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Facts
The assessee filed her return of income and during the assessment year, deposited a significant sum of Rs. 49,75,500/- in her bank account. The Assessing Officer (AO) added this amount to her total income as unexplained cash deposit, which was also confirmed by the CIT(A).
Held
The Tribunal observed that the assessee claimed the money belonged to three individuals, and affidavits were filed in support. However, the AO and CIT(A) had not adequately considered these submissions or the fact that the matter was referred to a BPC unit. Therefore, the Tribunal restored the case back to the AO for de-novo assessment.
Key Issues
Whether the addition of cash deposit of Rs. 49,75,500/- as unexplained income is justified without proper consideration of the assessee's explanation and supporting affidavits, especially when the matter was referred to a BPC unit?
Sections Cited
250, 143(3), 69A, 234B, 234C, 139(4), 142(1), 131
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCH “A”, JAIPUR
Before: Dr. S. SEETHALAKSHMI & SHRI GAGAN GOYAL
PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of NFAC, Delhi dated 15.04.2024 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’). The assessee has raised the following grounds of appeal: -
The impugned assessment order dated 04-12-2019 passed u/s. 143(3) of the Act is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same deserves to be fully quashed.
2. Rs.49,75,500/-: The Ld. CIT(A) erred in law as well as on the facts of the case in confirming the addition of Rs.49,75,500/- u/s. 69A on account of unexplained cash deposit during the demonetization period. The addition so made and confirmed being contrary to the provisions of law and facts, kindly be deleted in full.
The Ld. AO erred in law as well as on the facts of the case in charging interest u/s. 234B & 234C. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions of law and facts, kindly be deleted in full.
4. the appellant prays your honour's indulgence to permit add, amend or alter all or any of the Grounds of the Appeal on or before the date of hearing.
The brief facts of the case ate that the assessee has filed her return of income on 13.01.2018 u/s. 139(4) of the Act declaring total income at Rs. 1,63,380/-. The case of the assessee was selected for complete scrutiny under CASS and statutory notices were issued as required. During the year under consideration the assessee deposited a sum of Rs. 49, 75,500/- in her bank account. In opinion of the AO, she is not able to explain the source of cash deposit. Hence addition of the same u/s. 69A of the Act on substantive basis and on protective basis in the name of Sh. Anil Kumar Garg, Sh. Nitesh Paliwal and Sh.
Nitesh Agarwal. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT (A), who in turn confirmed the action of the AO by dismissing the appeal of the assessee. The assessee being further aggrieved with the same preferred the present appeal before us.
3. We have gone through the order of the AO, order of the Ld. CIT (A) and submissions of the assessee alongwith the grounds taken before us.
It is observed that the assessee under consideration tried to explain the source of cash deposit before the AO and the Ld. CIT (A). We deem it fit to reproduce herein below the submissions of the assessee before the AO and the Ld. CIT (A) also as under:-
Before the AO:
During the course of assessment proceedings the assessee was asked to furnish the source of above cash deposits. The assessee has submitted that these amounts pertain to Shri Anil Kumar Garg (PAN- AGPPG3600F), Shri Nitesh Agarwal (PAN-ANWPA5674M) and Shri Nitesh Paliwal (PAN AMNPP3530H). She stated that the above cash was provided by these people to her and accordingly on their direction the amount was transferred to respective person. The matter was referred to DCIT (BPU), Jaipur vide this office letter No 2125 dated 09.02.2018. The ACIT (BPU) vide his office letter no 987 dated 30.10.2019 intimated that the matter in the case is under process and matter will be dealt with according the provision of PBPT Act and action as per provision of Income Tax Act may be taken. Therefore a show cause letter was issued to the assessee as under- “Please refer to this office notice u/s 142(1) dated 02.09.2019 and reply filed by you in the matter. You have claimed that you have made cash deposits during demonetization period on behalf of (1) Shri Anil Kumar Garg, Shri Hitesh Paliwal and Shri Hitesh Agarwal. As you have deposited the case in your bank account, you are required to prove the source of cash deposits. Please produce the above person to substantiate that money belongs to these persons. Please date wise details of money received from these persons as claimed by you. Please also produce Smt. Beena Sharma from whom you have made property transaction during the year. Your case is fixed for 13.11.2019 at 11.00AM. Please show cause that in failure of above compliance, why the cash deposits made by you may not be added to your total income as per provision of Income Tax Act. Further source of payment made in respect to property transaction may also not be added.
On 13.11.2019 an adjournment application has been received. On request case was fixed for 20.11.2019. The assessee filed written reply on 20.11.2019 as under- “Regarding the source of cash deposit in my bank account I have already informed your honour that the cash belongs to Shri Anil Kumar Garg, Shri Nitesh Paliwal and Nitesh Agarwal. This money belongs to them and they insisted me to deposit the same in my bank account during the period of demonetization. They said to take the money back after some time I was not aware of the intention that they had behind asking me to do so. Later on they asked me to pay the money through RTGS to various jewelers Evidences which have been already filed earlier. That I am unable to produce them, before your honour. They are even forcing me not to appear before the income tax department. I have already filed FIR at the police department that the persons are trying to detain me for not appearing before the department. Copy of the same has already been filed with your honour. That the cash was deposited in the bank as and when I received the same from the above mentioned three persons. That Smt. Beena Sharma is also not traceable and the agreement with her was also fake which was written under the pressure of all the three persons.”
Before the Ld. CIT (A):
1. That, on facts and in law the Learned Income Tax Officer has wrongly added Rs. 49,75,550 /- as unexplained cash deposit in the bank on substantive basis. Your honour here I would like to submit that the appellant had already filed her submission on 03.10.2019 before the Learned Income Tax Officer. Copy of the same is enclosed herewith. The appellant repeatedly mentioned that the amount belongs to Shri Anil Kumar Garg, Shri Nithesh Paliwal and Shri Nitesh Agarwal. Therefore, the said amount deposited in the bank was transferred to the persons on the instructions of all the persons. The appellant has also filed an affidavit before the Income Tax Officer saying that the amount belong to all these persons. Copy of the affidavit is enclosed herewith.
That now, the appellant has the copy of her statements recorded before the Deputy Commissioner of Income Tax (BPC). The copy of same is enclosed herewith.
That, in the statement recorded before the Deputy Commissioner of Income Tax (BPC) the appellant had clearly mentioned that all these persons had deposited the money in name of other persons also. The, learned Income Tax Officer without verifying the statements of the appellant completed the case on substantive basis.
2. That, the Learned Income Tax Officer has erred in not giving cognizance to the appellant statements recorded from time to time. Here, I would like to submit that, the appellant in all of her statements has clearly mentioned that the money belongs to these persons namely Shri Nitesh Agarwal, Shri Anil Kumar Garg and Shri Nitesh Paliwal. She has also filed few evidences regarding their cheating in land cases and also given a copy of one newspaper in which their respective names are being mentioned in fraudulent activities. Sir, this confirms that these people are involved in fraudulent activities on regular basis. Moreover, Search and survey operation under Income Tax Act were conducted in the case of Shri Nitesh Agarwal right after the demonetization period.
That, from the above mentioned facts, it is clear that the money belongs to all these persons and even otherwise the appellant has no source for depositing such a huge amount. Sir, she was working under them and was being used by them to channelize their black money.
3. That, Shri Anil Kumar Garg and Shri Nitesh Paliwal neither attended the proceedings nor they have denied that the amount does not belong to them. In these circumstances it cannot be said that the appellant has offer no explanation regarding the deposited money hence section 69A is not applicable and because the two persons neither attended the Income Tax Office in response to the summons u/s. 131. They have not at all denied that the money does not belong to them. It is clear that the money belongs to them only. Hence, the addition of Rs. 49, 75,500/- made u/s. 69A requires to be deleted.
That, it is further requested that before giving any verdict, the files of all the three persons should be clubbed and meanwhile this appeal may be kept pending till then.
That, the order of learned Income Tax Officer is erroneous both in points of law and on facts. It is, therefore, prayed that the order of the Income Tax Officer be modified accordingly and the income of the appellant be reduced."
4. In view of the above submissions made by the assessee before the AO and the Ld. CIT (A), we are of the opinion that the allegations made by the assessee, meagre source of income and affidavits filed need a thorough consideration by the authorities below. Especially in the light of the facts that matter has been referred by the Department to the BPC unit. Secondly the affidavits filed by the assessee have not been dealt in by the AO and the Ld. CIT (A). There is no mention of the actions taken by the BPC Unit or any sought of progress report against/in favour of the three persons mentioned (supra). In this matter the consequential action of BPC Unit has a phenomenal and deciding role and without considering the reports of BPC Unit adjudication of the assessee cannot with completed in a justify manner.
In view of the above, the matter is restored back to the file of the JAO and directed to the assessment de-novo considering the impact of the report prepared by the BPC Unit. Resultantly, grounds taken by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 24th day of March 2025. Sd/- Sd/- (Dr. S. SEETHALAKSHMI) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur, िदनांक/Dated: 24/03/2025 Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. आयकर आयु� CIT 3. 4. िवभागीय �ितिनिध, आय.अपी.अिध., Sr.DR., ITAT, 5. गाड� फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, Jaipur
Details Date Initials Designation
1 Draft dictated on PC on 24.03.2025 Sr.PS/PS 2 Draft Placed before author 24.03.2025 Sr.PS/PS 3 Draft proposed & placed before the Second JM/AM Member 4 Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8 Date on which the file goes to the Head clerk 9 Date of Dispatch of order