GULABSINGH RAGHUWANSHI HUF,INDORE vs. INCOME TAX OFFICE 2(5) , INDORE

appeal under the Act. The assessee is aggrieved by the order bearing Number ITBA/NFAC/S/250/2024-25/1066106127(1) dated 27.06.2024 passed by Ld. CIT(A) u/s 250 of the Act, which is hereinafter referred to as the “Impugned order”. The relevant Assessment Year is 2017-18 and the corresponding previous year period is from 01.04.2016 to 31.03.2017.

2.2 That Notice u/s 142(1) along with questionnaire was issued on 09/07/2019 fixing date of hearing on 16/07/2019. In compliance to the notices, the assessee filed written replies from time to time. Written replies were filed and documents in support of income shown in return were furnished.

2.3 That During the course of assessment proceedings it is seen that the assessee had deposited cash during the demonetization period in his Bank accounts maintained with as per details given below:-

Date Andhra Bank Andhra Bank Total A/c No. A/c No. 275011100000575 275010100009983 29.11.2016 50,000/- 50,000/- 1,00,000/- 01.12.2016 9,38,000/- 9,00,000/- 18,38,000/- 02.12.2016 5,72,000/- 3,50,000/- 9,22,000/-

Total 28,60,000/- 2.4 That the assessee was asked to establish the source of cash deposits in the above bank accounts during the demonetization period. In reply the assessee submitted that he had entered into agreement for 35,00,000/- on 16/04/2016 with Shri Ajay Singh Raghuvanshi R/o Ganjbasoda, Distt Vidhisha for purchase of land situated at village Vedan Khedi (Naseedpur). Old Patwari Halka no. 25 vandovast no. 266 block new no. 43.

Ganjbasoda Distt Vidisha by paying Rs. 28,50,000/- in cash, with the condition of seller as he will execute the sale deed after receiving remaining Rs. 6.50,000/- Due to disputes among the family members of the seller, the agreement was cancelled and the amount of Rs. 28,50,000/- was returned back on 19/10/2016 with compensation of Rs. 35,000/- The same amount was deposited in the above bank accounts.

2.5 That the assessee was asked to establish the sources of cash payment of 28,50,000/- made for the purchase of immovable property. In reply the assessee submitted that he has received repayment of already financed amount to 15 persons along with the interest totaling to 26,09,250/- & Page 3 of 19 with using cash in hand as on 01/04/2016, he paid Rs. 28,50,000/- for the purchase of immovable property. 2.6. That the replies filed by the assessee was considered by Ld. A.O and was not found legally tenable due to the following reasons:- a) During the course of assessment proceedings it was seen that the assessee has applied for PAN on 25/11/2016 i.e after the demonetization period. So it proves that the assessee had formed the HUF after the start of demonetization period and after the deposit of cash in the bank accounts. b) No documents in support of formation of HUF has been furnished by the assessee. c) After the formation of HUF the assessee has filed returns of income as per chart given below:-

S.No. Assessment Date of filing Returned Form Type Year Income 1 2015-16 01.12.2016 2,70,000/- ITR-2 2 2016-17 01.12.2016 2,95,850/- ITR-2

That upon perusal of the chart above it is seen that the assessee has filed its return of income for the Assessment Year 2015-16 & 2016-17 on 01/12/2016 i.e. on the day of deposit of cash in the Bank account maintained with Andhra Bank. Since the returns have been filed in ITR-2 form, there are no details regarding the balance sheet, cash-in-hand and other details to establish that the assessee has given the loans to various other persons and had any cash in hand. d) On perusal of the above Bank accounts statements of Andhra Bank no. 275010100009983 & 275011100000575 it is seen that both accounts have been opened on 28/11/2019 & 29/11/2016 itself. e) That during the course of the assessment proceedings the assessee was asked to produce Shri Ajay Singh Raghuvanshi the seller of the property but he failed to do so. f) That the assessee produced the confirmation of the persons from whom the amount claimed to have been received, on perusal of the confirmation it can be seen that none of the debtors has capacity to repay the loans, the debtors didn't had any creditworthiness to repay the loans.

That upon considering the above facts it is crystal clear that the assessee has failed to explain the source of cash deposit and submitted a so called story to establish his unaccounted income by way of cash deposit in Bank account during the demonetization period.

2.7 That the Ld. A.O in the above factual back drop has held that assessee had failed to explain the source of cash deposits in his bank accounts and treated the amount of Rs.28,60,000/- so deposited in above bank accounts as unexplained money u/s 69A r.w.s. 115 BBE of the Act and added back the said amount to the total returned income of the assessee.

2.8 The Ld. A.O then computed total income of the assessee as under:-

1 Income as per return of income Rs. 3,07,500/- 2 Addition as discussed in Para 2.4 Rs. 28,60,000/- 3 Total assessed income Rs. 31,67,500/-

Page 6 of 19 2.9 That the aforesaid assessment order of L:d. A.O bears Number : ITBA/AST/143(3)/2019-20/1022899738(1) and same is dated 23.12.2019, which is hereinafter referred to as the “Impugned Assessment order”.

2.10 That the assessee being aggrieved by the aforesaid impugned assessment order prefers first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “impugned order” has dismissed the first appeal of the assessee on the grounds specified therein.

2.11 That the assessee being aggrieved by the aforesaid “impugned order” has preferred instant second appeal on following grounds which are as under as per Form No.36:-

“1. On the facts and circumstances of the case the Ld. CIT(A), NFAC for holding the addition U/s 68 instead of section 69A of Rs 28,60,000/- to the amount deposited into Bank account is invalid because assessee was never granted any opportunity of being heard against such holding while said deposit amount was duly explained as deposited out of refund from cancelled agricultural land purchase transaction just before the deposit in bank account.

2. On the facts and circumstances of the case the Ld. CIT(A), NFAC was not correct in holding to PAN was obtained just deposit to the amount after ignoring to the Provisions of Sec. 139A of the Income Tax Act which requires PAN, after having taxable income as well as before opening of the Bank Account. Thus addition is made on misconception to the provision.

3. On facts and in the circumstances of the case, the Ld. CIT (A), NFAC was not correct in confirming to the addition of cash deposit in bank account without providing sufficient

Page 7 of 19 opportunity of being heard to the said confirmation. Thus violation to the principle of natural justice.

4. On the facts and circumstances of the case the Ld. CIT(A), NFAC wrongly held that as no evidence of formation of HUF was given while same were furnished during the assessment as well as appeal proceedings.

5. On the facts and circumstances of the case, Ld. CIT(A), NFAC was wrong in not considering various documents and details submitted during the course of appeal proceedings.

5. On the facts and circumstances of the case, L.d. CIT(A) was not justified in confirming the addition u/s 68 instead of 69A of Rs. 28,60,000/- on account of deposit of cash into bank even on having sufficient cash in hand before such deposit.

6. On the facts and circumstances of the company. the Ld. CIT(A), NFAC has wrongly held that person from whose amount got refunded due to earlier given against purchase of their land was not present during hearing while he was appeared on the hearing date but the Ld AO was busy in time barring cases. Thus confirming to the allegation of non appearance of the refundee person is against of facts.

Page 8 of 19 3.1 The hearing in the matter was held before this Tribunal on 17.04.2025 when Ld. AR for and on behalf of the assessee appeared before us and placed on record of this Tribunal a paper book containing pages 1 to 98, a brief synopsis and a written submission. The Ld. AR then interalia contended before us that the “impugned order” is illegal, bad in law and not proper and thus deserves to be set aside. The core issue in the instant appeal is whether the assessee has explained source of cash deposit of Rs.28,50,000/- which was deposited in the bank account of the assessee HUF during the time of demonetization properly, successfully before the tax authorities in a manner known to law or not?. The Ld. AR contention is that the sources of cash deposit by the assessee HUF is successfully demonstrated and that addition made is wrong and illegal by the tax authorities.

The sheet anchor of his argument was that the money was sourced as and by way of “Refund of Money”, on account of cancellation of agreement which was entered by the assessee HUF for the purchase of agricultural land, which was purchased from a person called Mr. Ajay Singh Raghuvanshi. The Ld. AR then contended that the assessee HUF had initially sourced the Page 9 of 19 amount of Rs.28,50,000/- as and by way of recovery of loan amount which assessee HUF had given to various persons in the earlier years. The Ld. AR then invited the attention of this Tribunal to agreement of sell dated 16.04.2016 wherein the seller of the land is one Mr. Ajay Singh Raghuvanshi and buyer of land is assessee (Not assessee HUF) and that the seller has agreed to sell certain portion of his land I.e. 0.186 Hectare out of land admeasuring 836 Hectare for lumpsum of Rs.35,00,000/- and that seller had received sum of Rs.28,50,000/- as advance payment/amount on 16.04.2016. It is further stated that upon receiving remainder amount of Rs.6,50,000/- the seller would do registry provided remainder amount of Rs.6,50,000/- is paid to him by buyer within 8 months w.e.f. 16.04.2016. This document is on page 27 and 28 of paper book filed. The Ld. AR then invited our attention to deed of cancellation at page 29 to 31 of paper book wherein it is stated that due to some domestic dispute in the family of seller on account of sell of land to the buyer, the seller is cancelling the sell agreement dated 16.04.2016 and has paid compensation of Rs.35,000/- to the buyer Gulabsingh Raghuvanshi (Not Gulabhsingh Raghuvanshi HUF) along with Page 10 of 19 refund of Rs.28,50,000/- received earlier by him as advance amount. Thus Rs.28,85,000/- (refund of advance of Rs.28,50,000/- plus Rs.35,000/- as compensation) was received back by the buyer Gulabsingh Raghuvanshi on 19.10.2016. The deed lof cancellation is dated 19.10.2016. The Ld. AR then invited our attention to an affidavit dated 03.10.2016 page 13 to 17 of paper book and interalia contended that the assessee HUF came into existence on 25.03.1974 just after birth of his daughter Deepa Raghuvanshi. In the said affidavit in para 4,5,6,7&8 following are avered:-

“4. That I have accepted following gifts on behalf of family from my following relative who has given the gift amount for my family in which consisting myself my wife and my Name of relative daughter Deepa on 25.03.1974. Name of relative Relation Amount Gold Jewellery Diwan Singh Father of Karta 21000/- 250 gram Raghuvanshi Smt. Jamna Devi Mother of Karta 21000/- 500 gram Raghuvanshi Girish Mama 21000/- -- Raghuvanshi Indra Moshi 21000/- -- Raghuvanshi Shashi Saroj Nani 251000/- 500 gram Rghuvanshi Bhupat Singh Nana 251000/- 150 gram Raghuvanshi

5. That I have been also received petty gift from under noted relatives on the birth of my son Bharat on 29.11.1979. Name of relative Relation Amount Diwan Singh Father of karta 121000/- Raghuvanshi Smt. Jamna Devi Mother of karta 121000/-

Page 11 of 19 Raghuvanshi Girish Raghuvanshi Relative 21000/- Indra Raghuvanshi Relative 21000/- Shashi Saroj Relative 41000/- Raghuvanshi Bhupat Singh Relative 41000/- Raghuvanshi Manish Raghuvanshi Relative 31000/- Ashish Raghuvanshi Relative 31000/- Neeta Raghuvanshi Relative 31000/-

Year Opening Income Gift Withdrawals Closing Balance during during Balance the year the year 1973-74 3000 586000 200 588800 1974-75 588800 3300 240 591860 1975-76 591860 3800 270 595390 1976-77 595390 4000 300 599090 1977-78 599090 4400 330 603160 1978-79 603160 5200 360 608000 1979-80 608000 5800 459000 420 1072380 1980-81 1072380 6000 450 1077930 1981-82 1077930 7800 480 1085250 1982-83 1085250 8200 520 1092930 1983-84 1092930 8400 600 1100730 1984-85 1100730 9000 720 1109010 1985-86 1109010 9200 840 1117370 1986-87 1117370 9800 960 1126210 1987-88 1126210 10400 1440 1135170 1988-89 1135170 11800 1500 1144470 1989-90 1144470 11000 1800 1153670 1990-91 1153670 11200 2100 1162770 1991-92 1162770 15000 2400 1175370 1992-93 1175370 15200 2500 1188070 1993-94 1188070 16600 2700 1201970 1994-95 1201970 18000 2800 1217170 1995-96 1217170 24000 3000 1238170

Page 12 of 19 1996-97 1238170 24600 3200 1259570 1997-98 1259570 25000 3400 1281170 1998-99 1281170 25600 3600 1303170 1999- 1303170 25900 3700 1325370 2000 2000-01 1325370 26000 3800 1347570 2001-02 1347570 26500 4000 1370070 2002-03 1370070 26800 4200 1392670 2003-04 1392670 27000 4300 1415370 2004-05 1415370 33000 4400 1443970 2005-06 1443970 36000 4500 1475470 2006-07 1475470 42000 4600 1512870 2007-08 1512870 52000 4700 1560170 2008-09 1560170 66000 4800 1621370 2009-10 1621370 78000 4900 1694470 2010-11 1694470 84000 5000 1773470 2011-12 1773470 102000 5200 1870270 2012-13 1870270 144000 6000 2008270 2013-14 2008270 172000 7200 2173070 2014-15 2173070 198000 8400 2362670 2015-16 2362670 260000 9600 2608070 2016-17 2608070 275000 14400 2863670 8.That my above statement is true and correct as per my knowledge and belief.”

After the Ld.AR had read the aforesaid affidavit few clarificatory questions were asked by the Bench that in the affidavit the deponent is “Gulabsingh Reghuvanshi” whereas the assessee is “Gulabsigh Raghuvanshi HUF” to which Ld. AR had no answer to give back to the Bench. It was also sought to know from Ld. AR as and by way of clarification that deponent “Gulabsingh Raghuvanshi” had signed the affidavit on 03.10.2016 whereas on page 1 below serial No, the date is 16th

Page 13 of 19 November 2016. Please clarify?. In reply the Ld. AR stated that 16th November, on 2016 notary had affixed this date with signature and seal and not on 03.10.2016, when the deponent had signed. As to yet another clarificatory question why there are no notarial stamps of notary public which is required to be affixed on an affidavit the Ld. AR invited our attention to three round “seals” on page 1 of affidavit and stated that they are notarial stamps. Upon a further query that no value is stated on so called stamps of notary he maintained studded silence and did not reply anything on our clarificatory question. The Ld. AR then closed his arguments and did not further argued the case and left it to this Tribunal to pass appropriate order basis records of the case.

3.2 Per contra Ld. DR for and on behalf of the Revenue interalia contended that the impugned order is well reasoned order and calls for no intervention by this Tribunal. The Ld. DR contended that affidavit and so also “agreement to sell” and “cancellation deed” are all self serving documents and that there is absolutely no corroborative material on record and under these circumstances source of cash deposit is not explained from any Page 14 of 19 genuine sources at all and hence prayed for dismissal of appeal of the assessee. It was also contended by him that affidavit is not by assessee HUF and so also “agreement to sell” and “cancellation deed” where words “HUF” is missing.

4.1 We now have to decide the legality, validity and the proprietary of the “Impugned Order” basis records of the case and rival contentions canvassed before us.

4.2 We have carefully perused the records of the case.

4.3 We basis records of the case and after hearing and upon examining the rival contentions are of the considered opinion that following observations and findings of Ld. CIT(A) in the impugned order:-

“4.3 The above submission of the appellant and the facts narrated by the Assessing Officer in assessment order have been considered. The appellant has stated that, the said amount of Rs.28,50,000/- which was deposited in the bank account of the appellant HUF during the time of demonetization, is nothing but the money which has been sourced from the refund of money on account of cancellation of agreement entered by the appellant for the purchase of agricultural land purchase with a person, namely Mr.Ajay Singh Raghuwanshi. 4.4 The appellant has further stated that, the initial payment of the said money of Rs. 28.50,000/- was sourced by way of the recovery of loan given to various persons by the appellant HUF in the earlier years.

4.5 The said explanation given by the appellant on the above stated cash deposit of Rs.28,60,000/- is devoid of merit on the following facts: i. The appellant's statement that the initial payment made to the seller of the land (Mr. Ajay Singh Raghuwanshi) out the refund recovery of the loan and advances given is not acceptable due to the fact that, the alleged recovery has been made by way of cash only and the appellant did not explain the reason for the receipt of demonetized currencies which were prohibited during the time of demonetization. Further, the appellant did not furnish the evidence for the initial payment of said loan and advances to the various persons and the source of the same. ii. Whereas, regarding the source of the said payment of loans to various persons, during the course of appellate proceedings, the appellant filed an affidavit and submitted that, the appellant HUF has been earning its own income since F.Y. 1973-74 and the said earnings was used for giving the loans to various persons. The said submission is not acceptable due to the fact that, the appellant has not filed any return of income upto the A.Y. 2014-15 and it has been clearly spelt out by the Assessing Officer that, the appellant HUF has applied for PAN only on 25.11.2016 and filed return of income for the A.Y. 2015-16 and A.Y. 2016-17 only on 01.12.2016. Accordingly, it is clear that the appellant had formed the HUF after the start of demonetization process and more particularly after the deposit of cash in the appellant bank account during demonetization period. In the absence of maintenance of accounts and filing of return of income for the earlier years, the appellant's contention that, it has given loan and advances to various persons in the earlier years and the same was recovered back in cash during the period of demonetization is purely an afterthought to escape from the taxation. iii. It is also observed from the confirmation letters submitted by the appellant from whom the loan and advances received back is not having the details of PAN of the said receptors of loan and the appellant did not furnish the other relevant documentary evidence to prove the genuineness viz. return of income filed by them and also their relevant bank statement and the reasons for the receipt of the same by way of demonetized currency, etc. Hence, the Page 16 of 19 mere submission of the confirmation letter in the uniformly scripted letter are also appears to be an afterthought by the appellant. iv. It is also notable that, the appellant did not take any effort to produce confirmation and other necessary documentary evidences for the receipt of the said cash from the proposed seller of the land during the course of appellate proceedings. v. Further, the bank statement submitted by the appellant has been examined and it was inferred from the same that, after deposition of cash in the said bank account of the appellant HUF, the deposited cash were immediately transferred out from the said account of the appellant by way of FD/Auto Swipe to the other account and the year- end balance was negligible. It clearly indicates that, the action of the appellant is purely intended to convert the unaccounted money available at the time of demonetization into accounted money.

4.6 In this regard, it is notable that, the onus of proving the source the money found to have been received by the appellant is rested with the appellant. When the nature and source of receipt is not satisfactorily explained by the appellant, it is open to the Revenue to hold that it is the income of the appellant and no further burden lies on the Revenue to show that, the income is from any particular source. The reliance is placed on the following decisions given by Hon'ble Supreme Court: i) Roshan di hatti (vs) CIT 107 ITR 738 Ii) Kale Khan Md. Hanif (vs) CIT 50 ITR 1

4.7 It is further notable that, as per the decision of Hon'ble High Court of Karnataka in the case of CIT (vs) Finance and Hon'ble High Court of Madras in the case of Shree Mangilal Jain (vs) ITO 315 ITR 105, it has been held that mere proof of identity of creditor is not sufficient if the appellant failed to prove the genuineness of the credit. Accordingly, it is clear that the appellant could not explain satisfactorily before the Assessing Officer and also during the course of appellate proceedings about the nature and source thereof, is liable to be taxed u/s 68 of the Act.

4.8 In view of the above, I am of the considered view that, the documentary evidences submitted by the appellant for the source of cash deposited is clearly an afterthought and the same is not acceptable as per the provisions of section 68 of the Act. Hence, the addition made by the Assessing Officer u/s 68 of the Act is sustainable and, accordingly, of the grounds of appeal filed by the appellant are hereby dismissed.”

Have not been refuted by the assessee HUF at all in a manner known to law and the source of cash deposit which has been explained is meritless. The documents like affidavit, agreement to sell, deed of cancellation etc. are all self serving documents solely made to give a plausible explanation on sources. The explanation offered and contentions canvassed before us are without any basis and that there are no credible evidence worth a credence to give legitimate explanation on sources of cash deposit.

There are no corroborative material as and by way of proof. We have also examined identity proof and confirmation letters of borrowers from page 36-92 of paper book and are not satisfied as they are sourced and procured one to give some explanation on sources of cash deposit. It is a “make believe” arrangement and Ld. CIT(A) has rightly rejected same.

Page 18 of 19 4.4 On the contrary Ld. CIT(A) impugned order is well reasoned and speaks to merit of case too.

4.5 In the circumstances and premises drawn up by us we dismiss the appeal of the assessee.

Order pronounced in open court on 05.05.2025.