NEHA WADHWA,KOTA vs. INCOME TAX OFFICER, WARD 6(1), JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM deys’k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 950/JP/2024 fu/kZkj.k o"kZ@Assessment Years : 2016-17 cuke Neha Wadhwa Income Tax Officer, Vs. 126-A, Ram Gali No. 3, Ward 6(1), Jaipur Raja Park, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABRPW 8210 A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. C M Birla, CA jktLo dh vksj ls@ Revenue by : Sh. Monisha Choudhary, Addl.CIT lquokbZ dh rkjh[k@ Date of Hearing : 28/08/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 27/09/2024 vkns'k@ ORDER

PER: RATHOD KAMLESH JAYANTBHAI, AM

Because the assessee is aggrieved by an order of the National Faceless Appeal Centre, Delhi dated 02/07/2024 [ for short ld. CIT(A) ] for assessment year 2016-17. That order arises because the assessee has challenged the order dated 26.11.2018 passed under section 143(3) of the Income Tax Act, by ITO, Ward-6(1), Jaipur before ld. CIT(A).

2 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO “1. That under the facts and circumstances of the case and in law the learned CIT(A) erred in confirming addition of Rs. 873500/- u/s 68 ignoring that this amount was receivable from sundry debtors as on 31.03.2015 (AY 2015-16) which is received in FY 2015-16. 2. That the appellant craves leave to add, alter, amend, modify and/or otherwise substitute any of the foregoing grounds as and when required.

assessee filed his ROI for the A.Y 2016-17 on 20.10.2016 declaring total

income of Rs. 9,15,720/- after claiming deduction of Rs. 82,542/- under

chapter VI A of the IT Act, 1961. The case of the assessee was selected for

‘Complete Scrutiny’ under CASS to primarily examine the claim of ‘large

exempt income.” Notice u/s 143(2) of the IT Act, 1961 was issued to the

assessee on 17.07.2017. Further notice u/s 142(1) of the IT Act, 1961 was

issued to the assessee on 09.07.2018 & 8/10/2018 online through e-

proceeding on ITBA calling for evidence in support of her returned income.

Assessee furnished details vide letter dated 10.10.2018.

3.1 From perusal of the computation of income, ld. AO noted that

assessee declared income of Rs. 1,62,060/- under the profit from business

and profession and Rs. 8,36,201 as income from other sources. It is seen

from the financial statements furnished by the assessee that the assessee

credited gross receipts of Rs. 4,05,000/- from car plying business also. On

3 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO further examination of the documents furnished by assessee, notice u/s

142(1) was issued along with detailed questionnaire on 27.10.2018 asking

the assessee to justify the interest receipts from sundry debtors amounting

to Rs. 4,45,200 and in the balance sheet pawning debtors of Rs. 8,73,500/-

have been shown as in the ROI for AY 2016-17 interest receipts from

sundry debtors came down to Rs. 10,300/- and Balance Sheet does not

contain any receivable from pawning debtors in the year under

consideration.

Therefore, the assessee asked to explain and furnish the ledger

accounts of all the pawning debtors dully confirmed and signed by the

debtors and explain how the amount due from them received. In response

to the same assessee furnished her reply dated 31.10.2018 along with

various documents contending that

“pawn debtors interest is charged when loan is given. As in period related to Assessment year 2015-16 loan was given or regiven interest was charged. As in Assessment year 2016-17 it is repaid by parties is it is not charged.”

3.2 As the assessee has shown debtors of Rs. 8,73,500/- as on

31.03.2015 which became ‘Nil’ as on 31.03.2016. Assessee, at point no. 1

of reply dated 31.10.2018 stated that all those loans were advanced to

labourers and no confirmation could be furnished. Assessee further

claimed that all those loans were less than Rs. 40,000/-. The claim of the

4 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO assessee regarding receipts of Rs. 8,73,500/- was rejected on the following

reasons by the ld. AO:

i. Assessee did not even furnish the break-up of the loans given. Neither the names nor the PANs of the debtors were furnished. ii. No confirmation was filed by assessee. Not even single debtors name, address or confirmation produced. iii. All of these loans were claimed to have given via cash. Not a single amount was advanced or received through banking channel. It is also important here that any loan given and received of the amount above Rs 20,000/- attracts penalty u/s 269SS or 269TT of the IT Act, 1961 as the case may be. Since assessee did not even furnish the party-wise break- up, it is not possible to verify. iv. Though, assessee claimed that on the next date of hearing books of accounts will be produced. However, the same were never furnished. Even if assessee could have brought the books, it would not have substantiated the claim of the debtors as the books of accounts are not audited and she failed to produce any single evidence to establish her claim.

In view of the above discussion the claim of the assessee regarding any

receipt from the debtor was rejected and added to the income of the

assessee.

assessee has along with other issues challenged the order of assessment

before ld. CIT(A). Apropos to the various grounds so raised by the

assessee, the relevant finding of the ld. CIT(A) is reiterated here in below:

“3. Analysis and Decision:

5 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO 3.1 In the assessment order passed u/s. 143(3) on 26.11.2018, the Assessing Officer made an addition of Rs. 12,88,800/- u/s.68 and made such addition taxable u/s 115BBE

3.2 The facts of the case are that the assessee is engaged in money lending business where she claimed to have given loan to various individuals of low- income group. During the year, she purchased a motor car from her Father-in- Law for a sum of Rs. 10.19,600/- She claimed that such car was used for hiring and she claimed that out of such letting of the vehicle, she earned Rs 4,05,000/- as car plying receipts. She disclosed of having a net income out of car plying receipt for Rs. 1,62,060/- after deducting depreciation of vehicle of Rs. 1,52,940/- and vehicle running expenses for Rs.90,000/-. She also disclosed income from other sources for Rs.8,36.201/-

3.3 While explaining the source of the purchase of the car, the assessee claimed that there was a repayment from pawn debtors for Rs.8,37,500/-

3.4 The Assessing Officer asked for the details of such debtors from whom the such sum of Rs.8,73,500/- was received. The assessee claimed that such fund was the repayment of loan given earlier to the borrowers and she claimed to have received such sum in cash. During the assessment, the assessee could not submit any loan confirmation and stated that since the loans were advanced mostly to labourers it is not possible to submit any confirmation. She also claimed that each of the loan was less than Rs.40,000/-

3.5 The Assessing Officer also asked for the details of records in respect of the receipts disclosed as car plying receipt and the corresponding expenditure for the running of the vehicle. The Assessing Officer also asked for a confirmation or receipt or the RC Book of the vehicle as was claimed to have been purchased from the Father-in-Law of the assessee. The assessee failed to submit any of such document stating that her turnover was much less then the stipulated amount for which regular books of accounts are to be maintained as per Income Tax Act. She claimed that out of the receipt of Rs.4,05.000/-, the income disclosed for Rs. 1,62.060/- was much more than the stipulated amount as per section 44E of the Act.

3.6 The Assessing Officer, in absence of any documentary evidence in support of the claims made by the assessee, had no other alternative than to treat the entire amount of Rs. 12.88.800/- as claimed as the source of purchase of the car and car running expense and other personal expenses claimed by the assessee. I have perused the assessment order and submissions made by the assessee during the appeal proceedings. On analysis of such evidences, it is found that the assessee received a substantial sum under will of her demised Mother-in-Law, which was forwarded to his Father-in-Law from which she received substantial interest income which was disclosed for Rs.8.36.200/- as income from other sources.

6 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO 3.7 Regarding the repayment of loans received in cash for Rs.8.73,500/-, a list of 21 debtors were presented during the appeal stage. It is seen that the lowest of such loan was for Rs 25,000/- and the highest was for Rs.48.000/-. The provisions of section 269SS or 269T debars an assessee to take cash loan or repay such loan in cash. However, in assessee's case, the provisions do not apply as she has received back loans advanced by her earlier. In absence of detailed address etc. whether the assessee's submission can be accepted is a subjective issue. In the list of 21 individuals, certain prefixes like driver, sweeper, etc, are made. However, such claim is not established without any proper documentary evidence or in absence of any receipt issued by the assessee. Under the circumstance, I do not want to interfere with the conclusion drawn by the Assessing Officer where he has treated such receipt of Rs.8.73,500/- as unexplained credit u/s 68.

3.8 With regard to the car running income and corresponding expenses, the assessee has submitted a ledger of day-wise receipts and payments for plying of such vehicle. The entire income and expenses were in cash. In absence of any other documentary evidence since the assessee has disclosed a profit of around 40% of the receipt as income, such disclosure is acceptable. Moreover, the assessee claimed that the car was given to one Hotel Rockland run by her husband and Father-in-Law on partnership basis. She claimed to have purchased vehicle from her Father-in-Law and have given it on hire to the hotel run by her Father-in-Law may seem to be a colourable device to show certain income in the hand of the lady assessee. However, since substantial income has been shown in the hand of the assessee, no adverse view may be taken in this regard.

3.9 Therefore, as discussed, addition of Rs.8.73.500/- is sustained as unexplained cash credit u/s.68 and the balance of the addition is directed for deletion. Having said so, it may be stated that that provisions of taxing income u/s.68 under a higher tax rate as per section 115BBE has come into effect w.e.f. 01.04.2013. Therefore, to that extent, the charging of higher rate of tax, as mentioned in the assessment order, is sustained. 4.1 Regarding the issue of deduction under Chapter VIA (section 80C of the Act), the Assessing Officer categorically stated the assessee could submit documentary evidence of payment of premium with LIC for Rs.40,704/- only against the claim of deduction of Rs.82,542/-. I find no reason to interfere with the denial of deduction for Rs.41,838/-, as mentioned in the assessment order.

ld. CIT(A) on account of pawning debtors realised in the year under

7 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO consideration for an amount of Rs. 8,73,500/- the assessee has preferred

the present appeal on the ground as reproduced hereinabove.

To support the various grounds so raised by the ld. AR of the

assessee, he has filed the written submissions in respect of the various

grounds raised by the assessee and the same is reproduced herein below:

“May it please your honour, 1. That appellant is assessed to tax since AY 2012-13. 2. That she had filed her ROI for AY 2015-16 on 17.10.2015. (PB1) 3. That Computation of Total Income, Capital Account and Balance Sheet. (PB 2 and 3) were filed before the learned AO during Assessment Proceedings which were not disputed by learned AO. 4. That during assessment proceedings the learned AO vide his Notice u/s 142(1) dated 27.010.2018 fixing date of hearing on 02.11.2018 raised following query in relation to pawning debtors of Rs.873500/-. “Kindly refer to the return of income submitted by for the AY 2015-16 wherein you have shown interest receipts from sundry debtors amounting to Rs.4,45,200/- and in the balance sheet pawning debtors of Rs.8,73,500/- have been shown. However, in the ROI for AY 2016-17 interest receipts from sundry debtors came down to Rs.10,300/- and Balance Sheet does not contain any receivable from pawning debtors. Kindly furnish the ledger accounts of all the pawning debtors dully confirmed and signed by the debtors and explain how the amount due from them was received. Also furnish the copy of your bank account statement evidencing amount received from pawning debtors.” (it is reproduced on page 3 of Assessment Order also) 5. Before the date of hearing (02.11.2018) the appellant assessee submitted reply on 31.10.2018. The relevant part reads as under: - “Point No 1:- In case of pawn debtors interest is charged when loan is given. As in period related to Ass. Year 2015-16 loan was given or regiven interest was charged. As in Ass. Year 2016-17 it is repaid by parties it is not charged. On next date of hearing we shall present the books of accounts to you wherefrom you may verify it. As loan was advances mostly to labourers its confirmation is not possible now. I may also mention that nature of each loan was less than Rs.40000/-.”

8 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO (it is reproduced on page 3 of Assessment Order also) 6. After this there was no further hearing. The ld. AO did not ask for any further information/details. The ld. AO made addition of Rs.873500/-and interest received on it Rs.10300/-. 7. During hearing of appeal before the Hon’ble CIT(A)2, Jaipur appellant assessee submitted written reply dated 10.07.2019. (PB 11 to 15). Submission in relation to addition of Rs.873500/- and Rs.10300/- total Rs.883800/- reads as under: - “4.3 (i) From my computation of Total Income capital A/c & Balance Sheet for Ass. Year 2015-16 (Annexure A supra) it is very clear that in Ass. Year 2015-16 I had received interest Rs.405000 from Sundry debtors whereon I had paid tax. Outstanding Sundry debtors as on 31.03.2015 were of Rs.873500 which are appearing in Balance Sheet as at 31.03.2015. (ii) That from my Balance Sheet as at 31.03.2016 (Annexure B supra) your honour will please find that on 31.03.2016 there are nil Sundry debtors. During assessment proceedings vide para 1 of letter dated 31.10.2018, copy enclosed vide Annexure C to this letter, we had requested learned AO that on next date of hearing books of a/cs shall be presented to enable him to verify Sundry debtors A/cs. However neither next date was given nor we presented it. We are enclosing herewith a Statement of Sundry debtors from whom Rs.883800 were received. This is marked as Annexure D. (iii) As stated above in Balance Sheet as at 31.03.2015 sundry debtors of Rs.873500 were appearing and Rs.873500 plus interest Rs.10300, on further loans during the year, thustotaling to Rs.883800 were received back from sundry debtors and therefore as nature and source of Rs.883800 is well explained therefore there was no reason for learned AO to tax it u/s 68.

I may add that Rs.873500/- is my opening balance meaning thereby it was taxed in earlier years. As held by Hon’ble Rajasthan High Court in C.I.T. VsParmeshwarBohra 301 ITR 404 (Raj.) earlier years carry forward balance can not be taxed in current year. As amount of Rs.873500 credited in current years books relates to earlier years outstanding being well explained does not attract provisions of section 68 and can not be taxed as unexplained cash credit in view of Hon’ble Rajasthan High Court decision.”

9 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO Details of Sundry Loans (Pawning Debtors) was also filed (PB 4). It was prayed to provide video conferencing hearing.

assessee has submitted following evidences;

10 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO

vehemently argued that ld. CIT(A) sustained that he has sustained the

addition of Rs. 8,73,500/- being the receipt of money from pawning debtors.

He has not appreciated the fact that the same was outstanding as on

31.03.2015. That money was received back in the year under consideration

for an amount of Rs. 8,73,500/- as unexplained cash credit u/s 68 of the

Act. In the year under consideration is not correct finding to drive home. To

drive home to this contention, the ld. AR of the assessee relied upon the

11 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO balance-sheet of the assessee filed before the revenue as on 31.03.2015.

The same is extracted herein below.

as advances and the re-payment of that advances received in the year

under consideration i.e. F.Y 2015-16 relevant to A.Y 2016-17.

The ld. AR of the assessee thus stated that the addition cannot be

considered u/s 68 of the Act as cash credit receipt of this advances in the

year under consideration since it was appearing balance-sheet as

receivable. In support of this contention the ld. AR of the assessee relied

upon the decision of our Hon’ble High Court in the case of CIT vs.

Parmeshwar Bohra [2004] 267 ITR 698 (Raj.).

authorities. The ld. DR strongly objected to the contentions raised she

submitted that the assessee did not give any details as to pawning debtors

12 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO outstanding. Even the assessee, while filing the appeal before ld. CIT(A) did

not consider it fit to give all details related to those advances realised by the

assessee. Based on these arguments she prayed to sustain the order of ld.

CIT(A). Thus, she submitted that had the assessee submitted details of

pawning debtors along with name, address and amount given the ld.

Assessing Officer could have made verification as per provision of section

133(6) of the Act.

assessee submitted the details of the advances given. He also submitted

that the advances were given in the earlier year and the same has been

received back in the year under consideration. Since, the debtors were

having no proper means and were pawning debtor’s assessee submitted

list of all the persons from whom advances were realised which were given

against the security. That list was placed on record at page No. 4 of paper

book so filed. The ld. CIT(A) did not consider this factual aspect even

though he acknowledged that the assessee submitted that list. That finding

is recorded at para 3.7 of the ld. CIT(A)’s order.

13 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO 11. We have heard the rival contentions and perused the material placed

on record. The bench noted that the apple of discord in this case is that

whether amount outstanding as on 31.03.2015 can be considered as

unexplained credit in the year under consideration i.e. F.Y 2015-16 relevant

to assessment year 2016-17, being the year of realisation of those

outstanding pawning debtors.

The bench noted that the ld. AO through ld. DR did not object to the

contentions of the assessee that the amount was given on or before

31.03.2015 and the same were outstanding as at 31.03.2015.

The money was advanced against the pawning security and the same

was realised in the year under consideration. The assessee has already

offered the interest arising out of those advances in the year when the

advances were given. Even that aspect of the matter has not been disputed

before us by either party.

Thus, when the assessee has demonstrated that she has given

advances against the security in the earlier year that source is not disputed

even the interest earned on that is not disputed. Now when these money

received back the same cannot be considered as unexplained money within

the meaning of section 68 of the Act. As the money so received in the year

under consideration is on account of opening balance of the advances of

14 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO the earlier year and the same cannot be considered as income of the

current year merely on the reasons that the assessee failed to give the

complete details of the pawning debtors outstanding as on 31.03.2015.

We get support of our view from our Hon’ble High Court Rajasthan in

the case of CIT vs. Parmeshwar Bohra [2004] 267 ITR 698 (Raj.), wherein

High Court held as under:-

“7. It appears that the Tribunal has considered the issue regarding accessibility of the capital while considering the assessee's appeal ITA 71(Jdpr)/1999 for the asst. yr. 1993-94 by order dt. 6th Dec., 2001, whereby the Tribunal held that it is not a case of introduction of cash credit but it is a case of unexplained investment under Section 69 of the Act of 1961 and the appropriate previous year for inclusion is the relevant financial year and, therefore, the opening capital account cannot be added as an unexplained investment under Section 69 of the Act of 1961 for the asst. yr. 1993-94. The Tribunal also held that the genuineness of the capital introduction has already been adjudicated upon by the assessing authority for the appropriate financial year relevant to asst. yr. 1992-93. The Tribunal also took note of the fact that the order passed by the assessing authority for the asst. yr. 1993-94 on the basis of notice under Section 148 dt. 17th June, 1997, has already been quashed by the order dt. 6th Dec., 2001, in the same ITA No. 71(Jdpr)/1999. Therefore, on the basis of the above decision dt. 6th Dec., 2001, the appeal of the assessee was allowed by the Tribunal. Nothing has come on record what happened to the order dt. 6th Dec., 2001, and whether the said order of the Tribunal was ever challenged by the Revenue or not. When the Revenue itself has accepted the order dt. 6th Dec,, 2001 wherein it has been held by the Tribunal that it is a case of unexplained investment under Section 69 of the Act of 1961 and the appropriate previous year for inclusion is the relevant financial year and its genuineness has already been adjudicated upon by the assessing authority for the appropriate financial year, i.e., 1992-93 (sic) then how the order of the assessing authority can be said to be erroneous or prejudicial to the interest of the Revenue. Since the Tribunal has decided the appeal on the basis of the decision dt. 6th Dec., 2001, therefore, there appears to be no illegality in the order passed by the Tribunal.

15 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO 8. The judgment relied upon by the learned counsel for the appellant delivered in the case of CIT v. Ashok Timber Industries (supra) has no application to the facts of this case because of the reason that the genuineness of the capital introduction in this case has already been adjudicated by the assessing authority for appropriate financial year i.e., 1992-93, therefore, it cannot be said to be unexplained investment after order passed by the assessing authority holding genuine capital introduction for the asst. yr. 1992-93.

Respectfully following the finding of Jurisdictional High Court as referred

and relied upon by the ld. AR of the assessee as ld. DR did not produce

any other contrary view on the issue having same strength. Thus, we do not

find any single reason to sustain the addition in the hands of the assessee

and we direct the ld. AO to delete that addition. Based on these

observations, ground No. 1 raised by the assessee is allowed.

Ground no. 2 being general and there is no specific grievance raised

by the assessee therefore, the same is not required to be adjudicated.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 27/09/2024.

16 ITA No. 950/JP/2024 Neha Wadhwa vs. ITO

Sd/- Sd/- ¼ jkBkSM deys’k t;arHkkbZ ½ ¼ lanhi xkslkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 27/09/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Neha Wadhwa, Jaipur izR;FkhZ@ The Respondent- Income Tax Officer, Ward 6(1), Jaipur 2. 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 950/JP/2024) 6. vkns'kkuqlkj@ By order,

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