AMIT MEHARDA,JAIPUR vs. ACIT, CIRCLE 6, JAIPUR, JAIPUR

fu/kZkfjrh dh vksjls@Assesseeby : Shri Mukesh Khandelwal, CA jktLo dh vksjls@Revenue by :Shri Gautam Singh Choudhary, Addl.CIT -DR a lquokbZ dh rkjh[k@Date of Hearing :24/04/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 06 /05/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of this appeal the assessee – appellant challenges the order of the learned Commissioner of Income Tax Addl./JCIT(A)-3, Delhi [ for short CIT(A) ]dated 12-02-2025 which relates to the assessment year 2016-17 raising therein following grounds of appeal; ‘’That the ld. CIT(A) has erred on facts in allowing part relief of Rs.80,000/- out of total addition of Rs.5,80,000/- done by AO on account of unexplained asset u/s SHRI AMIT MEHARDA VS ACIT, CIRCLE -6, JAIPUR 69A of the Income Tax Act, 1961 without properly appreciating the documents and explanations submitted to him.’’ 2.1 Apropos solitary ground of appeal of the assessee, it is noticed that the ld. AO made an addition of Rs.5.80 lacs in the hands of the assessee as the AO during the course of assessment proceedings noticed that the assessee had cash deposits of Rs.80,000/- on 23-12-2015 and Rs.5,00,000/- on 05-03-2016. The AO vide notice u/s 142(1) dated 29-09- 2018 asked the assessee to provide the detailed explanation of the source of every cash deposit made with proof of the source of the deposit of cash. The assessee was also asked to provide a complete cash book for the A.Y. 2015-16 and 2016-17 with narration of all the entries. However, the assessee did not provide the cash book of the relevant period and instead furnished a cash book for F.Y. 2016-17 only and the assessee stated that the source of the deposit is ‘’cash in hand’. The AO further noted that the assessee did not provide any explanation regarding the source of cash deposits and the proof of the claimed source. Thus, according to the AO, the assessee had failed to provide any basis or proof of the said claim despite being specifically asked by the AO to do the same. It is also noted that the assessee did not furnish cash book for A.Y. 2015-16 and A.Y. 2016-17 with narration of entries. Hence, the same remained unverifiable.

SHRI AMIT MEHARDA VS ACIT, CIRCLE -6, JAIPUR The AO further noted that the assessee even did not file the ITR for the A.Y. 2013-14, 2014-15 and 2015-16 within the due date of filing of return of income. Conclusively, the AO noted that the assessee could not put forth the source of cash deposits of Rs.5.80 lacs before the AO and the AO made an addition of Rs.5.80 lacs u/s 69A of the Act in the hands of the assessee. 2.2 In first appeal, the ld.CIT(A) restricted the addition to the extent of Rs.5.00lacs and allowed the relief of Rs.80,000/- to the assessee by observing as under:- ‘’The rival submissions are considered. It is found that the appellant had declared income from house property and income from other source being interest from bank during the year, therefore the necessity of maintaining cash book is not there. However, there was substantial amount of transaction involving cash during the year. Despite having income only from house property and interest from bank the reason of substantial transaction in cash is not explained The appellant had not explained the purpose behind very heavy cash withdrawal and keeping it with himself for considerable period. It is found that the following cash was deposited in the bank account of appellant:-

23.12.2015 SBBJ Rs. 80,000/- 05.03.2016 Axis Bank Rs. 5,00,000/- It is found that amount of Rs. 10,00,000/- was withdrawn from SBBJ on 14.12.2015. The deposit of Rs. 80,000/- was made in the same bank account on 23.12.2015. Therefore, it is presumed that the deposit is out of surplus remaining of cash withdrawal of Rs. 10,00,000/-after utilising the cash for the purpose it is withdrawn. So, there is proximity of dates hence explanation of appellant in this regard is accepted and addition of Rs. 80,000/- is deleted. However, the next SHRI AMIT MEHARDA VS ACIT, CIRCLE -6, JAIPUR deposit of Rs. 5,00,000/- in cash is on 05.03.2016 in axis bank. The amount cannot be attributed to the withdrawal of Rs. 10,00,000/- made on 14.12.2015. There is substantial time gap between the transaction and the additional facts of deposit of only Rs. 80,000/- on 23.12.2015 proves that the deposit is not out of cash withdrawal of Rs. 10,00,000/-. The other cash withdrawal has been made in April and May 2015 which are separated by long time gap from the deposit in March 2016. Despite, having income from House Property and bank interest, the pattern of heavy cash withdrawal and deposits was followed regularly in the next FY as well. The bank account of appellant revealed substantial cash withdrawal in earlier years also where no ITR was filed. Therefore, considering the above facts the addition made u/s 69A is restricted to Rs 5,00,000/- The appellant got relief of Rs. 80,000/-.’’ 2.3 During the course of hearing, the ld. AR of the assessee prayed to delete the addition of Rs.5.00 lacs sustained by the ld.CIT(A) by placing reliance on the following written submission; Written Submissions May it please yourhonour, Brief facts of the case :- The appellant earns income from rent and income from other sources during the year under consideration. He had filed his ITR for the relevant assessment year on 19.03.2018 vide e filing acknowledgment no. 462520430190318 declaring a taxable income of Rs. 15,34,210/-. The ITR was put to scrutiny and notice u/s 143(2) was issued. Thereafter notices u/s 142(1) were issued and various details were called for which were duly complied with by the appellant. The ld. AO raised query about cash deposit of Rs. 5,80,000/- in the bank account during the year under consideration. The appellant had submitted plausible reply but the ld. AO was not satisfied with the reply and considered the said deposit as unexplained money of the assessee and taxed the same in terms of section 69A r.w.s. 115BBE of the Income Tax Act, 1961. IstAppeal :

SHRI AMIT MEHARDA VS ACIT, CIRCLE -6, JAIPUR Appeal was preferred against the assessment before the Ld. CIT (A) who did not agree with the submissions of the appellant fully and allowed relief to the extent of Rs. 80,000/- and sustained the addition to the tune of Rs. 5,00,000/-. Against this order of the ld. CIT (A) the appellant is before your honours. Ground wise submissions :- Ground No.1 : That the CIT (A) has erred on facts in allowing only part relief of Rs. 80,000/- out of total addition of Rs. 5,80,000/- done by ld. AO on account of unexplained asset u/s 69A of the Income tax Act, 1961 without properly appreciating the documents and explanations submitted to him. The appellant was maintaining following bank accounts during the year under consideration :-

1. 51016434646 SBBJ 18.04.2015 1,00,000 (APB 1 back pg) 2. 61160697161 SBBJ 18.04.2015 2,00,000 (APB 6) 3. 61160697161 SBBJ 19.05.2015 5,00,000 (APB 6) 4. 61160697161 SBBJ 14.12.2015 10,00,000 (APB 6) 5. 433010100054038 Axis Bank 05.03.2016 5,00,000 (APB 7) Cash Deposits into bank accounts :-

1. 61160697161 SBBJ 23.12.2015 80,000 (APB 6) 2. 433010100054038 Axis Bank 05.03.2016 5,00,000 (APB 7)

SHRI AMIT MEHARDA VS ACIT, CIRCLE -6, JAIPUR The appellant had withdrawn Rs. 10,00,000/- on 14.12.2015 which itself was sufficient to justify the cash deposit of Rs. 80,000 on 23.12.2015 and Rs. 5,00,000/- on 05.03.2016. However ld. CIT (A) held that deposit of Rs. 80,000/- can be considered out of above said withdrawl due to very little time gap but there was sufficient gap between the date of withdrawl of Rs. 10,00,000/- and deposit of Rs. 5,00,000/- and hence he sustained the addition made by ld. AO at Rs. 5,00,000/-. The appellant had withdrew a sum of Rs. 10,00,000/- as he was considering a proposal of buying a piece of agricultural land and in the wake of advancing the sum to the seller this was withdrawn. He was in active negotiations with the broker regarding such purchase but ultimately such proposal did not mature and the money was lying with him only and ultimately he had deposited a sum of Rs. 5,00,000/- out of above stated withdrawl of Rs. 10,00,000/-. The ld. AO and ld. CIT (A) merely used their guess work to hold that money was not with the appellant on the date of deposit on account of time gap. No evidence has been brought by any of them to justify that the appellant had spent the amount withdrawn on 14,.12.2015 for some other use. Such estimation can not form the basis of making addition/ disallowance and hence is liable to be rejected. The appellant relies on following judicial pronouncements :- 1. DCIT vs. Pawan Agarwal (ITAT, Lucknow) (ITA No. 374/LKW/2013 vide order dated 23.01.2015) :-In the said case the assessment was completed by making addition on account of unexplained cash deposits in the bank account(s) of the assessee. The AO noted that there were frequent huge withdrawal from the bank and simultaneously huge cash deposit in the bank account of the assessee. During proceedings the assessee filed a cash flow statement showing the availability of sufficient cash in hand for making the deposits in the bank. In the said cash flow statement the assessee had considered the cash withdrawals made from the banks as source of the cash deposits. The AO doubted it. According to him, it was beyond comprehension as to why the cash amounts were required to be withdrawn when the cash out of earlier withdrawals was available and as to why the cash was deposited again in the bank account. Thus, the AO treated the amount of cash deposit as undisclosed income of the appellant and added the same. The Ld. CIT (A) deleted the addition as according to him, the assessee is not supposed to keep track of the number of respective notes which were received by him when the cash was withdrawn by him and get it tallied with the cash deposit which he is making in the same bank account or other bank account, but what is to be seen is as to whether there was sufficient cash available with the assessee. Further he found that the assessee had sufficient cash available with him out of the cash withdrawls made by him from time to time.

SHRI AMIT MEHARDA VS ACIT, CIRCLE -6, JAIPUR The revenue filed appeal before the Hon`ble ITAT, Lucknow bench, Lucknow and the Hon`ble ITAT sustained the order of the CIT (A) and dismissed the appeal of the department The Tribunal noted that from the findings recorded by the AO, it was apparent that he just disbelieved the cash deposits and cash withdrawal on the basis of surmises and conjectures.

2. Kamlesh Kantilal Bhandari v/s ITO, Ward 1 , Ahmednagar (ITAT, Pune) (ITA No. 1320/PN/2016 vide order dated 29.07.2016) : In this case the assessee was a retail business person and during assessment proceedings in his case for the AY 2012-13 it was noticed by ld. AO that the assessee had deposited cash sum of Rs. 24,25,000/- in his bank accounts. Due to non submission of any details the ld. AO considered the said sum as unexplained income of the assessee and taxed the same. During appellate proceedings the assessee had filed cash flow statement before the ld. CIT (A) and explained the cash deposits to be out of earlier cash withdrawls. However the Ld. CIT (A) also dismissed the appeal by holding that assessee failed to prove link between the amounts withdrawn from bank and deposit into bank accounts. On further appeal the Hon`ble ITAT allowed the appeal by holding as under :- “15. Since in the instant case there is no material before the revenue authorities that the assessee has made investment in some other assets or made some expenditure which has come to the notice of the department, therefore, in absence of any such material the plea of the assessee that cash deposited in the bank account was out of the previous cash withdrawal from the bank cannot be disbelieved summarily. Since the deposit in the bank account of Rs.24,25,000/- is much less than the amount of cash withdrawn on previous occasions from the bank amounting to Rs.33,70,000/- and since there is no material at the disposal of the Revenue that the assessee has spent the money otherwise, therefore, I am of the considered opinion that the cash withdrawn earlier is available with the assessee for deposit in the bank account. In this view of the matter, I set aside the order of the CIT(A) and direct the AO to delete the addition.

3. M/s. Karan Realty P Ltd. v/s ITO, Ward 2(1)(2) (ITAT, Ahmedabad) (ITA No. 2180/AHD/2018 vide order dated 08.09.2023) : The assessee had deposited cash sum of Rs. 16, 19,500/- into its bank accounts during demonetization period which was taxed by the ld. AO as unexplained money due to non submission of any details by the assessee. In first appeal the ld. CIT (A) also sustained the order as he was not satisfied about the time gap between earlier withdrawls from bank accounts and deposit of the same amount into bank accounts. On further appeal the Hon`ble ITAT allowed the appeal by holding as under :- 14. We have heard the rival contentions of both the parties and perused the materials available on record. Undeniably, the learned CIT(A) in his order has SHRI AMIT MEHARDA VS ACIT, CIRCLE -6, JAIPUR admitted that there was a cash withdrawal from the bank before depositing the same in the bank account of the assessee. None of the authorities below has pointed out that the cash withdrawn from the bank has been utilized by the assessee for any other purpose. In the absence of such finding, an inference can be drawn that the cash withdrawn from the bank was available with the assessee for the deposit in the bank account. Accordingly, we are of the view that the cash deposited by the assessee in the bank account cannot be treated as unexplained/undisclosed income of the assessee. Thus, we set aside the finding of learned CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal

of the assessee is hereby allowed.’’ In the case before your honour also no material has been brought on record by the ld. AO or CIT (A) to controvert the claim of the appellant that the cash deposited into bank account(s) was balance out of previous withdrawls and therefore the contention of the appellant deserves to be accepted and the addition sustained by ld. CIT (A) to the extent of Rs. 5,00,000/- may kindly be deleted and oblige. ‘’ To support hiswritten submission, the ld.AR of the assessee has filed the paper bookrelying on the following evidence / records:- S.N. Description Page No.

1. Bank Statement – SBBJ 01-04-2012 to 25-07-2016 A/c 1-2 No.51016434646 2. Bank Statement – Axis Bank 01-04-2015 to31-03-2016 3 A/c No. 09020041480683 3. Bank Statement – SBBJ 01-04-2012 to 13-12-2016 A/c 4 No. 61003538826 4. Bank Statement – SBBJ 01-04-2012 to 13-12-2016 A/c 5 No.61160697069 5. Bank Statement – SBBJ 02-04-2014 to 29-03-2017 A/c 6 No. 61160697161

6. Bank Statement – Axis Bank 01-04-2015 to 31-03-2016 7 A/c No. 433010100054038

7. Bank Statement –Axis Bank 01-04-2015 to 31-03-2016 8 A/c No. 910010003338655 2.4 On the other hand, the ld. DR supported the order of the ld CIT(A).

SHRI AMIT MEHARDA VS ACIT, CIRCLE -6, JAIPUR 2.5 We have heard both the parties and perused the materials available on record. In this case, it is noted that the assessee had deposited Rs.80,000/- in his bank account No.61160697161 maintained with State Bank of Bikaner & Jaipur, Jawahar Nagar, Jaipur on 23-12-2015 and had deposited Rs. 5,00,000/- in an another account No. 433010100054038 maintained with Axis Bank on 5-03-2016. The assessee claimed that said deposit was out of past withdrawals in cash by the assessee from his bank accounts and the source of that withdrawal was not in doubt. However, during assessment proceedings the AO observed that the assessee had failed to link up the cash deposits of Rs.5.80 lacs with the amount withdrawn by him on previous occasions and further the assessee had failed to produce cash books and the AO made addition of the whole amount of cash deposit of Rs.5.80 lacs as unexplained money of the assessee u/s 69A of the Act. In first appeal, the ld.CIT(A) was convinced about the deposit of Rs.80,000/- deposited with State Bank of Bikaner and Jaipur on 23-12-2015 as covered out of cash withdrawal of Rs.10,00,000/- on 14-12-2015 and allowed relief to the assessee for the same. However, regarding other deposit of Rs.5.00 lacs due to lapse of more than two months between the date of withdrawal of Rs.10,00,000/- and date of cash SHRI AMIT MEHARDA VS ACIT, CIRCLE -6, JAIPUR deposit of Rs.5.00 lacs, he restricted the addition to the tune of Rs.5.00 lacs. Before us, the assessee had claimed that he had withdrawn Rs.10.00 lacs on 14-12-2015 for making payment of advance for purchase of an agricultural land for which negotiations were going on and since the deal did not mature, therefore, the sum so withdrawn by the assessee remained with him and out of which Rs.5.00 lacs were deposited on 5-03-2016. The ld.AR of the assesseesubmitted that the Department was not having any evidence to prove the contentions of the assessee to be wrong and the ld. AR of the assessee prayed for allowing relief for the said cash deposit of Rs.5.00 lacs, considering the same as duly sourced. It is noted that the ld. AR of the assessee relied upon following judgements of various Tribunal on the similar set of facts; 1. DCIT vs Pawan Agarwal (ITAT Lucknow – vide order dated 23-01-2015).

Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 06/05/2025 *Mishra आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Amit Meharda, Jaipur 2. izR;FkhZ@The Respondent- The ACIT, Circle-6, Jaipur. 3. vk;djvk;qDr@CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 5. xkMZQkbZy@Guard File { } vkns'kkuqlkj@By order

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