RAJU JODHANI,R. K PURAM COLONY, FOY SAGAR vs. ITO WARD 1(2), AJMER

“It is humbly requested to your honour that the grounds of appeal are as follows: 1) The notice u/s 148 was issued only on the ground that the property under consideration was overvalued by the Collector stamps, Ajmer.

2) The matter of cash deposited in the bank account was not mentioned at the time of issuance of the notice u/s 148 of the Income tax act 1961.

3) The Learned AO had made the exparte decision in respect of the cash deposited in the bank account, without granting opportunity of hearing to the assessee.

4) The Learned AO had made addition of cash deposited in the bank account, due to the ITR was not filed by the assessee.

5) It is humbly requested that as per the Income tax Act 1961, ITR is mandatory to be filed only in the cases where the Income of the assessee was above the maximum exemption limit. It is requested humbly that the assessee had explained during the proceedings before the AO and the Honourable Commissioner (APPEALS), that the cash deposited was out of the past accumulated savings of many years and the assessee had started earning from the age of early 18 years.

6) It is humbly requested that the Income tax Act 1961 also does not bind everyone to file the Income tax returns. If there is any taxable income during the year under consideration, which is above the maximum exemption limit, then only the assessee is bound to file the ITR. It is humbly requested that the AO had not granted any opportunity to the assessee before making any addition, in respect of cash deposited in the Bank and not granted the natural justice.

7) It is humbly requested to your honour that, merely on the basis, that the ITR is not filed cannot be justified in concluding that the assessee had no income. There are many persons who have below taxable income and therefore they don't file the ITR. It does not mean that the person has no income. The Persons below taxable limit does not file the ITRs, but they do have income which is below taxable.

8) In the matter of 115 ITR 524(SC) "Brij Bhushan Lal PradumanKumar vs. CIT (1978)

Held "The authority making a best judgement assessment must make an honest and fair estimate of the income of the assessee and through arbitrariness cannot be avoided in such an estimate, the same must not be capricious but should have a reasonable nexus to the available material and circumstances of the 6 Raju Jodhani vs. ITO case." 9) It is further requested humbly that the assessee had replied to the Commissioner appeals from time to time and on 29th June 2023 also and the commissioner appeals Order is dated 28th June 2023. Besides that we had made many requests also regarding to the issuance of the order but the Order of commissioner appeals was not made available on Income tax Portal. Therefore we had to make many requests on the grievance section of Income tax Portal. Ultimately after many requests we could hardly have the order of commissioner appeals on Income tax portal. 10) It is prayed before your honour that beyond the facts and the appeal authority has not considered the submission of assessee and the commissioner appeal has sustained the addition of Rs.440000/- which was made addition by assessing officer. Please consider the facts and circumstances and allow the relief. The grounds may be added, modified, crave/add during the appeal proceedings, etc.”

4.1 The assessee was asked to furnish the documentary evidence in respect of cost and value taken for sale consideration. The assessee has not furnished any evidence in respect of cost of construction. The assessee is also intimated that the collector stamp has enhanced the value of the property for stamp purpose at Rs. 39,18,580/-. The matter was also referred to the DVO for valuation of the aforesaid property and also cost/construction. The DVO vide his report No. 395 dated 10.12.2018 decided the fare market value of the property for financial year 2010-11 at Rs. 49,65,200/-. As per provision of section 50-C(3) vide letter dated 14.12.2018 the assessee was asked as to why the sale consideration may Ajmer.

4.2 The assessee filed the reply on 18.12.2018 contending that cost of land taken by AVO is unrealistic and infeasible. However, the ld. AO taken the value at Rs. 39,18,580/- and accordingly added a sum of Rs. 16,49,230/- as long term capital gain chargeable to tax.

4.3 During the year under consideration a sum of Rs. 4,40,000/- deposited in cash against which the assessee was asked to justify the source of cash deposited into the bank account. The assessee submitted that the said cash is sourced from earlier withdrawal and savings. The explanation given by the assessee was considered but acceptable as the same is not supported by any evidence. Thus, the cash deposited by the assessee was added as concealed income of the assessee.

4.4 Interest income of Rs. 4,210/- was earned on the saving bank account of the assessee with HDFC bank. As the said income was not shown by the assessee in the ITR the same was added as concealed income of the assessee. determined at Rs. 22,24,200/- as against the returned income of Rs. 1,50,760/-.

“8. Decision I have carefully considered the submissions made by the appellant, the facts on record, the AO’s remand report and the applicable law in this regard. On perusal of the grounds of appeal filed vide Form 35, it is noted that the grounds are not clearly and succinctly worded and not numbers in a comprehensible manner. Hence for a better understanding and appreciation of the issues involved, the grounds are re-framed as under: Ground 1: Against the cost of acquisition and improvement and valuation of the property transferred during the relevant A. Y by the DVO Ground 2: Against the addition of Rs. 4,40,000/- as unexplained cash deposit: Ground 3: That reasons recorded u/s 147 are not valid, as it is recorded from borrowed information. In the course of appellate proceedings the appellant filed revised/additional grounds vide submission dated 16.06.2023 as under: "It is humbly requested, Before your honour, that in the Grounds of Appeal previously the assessing officer has taken the value Rs 3890830/- which was ascertained by the Collector (Stamp), Circle-Ajmer vide his order dated 12.06.2012, the enhanced DLC value of property was Rs.2269350/-. The assessee has preferred the Appeal before the Honourable Tax Board Rajasthan, Ajmor and the Honourable Rajasthan Tax Board has sustained value of Rs. 2269350/- which was valued by the Registration department at the time of registration of the sale deed (copies is enclosed). This is the 10 Raju Jodhani vs. ITO modified Grounds of Appeal before your honour, during the Appeal period and it is prayed humbly to allow the relief. This value of Rs.2269350/- has also been discussed by the assessing officer in the body of the assessment order at Page.2.

Thus as a result of the order of Honourable Rajasthan Tax Board, Ajmer, the basis of issuance of notice u/s 148 ceases to exist. Therefore all the proceedings done u/s 148 becomes invalid. Therefore it is humbly prayed to your honour that as the grounds of issuance of notice u/s 148 becomes null and void. Therefore it is humbly prayed to your honour to kindly quash the demand raised.

It is humbly requested to your honour, to kindly consider the modified grounds of appeal before your honour, in the Form No.35 dated 23/01/2019.

As the above revised/additional grounds are directly pertinent to the issues being agitated, and as I am satisfied that these are bona fide grounds which could not have been raised earlier for the reason that the order of Honourable Rajasthan Tax Board, Ajmer, was received subsequent to filing of appeal, the revised/additional grounds are admitted and considered for adjudication as under:

Ground 4: As a result of the order of Honourable Rajasthan Tax Board, Ajmer, the basis of issuance of notice u/s 148 ceases to exist and all the proceedings u/s 148 becomes invalid and the demand raised may be quashed.

The reframed grounds of appeal are adjudicated as under:

Vide Ground of appeal No. 1 the appellant contends that the DVO has erred in valuating the property which was transferred during the relevant A.Y and in respect of which capital gains was computed at Rs. 1799994 by the A.O. However, it is pertinent to note that as recorded in the assessment order, in assessing the capital gains, the sale consideration was considered applying the provisions of section 50C at Rs.39,18,580/-i.e the value decided by the Collector Stamp, Ajmer. Further the cost of construction claimed by the assessee was accepted, being lower than the cost of construction as per the DVO. Hence, as the Cost of acquisition and improvement was taken as claimed by the assessee and not according to DVO's valuation, the above ground of appeal is not maintainable and is dismissed.

Grounds of appeal No.3 & 4 vide which the appellant is questioning the validity of the proceedings u/s 147 are inter-related and hence taken up together for adjudication.

The appellant has contended vide Ground 3 that the reasons recorded u/s 147 are not valid, as it is recorded from the borrowed information and has relied

11 Raju Jodhani vs. ITO on the judicial decisions in the case of Nirmala Agarwal vs. ACIT (2018) 64 ITR (Tribunal) 658 (Jaipur) and BirBahadur Singh Sijwali vs. ITO, Ward-1. Co. 366 (Delhi-Trib).

In the instant case, the assessee had sold land situated at Village Makarwali, Tehsil & District Ajmer for a consideration of Rs. 15,00,000/- on 01-11- 2010 and the DLC value of the same was taken by the Sub-Registrar-2, Ajmer at Rs.22,69,350/-. However, the Collector (Stamp), Circle-Ajmer vide his order dated 12.06.2012, enhanced the DLC value of the above immovable property from Rs.22,69,350/- to Rs.38,90,830/-. As the assessee had not filed his return of income for the year under consideration, notice U/s 148 of the I.T. Act, 1961 was issued on 23-03-2018. It is pertinent to note that despite having transferred immovable property which resulted in capital gains the assessee did not file his return of income u/s 139. As no return had been filed by the assessee, and as there was no response to the enquiry letter sent by the A.O, asking to explain the above transaction, the A.O had reason to believe that income had escaped assessment.

In the case of Nirmala Agarwal vs. ACIT (2018) 6 4 ITR (Tribunal) 658 (Jaipur) relied upon by the assessee, the re-opening was on the basis of statement recorded by investigation wing and cross examination was not provided; whereas the case Bir Bahadur Singh Sljwali vs. ITO, Ward-1, Haldwani was a case where cash deposits were found in the assessee's bank account, and the Tribunal observed that ther easons recorded for reopening the assessment did not make out a case that the assessee was engaged in some business and the income from such a business had not been returned by the assessee. The instant case however is a case of transfer of Immovable property where no retum of income was filed, and the information based on which the case was re-opened was not some third party statement but the order of Collector (Stamp), Circle- Ajmer enhancing the DLC value of the above immovable property. This is an order passed by a judicial authority and thus has legal sanctity which can only be challenged by due judicial process. Hence, I find no merit in the appellant's contention that the proceedings u/s 147 are not valid as being based on borrowed information.

Further, it has been submitted the assessee went in appeal against the order of Collector (Stamp), Circle-Ajmer enhancing the DLC value of the above immovable property. The assessee submitted that the Honourable Tax Board, Rajasthan, Almer decided in his favour and sustained the value of the property at DLC rate only Le Rs.22,69,350 and the value of Rs 38,90,830 as confirmed by Collector stamps was rejected. A copy of the order of the Tax Board was submitted, and it is seen that vide above order the value of the property sold by the assessee was confirmed at DLC rate i.e. Rs. 22,69,350/-. However, it is also pertinent to note that at the time of initiation of proceedings us/ 147 the prevailing value of the property was the enhanced value of Rs. 38,90,830 as per the order of the Collector stamps, Circle- Ajmer. The basis of issuance of notice u/s 148

12 Raju Jodhani vs. ITO was valid at the time of issue of notice and completion of proceedings u/s 147. It is only due to further appeal filed and subsequent adjudication of the issue by the higher authority that the valuation of the property has been reverted/revised. Hence, this post facto decision does not alter the validity of the notice u/s 148 and the resultant proceedings. However, the A.O is directed to pass necessary orders to rectify the computation of long term capital gains in the hands of the assessee taking into account the revised/reverted valuation of the immovable property at Rs. 22,69,350/- by the order of the Honourable Tax Board Rajasthan, Ajmer dated 12.02.2021, and the demand raised on this account may be reduced accordingly. This ground is treated as partly allowed.

Ground No. 2 is against the addition of Rs. 4,40,000/- as unexplained cash deposit

During assessment proceedings, the A.O on perusal of bank statement of the assessee's account with HDFC Bank, Ajmer, noted that the assessee had deposited cash totaling Rs.4,40,000/- during the financial year 2010-11. The assessee submitted that the cash was deposited out of past saving and out of withdrawals from Bank. The A.O noted that the assessee had not shown any evidence that after withdrawing he had deposited the same in bank account. Further, as the assessee had also not filed any return of income in earlier years, the plea of past saving was found not acceptable and hence, the cash deposit of Rs.4,40,000/- was treated as found unexplained money. In remand proceedings also, the assessee was unable to explain the above cash deposits.

In the present appellate proceedings, it was submitted that the assessee was around 50 years old in F.Y 2010-11 and belonging to Sindhi Community, and having earning from an early age 18 years and thus he had enough cash liquidity out of which he had deposited cash in the bank account. It was further submitted that he had made withdrawals from his account with State Bank of India which was deposited in his HDFC account. It was further stated during VC hearing that the assessee had been earning some income from poultry business but as the same was below taxable threshold therefore he had not filed income tax return for the A.Y. 2011-12 or for earlier years.

Having duly considered the assessee's submissions, and the facts on record, it is noted that the claim of the sources for the cash deposit are not authenticated in any way other than by self serving statements. In the absence of any returns filed there is no evidence to support the claim of business income earned in preceding years or even in the relevant year. The claim of withdrawal from one account and re-deposit into another account cannot be accepted as explanation for the source of the cash deposit in a case where no returns are filed and there is no evidence to prove that the assessee had earned such income as claimed. It is also relevant to note that in the account with SBI there are again cash deposits on various occasions. Unexplained cash deposits in one account cannot be taken to be an acceptable source for cash deposits in the other account. This being the case, the 13 Raju Jodhani vs. ITO addition made by the A.O of Rs. 4,40,000/- as unexplained cash deposit is upheld and appellant's ground is dismissed. 9. Accordingly, in the result, the appeal filed by the appellant is partly allowed.”

“It is humbly prayed before your honour, that in the body of the assessment order for A.Y. 2011-12 , the A.O. has made addition of Rs. 4,40,000/- on account of cash deposited in HDFC Bank, treating as unexplained cash. It is prayed that without providing proper opportunity of hearing and before rejecting the submission of assessee, the opportunity of hearing was not granted and the AO has made addition of Rs.4,40,000/- as cash deposit in bank and during the assessment proceedings the AO has not discussed and not asked assesee the reason for not filing Income Tax Return in the previous years, neither this question was asked from assesse that why not this addition may be made. Thus opportunity of hearing and explaination for non filing of the ITRs in the previous years , was not granted by the assessing officer. The grounds of appeal was also submitted before the Honourable Commissioner of Income Tax(Appeals), Regarding addition of Rs. 4,40,000/- the assessee is 49 years old in the year under consideration , who belongs to Sindhi Community, these are the earning from the early age and he has enough cash liquidity out of it, he has deposited cash in bank account. He has below taxable income, therefore he has not filed income tax return for the A.Y. 2011-12. It is further prayed that the Honourable Commissioner of Income Tax(Appeals) has upheld the addition of Rs. 4,40,000/- which is made by the assessing officer. It is prayed before your honour that assessee is above 50 years old person and by nature of Sindhi Community they are doing any business to meet out the expenses for household and keep cash with him for the business uncertainty and unseen expenses in the family and in the social responsibility etc, he has 14 Raju Jodhani vs. ITO accumulated enough cash of Rs. 8,30,969/- before the financial year 2010-11 and he has below taxable income therefore he was not required to furnish income tax return as per the section 139(1) of the Income tax Act 1961.

Further it is prayed that Shri Raju Jodhani with his wife Seema Jodhani has joint account in the State bank of India ,Account no.: 10158211236 and from this statement it is self explained that during the year the assessee has withdrawn the cash . The Details of the cash withdrawal from the joint account with wife Seema are as follows :

Date Amountwithdrawn 13/08/2010 125000 25/02/2011 160000 02/03/2011 300000

Thus In the HDFC Bank account No.: 02021930004193, amount of Rs.4,40,000/- (Deposited Rs. 200000 dated 20/12/2010 , Rs. 140000 dated 12/03/2010 and Rs. 100000 , dated 24/03/2011) is from the sources of old cash savings and withdrawals from the joint account which is mentioned in the SBI and evident from the bank statement enclosed and abovementioned information. Therefore it is prayed that the sources for cash deposited are submitted before your honour and it is prayed that if the assessee has below taxable income it is not mandatory for the assessee to file the Income Tax return every year.

The notice issued u/s 147/148 was on the ground of property sold during the year , the matter of cash deposit was no where mentioned or raised in the above said notice issued u/s 148 . It is prayed that Commissioner Of Income Tax (Appeals) has allowed relief in respect of the ground on which addition were made in the assessment order and in the reason of notice issued u/s 148 , grounds of cash deposited in bank , is not mentioned in the body of the assessment order. Therefore it is requested to consider the facts and circumstances. Please delete the additions made by the concerning officer.

It is humbly requested that I Am BP patient and have cardiac problem and I have viral fever. Therefore please adjourn the case for 30 days and oblige.

Honourable Sir, It is humbly requested before your honour that opportunity of hearing may be granted , before passing order by your good self . It is further prayed that if any information is required it may be submitted separately. I will be grateful to your honour.” reliance was placed on the bank statement of HDFC Bank, SBI Bank and affidavit of the assessee regarding the cash deposited into the bank account.

S. No. Particulars Page no. 1 [2015] 60 taxmann.com 333 (Karnataka) High Court of 1-18 Karnataka N Govindaraju v. Income-tax officer, Ward-8(2), Bangalore 2 [2012] 25 taxmann.com 124 (Punjab & Haryana) High Court of 19-22 Punjab and Haryana Majinder Singh Kang vs. Commissioner of Income-tax 3 [2014] 52 taxmann.com 51 (Punjab & Haryana) High Court of 23-26 Punjab & Haryana Commissioner of Income tax vs. Mehak Finvest (P.) Ltd.,

9.1 The ld. AR of the assessee while arguing the case of the assessee drawn our attention that as in the case of the assessee the assessment was re-opened to verify the capital gain which was done and for that the assessee has received the relief from the order of the ld. CIT(A). As regards assessee submitted the details of the source of cash deposit and therefore, before making the addition of Rs. 4,40,000/- the assessee was not given any show cause notice to justify the source and therefore, ld. AR submitted that the order of the ld. AO and that of the ld. CIT(A) violated the principles of natural justice. As the assessee was not allowed to support the claim the assessee has filed a detailed affidavit in support of deposit of cash into the bank account. The content of the affidavit filed by the assessee reads as under:

As it is evident that the assessee was not given any show cause notice before making the addition. The assessee already contended before the lower authority that the source of deposit of cash into the bank account was from the withdrawal made from the joint account maintained by the assessee with her wife Ms. Seema Jodhani. The assessee also filed a bank statement to support the withdrawal of cash in addition to the affidavit. It is also evident from the bank statement that the assessee has withdrawn a sum of Rs. 5,85,000/- and out of that amount he has deposited a sum of brushed a set because the assessee has not filed any ITR for the immediately previous year and even for that the assessee has submitted that withdrawal was made from the joint and account with his wife and the assessee has income below the maximum amount not chargeable to tax and therefore, he was not under obligation to file ITR. The bench noted the overall facets of the dispute but when all the aspect of the matter has been clarified by filling an affidavit and the same has not been controverted by the ld. AO through the ld. DR we find no reason to sustain the addition of Rs. 4,40,000/- in the hands of the assessee. Since all the grounds are surrounded for an addition of Rs. 4,40,000/- we need to deal with all the grounds of the assessee separately and based on this observation the appeal of the assessee is allowed.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 22/07/2024.