TRIBHUVAN SHARDA,JAIPUR vs. INCOME TAX OFFICER WARD 6 (2), JAIPUR

आयकरअपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR JhlanhixkslkbZ]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ITA No. 199/JP/2024 fu/kZkj.ko"kZ@AssessmentYear : 2007-08 Shri Tribhuvan Sharda cuke The ITO Vs. C-58, Mahavir Marg, Ward 6(2) C-Scheme, Jaipur 302 001 Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AMVPS 4117 M vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri Sanjeev Kumar Mathur, CA jktLo dh vksj ls@Revenue by: Shri Anoop Singh, Addl. CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 03/04/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 24 /04/2024 vkns'k@ORDER PER: SANDEEP GOSAIN, JM The assessee has filed an appeal against the order of the ld. CIT(A) dated 27-12-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2007-08 raising therein following grounds of appeal. ‘’1. The ld. CIT(A) has erred in confirming addition of Rs.73,17,000/- made by the AO without appreciating/ considering the fact that cash deposit in bank account is only out of the cash withdrawn or balance available with the assessee and not from any unexplained source.

2 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR 2. The ld. CIT(A) has erred in confirming the addition without considering the additional evidence produced by the assessee at the time of remand report or submitting before the ld. CIT(A). 3. The ld. CIT(A) has erred in not appreciating the fact that the addition of Rs. 73,17,000/- was made by the AO on account of alleged unexplained cash deposit and not on account of the genuineness of source of fund in bank account and other issues and also without considering the fact that all the corroborative evidence of source of fund in bank account were available before the AO at the time of remand report proceedings as well as before the ld. CIT(A). 4. The ld.CIT(A) has erred in not accepting the cash book as genuine without considering the fact that AO observation in respect of cash book is against the accounting norms and also without considering the fact that all the entries in cash book is tallied with the books of accounts. 5. The ld. CIT(A) has erred in confirming the addition of Rs.1,20,000/- as personal / household expenses on presumption basis. 2.1 It is also noted that the assessee vide his letter dated 01-04-2024 has filed the following additional ground No.1 concerning the above mentioned appeal for which we have no objection to admit and to readjudicate upon it. ‘’The ld CIT(A) has erred in confirming the addition made u/s 69 of the Income Tax Act, 1961 without considering the fact that all the deposits and withdrawal in bank account are recorded in the books of account which have been duly produced at the time of remand proceedings. ‘’ 3.1 Brief facts of the case as per assessment order dated 24-12-2014 are that as per ITS details available, the assessee made cash deposits of Rs.73,17,000/- in his account of Canara Bank and received interest of Rs.32,014/- from Centurian Bank of Punjab. The assessee did not file his return of income for the assessment year under consideration. Therefore, the above transaction amounting to Rs.73,49,014/- were not verifiable. Accordingly on the basis of above information and after duly

3 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR recording reasons and obtaining necessary approval u/s 151 of the Act from the Addl. CIT, Range-6, Jaipur, notice u/s 148 of the Act was issued on 21-03-2014 which was duly served upon the assessee on 24-03-2014. From the assessment order, it is found that the assessee filed his return of income on 26-06-2014 but till date, ITR-V had not been filed. Hence, according to the AO, return filed by the assessee cannot be treated as valid return u/s 148 of the Act. The AO also noted that the assesee failed to offer any explanation in respect of the additions like Undisclosed Income of Rs.73,17,000/-,Household / personal expenses of Rs.1,20,000/- and Other sources of Rs.32,014/- for which narration as made by the AO in respect of the above additions are reproduced hereunder for the sake of convenience. ‘’UNDISCLOSED INCOME: As per ITS information, the assessee deposited cash of Rs. 73,17,000/- in his saving bank account at Canara Bank. No sales / business receipts have been declared in the return of income filed by the assessee u/s 148. During the course of assessment proceedings, inspite-of several opportunities allowed to the assessee, he has failed to offer any explanation in respect of source of cash deposited in his bank account. Therefore, in view of the provisions of section 69 of the income tax Act, 1961, the unexplained cash deposits amounting to Rs. 73,17,000/-, which is deposited by the assessee in his bank account is treated as unexplained investment and assessed as his undisclosed income for the assessment year under consideration. Thus an addition of Rs. 73,17,000/- is hereby made in the total income of the assessee. Further, the penalty proceedings u/s 271(1)(c) of the Income tax Act, 1961 are also being initiated separately for furnishing inaccurate particulars of income and concealment of income.

4 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR HOUSEHOLD/PERSONAL EXPENSES: The assessee has not furnished any explanation is respect of source of his personal/ household expenses. Therefore, In view of these facts & circumstances of the case, I hereby estimate personal / household expenses of the assessee at Rs. 1,20,000/- @ Rs. 10,000/- p.m. incurred out of undisclosed income. Accordingly, in view of provisions of section 69C of the Income tax Act, 1961, an addition of Rs. 1,20,000/- is hereby made in the total income of the assessee. Further, the penalty proceedings u/s 271(1)(c) of the Income tax Act, 1961 are also being initiated separately for failure to furnish particulars of income and concealment of income.

OTHER SOURCES: As per ITS information, the assessee has received interest of Rs. 32,014/- from Centurian Bank of Punjab which has not been included by the assessee in his cotal income. Therefore, the amount of interest of Rs. 32,014/- received by the assessee and not included by him in his total income is hereby assessed as undisclosed income of the assessee under the head 'Other Sources'’’ 3.2 In first appeal, the ld. CIT (A) has dismissed the appeal of the assessee by observing at para 5.4 to 7.2 of his order. ‘’5.4 I have perused the assessment order, grounds of appeal, additional evidences, arguments made during VC, remand report and comment of the appellant on the remand report. Considering the facts of the case and the explanation submitted by the appellant, the additional evidences produced are admitted and the grounds of appeal raised by the appellant are adjudicated as under:- 6. Ground No. 1: In this ground, the appellant has contested the addition of Rs.13,17,000/- made u/s 69 on account of unexplained cash deposited in the bank account treating the same as unexplained investment. 6.1 The appellant submitted that the cash was deposited in bank accounts out of cash balance available in the cash book which

5 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR was withdrawn from the bank accounts. The appellant submitted the additional evidences during appellant proceedings. The appellant further submitted that during period relevant to the re- assessment proceedings, father of the appellant was suffering from Cancer and was critical and was hospitalized and after some time passed away due to which the appellant could not attend the hearing and had asked for adjournment but the AO completed the assessment ex-parte by making addition of Rs.73,17,000/-on account of cash deposited and Rs. 1,20,000/- on account of personal/house hold expenses. 6.2 I have perused the assessment order, grounds of appeal, submission filed by the appellant including the additional evidences produced, the remand report submitted by the AO and comments submitted by the appellant on the remand report carefully. I find from the remand report that the appellant had not filed return of income for AY 2007-08 but as per the information available with the AO, the appellant had deposited cash of Rs.73,17,000/- in saving bank account and received interest of Rs.32,014/-. Based on this information,, notice u/s 148 was issued on 21/03/2014. In response the appellant had filed return of income on 26/04/2014 but no ITR-V was filed therefore the said return of income was treated as invalid. Further the notice u/s 142(1) was issued by the AO during assessment proceedings but the same was not responded by the appellant, hence the assessment was completed by the AO u/s 144 of the Act by making additions of Rs.74,69,014/- i.e. unexplained cash deposits u/s 69 of Rs.73,17,000/- and house hold expenses u/s 690 of Rs. 1,20,000/- and interest income of Rs.32,014/-. During appellate proceedings, the appellant produced additional evidence in the form of cash book and claimed that the source of cash deposits was out of cash available in the cash. The additional evidences produced were referred to AO and a remand report was called after examining the additional evidences and making necessary inquiries as deemed fit. In response the AO submitted remand report 14/8 / 2023 which is already reproduced in para 5.2 and comments of the appellant

6 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR on the remand report are also reproduced in para 5.3 above. In the remand report, the AO observed that the claim of the appellant for starting the construction activities with his brother with partnership in FY 2005-06 is not proved with available records. Further AO has submitted that details and confirmations of persons from whom the loans and advances claimed to be received are not filed and the cash books is prepared on the basis of bank statement only without showing opening cash balance and the cash balance as on 01/04/2006 is not commensurate with the return of income and income disclosed for AY 2006-07. Therefore the AO reported that the claim made by the appellant is not supported by corroborative evidences and justifications hence the source of cash deposit remains unverified. In the counter comments on remand report, the appellant has claimed that as per agreement of division of joint property at C-58A MahaveerMarg, C-cheme, Jaipur the appellant started the construction of the property with his brother and the bank account is in joint name. It is also submitted that initially the said bank account was in the name of the appellant but after 3-4 months, the name of his brother was incorporated in the bank account as a joint holder. Further appellant submitted that the MAP approved by the Jaipur Nagar Nigam for construction is signed by the appellant and his brother. Regarding the confirmation of the loans and advances, the appellant submitted a copy of sale deed registered and claimed that the said agreement indicates the names and payment details of the persons giving the advances. Regarding loans taken from Mr.Satish Ajmera and Mrs. Suman Ajmera of Rs.21,50,000/- and Rs.41,00,000/- the appellant submitted the ledger account and bank statement. In respect of loan taken from Mr. S. S. Srivastava of Rs.45,00,000/- and ASI Mumbai of Rs.25,00,000/- the appellant submitted that the amounts were returned later on. I have considered the facts of the case and submissions filed by the appellant. I find that the genuineness of the cash book is not proved by supporting evidences during remand

7 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR report proceedings before AO and before me during appellate proceedings. Similarly the appellant has not proved his claim of conducting construction activities with his brother with conclusive evidences during assessment proceedings before AD and before me during appellate proceedings Similarly the genuineness of loans and advance transaction is also not proved with conclusive evidences before AO during assessment proceedings and remand proceedings and before me during appellate proceedings. Therefore the contentions raised by the appellant are not found to be acceptable. Hence the addition made by the AO is confirmed and the grounds of appeal raised by the appellant is dismissed 7. Ground No.2:- In this ground the appellant has contested the addition of Rs.1,20,000/-made by the AO on account of house hold expenses. 7.1 The appellant submitted that the AO has made addition on adhoc basis without any basis and claimed that the house hold expenses were met out the bank account of the appellant. 7.2 I have perused the assessment order, grounds of appeal and submission filed by the appellant carefully. I find from the assessment order that the appellant has not furnished any explanation in respect of source of his personal/household expenses, therefore the AO estimated the household expenses at the rate of Rs. 10,000/- per month and made the addition of Rs.1,20,000/- treating the same as undisclosed expenditure u/s 69C of the IT Act. During the appellant proceedings the appellant has submitted that the house hold expenses are incurred from his bank account, however this explanation is not supported by any specific transactions in the bank account. Therefore the explanation submitted by the appellant is very vague and without any supporting evidences. Therefore the addition made by the AO is confirmed and ground of appeal raised by the appellant is dismissed. 8. Ground No.3:- In this ground the appellant crave the right to add, alter or in any way amend the grounds of appeal. However

8 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR during the course of appellate proceedings the appellant has not exercised this option. Therefore the ground of appeal raised by the appellant is dismissed. 9. In the result, the appeal is dismissed.’’

3.3 During the course of hearing, the ld. AR of the assessee filed the following written submission praying therein to delete the addition. ‘’Brief Fact of the Case The assessee is an individual. He alongwith his brother started the construction on their land situated at C-Scheme, Jaipur in the F.Y 2005-06. Total 15 flats were constructed on such land. During the F.Y 2006-07(A.Y 2007-08) which is under consideration the assessee received advances against the flat booking and also taken loans, all the advances against flat bookings and loans were through cheque or banking channel only. The assessee and his brother after retaining some flats for their personal use sold the remaining flats and disclosed the sale proceed in their return of income for the respective assessment years in which they sold the flats. A notice u/s 148 was issued on 21.03.2014for the A.Y 2007-08 and in response to the notice assessee filed the return on 26.06.2014. During this period the assessees father has suffered from Cancer and was critical and hospitalized and after some time passed away,due to this reason assessee could not attend the hearing and asked for adjournment in the matter. The Ld AO without considering the request decided the matter exparte and passed an order u/s 144 of the act. The Ld.AOmade an addition of Rs 73,17,000/- u/s 69 of the Income tax act,1961 by treating the cash deposited in the bank account as unexplained investment and also disallowed Rs 1,20,000/-as personal/ house hold expenses. The assessee maintained the cash book regularly from the FY 2005-06 (year of start of construction) The cash book for the FY 2005-06 and for the FY 2006- 07 clearly shows that the cash has been deposited out of the balance available with him and no unexplained cash has been deposited in to the bank. During the Physical hearing before the Ld. CIT(A)II, Jaipur, an application under rule 46A was submitted for submission of additional evidence in the matter and based on such application the Ld. CIT(A) directed the concerned Assessing Officer for remand report in the matter. The Ld. AO issued a Notice No

9 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR ITBA/COM/F/17/2019-20/1023761560(1) dated 10.01.2020 for submission in the matter of Remand report. The details were submitted to the Ld AO vide letter dated 29.01.2020 to substantiate the claim that cash is deposited from the balance available with the assessee. The Ld.AO again issued a notice on 5.01.2023. In the notice the Ld.AO asked to furnish written submission and supporting evidence if any. (A copy of notice is enclosed as paper book page no 293). In response to above notice, the assessee again submitted the detailed submission to AO (Copy of submission to AO alongwith attachments is enclosed as paper book no 217 to 292).

In the submission to AO the assessee submitted the balance sheet, profit and loss statement for the FY 2006-07 and a copy of cashbook for the FY 2005-06 and FY 2006-07 alongwith bank statements for the period and other documents. The assessee also submitted the details of advances received against the flat bookings and details of major loans and advances received during the FY 2006-07 to establish the source of funds in his bank account as all the loans and advances are received through banking channel only , for verification of all the advances received against the flat booking the assessee submitted the copy of receipt issued by the Stamp and Registration department for registration of sale deed in favour of the same person from whom he received the advance against flat booking and in case of loans and advances the assessee established the identity, creditworthiness and genuineness of such transactions through his submission. The assessee also submitted the copy of his income tax return for the AY 2008-09 as well as ITR of his brother for the AY 2009-10 to demonstrate that sale of flats has been duly shown in the ITR of the respective years To substantiate the claim that construction has been carried out jointly alongwith his brother the assessee submitted agreement for division of flats constructed on the land situated at C-58A Mahaveer Marg, C- Scheme, Jaipurbetween himself and his brother. The Ld AO after submission did not raise any query or issue any further questionnaire in this regard and did not ask for further documents for verification purpose and had not given the assessee an opportunity to further clarify the issues if any required to be clarified in connection with remand report. The AO in the remand report stated that I do not agree with facts and submission of the assessee based on the following reason.

10 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR 2. Detail and confirmation of persons have not been provided to whomloan and advances were taken for construction of flats during the relevant assessment year. Moreover detail of advance received from sale of flats during the FY 2006- 07 are not verifiable without regular books of accounts, ITR and relevant corroborative evidences. 3. The assessee has produced cash book for the FY 2005-06 and FY2006-07 which is based on bank statements for the relevant years andprepared on sweet will without for showing opening cash balanced of Rs.27,67,799/-as on 01.04.2006. The assessee furnished return of income in Form 2D for the AY 2006-7 showing total income of Rs.2,53,970/-.It revealed that cash balance is not commensurate withthe declared total income of the relevant assessment year 2006-07, and the assessee failed to furnish return of income for the relevant AY2007-08 therefore, opening balance shown as on 01.04.2006 and transaction of joint cash book are remain unverified. Further the assessee in his comment on remand report made comment on the each and every observation of the Ld AO and also provided the additional evidence in respect of his submission on remand report ( Refer to page no 29 to 207 of the paper book).

The Ld CIT(A) sustained the addition without analyzing the comments and additional evidences submitted by the assessee, whereas the assessee proved the genuineness of cash book as well as loans and advances and construction undertaken jointly with conclusive evidence. The Ld. CIT (A) did not consider the fact that addition is made u/s 69 of the act and not on account unexplained cash credit under section 68 of the act. The AO has also wrongly made an addition u/s 69 of the Act treating cash deposits made by assesee in his bank account as unexplained investment without considering the fact that each and every deposit was recorded in the cash book produced by the assessee. We are reproducing sec 69 for reference which clearly state that in case of non recording the investments in the books of accounts the investment may be deemed to be the income of the assessee for such financial year. Section 69 “Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year”.

11 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR

Grounds of appeal Ground No. 1& 4

12 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR Ground No. 2 and 3

13 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR The Ld. CIT(Appeals) has erred in conforming addition of Rs. 120000/- as personal/ household expenses on presumption basis. Our submission The Ld CIT(A) confirmed the addition without appreciating that such additions are not justifiable on presumption basis. Additional Ground No 1 The Ld. CIT (A) has erred in confirming the addition under section 69 of the Income Tax Act without considering the fact that all deposits and withdrawal in bank account are recorded in the books of account which have duly been produced at the time of remand report proceedings. Our Submission We submit that the Ld.CIT (A) confirmed the addition without considering the fact that when the cash deposits are recorded in the books of accounts maintained by the assesee no addition can be made as per provisions of sec 69 of the Income tax Act,1961 on account of unexplained investment. In this matter the assessee has recorded all the transactionsof cash deposit in the books of accounts maintained by him and such books are duly produced before the AO at the time of remand report proceedings, therefore any addition u/s 69 of the act is illegal and against the provisions of the act.We are reproducing sec 69 for reference. Section 69 “Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year”. Keeping in view of the above submission, we request the honorable bench to kindly allow the appeal.’’

3.4 During the course of hearing, the ld. DR supported the orders of the lower authorities and emphatically objected to the written submissions of the ld. AR of

14 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR the assessee and also argued that the assessee had not responded to the notices issued by the AO in spite of several opportunities in respect of the cash deposited in his bank account, not furnished any explanation in respect of source of his personal/ household expenses and further the assessee had not included the interest amount received from Centurian Bank of Punjab and the order passed by the ld. CIT(A) has merit. 3.5 We have heard both the parties and perused the materials available on record and also the submissions made by the assessee. In this case, it is noted that the AO made three additions namely Undisclosed Income of Rs.73,17,000/-,Household / personal expenses of Rs.1,20,000/- and Other sources Rs.32,014/- which has been confirmed by the ld. CIT(A) as mentioned hereinabove. The Bench finds from the records that assessee has explained the source of cash deposit in bank account during the remand report proceedings as well as before the CIT(Appeals). The asessee had deposited the excess cash available with him which was withdrawn from the bank account itself. The cash book submitted by the assesee for the FY 2005-06 and 2006-07 is in conformity of the Balance sheet, profit and loss statement and bank statement submitted by the assessee. It is noted that the AO made general observations in remand report without analyzing the source of fund in bank account and also did not establish any other source of cash deposit by the assesee. It is also noted that the AO also made observation that cash book has been

15 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR prepared on the basis of bank statement without appreciating the fact that bank statement does not contain the cash expenditure and other cash payments whereas in the cash book such expenditure and other cash payments are recorded apart from the contra entries. Such observation of the AO is against the accounting norms and without any basis. The Ld. AO also stated that assessee has shown total income of Rs 2,53,970/- in the ITR for the AY 2006-07 therefore opening cash balance is not commensurate with the ITR. The AO has not considered the nature of activity undertaken by the assessee and the ITR filed by the assessee and his brother in subsequent assessment year which is commensurate with the cash balance and also did not consider the fact that cash balance has no relevance with the total income as during this period construction activity was going on which requires cash inflow and outflow only. Further, it is noticed that the ld CIT(A) failed to appreciate the fact that it was the joint property and sale proceeds had been credited in the joint account of the assessee. We find from the records that the addition has been made on account of unexplained investment u/s 69 of the Act whereas all the cash deposited are recorded in the books of account of the assessee and source of such deposits have been established by the assessee. Hence, when the cash deposits are recorded in the books of account maintained by the assesse then no addition can be made as per provisions of Section 69 of the Act on account of unexplained investment. Hence keeping in view of the above facts and circumstances of the

16 ITA 199/JP/2024 TRIBHUVAN SHARDA VS ITO, WARD 6(2), JAIPUR case, we do not concur with the findings of the ld. CIT(A) on the issue and thus delete the addition of Rs.73,17,000/-. 3.6 As regards the addition confirmed by the ld. CIT(A) amounting to Rs.1,20,000/- for which the ld. AR has not properly advanced any arguments and supporting documents, the Bench feels that with a view to meet the ends of justice, 50% of the expenses under the head of house hold expenses are partly confirmed. Thus the appeal of the assessee is partly allowed. 4.0 In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 24 /04/2024.

Sd/- Sd/- ¼jkBksMdeys'kt;UrHkkbZ ½ ¼lanhi xkslkbZ½ (Rathod Kamlesh Jayantbhai) (Sandeep Gosain) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- /04/2024 *Mishra आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Shri Tribhuvan Sharda, Jaipur 2. izR;FkhZ@ The Respondent- The ITO, Ward 6(2), Jaipur 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZQkbZy@ Guard File (ITA No.199/JP/2024) vkns'kkuqlkj@ By order,

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