentions of the appellant as under:- a. Opening cash balance not properly considered b. Cash received from above five registered sale deeds not considered c. No specific query or show cause was raised/issued in respect of the alleged amount of Rs.4,86,143/- on 12.08.2014. Instead, the present AO who submitted the remand report got confused about some of the cancelled agreements which was not even mentioned in the assessment order by the then AO who framed the assessment. These cancelled agreements were also not before the CIT(A) as they were not in dispute in the assessment order passed. Raising fresh dispute while calling for remand report on Rule 46A application particularly when these documents doesn’t form part of the Rule 46A application is against the judicial propriety. The learned CIT(A) arbitrarily dismissed the appeal by considering the undisputed cancelled agreements issue from the remand report by ignoring the fact firstly that the learned AO has not disputed this in the assessment order passed and secondly that these agreements were not part of the appeal proceedings at all.

While dismissing the appeal, the learned CIT(A) concluded that on going through the cash books of Satya Narain Agarwal and Shree Balaji Market it is revealed that the appellant has shown on 12.06.2014 in the cash book of Shree Balaji
Market on the credit side payment of Rs. 1,50,000/- to S N Agarwal but the same is not showing in the cash book of Satya Narain Agarwal on debit side. Thus, on 26.06.2014 in the cash book of Shree Balaji Market two entries of Rs. 75,000/- &
2,25,000/- respectively were mentioned on credit side for payment by S.N.
Agarwal, but in the cash book of Satya Narain Agarwal no entry of dated
26.06.2014 are mentioned (paper book page no. 29 & 8). In this respect, it is humbly submitted firstly that even if the appellant’s accountant has shown cash withdrawals by Satya Narain Agarwal in the cash book of Shree Balaji Market and not shown corresponding cash inflow in the cash book of Satya Narain
Agarwal, then it decreasing the cash balance of the appellant which is detrimental to appellant’s own interest as his cash balance is decreasing and not increasing. Hence, no adverse inference can be drawn against the appellant.
Secondly, the learned CIT(A) was able to locate the reason for negative cash balance in the cash book of Satya Narain Agarwal to the extent of Rs.4,50,000/- as had the cash inflow been shown in the cash book of Satya Narain Agarwal, the cash balance could not have negative to this extent. Thirdly, in case of any doubt in the mind of learned CIT(A) in the interest of justice he could have clarified it from the appellant by giving him an opportunity of being heard instead of dismissing the appeal and sustaining the addition. Hence, the action of the learned CIT(A) is against judicial propriety and also against the principles of natural justice.

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It is further submitted that the learned CIT(A), while dismissing the appeal, has arbitrarily held that the appellant has given fabricated evidence which is erroneous as the evidences in the form of opening cash balance mentioned in the preceding year income tax return e-filed on the income-tax portal cannot be fabricated. Similarly, the registered sale deeds which are registered with the Sub-