ACIT, CENTRAL CIRCLE, KOTA, KOTA vs. AJAY BAKLIWAL , KOTA

3. Whether on facts and in circumstances of the case, the CIT(A) is justified in deleting the addition of Rs. 30,00,000/- on account of unaccounted and unexplained cash without appreciating the facts that assessee has not furnished satisfactory explanation that the amount was withdrawn in parts long before the day of search 3 and kept accumulated at residence for business purpose and also failed to substantiate his claim by producing evidences that it is practice of the assessee to withdraw cash from business account and keep cash at residence and it is used to meet the various expenditure related to different sites and the CIT(A) has accepted reply of the assessee without any verification.

4 Whether on facts and in circumstances of the case, the case, the CIT(A) is justified in deleting the addition of Rs. 49,85,873/-on account of unaccounted expenses by accepting reply of the assessee that these expenses were accounted for in regular books of accounts without appreciating the facts that the assessee have failed to make these expenses verified from the cash book vouchers and other documentary evidences during assessment proceedings as well as appellate proceedings?

5 Whether on facts and in circumstances of the case, the CIT(A) is justified in deleting the addition of Rs. 49,85,873/- on account of unaccounted expenses by accepting reply of the assessee during the appellate proceedings that a letter ACIT v. Ajay Bakliwal dated 12.12.2019 was submitted before the AO during assessment proceedings without appreciating the facts that it is evident from the reply filed during the appellate proceedings that the assessee has not produced cash book vouchers for verification during appellate proceedings and the entries of unaccounted expenses have been verified from the necessary cash book vouchers during the appellate proceedings?

6 Whether on facts and in circumstances of the case, the CIT(A) is justified in deleting the addition of Rs. 49,85,873/- on account of unaccounted expenses by accepting reply of the assessee without appreciating the facts that cash book vouchers mentioned in reply were not sent to the AO during appellate proceedings for verification and the CIT(A) has not called for the remand report for verification of claim of the assessee and cash book vouchers mentioned in reply?

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

3.2 Ld. AO noted that during the search action u/s 132 of the Act, cash amounting to Rs. 32,75,200/- was found. On being asked during the statements vide Q No. 28 to explain source of cash and to reconcile it with books of accounts, assessee Shri Ajay Bakliwal stated that amount of Rs. 30,00,000/- was withdrawn from bank on various dates and Rs. 2,75,200/- were lying for house hold expenses. Ld. AO considered withdrawal of last 20 days to the date of search i.e. 07.09.2017 total amount came to Rs. 16,84,295/-. Assessee stated that cash found was already disclosed in his books of account and will submit necessary evidence. Further out of cash found of 32,75,200/-, cash of 12,75,200/- was seized. During the assessment proceeding, the assessee was asked vide show cause notice dated 15.12.2019 to submit his response in this regard. The assessee submitted his reply on 17.12.2019 stating that the cash found during search on different sites. Ld. AO considered the reply of the assessee but not found satisfactory. Ld. AO noted that the cash was found from the residential premise of the assessee not from the business premise.

Therefore contention of the assessee that the cash was kept for various expenditures related to different sites was not found convincing. During the search action many incriminating documents were found and seized from the premise of assessee by the search party. It is also noticed that many transactions had not been entered by the assessee in his regular books of accounts. Based on these the balance in cash book as submitted by the assessee is not reliable. Therefore, the amount of Rs. 30,00,000/- out of total cash found Rs. 32,75,000/- is considered unexplained money and added to the total income of the assessee u/s 69A and taxed as per provisions of section 115BBE of the IT Act.

3.3 During the search action many incriminating documents were found and seized from the premise of the assessee by the search party. During the assessment proceeding, the assessee was asked to submit details and explanation in this regard. Assessee has submitted his reply regarding loose papers found and seized during the search. When loose papers were cross checked some of the entries for an amount of Rs. 48,85,873/- were considered as not verifiable / accounted and accordingly addition of that amount was made in the hands of the assessee.

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:

The addition of Rs. 30,00,000/- on account of unexplained money u/s 69A of the Act. “6.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under- The AO noted that during the search action cash amounting to Rs. 32.75,200/- was found. On being asked during the statements vide Q No. 28 to explain source of cash and to reconcile it with books of accounts, assessee Shri Ajay Bakliwal stated that amount of Rs. 30,00,000/- was withdrawn from bank on various dates and Rs. 2,75,200/-were lying for house hold expenses. However on considering withdrawn amount from last 20 days to the date of search ie. 07.09.2017 total amount came to Rs. 16,84,295/- Assessee stated that cash found was already disclosed in his books of account and will submit necessary evidence. Further out of cash found of Rs 32,75,200, cash of Rs. 12,75.200/- was seized. The assessee submitted his reply on 17.12.2019 stating that the cash found during search is fully accounted and kept at home considering the various expenditures on different sites. The reply of the assessee was considered but not found satisfactory. The cash was found from the residential premise of the assessee not from the business premise. Therefore contention of the assessee that the cash was kept for various expenditures related to different sites is not found convincing. During the search action many incriminating documents were found and seized from the premise of assessee by the search party. It is also noticed that many transactions had not been entered by the assessee in his regular books of accounts. Based on these ACIT v. Ajay Bakliwal the balance in cash book as submitted by the assessee is not reliable. Therefore, the amount of Rs. 30,00,000/- out of total cash found Rs. 32,75,000/- is considered unexplained money and added to the total income of the assessee u/s 69A and taxed as per provisions of section 115BBE of the IT Act.

The appellant explained that during the course of assessment proceedings the asseseee submitted updated cash book from which the availability of cash is verifiable.

It is stated that the learned AO has rojected the cash book on the ground that during the course of search many incriminating documents were found and many transactions were not entered by the assessee in his regular Books of Accounts but this is only a general statement of the learned AO. He has not specified any Incriminating material nor he has pointed about any transaction which remained unaccounted.

It is stated that the learned AO erred in rejecting the cash book summarily without undertaking any exercise to verify the withdrawals from the Bank. In view of this it is submitted that addition has been made without considering the regular Cash Book. In view of this the addition made is totally unwarranted and same deserves to be deleted. It is stated that the learned AO has not been able to bring any material on record to disprove the submission of the assessee that amount of Rs. 30,00,000/- pertained to withdrawal from Bank. The learned AO has also not been able to controvert the transactions incorporated in the cash book pertaining to withdrawals made in cash from the Bank. In view of this it is obvious that the learned AO has disregarded the documentary evidences and has acted on conjuncture, guess work and suspicion. The learned AO has acted purely on suspicion. In this regarded it is submitted that suspicion however strong can not the place of evidence. The facts of the case are considered. The AO mentioned in the reason for rejecting the claim of the assessee with regard to cash found from residence that the cash was found from the residential premise of the assessee not from the business premise. Therefore contention of the assessee that the cash was kept for various expenditures related to different sites is not found convincing. This argument of the AO is not found to be sustainable. The cash can be kept at residential premise for the security reasons. There is no illegality in such practice.

The ITAT Amritsar Bench in the case of Daljit Singh v. Assistant Commissioner of Income-tax [2004] 1 SOT 249 (Amritsar) [30-12-2002] held that when it was clear from facts that claim of assessee was bona fide as cash-in-hand of firm was sufficient to meet out cash found at residential premises of assessee, there was no justification for sustaining any addition. The head note of the decision are as under-

"Section 894 of the Income-tax Act, 1961-Unexplained moneys-Block assessment year 1-4-1987 19-10-1997-Dung search cash of Rs. 3 lakhs and odd was found at ACIT v. Ajay Bakliwal residential premises of assessee and also draft of Rs. 1 lakh was sized Assessee claimed that cash belonged to firm W' in which he was a partner and same was kept in safe custody at residence as cash and draft-Assessing Officer, however, made addition of Rs. 3 lakhs while Commissioner (Appeals) sustained addition of Ris lakh Department did not question genuineness of cashbook of firm filed before Assessing Officer-Whether since it was apparently clear from facts that claim of assessee was bona fide as cash-in-hand of firm was sufficient to meet out cash found at residential premises of assessee, there was no justification for sustaining any adidition-Held, yes"

The ITAT Surat Bench in the case of Deputy Commissioner of Income-tax Vs. Gordhanbhai L. Talavia [2023] 146 taxmann.com 528 (Surat-Trib.) held as under- x x x x No adverse view was taken only because of the fact that the cash belonging to business is found at the residential premise. Hence, the addition made by the AO is not found to be sustainable on this issue.

The AO further mentioned that during the search action many incriminating documents were found and seized from the premise of assessee by the search party. It is also noticed that many transactions had not been entered by the assessee in his regular books of accounts. Based on these the balance in cash book as submitted by the assessee is not reliable.

The assessee stated against this that the AO has not specified the transactions which has not been entered by the assessee in his regular books of accounts. The facts of the case are considered. The claim of the assessee was required to be verified and rejected by the AO after making verification of cash book. The AO has not pointed out any specific transaction which is not recorded in regular books of accounts and which is having bearing on the cash balance reflected in the cash book. In the absence of specific findings in this regard, the addition of cash is not found to be sustainable.

It is also observed that during the course of search proceedings also the assessee was asked to explain the source of cash of Rs. 32,75,200/- found during search. The relevant question put to the asseseee in a statement under section 132(4) is question No.

In these facts, the addition made by the AO is not found to be sustainable and deleted.

This ground of appeal is treated as allowed.

The addition of Rs. 49,85,873/- on account of unexplained expenditure u/s 69C of the Act.

7.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-

The AO noted that during the search action many incriminating documents were found and seized from the premise of assessee by the search party. Assessee has submitted his reply regarding loose papers found and seized during the search. When loosé papers were cross checked some of the entries as mentioned in loose papers are not recorded in his regular books of accounts. The details of such entries are as under: Exhibit No. 01, Part No.9

As these expenses were made in cash and not entered in his regular books of accounts therefore it is considered that the source of these expenses is not verifiable/accounted. Hence, the expense made in cash at Rs. 49,85,873/- is added to the total income of the assessee treated as unexplained expenditure u/s 69C and taxed as per provisions of section 115BBE of the IT Act.

In the appellate proceedings, the assessee furnished copy of the letter dated 11.12.2019 which was delivered in the office of the learned AO on 12.12.2019. The AO has even not discussed the reply of the assessee. The assessee is explaining all the entries totaling to Rs. 49,85,873/- in the following table.

It was claimed that perusal of the table reveals that against each entry the assessee is giving Number of relevant cash book voucher where the expenditure is accounted for.

The asseseee has also produced cash book for verifying the fact that the expenditure noted in these pages is fully accounted for.

The asseseee reiterates that the entire expenses are accounted for and the additions are totally unwarranted and the same deserve to be deleted. The expenditure was wholly and exclusively for business purpose. It is not the case of the learned AO that the expenditure is of capital nature or of personal nature. In view of this the addition made is totally unwarranted.

The facts of the case are considered. The AO mentioned in the order that the assessee has not entered these expenses in his regular books of accounts therefore it is considered that the source of these expenses is not verifiable/accounted. However, the assessee is claiming that the reply was furnished explaining that the entire expenses are accounted for. The assessee furnished copy of the letter dated 11.12.2019 which was delivered in the office of the learned AO on 12.12.2019. Considering the explanation of the assessee which was not considered by the AO during the assessment proceedings, the addition made by the AO is not found to be sustainable and deleted.

This ground of appeal is treated as allowed.

CIT(A) the revenue preferred the present appeal raising the six grounds of appeal, on the addition deleted by the ld. CIT(A). The ld. DR is heard who heavily relied upon the finding so recorded in the order of assessment and she submitted her written submission in support of the grounds of appeal raised by the revenue. The written submission so filed reads as under :

Grounds of Appeal

1. Unexplained Cash of �30,00,000/-

• Whether, on the facts and circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of �30,00,000/- on account of unaccounted and unexplained cash found during the search proceedings at the residence of the assessee, without appreciating the fact that the assessee failed to explain the source of cash during both the search and assessment proceedings?

• Whether, on the facts and circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of �30,00,000/- without ensuring verification of the cash book from necessary evidence as per the assessee's submission during the statement recorded under Section 132(4) of the Act?

• Whether, on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of �30,00,000/- without calling for a remand report from the AO to verify the assessee's claim and without sufficient supportive evidence to justify the alleged withdrawals for business expenditure.

• Whether, on the facts and circumstances of the case, the Ld. CIT(A) was justified in accepting the explanation of the assessee without appreciating that the withdrawals claimed were made in parts, long before the date of the search, and no evidence was provided to substantiate the claim that the cash was accumulated at the residence for business-related expenses?

2. Unaccounted Expenses of �49,85,873/-

• Whether, on the facts and circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of �49,85,873/- on account of unaccounted expenses, by accepting the assessee's claim that these expenses were accounted for in the regular books of accounts, without appreciating the fact that the assessee failed to substantiate these claims with cash book vouchers and other supporting documents during assessment or appellate proceedings? • Whether, on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of �49,85,873/- by relying on a letter dated 12.12.2019 allegedly submitted during assessment proceedings, without verifying whether the claimed entries were reconciled with the loose papers seized during the search? • Whether, on the facts and circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of 249,85,873/- without calling for a remand report from the AO to verify the authenticity of the cash book entries and supporting vouchers, as alleged by the assessee?

Revenue's Submission

1. Ground Related to Addition of �30,00,000/- under Section 69A

Assessment Order Findings:

• During the search operation on 07.09.2017, cash amounting to 32,75,200/-was found at the residential premises of the assessee. • The assessee claimed �30,00,000/- was withdrawn from the bank and 2,75,200/- was household savings. • The AO observed that:

The cash book was unreliable due to discrepancies, as noted in Para 6 of the assessment order. Withdrawals over the last 20 days amounted to only 16,84,295/-, far below the claimed �30,00,000/-. Loose papers found during the search reflected unrecorded transactions, further discrediting the cash book.

• Consequently, �30,00,000/- was added as unexplained cash under Section 69A, taxed under Section 115BBE, and penalty proceedings were initiated under Section 271AAC.

CIT(A)'s Decision:

• The Ld. CIT(A) deleted the addition, accepting the assessee's explanation based on the cash book entries and reasoning that the AO failed to rebut the cash book claims.

Revenue's Arguments:

1. Contradictory Observations by CIT(A):

• The CIT(A) observed that the AO had not considered the reply furnished by the assessee (as mentioned on Page 16 of the CIT(A) order). However, on Page 11, the CIT(A) stated that the AO had considered the reply. These contradictory observations undermine the basis of the CIT(A)'s findings. • The AO specifically identified defects in the cash book, as noted in Para 28 of the assessment order. The CIT(A) failed to consider these observations holistically.

2. Unreliable Cash Book:

• The AO identified material discrepancies in the cash book, supported by seized documents. • As held in Sumati Dayal v. CIT [(1995) 214 ITR 801 (SC)], evidence must be corroborated with surrounding circumstances and human probabilities.

3. Unsubstantiated Withdrawals:

• The assessee failed to substantiate that �30,00,000/- was withdrawn specifically for business expenses or retained as claimed. • Judicial precedents (P Mohanakala v. CIT [(2007) 291 ITR 278 (SC)]) establish that unexplained cash or transactions must be substantiated with credible evidence.

4. Applicability of Section 69A:

• As per Section 69A, unexplained cash is deemed income. The AO rightly taxed the addition under Section 115BBE.

5. Incomplete Explanation:

• Judicial precedents like CIT v. Durga Prasad More [(1971) 82 ITR 540 (SC)] highlight the importance of substance over form in evaluating claims.

2. Ground Related to Addition of �49,85,873/- under Section 69C

Assessment Order Findings:

• Loose papers seized during the search revealed unaccounted cash expenses totaling 249,85,873/-. • The AO treated these as unexplained expenditure under Section 69C and taxed them under Section 115BBE.

CIT(A)'s Decision:

• The Ld. CIT(A) deleted the addition, relying on a letter dated 12.12.2019 in which the assessee claimed these expenses were accounted for in the cash book.

Revenue's Arguments:

1. Incriminating Nature of Loose Papers:

• The loose papers are valid evidence as per Chuharmal v. CIT [(1988) 172 ITR 250 (SC)]. The onus to disprove their contents lay with the assessee, who failed to do so. • The AO observed that these papers reflected unrecorded transactions, which were not reconciled with the cash book.

• The CIT(A) relied on the letter dated 12.12.2019, claiming the expenses were accounted for. However, no remand report was called to verify these claims. • As noted in Sumati Dayal v. CIT [(1995) 214 ITR 801 (SC)], the claim must be supported by human probabilities and surrounding circumstances.

3. Contradictions in CIT(A)'s Observations:

ACIT v. Ajay Bakliwal • On one hand, the CIT(A) accepted that the AO considered the assessee's reply. On the other hand, the CIT(A) relied on a claim that the reply was ignored. • Such inconsistencies highlight the need for thorough verification, which the CIT(A) failed to undertake.

• Section 69C deems unexplained expenditure as income unless satisfactorily explained. The AO acted within the law in taxing these amounts under Section 115BBE.

• The assessee failed to reconcile the loose paper entries with cash book vouchers or substantiate claims of regular accounting practices. • In P Mohanakala v. CIT [(2007) 291 ITR 278 (SC)), the onus is on the assessee to substantiate legitimate transactions.

Conclusion

The Revenue respectfully submits that:

2. The Ld. CIT(A)'s decision to delete these additions is inconsistent with the evidence, judicial precedents, and the law. Prayer The Revenue respectfully prays that the Hon'ble ITAT:

1. 1. Reverse the deletion of additions made by the Ld. CIT(A). 2. Uphold the findings of the AO as reflected in the assessment order. 3. Grant any other relief deemed appropriate in the interest of justice.”

1. Addition of Rs.30,00,000/- u/s 69A The DR has stated that observing the following- • The cash book was unreliable due to discrepancies, as noted in para-6 of the assessment order • Withdrawals over the last 20 days amounted to only Rs.16,84,295/- far below the claim of Rs.30,00,000/- • Loose papers found during the search reflected unrecorded transactions, further discrediting the cash book the AO made the addition.

ACIT v. Ajay Bakliwal Whereas the AO had made the addition stating- The cash was found from the residential premises of the assessee and not from the business premises, therefore contention of the assessee that the cash was kept for expenditure related to different sites is not found convincing (It may be mentioned that that the office and residential premises are in the same building. The ground floor is used for office whereas the first and the second floor are used for residence, and the cash was kept at residence for security reasons). During the course of search, many incriminating documents were found and seized from the premises of the assessee (No description of such documents has been given by the AO in his order) It is also noticed that many transactions had not been entered by the assessee in his regular books of accounts (Again, the AO did not specify as to which transactions were not recorded) Based on these, the balance in cash book submitted by the assessee is not reliable.

From the above facts, it can be seen that the Ld. DR has tried to misguide the Bench by stating what has not been stated by the AO. The LD.DR is misrepresenting and distorting the facts before the Hon’ble Bench. The findings of CIT(A) on the issue are given on page-14 to 16 of the appellate order, which may kindly be perused. The Ld.CIT(A) has passed a well reasoned order quoting judgements of various ITATs on the issue. It would be pertinent to mention that the books of the assessee are duly audited. In the letter produced to the AO on 12.12.2019, the explanation with regard to cash of Rs.30,00,000/- found and a table indicating there in the relevant voucher numbers of all the expenses of Rs.49,85,873/- stated to be not recorded in the regular books, was given. The Ld.AO did not call for any further clarification. Therefore, the assessee was given to believe that the AO is satisfied with the reply of the assessee. In the assessment order, he went on to make the addition on both the counts. Further, even in his statements, the assessee had stated the same facts before the Authorized officer regarding the source of the cash found and had deposed that the necessary evidence would be produced. The learned AO has got no material to controvert the statement of the assessee. It is not the case of the learned AO that withdrawals had not been made form Bank. The cash balance as per cash book of Nav Bharat Nirman Co.(the proprietory concern of the assessee) was Rs.34,30,751/- which was sufficient to cover the availability of cash found from the assessee. Before the Ld. CIT(A), the copy of the letter filed before the AO during the assessment proceedings along with the relevant cash books was produced, which were duly examined by him and after being satisfied, the additions made by the AO were rightly deleted.

ACIT v. Ajay Bakliwal Coming to Revenue’s arguments put forth by the Ld. DR (Page-4), regarding Contradictory observations by CIT(A), again there is misrepresentation of facts. The CIT(A) has nowhere mentioned on page-16 that the AO had not considered the reply filed by the assessee. As regards defects stated to be pointed out by the AO in Para-28 of the assessment order, the order of the AO contains only 8 paragraphs.

Unreliable cash book - The Ld.DR has stated that the AO identified material discrepancies in the cash book, supported by seized documents. The assessee has maintained separate cash books for each site in his concern Nav Bharat Nirman Company. Apart from that there are cash books of other proprietorship concerns, viz. Bakliwal & Associates, Shubham Fly Ash, The AO has not stated in his order as to in which cash book he noticed discrepancies.

Unsubstantiated withdrawals – The Ld.DR has stated that the assessee failed to substantiate that Rs.30,00,000/- was withdrawn specifically for business expenses or retained as claimed. The bank account was before the AO. The cash book of Nav Bharat Nirman Co. was before the AO. The AO had not disputed that the closing balance as per cash book was incorrect. The withdrawals from bank was also test checked by the AO. The Ld.DR is expecting to explain something which is inexplicable. The cash book for the entire year showed that not even on a single occasion, any expense apart from business expense was incurred. The assessee had to maintain sufficient cash to meet out any urgent and unforeseen expenditure on various construction sites of his. Isn’t the cash balance as per books a substantive evidence/proof of cash found during searches.

Applicability of Section 69A – The Ld. DR has stated that unexplained cash is deemed income and the AO has rightly taxed the addition u/s 115BBE. It is submitted that the learned AO has made the additions applying the provisions of section 69A of the IT Act. The provisions of section 69A are not applicable to the facts of the case. The provisions of section 69A are quoted below:- section 69A-Unexplained money, etc. “69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewelry or other valuable article and such money, bullion, jewelry or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewelry or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewelry or other valuable article may be deemed to be the income of the assessee for such financial year”

The perusal of provisions of section 69A reveals that these are applicable only in a case where the money found is not recorded in the Books of Accounts. In this case the entire cash which was withdrawn from the bank stood accounted for in the regular cash book of Nav Bharat Nirman Co., maintained by the assessee. Therefore the provisions of sections 69A are not applicable. The additions made was unlawful and rightly deleted by CIT(A) after perusing the cash book and the bank account.

2. Addition of Rs.49,85,873/- u/s 69C The DR has stated that the AO had given a finding that loose papers seized during search revealed unaccounted cash expenses totaling Rs.49,85,873/- which were treated as unexplained expenditure u/s 69C whereas the Ld.CIT(A) deleted the addition relying on the letter dated 12.12.2019 in which the assessee claimed that these expenses were accounted for in the cash book. During the course of survey, explanation was sought on these papers. The assessee, in his statements recorded u/s 132(4), in reply to Q.No.18, had deposed that these expenses pertain to construction carried out by Nav Bharat Nirman Co. He even said that the muster roll of the persons to whom the consolidated payment exceeding Rs.20,000/- had been made was in possession of his Accountant or the respective person in whose name the voucher was made and would be made available later on. A copy of the relevant page of the statement is enclosed for your honor’s perusal.

At the time of assessment, the assessee had explained all the entries totaling to Rs. 49,85,873/- in tabulated form, before the AO, mentioning the Voucher no. of the relevant expense, along with the letter dated 12.12.2019. Books were also produced before him, as has been acknowledged by him in his order. The AO did not bother to verify the same. He told that he has to abide by the Appraisal Report. Before the CIT(A), no new evidence was adduced, as would have necessitated the calling of Remand report from the AO. The very letter dated 12.12.2019 which the AO ignored, was produced before the CIT(A) and the entries as per table were got verified from the books. The relevant books of NNC (Sanwariya Seth Site) viz. Cash Book and Navin Jain Imprest A/c were produced before the CIT(A) who verified each and every entry given in the table. It may be mentioned that the powers of CIT(A) are coterminous with that of AO. The CIT(A) did what the AO had failed to do.

Page Date Amount Ledger Mode of Remarks No payment 132 19.08.2017 700122.00 Site Exps Cash CBVoucherNo.103

130 08.06.2017 108370.00 Door Labour Exps Cash CBVoucherNo.13 128 12.05.2017 26000.00 Labour charges Cash CBVoucherNo.11 126 05.07.2017 130000.00 Labour charges Cash CBVoucherNo.47 124 07.07.2017 50000.00 Door Labour Exps Cash CBVoucherNo.54 122 10.07.2017 154690.00 Site Exps Cash CBVoucherNo.4 121 15.04.2017 35000.00 Cottage site exps Cash CBVoucherNo.21 120 15.04.2017 25000.00 Bottom tiles Exps Cash CBVoucherNo.20 118 10.07.2017 320000.00 Site Exps Cash CBVoucherNo.57 114 10.05.2017 36500.00 Grading Exps Cash CBVoucherNo.48 112 10.05.2017 30000.00 Bottom tiles Exps Cash CBVoucherNo.47 111 10.05.2017 40000.00 Outdoor plaster exps Cash CBVoucherNo.46 110 10.05.2017 173700.00 Site exps. Cash CBVoucherNo.56 107 23.05.2017 50000.00 Cottage Site Exps Cash CBVoucherNo.62 106 23.05.2017 32000.00 Salary Exps Cash CBVoucherNo.63 105 10.07.2017 775736..00 Site Expenses Cash CBVoucherNo.63 101 15.06.2017 100000.00 Tiles Exps(Surajmal) Cash CBVoucherNo.35 100 15.06.2017 250000.00 Tiles Exps(Kapasia Cash CBVoucherNo.34 Builders) 98 30.06.2017 150000.00 Tiles Exps (Kapasia Cash CBVoucherNo.46 Builders ) 94 10.07.2017 231000.00 Site Exps Cash CBVoucherNo.55 92 10.07.2017 57760.00 Site Exps Cash Request for payment 91 08.08.2017 100000.00 Labour Exps Cash CBVoucherNo.100 90 25.07.2017 100000.00 Door Labour Exps Cash CBVoucherNo.68 89 21.08.2017 498270.00 Site Exps Cash CBVoucherNo.102 87 21.07.2017 25000.00 Tiles Exps Cash CBVoucherNo.117 86 21.07.2017 140000.00 Site Exps Cash CBVoucherNo.116 85 21.07.2017 25000.00 Site Exps Cash CBVoucherNo.115 83 21.07.2017 75000.00 Cottage Site Exps Cash CBVoucherNo.114 82 21.07.2017 30000.00 Tiles expenses Cash CBVoucherNo.113 81 21.07.2017 30000.00 Cottage site Exps Cash CBVoucherNo.112 80 21.07.2017 35325.00 Site Expenses Cash CBVoucherNo.118 78 06.08.2017 25000.00 Tiles Exps Cash CBVoucherNo.99 77 06.08.2017 25000.00 Tiles Exps Cash CBVoucherNo.98 76 06.08.2017 180000.00 Site Exps Cash CBVoucherNo.97 74 06.08.2017 25000.00 Cottage Site Exps Cash CBVoucherNo.96 73 06.08.2017 25000.00 Cottage Site Exps Cash CBVoucherNo.95 72 06.08.2017 60000.00 Cottage Site Exps Cash CBVoucherNo.94 70 11.08.2017 111400.00 Site Exps Cash CBVoucherNo.101 Total 4985873.00

Perusal of the table reveals that against each entry the assessee had given No. of relevant cash book voucher where the expenditure is accounted for. Had the learned AO cared to go through the reply of the assessee there would have been no occasion for making the addition. The Ld.CIT(A) verified the expenses stated to be unrecorded by the AO, from the cash book and gave a finding that the expenses are duly accounted for. Otherwise also the assessee submits that there is no reason why the business expenditure would not be accounted for in the Books of Accounts. The claim of expenditure is normally inflated in case of Builders and civil contractors. But here is a case where the learned AO is making observations that expenditure has not been claimed by the assessee in the regular Books of Accounts. The asseseee reiterates that the entire expenses are accounted for and the additions were totally unwarranted and the same have been rightly deleted by the Ld. CIT(A)

In the light of the above submission, it is prayed that the order of CIT(A) providing relief to the assessee after carrying out thorough examination of the books, may kindly be upheld.”

Assessee use ground floor for office and other part as residence of the assessee. The cash was kept at residence for security reasons. During the course of search, many incriminating documents were found and seized from the premises of the assessee as alleged by the ld. AO but no description of such documents given by the AO in his order. It is also noticed that many transactions had not been entered by the assessee in his regular books of accounts here again ld. AO did not specify as to which transactions were not recorded. The DR has stated that the AO had given a finding that loose papers seized during search revealed unaccounted cash expenses totaling Rs.49,85,873/- which were treated as unexplained expenditure u/s 69C whereas the Ld. CIT(A) deleted the addition relying on the letter dated 12.12.2019 in which the assessee claimed that these expenses were accounted for in the cash book and therefore, even before ITAT in the present appeal ld. AO did not bring anything contrary to that finding and has choose to remain silent again. Based on these contention ld. AR of the assessee relied upon the order of the ld. CIT(A). on record. In the present appeal the revenue while challenging the order of ld. CIT(A) raised three grounds related to direction for deleting the addition of Rs. 30,00,000/- being the amount of cash found was considered as explained whereas the same was in fact unexplained at the time of search by the assessee.

The other three grounds challenge the direction for deleting the addition of Rs. 49,85,873/- made by the ld. AO considering the same as unaccounted expenses.

Thus, effectively the issue raised relates to the two-addition made by the ld.AO which were directed to deleted by the ld. CIT(A) and thereby the present appeal filed by the revenue.

The brief fact related to these two additions are that a search & seizure operation under section 132(1) of the Act was carried out on 07.09.2017 at the various premises of ‘Resonance Group, Kota to which the assessee belongs. In that proceeding cash, jewellery and other documents found and seized including that of the assessee.

Record reveals that the assessee is an individual and derives income under the head salary, income from business or profession and other sources. For the year under consideration the Assessee had filed his return 26,91,090/-. Statutory notices were issued and served upon the assessee calling for the details and the assessee in response to those notice furnished the details / information / documents / which were examined with respect to claims made in the return of income.

Ld. AO further noted that that while search action many incriminating documents were found and seized from the premises of the assessee by the search party. The list relates to 70 entries as detailed in the assessment order which relates to the various expenses related to the sites and were incurred in cash for an amount of Rs. 49,85,873/-. Ld. AO therefore considered that these expenditures were not recorded in the regular books of account and therefore, it was considered as not accounted / verifiable.

The assessee carried out that disputed addition by filling an appeal before the ld. CIT(A) and because the cash on hand and the alleged expenditure were duly recorded in the cash book so filed by the assessee the same were directed to be deleted by the ld. CIT(A) on merits.

The revenue challenges that order before us contending that ld. CIT(A) was not justified in deleting the addition of �30,00,000/- on account of the residence of the assessee, without appreciating the fact that the assessee failed to explain the source of cash during both the search and assessment proceedings. The contention of having cash on hand was not verified by the ld. CIT(A) and even in the statement the assessee said he will explain but did not do so. While giving direction ld. CIT(A) did not call for the remand report from the assessing officer to verify the contention of the assessee and thereby erred in the accepting the contention of the assessee of the withdrawal made by the assessee which were long before the search and therefore, the finding of ld. CIT(A) was disputed on that aspect. The bench noted that the assessee – appellant while replying the question no.

28 at the time of search categorically submitted that the cash on hand for an amount of Rs. 30 lac is out of withdrawal and meant for the expenditure to be incurred on the various sites of construction going on. That specific reply was also filed in the assessment proceeding vide letter dated 12.12.2019 contending that the cash found during search is fully accounted and kept at home considering the various expenditures on different sites.

Ld. AO did not considered that reply of the assessee merely on the reasons that cash was found from the residence of the assessee and thereby the contention which is supported by filling the copy of cash book was rejected. as residence and therefore, effectively the cash was available in the same premises. Thus, merely the contention that the cash was found at the residence being in the same premises, the cash which is reflected in the cash book cannot be denied. The bench also noted that the assessee was asked a specific question as to the withdrawal of last 20 days is only 18,84,295/- and thereby while dealing with the question for seizure of cash for an amount of Rs. 12,75,200/- the assessee contended that the same is already disclosed in the books of accounts and assured to produce the proof of the same. We also note that the ld. AO made that addition as per provision of section 69A of the Act which deals that the addition of the cash can only be made if the same is not recorded in the books of account but here the same is already supported by a cash book filed and the same was not disputed by the ld. AO in the assessment proceeding, before the ld. CIT(A) and while the matter listed for us the same was not disputed by the ld. AO by filling any contrary material to the facts already on record.

Therefore, considering that aspect of the matter we see no infirmity in the order of the ld. CIT(A). Based on these observations, ground no. 1 to 3 raised by the revenue stands dismissed.

Rs. 49,85,873/- which was made considering the provision of section 69C of the Act on the ground that the expenditure listed at Sr no. 1 to 70 totaling to Rs. 49,85,873/- was not recorded in the books of account of the assessee. Since that addition was made considering that provision of the Act, it would be appropriate to deal with that provision of the Act;

Unexplained expenditure, etc. 69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year : Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.

As is evident from the above provision of the Act, when the assessee incurs any expenditure and offers no explanation about the source of such expenditure and the explanation offered by the assessee is not satisfactory than the ld. AO may make the addition. Records reveals that ld. AO contended that loose papers were seized during search were unaccounted cash expenses totaling Rs.49,85,873/- which were treated as unexplained expenditure u/s 69C. Ld. CIT(A) deleted that addition relying on the letter dated 12.12.2019 in which the assessee claimed that these expenses were accounted for in the cash book. While search action the statement of the assessee was recorded u/s 132(4) of the Act wherein in reply to Q.No.18, assessee submitted that these expenses pertain to construction carried out by Nav Bharat Nirman Co. He even said that the muster roll of the persons to whom the consolidated payment exceeding Rs.20,000/- had been made was in possession of his Accountant or the respective person in whose name the voucher was made and would be made available later. At the time of assessment, the assessee had explained all the entries totaling to Rs. 49,85,873/- in tabulated form, before the AO, mentioning Voucher no. of the relevant expense, along with the letter dated 12.12.2019. Books were also produced before him, as has been acknowledged by him in his order.

The ld. AO has not verified that contention of the assessee. As the assessee has not produced anything new before the ld. CIT(A) there is requirement to call for the remand report and even before us the assessee submitted a tabulated reply giving reference to the cash book vouchers no and the list of the expenditure considered alleged to have unexplained in fact was recorded in the cash book so filed. The list filed reads as under:

Page Date Amount Ledger Mode of Remarks No payment 132 19.08.2017 700122.00 Site Exps Cash CBVoucherNo.103 130 08.06.2017 108370.00 Door Labour Exps Cash CBVoucherNo.13 128 12.05.2017 26000.00 Labour charges Cash CBVoucherNo.11 126 05.07.2017 130000.00 Labour charges Cash CBVoucherNo.47 124 07.07.2017 50000.00 Door Labour Exps Cash CBVoucherNo.54

122 10.07.2017 154690.00 Site Exps Cash CBVoucherNo.4 121 15.04.2017 35000.00 Cottage site exps Cash CBVoucherNo.21 120 15.04.2017 25000.00 Bottom tiles Exps Cash CBVoucherNo.20 118 10.07.2017 320000.00 Site Exps Cash CBVoucherNo.57 114 10.05.2017 36500.00 Grading Exps Cash CBVoucherNo.48 112 10.05.2017 30000.00 Bottom tiles Exps Cash CBVoucherNo.47 111 10.05.2017 40000.00 Outdoor plaster exps Cash CBVoucherNo.46 110 10.05.2017 173700.00 Site exps. Cash CBVoucherNo.56 107 23.05.2017 50000.00 Cottage Site Exps Cash CBVoucherNo.62 106 23.05.2017 32000.00 Salary Exps Cash CBVoucherNo.63 105 10.07.2017 775736..00 Site Expenses Cash CBVoucherNo.63 101 15.06.2017 100000.00 Tiles Exps(Surajmal) Cash CBVoucherNo.35 100 15.06.2017 250000.00 Tiles Exps(Kapasia Cash CBVoucherNo.34 Builders) 98 30.06.2017 150000.00 Tiles Exps (Kapasia Cash CBVoucherNo.46 Builders ) 94 10.07.2017 231000.00 Site Exps Cash CBVoucherNo.55 92 10.07.2017 57760.00 Site Exps Cash Request for payment 91 08.08.2017 100000.00 Labour Exps Cash CBVoucherNo.100 90 25.07.2017 100000.00 Door Labour Exps Cash CBVoucherNo.68 89 21.08.2017 498270.00 Site Exps Cash CBVoucherNo.102 87 21.07.2017 25000.00 Tiles Exps Cash CBVoucherNo.117 86 21.07.2017 140000.00 Site Exps Cash CBVoucherNo.116 85 21.07.2017 25000.00 Site Exps Cash CBVoucherNo.115 83 21.07.2017 75000.00 Cottage Site Exps Cash CBVoucherNo.114 82 21.07.2017 30000.00 Tiles expenses Cash CBVoucherNo.113 81 21.07.2017 30000.00 Cottage site Exps Cash CBVoucherNo.112 80 21.07.2017 35325.00 Site Expenses Cash CBVoucherNo.118 78 06.08.2017 25000.00 Tiles Exps Cash CBVoucherNo.99 77 06.08.2017 25000.00 Tiles Exps Cash CBVoucherNo.98 76 06.08.2017 180000.00 Site Exps Cash CBVoucherNo.97 74 06.08.2017 25000.00 Cottage Site Exps Cash CBVoucherNo.96 73 06.08.2017 25000.00 Cottage Site Exps Cash CBVoucherNo.95 72 06.08.2017 60000.00 Cottage Site Exps Cash CBVoucherNo.94 70 11.08.2017 111400.00 Site Exps Cash CBVoucherNo.101 Total 4985873.00 As is evident from the above table that against each entry the assessee had given No. of relevant cash book voucher where the expenditure is through the ld. DR. Ld. CIT(A) having co-terminus power had considered the reply which was not disputed before us we do not find any infirmity in the finding of the ld. CIT(A) while directing to delete the addition of Rs.

49,85,873/-. Even other wise no wise business would like to not record the business expenses. Thus, we note that when all the entries so alleged to have been considered as unexplained were in fact recorded in the cash book filed and when the same was filed before ld. AO he did not bother to file any contrary evidence before us as to why that explanation should not be considered. In the light of these discussion we do not any infirmity in the finding so recorded by the ld. CIT(A) and therefore, ground no. 4 to 6 raised by the revenue stands dismissed.

In the result, the appeal filed by the revenue stands dismissed in terms of the observation so made herein above.

ACIT v. Ajay Bakliwal Order pronounced in the open court on 11/04/2025. 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:-11/04/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- ACIT, Central Circle, Kota 2. izR;FkhZ@ The Respondent- Ajay Bakliwal, Kota 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 1413/JP/2024) 6. vkns'kkuqlkj@ By order,

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