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

Page 2 of 9 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.

Page 3 of 9 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/-.

Page 4 of 9 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.

Subhash Chandra Agrawal 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."

Page 6 of 9 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.

4.2 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

Page 7 of 9 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

Page 8 of 9 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.

Order pronounced in open court on 26.03.2025.