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Facts
The assessee deposited Rs. 10,57,000 in his bank account. Out of this amount, Rs. 10,00,000 was taken as a loan from three individuals to purchase immovable property, and the remaining Rs. 57,000 was from earlier savings. The deal for the property did not materialize, so the withdrawn cash was redeposited, and the loans were repaid through banking channels.
Held
The Tribunal held that the assessee has provided adequate documentation and followed banking channels for the loan transactions, proving the source of cash deposits. The earlier reassessment proceedings were challenged but Grounds 1 and 2 were not pressed. The addition of Rs. 7,57,000, which was confirmed by the NFAC on the basis of un-explained cash deposits, was deleted.
Key Issues
Whether the addition of Rs. 7,57,000 confirmed by NFAC on account of unexplained cash deposits, sourced from loans and subsequent repayments, is sustainable under Section 69 of the IT Act.
Sections Cited
147, 148, 151, 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC’’ JAIPUR
Before: Hon’ble SHRI SANDEEP GOSAINvk;dj vihy la-@ITA No. 150/JP/2024
ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 29-12-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2011-12 raising therein following grounds of appeal. ‘’1. In the facts and circumstances of the case and in law Id. CIT(A)/NFAC has erred in confirming the action of Id. AO in reopening the case of the assessee u/s 147 of the Act. The action of the Id. CIT (A)/NFAC is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the entire reassessment proceedings.
2. In the facts and circumstances of the case and in law, ld.CIT(A) /NFAC has erred in confirming the action of the Id. AO in issuing notice u/s 148 without obtaining proper 2 RAM GOPAL SAINI VS ITO, WARD 4(2), JAIPUR sanction u/s 151 of the Act. The action of the ld. CIT (A)/NFAC is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the entire reassessment proceedings.
3. In the facts and circumstances of the case and in law, ld. CIT(A) /NFAC has erred in confirming the addition of Rs. 7,57,000 u/s 69 of the Act. The action of the ld. CIT (A)/NFAC is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting such addition amounting to Rs 7,57,000.
2.1 During the course of hearing, the ld. AR of the assessee has not pressed the Ground No. 1 & 2. Hence, the same are dismissed being not pressed. 3.1 Apropos Ground No. 3, as per the facts of the present case, the AO made additions under section 69 of the IT Act on account of cash deposited in the bank account treating the same to be unexplained. 3.2 On appeal the NFAC restricted the additions to Rs. 7, 57, 000/- out of e total additions of Rs. 19, 57, 000/- made by the AO.
3.3 Against this order, the assessee has filed the present appeal before me on the grounds mentioned here in above.
3.4 The only ground raised by the assessee is challenging the order of upholding of additions and in this regard assessee has reiterated the same arguments as were raised by learned AR before the revenue authorities has also relied on his written submissions which are reproduced here in below
SUBMISSIONS:
3 RAM GOPAL SAINI VS ITO, WARD 4(2), JAIPUR 3.1 It is submitted that the assessee deposited Rs 10,57,000 in his bank account maintained with ICICI Bank. Out of the total amount of cash deposited of Rs 10,57,000, assessee took loan of Rs 10,00,000 from three persons i.e., Maya Devi Jain, Lokendra Jain, and Ramesh Chandra Jain to purchase immovable property and balance Rs 57,000 were out of his earlier accumulated savings.
3.2 The assessee had taken entire loan through banking channel.This fact is not in dispute. Details of loan taken are as under: Amount in PB Date of receipt Particulars Rs. 09.08.2010 Maya Devi Jain 3,00,000 7 16.08.2010 2,00,000 16.08.2010 Ramesh Chandra Jain 7 4,00,000 18.09.2010 Lokendra Jain 7 1,00,000 10,00,000 Total 3.3 The assessee after obtaining such loans from the aforementioned persons withdrew cash for purchase of immovable property. However, the deal could not be materialized as the seller of the property demanded higher amount than the agreed price between them.
3.4 The assessee after such increase in price of the immovable property decided not to purchase the said property and again deposited the amount in bank. After such deposition of cash, the assessee repaid the loan to the said parties. The entries of loan taken and repaid are clearly evident in the bank statement itself.
3.5 The above transactions of acceptance of loan, withdrawal of cash and repayment of loan can be summarized as under:
Date of receipt Particulars Amount in Rs. 09.08.2010 Maya Devi Jain 3,00,000 16.08.2010 2,00,000 16.08.2010 Ramesh Chandra 4,00,000 Jain 18.09.2010 Lokendra Jain 1,00,000 Total 10,00,000
Date of Cash deposit in Bank: 22-10-2010
Date of Particulars Amount of loan taken PB repayment 26.10.2010 Maya Devi Jain 5,00,000 2 26.10.2010 Ramesh Chandra 4,00,000 2 Jain 07.01.2011 Lokendra Singh 1,00,000 2 Total 10,00,000 3.6 It can be seen that within a short span of two months the assessee had repaid the loan taken for the purchase of immovable property as the deal could not be executed at the agreed price.
3.7 Ld. NFAC out of the total cash deposited of Rs 10,57,000, granted relief of Rs 3,00,000 on the basis of past savings & cash in hand and confirmed the balance addition of Rs 7,57,000 (10,57,000-3,00,000)
3.8 Ld. NFAC has misdirected itself in assuming that the assessee has not provided the source of cash deposits. The source of cash deposits is the loan taken from aforementioned parties.
3.9 The assessee has furnished adequate documents in order to prove the acceptance of loan from various persons which is the source of cash deposits. The said fact is undisputed.
3.10 Ld. NFAC has itself mentioned at Page-6 of the order that the assessee has furnished PAN and Aadhar of the persons from whom the loans were taken. The said fact itself proves that the assessee has established the source of cash deposits in the bank.
3.11 It is submitted that the entire transaction of loan is through the banking channel. The entries of loan acceptance is reflecting in the bank statement of the assessee [PB 7]
5 RAM GOPAL SAINI VS ITO, WARD 4(2), JAIPUR 3.12 The bank statement of the lender also reflects the entries of loan given to the assessee [PB 10, 15,17] The said facts are not disputed by ld. NFAC.
3.13 Ld. NFAC has not doubted the loan transaction of the assessee. He has further not doubted the cash withdrawals made out of such loan accepted by the assessee.
3.14 The only suspicion in the mind of Ld. NFAC was the source of cash deposit made by the assessee. The whole transaction has taken place in the following sequence: a. Loan acceptance by the assessee b. Cash withdrawal out of the loan accepted by the assessee c. Cash deposited out of the above cash withdrawal d. Loan returned by the assessee 3.15 The above transaction took place in a short span of two to three months. It is important to note that ld. NFAC has not disputed the first two steps of the transaction. However, has only doubted the source which has been well explained by the assessee.
3.1 Following documents were submitted before ld. NFAC to prove the loan transaction: a. PAN, Aadhar and Bank Statement of the lenders 3.17 The said transaction as well as documents are not disputed by ld. NFAC. Reliance is placed on the recent judgement of ITAT, Jaipur Bench wherein it has been held as under: Shri Ashok Choudhary vs. ITO Ward- Jhalawar After having gone through the facts of the case and after hearing both the parties at length and on perusal of the documents placed on record, orders passed by the Revenue Authorities and the judgements cited by the respective parties, the Bench found that it is an undisputed fact that the assessee had withdrawn amount of Rs.24.00 lacs from his bank account on 11-11-2024 and re-deposited the equal amount in his bank account on 23-11-2016. Thus, in this way, the source of deposit of cash in the bank account of the assessee stands fully proved.
3.18 Hon’ble Bench has relied on the following judgements while passing the aforementioned order. i. Hon’ble Karnataka High Court in the case of S.R. Venkata Ratnam vs CIT (1981) 127 ITR 807 There is some force in the argument of the ld counsel for the petitioner and the judgement advanced by the Revenue is, therefore, without any force. Once the petitioner assessee discloses the source as having come from the withdrawal made on a given date from a given bank, it was not possible for respondents Nos. 1 and 2 to concern themselves with what the assessee did with that ii. Hon’ble Delhi High Court in the case of CIT vs Kulwant Rai (200&0, 210 CTR 380 (Delhi) The orders of Assessing Officer as well as Commissioner of Income-tax are completely silent as to for what purpose the earlier withdrawals would have been spent. As per the cash book maintained by the assessed, a sum of Rs. 10,000/- was being spent for household expenses every month and the assessed has withdrawn from bank a sum of Rs. 2 lacs on 4th December, 2000 and there was no material with the Department that this money was not available with the assessed. It has been held by the Tribunal that in the instant case the withdrawals shown by the assessed are far in excess of the cash found during the course of search proceedings. No material has been relied upon by the Assessing Officer or Commissioner Income-tax (A) to support their view that the entire cash withdrawals must have been spent by the assessed and accordingly, the Tribunal rightly held that the assessment of Rs. 2.5 lacs is legally not sustainable under section 158BC of the Act and the same was rightly ordered to be deleted." 3.5 After having heard the Counsel for both the parties and after perusal of the material placed on record and the judgements cited by the parties I noticed from the record that the assessee deposited Rs 10,57,000 in his bank account maintained with ICICI Bank. Out of the total amount of cash deposited of Rs 10,57,000, assessee took loan of Rs 10,00,000 from three persons i.e., Maya Devi Jain, Lokendra Jain, and Ramesh Chandra Jain to purchase immovable property and balance Rs 57,000 were out of his earlier accumulated savings.The assessee had taken entire loan through banking channel.This fact is not in dispute. Details of loan taken are as under:-
Amount in PB Date of receipt Particulars Rs. 09.08.2010 Maya Devi Jain 3,00,000 7 16.08.2010 2,00,000 16.08.2010 Ramesh Chandra Jain 7 4,00,000 And after obtaining loan from the aforesaid persons withdrew cash for purchase of immovable property and since the deal Could not be materialised because of dispute of price between them therefore the said amount was again redeposited in the bank and consequently the assessee repaid the loan to the said parties . I have perused the entries of loan taken and repaid which are clearly evident in the bank statement itself. The sumrised transactions of acceptance of loan, withdrawal of cash and re- payment of loan are reproduced below:-
Date of receipt Particulars Amount in Rs. 09.08.2010 Maya Devi Jain 3,00,000 16.08.2010 2,00,000 16.08.2010 Ramesh Chandra 4,00,000 Jain 18.09.2010 Lokendra Jain 1,00,000 Total 10,00,000 Date of Cash withdrawal for purchasing the property on 17-08-2020 and18-09- 2010
Date of Cash deposit in Bank: 22-10-2010
Date of Particulars Amount of loan taken PB repayment 26.10.2010 Maya Devi Jain 5,00,000 2 26.10.2010 Ramesh Chandra 4,00,000 2 Jain From the records I also noticed that within a short span of 2 months the assessee had repaid the loan taken for the purchase of immovable property as the deal could not be materialised. Whereas the NFAC has misdirected itself in assuming that the assessee has not provided the source of cash deposits. However the assessee has categorically mentioned the source of cash deposits is the loan taken from the aforementioned parties. And in this regard, the assessee had furnished adequate documents in order to prove the acceptance of loan from various persons which is the source of cash deposits and the said fact has not been disputed by the revenue. I also noticed that ld. CIT(A) NFAC has itself mentioned in its order that the assessee has furnished Pan and Aadhar of the persons from whom the loans were taken. It is also important to mention here that the entire transaction of loan is through the banking channel and the entries of loan acceptance is reflected in the bank statement of the assessee which is at paper book page number 7. The similar issue has already been decided by the co-ordinate bench of ITAT Jaipur in the case of Ashok Choudhary versus ITO ITA 238 /JP/ 2024 where in it was held as under:-
‘’ Shri Ashok Choudhary vs. ITO Ward- Jhalawar After having gone through the facts of the case and after hearing both the parties at length and on perusal of the documents placed on record, orders passed by the Revenue Authorities and the judgements cited by the respective parties, the Bench found that it is an undisputed fact that the assessee had withdrawn amount of 9 RAM GOPAL SAINI VS ITO, WARD 4(2), JAIPUR Rs.24.00 lacs from his bank account on 11-11-2024 and re-deposited the equal amount in his bank account on 23-11-2016. Thus, in this way, the source of deposit of cash in the bank account of the assessee stands fully proved.’’ Therefore taking into consideration the totally of the facts and circumstances of the present case it is an undisputed fact that the assessee had taken the loan from the aforesaid persons through banking channel and withdrawn the cash for the purpose of purchase of the property , but since the deal could not be materialised therefore the cash was again redeposited in the bank account and consequently the loan was repaired. Thus , in this way the source of deposit of cash in the bank account of the assessee stands fully proved. Therefore keeping in view the above observations the bench deletes the above addition. Hence, the appeal of the assessee is allowed.
4.0 In the result, the appeal of the assessee stands allowed with no orders as to costs. Order pronounced in the open court on 01 /07/2024. Sd/- ¼lanhi xkslkbZ½ (Sandeep Gosain) U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 01 /07/2024 *Mishra आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Shri Ram Gopal Saini, Jaipur 2. izR;FkhZ@ The Respondent- The ITO, Ward- 4(2), Jaipur 3. vk;dj vk;qDr@ The ld CIT