SUBHASH CHANDRA AGRAWAL,JHABUA vs. INCOME TAX OFFICER ITO-1, O/P DISTRICT TELECOM ENGINEER, BSNL ADMINSTRATIVE BUILDING, RATANPURA, JHABUA

आदेश/ O R D E R

Per Paresh M Joshi, J.M.:

This is an appeal filed by the Assessee Under Section 253 of

the Income Tax Act, 1961 (hereinafter referred to as the Act for

sake of brevity) before this Tribunal as and by way second appeal.

The assessee is aggrieved by order bearing Number

ITBA/NFAC/S/ 250/2024-25/1065846373(1) dated 20.06.2024

of Ld. CIT(A), passed U/s 250 of the Act in first appeal preferred

u/s 246A of the Act which is hereinafter referred to as the Page 1 of 9

Subhash Chandra Agrawal ITA No. 551/Ind/2024 A.Y. 2017-18 “impugned order”. The relevant Assessment Year is 2017-18

and the corresponding previous year period is from 01.04.2016 to

31.03.2017.

2.1 That the assessee filed return of income (ROI) for the

A.Y.2017-18 on 24.01.2018 declaring total income of

Rs.1,65,130/- and agriculture income of Rs.1,10,000/-.

2.2 That the case of the assessee was selected for complete

scrutiny through CASS on the basis of large cash deposit in the

bank accounts during the year consideration.

2.3 That a notice u/s 143(2) dated 21.09.2018 under the Act was

issued and served upon the assessee by e-mail and speed post.

No compliance was made by the assessee.

2.4 That vide a notice u/s 142(1) dated 02.07.2019 the assessee

was called upon to furnish certain information along with details

on or before 15.07.2019. The assessee filed compliance on

13.07.2019 which was examined by Ld. AO and kept on record.

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Subhash Chandra Agrawal ITA No. 551/Ind/2024 A.Y. 2017-18 2.5 That the assessee was further issued notices u/s 142(1)

dated 09.08.2019 and 04.09.2019. The assessee finally furnished

reply 05.09.2019 and 27.09.2019 wherein the Bank Statements

and copy of proof of agricultural land were filed.

2.6 That as per bank statement and bank letter dated

22.01.2018 the assessee has deposited cash of Rs.3,20,000/-

in account no.5097351100000028 and Rs.50,000/- in account

no.50972510000022 with Narmada Jhabua Gramin Bank

Sarangi during demonitization period from 09.11.2016 to

30.12.2016.

2.7 That in view of the above a “show cause” with notice u/s

142(1) dated 07.11.2019 was issued to the assessee calling upon

him to show cause and explain about source of “cash deposits”

in above mentioned bank account (s). In reply on 11.11.2019 the

assessee contended that he is engaged in doing treading business

of mobiles and mobile accessories. The cash was deposited out of

sales proceeds of trading business by single entry. The total

deposit is of Rs.370000/- in cash during the period of

demonitization.

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Subhash Chandra Agrawal ITA No. 551/Ind/2024 A.Y. 2017-18 2.7 That Ld. AO basis reply as aforesaid (para 2.5 & 2.7 supra)

which was examined carefully came to the conclusion that the

assessee had not furnished the supporting documents of his

business activity but had only furnished the supporting

documents of activities relating to agricultural land. The Ld. AO

after examining the ROI, overall facts and circumstances of the

case made addition of Rs.1,50,000/-(estimated) and added the

same to the total income of the assessee. Total computed

income was Rs.3,15,130/-. (Rs.1,65,130+ 1,50,000).

2.8 That the aforesaid assessment order of Ld. AO bears

number:- ITBA/Ast/S/143(3)/2019-20/1020758045(1) and is

dated 20.11.2019 which is hereinafter referred to as the

“Impugned Assessment Order”.

2.9 That the assessee being aggrieved by the aforesaid “impugned

Assessment order” prefers first appeal in terms of section 246A of

the Act before CIT(A) who by the “Impugned Order” has dismissed

the appeal of the assessee and has enhanced the returned

income of the assessee by Rs.3,20,000/-.

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Subhash Chandra Agrawal ITA No. 551/Ind/2024 A.Y. 2017-18 2.10 That the assessee being aggrieved by the impugned Order”

has preferred present appeal before us and has raised following

grounds of appeal in form 36 which are as under:

“1. That the order of the CIT(A) is perverse, erroneous and is not tenable on facts and in law and also in breach of principle of natural justice. 1.1 That the CIT(A)has erred in passing order without application of mind. 2. That the CIT(A)has erred in deciding the appeal without calling/downloading the replies submitted by the appellant during assessment proceedings and thus ignoring the vital documents such as, cash book, bank statement and thus the order of CIT(A) is against the principles of natural justice. 2.1 The CIT(A) has erred in law and in facts in confirming the assessment order passed by the AO assessing the total income at Rs. 4,85,130/- ας against returned income of Rs. 1,65,130/- 3. The Ld. CIT (A) erred in enhancing the total income of appellant without following the statutory provision which clearly provides for issue of notice and grant of proper opportunity of hearing before enhancing any income of the Assessee. 4. That the CIT(A) erred in confirming the addition of Rs 3,20,000/- u/s 69A without appreciating the written Submission & replies filed during the proceedings. 4.1 That the CIT (A) has erred in confirming the addition u/s 69A without appreciating that provision of Section 69A is not applicable in case of cash deposit made from trading activity. Thus the provision of section 69A is not applicable and has wrongly been invoked.

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Subhash Chandra Agrawal ITA No. 551/Ind/2024 A.Y. 2017-18 5. The appellant craves permission to raise additional grounds and to amend or alter the foregoing ground before the appeal is finally decided."

3.1 The hearing in the matter took place before this Tribunal on

24.03.2025 when the Ld. AR for and on behalf of the assessee

appeared before us and interalia contended that the “Impugned

Order” is bad in law, illegal and not proper and that the same

deserves to be set aside by this Tribunal. The sheet anchor of

the argument of Ld. AR was that it was just not open for the

ld. CIT(A) to have enhanced the assessed total income to

Rs.4,85,130/-(ROI= Rs.1,65,130 +Rs.3,20,000/- (enhanced

amount by Ld. CIT(A). The action on part of Ld. CIT(A) by

enhancing the income is totally arbitrary and capacious, as no

opportunity was provided by Ld. CIT(A) before doing so in the

“Impugned Order”. The Ld. AR then contended that the assessee

is a very small business-cum-agriculturist. The assessee is a

senior citizen too. The Ld. AR fairly stated that the cash was

deposited in bank in which he had loan account too. Ld. AR

brought to our attention instruction no:-3/2017 dated

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Subhash Chandra Agrawal ITA No. 551/Ind/2024 A.Y. 2017-18 21.02.2017 which is at page 9 to 14 of paper book. The Ld. AR

basis instructions (supra) contended that since original addition

is of Rs.1.5 lakh as per “Impugned Assessment order” a lenient

view is required to be taken and Government in its collective

wisdom has taken a conscious decision not to touch those cases

where amount of cash deposit is less than 2.5 lakhs. The Ld. AR

has placed reliance on few decision of ITAT which are enclosed in

the paper book. Per contra Ld. DR appearing for and on behalf of

revenue has contended that orders of lower authority are legal

and correct. The ld. DR however, looking to over all facts and the

circumstances of the case left it to this Tribunal to pass such

order as it thinks fit and proper but in accordance with law.

4.1 We have adjudicate and adjudicate this present second

appeal before us basis records of the case.

4.2 We have carefully perused the records of the case and have

heard rival submissions of both Ld. AR as well as Ld. DR

patiently. We are of the considered view that the “Impugned

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Subhash Chandra Agrawal ITA No. 551/Ind/2024 A.Y. 2017-18 Order” has enhanced the total assessed income to

Rs.4,85,130/- whereas original assessed income as

“Impugned Assessment Order was Rs.3,15,130/-. Ld. AO had

made addition of only Rs.1.5 lakh whereas Ld. CIT(A) has made

addition of Rs.3,20,000/- without giving any opportunity or

notice to the assessee herein which approach in our respectful

view is totally illegal and bad in law. We hold that by virtue of the

provision contained in section 251(2) of the Act it is not open

for Ld. CIT(A) to enhance the assessment unless the assessee has

been given a reasonable opportunity of showing cause against

such enhancement. Nothing is brought on record by Ld. DR to

demonstrate before us that such an opportunity in terms of

section 251(2) of the Act was indeed given to the assessee before

the Impugned order was passed.

4.3 In the premises we have no hesitation in holding that

Impugned order is illegal and bad in law. It is indeed contrary to

the statutory scheme u/s 251(2) of the Act. Even otherwise

addition of Rs.1.5 lakh made in the Impugned Assesment order is

basis estimation. The addition is therefore made on conjuctures,

surmises and presumption. The assessee is an agriculturist too

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Subhash Chandra Agrawal ITA No. 551/Ind/2024 A.Y. 2017-18 has not been contested seriously by Ld. DR. The subject bank is

a rural bank used by the assesee both for loans and deposit.

4.4 In the Premises, we, therefore, set aside the Impugned Order

and allow the appeal of the assessee.

5.2. In result, appeal of assessee is allowed.

Order pronounced in open court on 26.03.2025.

Sd/- Sd/-

(BHAGIRATH MAL BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore िदनांक/Dated : 26/03/2025 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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