DALSUKHBHAI JIVRAJBHAI SAVALIA,LILIYA MOTA vs. ITO WD 3(1)(4), RAJKOT-AMRELI, AMRELI

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ITA 188/RJT/2025Status: DisposedITAT Rajkot04 August 2025AY 2017-186 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee had submitted a plethora of documents and evidence before the lower authorities to support his claim regarding the source of cash deposits. The Assessing Officer had not refuted or discredited these evidences and had merely brushed them aside without providing reasons for their rejection. The Tribunal noted that the Ld. CIT(A) had sustained 30% of the addition, which was Rs. 9,87,961. However, considering the extensive documentary evidence provided by the assessee, including agricultural land holding documents (Forms 7/12 and 8-A), income from his mother, cash withdrawals from a Kishan Credit Account, and agricultural income of Rs. 4,19,040, the Tribunal found the sustained addition to be on the higher side. The Tribunal reduced the addition to 8% of Rs. 32,93,205, amounting to Rs. 2,63,456. The AO was directed to sustain this reduced addition. The Tribunal clarified that this sustained addition should be taxed at the normal rate of income tax, not under Section 115BBE.

What were the facts?

The assessee, Dalsukhbhai Jivrajbhai Savalia, an individual, filed a revised return for Assessment Year 2017-18, declaring an income of Rs. 2,98,160. The case was selected for scrutiny. During demonetization, the assessee deposited Rs. 32,93,205 in cash across three bank accounts. The Assessing Officer (AO) issued notices under sections 143(2) and 142(1) and obtained bank statements under section 133(6). The assessee submitted a computation of income, cashbook, an affidavit from his mother regarding agricultural business, and claimed agricultural income of Rs. 4,19,040. The AO rejected these submissions, deeming the cash deposits unexplained, and made an addition of Rs. 32,93,205 under section 69A. The assessee appealed to the National Faceless Appeal Centre (NFAC), Delhi (Ld. CIT(A)), who partly confirmed the addition, retaining Rs. 9,87,961 (30% of the AO's addition). The assessee is now appealing to the ITAT.

What were the issues?

1. Whether the Ld. CIT(A) erred in law and on facts by confirming an addition of Rs. 9,87,961, out of the total addition of Rs. 32,93,205 made by the Assessing Officer, when the assessee had provided evidence for the source of cash deposits? (Mixed question of law and fact, concerning Section 69A of the Income Tax Act, 1961). Assessee's Contention: The assessee argued that all necessary documents, including proof of agricultural income, cashbook, bank statements, bills for agricultural produce, affidavit from his mother, and withdrawal details from a loan account, were submitted to both the AO and the Ld. CIT(A). These documents clearly explained the source of the cash deposited during demonetization, and therefore, the entire addition should be deleted. Revenue's Contention: The Ld. DR for the Revenue reiterated the stand taken by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(2),Section 142(1),Section 133(6),Section 250,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: DR. ARJUN LAL SAINI

For Respondent: Shri Dheeraj Kumr Gupta, Sr-DR
Hearing: 15/05/2025Pronounced: 04/08/2025

Per Dr. Arjun Lal Saini, A.M

Captioned appeal filed by the assessee, pertaining to Assessment Year 2017-18, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals) [in short, “Ld.CIT(A”], dated 29.01.2025, which in turn arises out of an order passed by Assessing Officer u/s 143(3) of the Act, on 24.12.2019. 2. The assessee has raised the following grounds of appeal:

“1. The grounds of appeal mentioned hereunder are without prejudice to one another.

2.

The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as the "CIT(A)"] erred on facts as also in law in confirming addition to the extent of Rs.9,87,961/-, out of addition made by Assessing officer of Rs.32,93,205/-. Out of total addition, 30% addition retained by Ld. CIT(A) is bad in law as also on facts and therefore the same may kindly be deleted.

3.

The Ld. CIT(A) erred on facts as also in law in partly confirming the addition made by AO.

4.

Your Honor's appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.”

3.

Succinctly, the factual panorama of the case is that assessee before me is an individual and had filed revised return of income for assessment year (AY) 2017-18, through e-filing on 30.03.2018, declaring total income of Rs.2,98,160/-. The assessee’s case was selected for scrutiny through CASS and notice u/s 143(2) of the Act was issued to the assessee. Subsequently notice u/s 142(1) of the Act, along with questionnaire was issued on 26.09.2019. Information was obtained from banks by issuing notice u/s133(6) of the Act and as per bank statement, the assessing officer noticed that assessee has deposited

cash in three bank accounts during demonetization period.

SI. | Name of bank Account No. | Amount of cash deposited No. during FY 16-17 1__| Amreli Jilla Madhyasth Sahakari Bank Ltd. | 202001969573 _| 2,93,205/- 2__| Kotak Mahindra Bank 820010011439 | 2,00,000/- 3__ | Kotal Mahindra Bank 5820044000782 | 28,00,000-

4.

A further show -cause notice was issued to the assessee. In response to the show cause notice, the assessee submitted computation of income, cashbook for financial year 2016-17 up to 31.12.2016. The assessee has business income of Rs.2,54,013/-. The assessee has provided a copy of affidavit received from his mother regarding the agricultural business. In his profit and loss account the assessee submitted khetiwadi income amounting to Rs.4,19,040/-.

5.

However, the assessing officer, rejected the above documents and contention of the assessee, and held that in the absence of any submissions for the sources for cash deposits amounting to Rs.32,93,205/- remains unexplained therefore, assessing officer made addition u/s 69A of the Act, as undisclosed

cash deposit.

6.

Aggrieved by the order of Assessing Officer, assessee carried the matter in appeal before Ld.CIT(A), who has partly confirmed the addition made by the Assessing Officer. The ld.CIT(A) noticed that the assessee had furnished that some of the income was received from his mother which was kept as accumulated savings and deposited during demonetization period. Further, during the year, some cash withdrawals from Kishan Credit Account was done by the assessee, which was subsequently redeposited during the demonetization period. The assessee was also holding some agricultural land and also earned agricultural income apart from regular business income, for the year under consideration, the assessee has shown khetiwadi income of Rs.4,19,040/-. Thus, from the facts and circumstances, the ld CIT(A) noticed that the assessee mainly deriving income from agricultural operation. The assessee was also handling affairs of his mother as it appears that there were reasonable savings which is lying as cash in hand in the assessee’s accounts for a period of time. Considering all these facts circumstances, 30% of the addition was sustained by Id.CIT(A), which comes to Rs.9,87,961/- and balance addition was deleted.

7.

Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before this Tribunal.

8.

I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned Counsel for the ITA No. 188/RJT/2025 (AY:17-18) as Dalsukhbhai J Savalia ‘@)

assessee, argued that assessee has submitted proof of agricultural income earned, cashbook showing opening cash and subsequent realization of cash up to the demonetization period, copies of bank statements, bills for agriculture produces sold, affidavit of mother, bank statement for withdrawn of funds from loan account etc. It was explained before the Assessing Officer that withdrawal was made from the bank, and bank account clearly shows withdrawal of cash. Besides, the assessee has submitted a plethora of documents, before the assessing officer, such as, balance sheet, profit and loss account, capital account, cash book, cash deposited statement during demonetization period, total income computation statement, income tax receipts etc, to prove his claim. Before the Ld.CIT(A), the assessee submitted all the evidences which were produced before the Assessing Officer. Therefore, the source of money, which was deposited, during the demonetization period, has been clearly explained by the assessee, hence, entire addition made by the assessing officer may be deleted. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. I note that the assessee had deposited Rs.32,93,205/-, in SBNs notes. Before the Assessing Officer, the assessee furnished a copy of affidavit in which the mother of the assessee has authorized to look after the agriculture business and handle all the financial affairs. In addition to this, before the assessing officer, the assessee furnished, documents of agricultural land holding, that is, forms Nos. 7/12 and 8-A and some income was received from his mother which was kept as accumulated savings and deposited during demonetization period. Further, during the year, some cash withdrawals from Kishan Credit Account was shown by the assessee. I find that the amount deposited during demonetization period to the tune of Rs.32,93,205/-, was partly from Khetiwadi income of Rs.4,19,040/- also. Considering these facts, I find that addition sustained by the learned CIT(A) at the rate 30% is very higher side. I find that assessee has submitted a plethora of documents and evidences before the authorities below. I note that assessing officer has not refuted or discredited these evidences and documents. The assessing officer does not mention why he is not accepting these evidences. On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Based on this factual position, I sustain the addition at the rate of 8% on Rs.32,93,205/-, which comes to Rs. 2,63,456/- (8% of Rs.32,93,205). Hence, I direct the assessing officer, to sustain the addition in the hands of the assessee, to the tune of Rs.2,63,456/-.

9.

Before parting, I would like to make it clear that since the assessee had explained the source of cash deposit, therefore, 8% addition of Rs. 2,63,456/-, sustained by me, should be taxable under the normal rate of income-tax (not u/s 115BBE of the Act).

10.

In the result, the assessee’s appeal is partly allowed, in above terms.

Order pronounced in the open court on 04/08/2025. (Dr. A.L. SAINI) dar waea/ACCOUNTANT MEMBER

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