DILIP MAHESHWARI,JAIPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3,, JAIPUR

1 ITA No. 666/JP/2024 Shri Dilip Maheshwari, Jaipur. आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: HON’BLE SHRI SANDEEP GOSAIN, JM & HON’BLE SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 666/JP/2024 fu/kZkj.k o"kZ@Assessment Year : 2017-18. cuke Dilip Maheshwari Assistant Commissioner of Vs. Partanion Ka Mandir, Income-tax, Central Circle-3, Partanion Ka Rasta, Johari Bazar, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. ADDPM 3904D vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.R. Sharma, CA & Shri R.K. Bhatra, CA jktLo dh vksj ls@ Revenue by : Shri Ajey Malik, Ld. CIT lquokbZ dh rkjh[k@ Date of Hearing : 13/08/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 30/09/2024 vkns'k@ ORDER

PER: SANDEEP GOSAIN, J.M.

This appeal by the assessee is directed against the order dated 22.03.2024 of ld. CIT (Appeals)-4, Jaipur passed under section 250 of the Income Tax Act, 1961 for the assessment year 2017-18. The grounds raised in the appeal are reproduced as under :-

2 ITA No. 666/JP/2024 Shri Dilip Maheshwari, Jaipur.

remained unverified after rejecting submission of the appellant that the said deposits were out of cash and advances aggregating to Rs. 23890000/- offered to tax by the appellant is A.Y. 2016-17 during course of search u/s 132 and duly accepted in assessment made u/s 153A r/w sec.143(3).

(b) The Ld. CIT(A) is further wrong and has erred in law in confirming addition of said amount of Rs 1,45,00,000/- made to the income of the appellant by the Ld. AO as unexplained cash credit u/s 68 of the IT Act, 1961 chargeable to tax @60% u/s 115BBE.

Maheshwari Associates from which remuneration and profits were received and also

have income from other sources like SB A/c interest etc. The assessee filed his return of

income for the year under consideration on 28-11-2017 declaring total income of Rs.

33,09,400/-. The case was selected in scrutiny by issue of notice u/s 143(2)/142(1)

which assessee complied. The A.O. in the course of assessment proceedings noticed

that assessee has deposited total cash amounting to Rs. 1,45,00,000/- in his Bank A/c

during the financial year 2016-17 i.e. Rs. 1,25,00,000/- between 01.04.2016 to

8.11.2016 and Rs. 20,00,000/- between 09.11.2016 to 30.12.2016 i.e. demonetization

period. The assessee was asked to explain source of cash deposits during the above

period, to which the assessee filed his written submissions, which the AO held as

unacceptable and observing that the said cash deposits made by the assessee in his

bank account remains unexplained and treated them as out of his undisclosed source

and accordingly taxed as per provisions of section 68 of I. T. Act, 1961 and included the

3 ITA No. 666/JP/2024 Shri Dilip Maheshwari, Jaipur.

same in the total income of assessee and taxed @ 60% as per provisions of section 68

read with section 115BE (1) (a) of I. T. Act, 1961. Aggrieved by the order of the AO,

the assessee preferred appeal before the ld. CIT (A). The Ld. CIT(A)-4, Jaipur vide his

order dated 22-03-2024 upheld the additions

Now the assessee is in appeal before us.

the ld. CIT (A) and has further submitted his written submissions as under :-

“ It is submitted that in case of assessee a search u/s 132 was took place on 07-1-2016 at his office premises as well as at his residence. In search cash amounting to Rs. 29,08,950/- was found at the residence of assessee. The assessee claimed that Rs. 1,08,950/- found in cash is out of savings of his family which was considered reasonable and so balance cash of Rs. 28,00,000/- was seized and in office premises cash amounting to Rs. 6,45,000/- and cash advance slips of Rs. 1,70,00,000/- were found. These cash slips of Rs. 1,70,00,000/- and cash found of Rs. 34,45,000/- (6,45,000/- + 28,00,000/-) total Rs. 2,04,45,000/- were inventorised as cash found/seized as can be seen in inventory of cash found/seized prepared in course of search. The assessee in the statement u/s 132 recorded in course of search surrendered said cash/slips found totaling to Rs. 2,04,45,000/- as its current years business income. 1.2 The assessee in his books of accounts recorded Rs. 2,04,45,000/- as current years income declared during the search by debiting Rs. 28,00,000/- to Income Tax Department being cash seized by department, by debiting Rs. 1,70,00,000/- to sundry debtors being amount of cash slips seized in course of search and balance Rs. 6,45,000/- being cash not seized was included in cash in hand on 07-01-2016. In the financial year 2015-16 assessee on 05-03-2016 realised cash of Rs. 25,00,000/- from cash advances found noted in cash advances slips seized in course of search and deposited Rs. 30,00,000/- on 15-03-2016 towards income tax payable for A.Y. 2016-17 (balance of Rs. 5,00,000/- was out of said cash of Rs. 6,45,000/- not seized by department) . These all entries are recorded in books of accounts i.e. Cash Book and Ledger maintained by assessee. In the Balance Sheet of assessee as on 31-3-2016 sundry debtors representing cash advance slips was clearly shown at Rs. 1,45,00,000/- (Rs. 1,70,00,000 – Rs. 25,00,000/- realized as stated above). The assessee thereafter filed his income tax

4 ITA No. 666/JP/2024 Shri Dilip Maheshwari, Jaipur.

return for A.Y. 2016-17 on 15-10-2016 declaring an income of Rs. 2,31,46,620/- (which included the surrendered income of Rs. 2,04,45,000/- as ‘current year business income offered to tax during course of search’) and paid due tax thereon. In support of above stated facts we submit for your perusal following:- 1. Panchnama of search, inventory of cash seized, Page 1 to 8 inventory of seized A/c books etc. seized and slips of advances. 2. Copy of statement recorded u/s 132 in course of Page 8-22 search. 3. Copy of Return of income for A.Y. 2016-17, Computation of Income, Balance sheets on 31-3- 2016, copy of Bank Pass Book (HDFC Bank A/c No. 50100015502562 in the name of assessee for period Page 23-39 1-4-15 to 31-3-2016) with details giving narration of entries, copy of cash book of assessee for 1-4-15 to 31-3-2016, copy of A/c of assessee in firm M/s Maheshwari Associates for 1-4-15 to 31-3-2016 with details of summary of cash transactions.

1.3 Thereafter the assessment of assessee for A.Y. 2016-17 was completed by DCIT, Central Circle – 3, Jaipur u/s 143 (3) r.w.s. 153B (1) (b) vide order dated 30-12-2017 after examining relevant details the declared income including surrendered income was accepted but making additions on account of cash found Rs. 1,08,950/- (Rs. 29,08,950/- cash found less surrendered Rs. 28,00,000/-) and for Rs. 2,84,736/- holding that silver items found in excess. In appeal against assessment order, CIT (A) deleted addition of Rs. 1,08,950/- made on account of cash found. The copy of Assessment Order and Appeal Order is submitted for your perusal being Paper Book Page 40-50. 1.4 In financial year 2016-17 (A.Y. 2017-18) the assessee realized in cash the remaining sundry debtors representing cash advance slips of Rs. 1,45,00,000/- on different dates and deposited the same cash amount in his Bank Account as can be seen from copy of cash book submitted herewith (Page 51-53). Thus the cash of Rs. 1,45,00,000/- deposited in Bank A/c of assessee in F.Y. 2016-17 (Rs.1,25,00,000/- before demonetization and Rs. 20,00,000/- in demonetization period of 09-11-2016 to 31-12-

5 ITA No. 666/JP/2024 Shri Dilip Maheshwari, Jaipur.

2016) is the amount realized from cash advances which were surrendered as income of A.Y. 2016-17 which has already been subjected to tax under the Act. In reply to show cause notice issued by A.O. asking to explain the source of said cash deposits assessee filed the same explanation which Ld. A.O. not examined from the assessment record/search record of A.Y. 2016-17. The Ld. A.O. by examining the return of income of assessee for A.Y. 2017-18 held ‘On perusal of the return filed for this year, the assessee has shown income from business at Rs. 34,88,000/- and Rs. 41,903/- from interest and misc. income. However, the cash amounting to Rs. 1.70 Cr. was deposited which clearly prove that this cash was deposited out of his undisclosed income from unexplained sources’. The Ld. A.O. while giving this finding referring to IT Return filed by assessee for A.Y. 2017-18 while the issue is arising from the search proceedings took place in 07-01- 2016 and dealt by assessee in return filed for A.Y. 2016-17 and assessment completed thereon. The Ld. A.O. is wrong in holding that regarding cash received from parties complete details not filed. It is submitted that cash was received for the same cash advance slips found in course of search which were unexplained and, therefore, the same was surrendered as income of that year. The Hon’ble ITAT Delhi Bench, Delhi in case of Racmann Springs Pvt. Ltd. Vs DCIT (1995) 55 ITD 159 held that : “On having found that several drafts had been deposited in bank without mentioning names of parties in corresponding vouchers except name of stations like Calcutta, etc., in some cases, Assessing Officer observed in his original order that assessee was asked to give names and explain nature and source of those deposits but he had failed to do - Assessee filed a reconciliation statement of sundry debtors for a number of years which, inter alia, showed realisations for assessment years 1981-82 to 1984-85 - Assessing Officer in his subsequent order observed that while realisations in any of years 1982-83 to 1984- 85 did not exceed Rs. 5 lakhs, it was unlikely that in current year assessee suddenly had a realisation from sundry debtors amounting to Rs. 18,00,763 - He, therefore, held that drafts deposited in bank accounts were actually undisclosed sales of assessee and, accordingly, treated same as assessee’s income under section 68 - Whether Assessing Officer, having accepted figure of sundry debtors as on 30-6- 1981 to 30-6-1985, could not find fault with figure of sundry debtors as on 30-6- 1980 because then he should have enhanced figure of sundry debtors as on 30-5- 1980 by Rs. 18,00,763 and adopted same in later years - Held, yes – Whether realisations from sundry debtors could be treated as cash credits under section 68 - Held, no”.

6 ITA No. 666/JP/2024 Shri Dilip Maheshwari, Jaipur.

It is further submitted that cash was realized for the same cash advance slips found in course of search which were unexplained and, therefore, the same was surrendered as income of that year. It is thus realization of income which was already taxed in A.Y. 2016-17. The realization of Rs. 25,00,000/- of cash advance slips was made in F.Y. 2015- 16 (A.Y. 2016-17) which stand accepted in A.Y. 2016-17 and, therefore no other view can be taken on same set of facts in subsequent year. The taxing of same income twice is not warranted by law. The Supreme Court in case of State of UP Vs. Raza Buland 118 ITR 50 (SC) held that – “The income tax law is to charge tax on income but in the hands of same person only once. There could be no double taxation of the same income in the hands of same person (See also Ghisa Lal Vs. CIT 248 ITR 506). In the case of Laxmipat Singhania Vs. CIT (1969) 72 ITR 291 (SC) at 294 where Hon'ble Supreme Court has observed that “It is fundamental rule of law of taxation that, unless otherwise expressly provided, income cannot be taxed twice (See also Jain Brothers Vs. Union of India (1970) 77 ITR 107 (SC). The amount of Rs. 1,25,00,000/- was deposited in Bank A/c in the period prior to demonetization and in demonetization period only Rs. 20,00,000/- was deposited which was not undisclosed income but out of income already disclosed by assessee in A.Y. 2016-17 and thus there is no reason to hold by A.O. that if the demonetization was not declared then the above undisclosed income was never be disclosed and assessee would have remained out of tax net. The assessee had discharged his onus to explain the credits being deposit in his Bank A/c. The Ld. A.O. did not examined the facts of case and explanation of assessee properly and arbitrarily held the said amount of Rs. 1,45,00,000/- being cash deposited in Bank as undisclosed as source of it remains unexplained and thereby treating it unexplained credit u/s 68 of the Act and adding the same to declared income of assessee which deserves to be deleted.

record. On perusal of the record, we find that the assessee during the course of search

on 07.01.2016 the appellant surrendered a sum of Rs. 2,04,45,000/- (Rs. 1,70,00,000/-

on account of unaccounted loans and Rs. 34,45,000/- on account of excess cash found)

as his additional income and the same was accepted by the AO in the assessment. In

7 ITA No. 666/JP/2024 Shri Dilip Maheshwari, Jaipur.

the assessment for the Assessment Year 2016-17 the AO also made certain other

additions besides the returned income which comprised of the surrendered amount of

Rs. 2,04,45,000/- and such other additions were deleted by the ld. CIT (A). The

argument of the appellant is that he had deposited Rs. 1,45,00,000/- in his bank

account during the relevant previous year out of realization made by him from

matching amount of debtors which were taxed as unexplained income in course of

search/assessment. As against this, the AO has not accepted the claim of the assessee

on the reasoning that the appellant failed to give details i.e. name, address, PAN etc. of

such debtors from whom the assessee realized Rs. 1,45,00,000/-. The LD. CIT (A) also

rejected the contention of the appellant and sustained the addition meaning thereby

that both the lower authorities are of the view that a sum of Rs. 1,45,00,000/-

deposited in the bank account of the appellant was from undisclosed income of the

appellant and there was no recovery from the debtors found recorded at the time of

search. The main contention of the lower authorities is that recovery of the amount

from the debtors also partake the character of cash credit whereas as per the appellant

the same is not cash credit in terms of section 68 of the IT Act, 1961 and no burden lies

on the appellant to prove ingredients of section 68 on such recoveries received from

loan/debtors. On perusal of the statement of the assessee recorded during the course

of search (APB 18), it is seen that a query was raised from the assessee to explain

Annexure A-57 found in his premises which related to advances or Rs. 1.70 crores for

which the assessee explained that this was the money advanced by him out of his

earning from real estate transactions/business. This statement of the assessee was

8 ITA No. 666/JP/2024 Shri Dilip Maheshwari, Jaipur.

accepted by the Department and was taxed. At that time, no query was raised by the

Department from the assessee about the name, address and PAN of the parties to

whom the advances had been given and now when the said advanced money came

back to the assessee, the AO asks for details i.e. name, address and PAN which is not

justified. Moreover, we find that no adverse material has been brought on record by the

AO to prove that the appellant did not make recoveries from old loans but this sum was

out of his unaccounted money for the year under consideration. In this regard we rely

on the judgment of Coordinate Bench of the Delhi Tribunal in the case of Singhal Exim Pvt. Ltd. vs. ITO in ITA No. 6520/Del/2018 dated 12th April, 2019 wherein the issue

was regarding cash deposit in the bank account for Rs. 59.11 crores which was claimed

by the assessee to be out of cash sales. The AO in that case added a sum of Rs. 59.11

crores as unexplained cash credit under section 68 of the IT Act, 1961, which action

was sustained by the LD. CIT (A). On appeal, the Coordinate Bench of Delhi Tribunal

(supra) allowed the appeal of the assessee by holding that sale consideration received

in cash cannot be subject matter of section 68 because after sale of goods the buyer of

the goods becomes the debtor of the assessee and any receipt of money from him is

the realization of such debt and, therefore, section 68 cannot be applied. The

Coordinate Bench of the Tribunal Delhi also held that the realization from the sundry

debtors cannot be treated as cash or credits. Cash credits always appear as a liability in

the balance sheet of the assessee. Realization from the sundry debtors would reduce

the sundry debts appearing on the assets side of the balance sheet. As in the case of

appellant the AO during the course of assessment proceedings of the searched year

9 ITA No. 666/JP/2024 Shri Dilip Maheshwari, Jaipur.

1916-17 has accepted the above said amount as sundry loan debtors and accordingly

the ld. AO has confirmed that the above referred amount is an asset and not a liability.

Further, the AO has also taxed the entire loan amount as an income in the above

searched year assessment. In the present case, the claim of the appellant that he had

realized Rs. 1.45 crores from the debtors and the lower authorities raised doubt

thereon. In our opinion, in absence of any adverse material made available by the AO,

the contention of the appellant deserves to be accepted. In view of the above

discussion, we delete the addition of Rs. 1,45,00,000/-.

Ground No. 2.

requires no adjudication.

Order pronounced in the open court on 30/09/2024.

Sd/- Sd/- ¼lanhi xkslkbZ½ ¼ jkBkSM+ deys'k t;arHkkbZ ½ (RATHOD KAMLESH JAYANTBHAI) (SANDEEP GOSAIN) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 30/09/2024. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Dilip Maheshwari, Jaipur.

10 ITA No. 666/JP/2024 Shri Dilip Maheshwari, Jaipur. 2. izR;FkhZ@ The Respondent- The DCIT, Central Circle-3, Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 666/JP/2024}

vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत