RAJESH KUMAR TODWAL,JAIPUR vs. ITO, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh Hkkxpan] ys[kk lnL;] ds le{k BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER vk;dj vihy la-@ITA No. 543/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2010-11 cuke Shri Rajesh Kumar Todwal, Income Tax Officer, Vs. S/o- Shri Badri Narain Todwal, Ward 1(1), Shop No. 116, Gopal Ji Ka Rasta, Jaipur. Johri Bazar, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACDPT 4271 F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.R. Sharma & Rajnikant Jhada (CA) jktLo dh vksj ls@ Revenue by : Smt. Poonam Rai (DCIT) lquokbZ dh rkjh[k@ Date of Hearing : 15/03/2017 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 27/04/2017 vkns'k@ ORDER PER: BHAGCHAND, A.M. This is an appeal filed by the assessee emanates from the order dated 11/03/2016 passed by the ld. CIT(A), Aligarh at Jaipur (Camp Office) for the A.Y. 2010-11. The only issue involved in this appeal is against sustaining the addition of Rs. 18,82,000/- made to the income of the assessee by the Assessing Officer on account of alleged unexplained bank deposit.

ITA 543/JP/2016_ 2 Rajesh Kumar Todwal Vs ITO

partner in firm M/s Kailash Yadav & Company. The assessee filed his

return of income for the year under consideration on 04/10/2010 declaring

NIL income. During the assessment proceedings, the Assessing Officer

made addition of Rs. 17,80,000/-, which has been confirmed by the ld.

CIT(A) for not accepting the explanation provided by the assessee that the

amount deposited in the bank was received from M/s Kailash Yadav &

Company, partnership firm where the assessee was a partner. The

Assessing Officer doubted the genuineness of the firm and the ld. CIT(A)

also confirmed the action of the Assessing Officer by holding that, it

appears that the firm M/s Kailash Yadav & Company has been created for

the purposes of explaining the cash entries in the bank account.

was a partner in M/s M.K. Enterprises and M/s Kailash Yadav & Company.

The assessee was having bank account with ICICI Bank and also a savings

bank account with Bank of Baroda. The assessee was maintaining books of

account for his financial transactions. The assessee had filed return of

income declaring NIL income due to loss in the firms. It was submitted

that the amount deposited in the bank account maintained with Bank of

Baroda, Johari Bazar Branch, jaipur was out of the cash received from M/s

ITA 543/JP/2016_ 3 Rajesh Kumar Todwal Vs ITO

Kailash Yadav & Company where the assessee is a partner. The books of

account maintained with M/s Kailash Yadav & Company support and shows

the cash withdrawals by the assessee. The assessee produced books of

account of the firm before the Assessing Officer, the capital account of the

partners and the income tax return filed by the firm was also produced.

The assessee also filed partnership deed of the firm and also confirmation

from the same and it is contended that the evidences submitted by the

assessee are not correctly appreciated. He placed reliance on the decision

of the Hon’ble Rajasthan High Court in the case of Mangilal Agarwal Vs

ACIT 300 ITR 372 for the proposition that once the assessee points out

depositor from whom he has received money who has owned

advancement of money to the assessee then further enquiry into the

source cannot result in invoking the provisions of Section 68 of the Income

Tax Act, 1961 (in short the Act) unless the existence of the person in

whose name credit entry is found is not proved or he disowns having

made such deposit. In the assessee’s case, M/s Kailash Yadav & Company

has given a confirmation and accepted that the money deposited in the

bank account of the assessee had been advanced by it. He also relied on

the decision of Hon’ble Jurisdictional High court in the case of Kanhaiya Lal

ITA 543/JP/2016_ 4 Rajesh Kumar Todwal Vs ITO

Jangid Vs ACIT 217 CTR 354 and CIT Vs Rao Raja Hanut Singh (2001)252

ITR 528.

of the authorities below.

individual and partner in M/s M.K. Enterprises and M/s Kailash Yadav &

Company. The source of cash deposited in the bank account is out of the

cash withdrawals from M/s Kailash Yadav & Company and the books of

account of M/s Kailash Yadav & Company reflects such advancement in its

books of account. The assessee produced cash books of M/s Kailash Yadav

& Company alongwith capital account of partners and proof of filing of

income tax return for A.Y. 2010-11. The assessee also submitted copy of

the partnership deed of the firm and also a confirmation. Therefore, the

assessee has substantially proved the source of cash deposited in the bank

account. Further the Assessing Officer doubted that the partnership deed

was not registered, is also cannot be made a basis for not treating the firm

as a genuine. The Hon’ble Rajasthan High Court in the case of Kanhaialal

Jangid Vs. ACIT (supra) has held as under:-

“The question No. 1 relates to disallowance on account of cash credits found in the books of the assessees. Rs. 16,000 was alleged to have been borrowed to have been by Sri Devendra Sankhla and Rs. 16,000 was allegedly borrowed from one Ramulal. Assessee has produced the confirmation letters from both the creditors

ITA 543/JP/2016_ 5 Rajesh Kumar Todwal Vs ITO

and has also produced Sri Devendra Sankhla before the AO. Sri Devendra Sankhla on being produced before the AO, affirmed that he had given in advance a sum of Rs. 16,000 to the assessee. However, the explanation of the assessee about the receipt of Rs. 16,000 from Devendra Sankhla was rejected on the ground that on inquiry from Devendra Sankhla the creditor could not satisfactorily explain source wherefrom whether he could have advanced Rs. 16,000, looking to his income and family expenditures. In other words, the cash credit in the name of Devendra Sankhla was rejected on the ground that the assessee has failed to prove source wherefrom deposit or advance by Sri Devendra Sankhla could be made. This finding has been consistently affirmed by CIT(A) as well as by Tribunal. We are of the opinion that in rejecting the explanation of the assessee on the undisputed facts is founded on erroneous application of law in the matter. While it was the assessee's burden to furnish explanation relating to such cash credits, the assessee's burden does not extend beyond proving the existence of the creditor and further proving that such creditor owns to have advanced the amount credited in the account of assessee to him. However, the burden does not go beyond to put the assessee under an obligation to further prove that wherefrom the creditor has got or procured the money to be deposited or advanced to the assessee. The fact that the explanation furnished by the creditor about the source from where he procured the money to be deposited or advanced to the assessee, is not relevant for the purposes of rejecting the explanation furnished by the assessee, and make additions of such deposits as income of the assessee from undisclosed sources by invoking s. 68 of the IT Act, unless it can be shown by the Department that the source of such money comes from the assessee himself or such source could be traced to the assessee itself. In the present case while existence of Sri Devendra Sankhla the creditor is not in doubt, and he has admitted to have advanced the loan to the assessee. The fact that the explanation furnished by Sri Devendra Sankhla about his source of such advancement has not been accepted by the Revenue authority cannot lead to any presumption that the source of such advancement by Sri Devendra Sankhla emanated from the assessee. Therefore, addition of Rs. 16,000 in the income of assessee as cash credit in the name of Sri Devendra Sankhla cannot be sustained. Such addition of income of assessee has to be deleted from the income of assessee.”

The Hon’ble Rajasthan High Court in the case of Mangilal Agarwal Vs ACIT

(supra) has held as under:-

“Held, allowing the appeal, that section 69A could not be invoked merely on the basis that a person was found in possession of any valuable article and it was only on his being further found to be the owner of such money, bullion, jewellery or

ITA 543/JP/2016_ 6 Rajesh Kumar Todwal Vs ITO

other valuable articles that section 69A could be invoked for raising presumption. This basic link was missing through the proceedings. The assessee had explained the transactions through which the primary gold and the gold ornaments came in his possession and to support his explanation he had produced three persons who had brought the ornaments to him and had furnished their affidavits admitting such fact. No presumption of ownership had been raised statutorily in favour of the Revenue and against the assessee, nor was there any warrant to invoke section 69A merely on the basis of the assessee’s possession. On his disclaimer that such articles found in his possession did not belong to him, the burden was on the Revenue to establish the ownership of the assessee before raising any presumption against him. On the ground that these three persons failed to prove their ownership to the ornaments, the assessing authority concluded that the ornaments belonged to the assessee and those findings were affirmed by the Commissioner (Appeals) and the Tribunal. Merely because the explanation furnished by these three persons about the purpose for which the gold ornaments were delivered for making new ornaments was found not acceptable that could not provide any a nexus between the facts and conclusion reached by drawing an inference that the primary gold and gold ornaments belonged to the assessee. Thus, the value of gold and the gold ornaments could not be taxed in the hands of the assessee.”

By following the ratio laid down by the Hon'ble High Courts, I find merit in

the contention of the ld. AR, therefore, I direct to delete the addition.

Order pronounced in the open court on 27/04/2017.

Sd/- ¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 27th April, 2017 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Rajesh Kumar Todwal, Jaipur. 1.

ITA 543/JP/2016_ 7 Rajesh Kumar Todwal Vs ITO izR;FkhZ@ The Respondent- The ITO, Ward 1(1), Jaipur.. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 543/JP/2016) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत