KAMAL DEWAN,JAIPUR vs. ITO WARD 2(3), JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC’’ JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ds le{k BEFORE: Hon’ble SHRI SANDEEP GOSAIN, JUDICIAL MEMBER vk;dj vihy la-@ITA No. 135/JP/2024 fu/kZkj.k o"kZ@Assessment Year : 2017-18

M/s. Kamal Dewan cuke The ITO Vs. B-24, Ajmer Road, Suraj Nagar Ward 2(3) Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACGPD 1234 M vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri Sharwan Kumar Gupta, Adv. jktLo dh vksj ls@Revenue by: Smt. Monisha Choudhary, Addl. CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 21/03/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 22 /04/2024 vkns'k@ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 24-11-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2017-18 raising therein following grounds of appeal. ‘’1.1 The impugned assessment order u/s 143(3) dated 13.12.2019 as well as the notice issued are bad in law and on facts of the case, for want of jurisdiction, barred by limitation, without proper approval or satisfaction and various other reasons and hence the same may kindly be quashed. 2. The ld. CIT(A) has grossly erred in law as well as on the facts of the case in passing exparty order without providing adequate and reasonable opportunity of being

2 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR heard in the gross breach of law. Hence the additions so made by the ld. AO may kindly be quashed and delete. 3. Rs.14,87,500/- : The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs.14,87,500/- made by the ld. AO on account of cash deposit in the bank account during the demonetization period u/s 69A as alleged unexplained money. The Ld. AO also erred in not considering the vital facts and material available on record in their true perspective and sense. Hence the addition so made by the ld. AO and confirmed by the ld. CIT(A) is also being contrary to the real facts of the case and not according to the provision of law, hence the same may kindly be deleted in full. 4. The ld. AO has also grossly erred in law as well as on the facts of the case invoking the provisions of Sec. 115BBE for taxing the income at the higher rate, without issue any show cause notice and also not applicable in the present case. The Ld. AO has also erred in not considering the vital facts and material available on record in their true perspective and sense. Hence the provisions of Sec. 115BBE so invoked are also being contrary to the real facts of the case and not according to the provision of law, hence the same is illegal, bad in law, against the principle of natural justice the same may kindly be deleted in full. 5. The ld. AO has grossly erred in law as well as on the facts of the case in charging the interest u/s 234A, B,C. The interest so charged is being totally contrary to the provision of law and on facts of the case and hence same may kindly be deleted in full. 2.1 At the outset of the hearing, the Bench noted that there is delay of 19 days in filing the appeal by the assessee for which the assessee filed an application dated 08-02-2024 for condonation of delays alongwith affidavit narrating therein the reason as under:- ‘’3. The reason of late filing was that after receiving the order on email I downloaded the same and I had given the same to my staff and asked him to go in the office of the counsel and to discuss after 4-5 days. However, the staff due to busyness in other work has forgotten to hand over te same to the counsel. However, recently some day before when I contacted to the counsel for same income tax matter and asked about the CIT(A) order proceedings then the counsel has stated that he has not received any papers from your office staff then I asked

3 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR to staff and the staff has realized his mistake and stated that he has forgotten to give the papers to the counsel. Thereafter the counsel has advised to me to file the appeal against the CIT(A) order being the strong case in favour and there is no default of assessee.

2.2 On the other hand, the ld. DR objected to such delay made by the assessee in filing the appeal. 2.3 The Bench has heard both the parties and perused the application for condonation of delay in filing the appeal. From these documents, it indicates that that there is a merit in the submission of the assessee and thus in view of the submissions of the assessee, the delay in filing the appeal by the assessee is condoned. 3.1 Further the Bench at the time of hearing of the appeal noted that the ld. CIT(A) has confirmed the addition by taking into consideration the order of the AO with the narration at page 3 that ‘’the AO has discussed the issue in detail at Paras 2,3 and 4 of the impugned order. It is seen that during the assessment

4 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR proceedings the assessee stated that the source of cash deposits of Rs.14,87,500/- as out of past withdrawals which could not be substantiated with documentary evidence and hence remained unexplained.’’ 3.2 However, at the time of hearing of the appeal, it is noted that the ld. AR of the assesse has not advanced any submission in connection with Ground No. 1 and 2 of the assessee. Hence, the same are dismissed. 4.1 As regards Ground No. 3 and 4 of the case, the Bench perused the assessment order, ld. CIT(A)’s, order and material available on record and it is noted that the assessee is a regular Income Tax assessee and filed ROI for the year under consideration on dt.24.03.2018 declaring the total income of Rs.8,43,970/-. The case of the assessee was selected for limited scrutiny on the issue of capital gain/loss on sale of property and cash deposit in the bank account during the demonetization period and for that AO issued the notice u/s 143(2)s and also thereafter issued the notice 142(1) to ask to the assessee for the source of cash deposit of Rs.14,87,500/- in the Karur Vysya Bank account. In response thereto, the assessee filed the reply placed at PB5-9, wherein he has stated that there were cash withdrawals from the same bank account before demonetization which were re-deposited in the bank account and in support of it, the assessee filed the copy bank statements and details. However, the AO was not satisfied from the explanation furnished by the assessee and observed at para 3 that “there is extra

5 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR ordinary and abnormal rise in the cash deposit made by the assessee in his bank account during demonetization period. The assessee’s submission that the above cash deposit was made from the earlier cash withdrawals made from his bank account are also not acceptable as it is seen from the bank account for the F.Y. 2015-16 that the assessee has made total cash withdrawal of Rs.16,00,000/- during the whole year but deposited only Rs.1,10,000/- in his bank account hence most of the withdrawals were utilized by the assessee himself. Similarly, the withdrawals as appearing in the bank account for the F.Y. 2016-17 upto November, 2016 are of Rs. 23,65,000/- and the same may be used for the purpose for which the withdrawals were made as the withdrawals were used in the earlier year. Hence, the assessee’s submission that the cash deposit of Rs.14,87,500/- was made from the earlier withdrawals is not acceptable and assessee has not given any reason or explanation regarding holding such huge cash with him”. Hence the cash deposits amounting to Rs 14,87,500/- appearing in Karur Vysa Bank account is deemed as unexplained money u/s 69A of the Income Tax Act, 1961 and added to the Total Income of the assessee”. 4.2 In first appeal ld. CIT(A) has relied upon on the assessment order and confirmed the additions by stating that no any documentary evidence has been produced in support of grounds of appeal, I find no infirmity or illegality in the assessment order and hence this grounds of appeal is dismissed.

6 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR 4.3 Aggrieved by the order of the AO and ld. CIT(A), the assessee has advanced his submission before us as under:-

“1. Invalid notices and illegal assessment: At the very outset it is submitted that in the present case the ld. AO has selected the case of the assessee for limited scrutiny on the issue of capital gain/loss on sale of property and cash deposit in the bank account during the demonetization period notices. However admittedly there was no sale of the property during the year. Hence proceedings are invalid, illegal and liable to be quashed. 2. Correct facts and evidences have not been considered rather proceed on assumption and suspicion: 1.1 As the assessee is a regular IT assessee from last many years. The credit or cash deposit in his bank account were out of the withdrawal made in earlier months from same bank account and the ld. AO himself admitted that the withdrawals as appearing in the bank account for the F.Y. 2016-17 upto November, 2016 are of Rs.23,65,000/-. As the cash withdrawn were laying as cash in hands with the assessee, when the demonetization was declared the assessee had to deposit this cash in the bank account, as the assessee could not used that cash withdrawals. Thus the cash has been accumulated due to withdrawals from earlier months and was within the cash in hand. In support we filed the bank statements also enclosed(PB10-21) herewith which clears all the position and it is also clear that there was various cash withdrawals in just before month (PB17). A chart showing cash withdrawals and deposits is also enclosed for your verification as Annexure-1. And in law there is no prohibition to keep cash in hands. On perusal of the observation of the ld. AO has clearly shows that the same is based on his own guess work, assumption, presumption and suspicion. And no addition is required to be made only on the basis of assumption, presumption, suspicion and geuse work is also the settled legal preposition. 3. Further the assessee in support had filed detailed written submissions, supporting papers/ documents, copy of bank account, statement of availability of cash in hand during the A.Y. under consideration to prove the genuineness and correctness of the deposits made in her bank account during the year. On occasion at the time of deposit in his bank account he had sufficient availability of cash with them during the A.Y. under consideration. The availability of cash represented from the earlier withdrawals made from her bank accounts admittedly. The transactions of withdrawal is duly reflected in said bank accounts also admitted by the ld. AO and the transaction is verifiable from the relevant records. Other side the ld. AO has not filed a single evidence in his support except in his own assumption, presumption, guess work and suspicion and blindly ignored these very vital facts or evidences of the case and proceeded on their own guess work, assumption, presumption and suspicion and it is the settled legal position that no addition can be the basis of suspicion, assumptions’ and presumption. An allegation remains a mere allegation unless proved. Suspicion may be strong however cannot take the

7 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR place of reality, are the settled principleskindly refer Dhakeshwari Cotton Mills 26 ITR 775 (SC) also refer R.B.N.J. Naidu v/s CIT 29 ITR 194 (Nag), Kanpur Steel Co. Ltd. v/s CIT 32 ITR 56 (All).Also refer CIT v/s KulwantRai 291 ITR 36( Del). In CIT v/s Shalimar BuildwellPvt Ltd 86 CCH 250(All) it has been held that the AO made the addition merely on suspicion which was not desirable in the eye of law. 4. It is submitted that assessee had discharged his duty to explain the deposits made in his bank account by furnishing the written explanation along with supporting evidences as above and their creditworthiness is never doubted. Other side onus lay upon the AO has not discharged his burden lay upon him with the evidences. Merely raising doubt and suspicion on the recorded transactions cannot be taken a valid basis to disown his claim, which are based on documents/papers and records. Documentary evidences furnished clearly clarifies that on occasion at the time of deposit in bank account, assessee had sufficient availability of cash which is also not disputed. Entire transaction of withdrawal and deposit are duly reflected in the bank account of the assessee and are verifiable from relevant records. The ld. AO has not brought on record the evidence that the assessee has utilized these cash anywhere or in any other assets or any other mode. 5. When source of cash deposit is explained and it is evident that it is the her own cash of the assessee which has been deposited in bank account, then there is no question of making addition under the unexplained money u/s 69A of the IT act 1961. Directly covered matter: Recently this Honble Tribunal under the same facts and circumstances in the case of Krishna Agarwal vs. ITO in ITA No. 53/JODH/2021 dt. Sep 7, 2021 (2021) 63 CCH 0048 Jodh Trib it has been held that “Income from undisclosed sources—Unexplained cash—Assessee derives income from renting of commercial property and other income under head "income from other sources" and filed her return of income—Case of assessee was selected for limited scrutiny to verify "Cash deposits during year—AO treated cash deposits as undisclosed income of assessee by making addition as unexplained cash deposits in bank account u/s 69A—CIT(A) has confirmed addition made by AO—Held, it is not in dispute that bank account which is in name of assessee has been operated by her and cash has also been deposited by her—Thus, factum of bank account belonging to assessee and deposit of cash by assessee herself is not in dispute and therefore, in such circumstances, Assessing officer is well within his jurisdiction to enquire about source of such deposits and seek explanation from assessee and examine whether explanation so furnished is reasonable, appropriate and satisfactory in facts and circumstances of present case— Assessee has explained that out of earlier year's cash withdrawals from her bank account which were available as cash balance assessee had deposited a sum in her bank account during year under consideration—Assessee in her return of income for A.Y 2016-17 has disclosed sale consideration on sale of plot of land for Rs 1,31,45,200/- and offered capital gains to tax—Sale consideration equivalent to stamp duty value has been duly disclosed by assessee and there is no finding that assessee has received any amount over and above declared sale consideration— Therefore, given that sale consideration has been received directly in assessee's bank account, source of cash withdrawals in earlier two years has been clearly demonstrated by assessee and we see no reason but to accept said explanation which is clearly demonstrated through sale documentation and tax filings by assessee—Cash was withdrawn for purposes of purchase of

8 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR another property by assessee for her son however, transaction couldn't fructify and as a result, another property by assessee for her son however, transaction couldn't fructify and as a result, another property by assessee for her son however, transaction couldn't fructify and as a result, assessee decided to re-deposit amount in bank account deposit amount in bank account—In an ideal situation, such an In an ideal situation, such an explanation is expected to be supported by explanation is expected to be supported by some documentary evidence some documentary evidence however, mere absence of supporting documentation cannot be a reason enough to allege any malafide in absence of supporting documentation cannot be a reason enough to allege any malafide in absence of supporting documentation cannot be a reason enough to allege any malafide in explanation so submitted especially where assessee has explained and duly disclosed source of explanation so submitted especially where assessee has explained and duly disclosed source of explanation so submitted especially where assessee has explained and duly disclosed source of deposits in bank account out of deposits in bank account out of which withdrawals have been made and has thus established which withdrawals have been made and has thus established necessary linkage and availability of cash in hand and availability of cash in hand—Mere time gap between withdrawals and Mere time gap between withdrawals and deposits cannot be a sole basis for rejecting explanation of assessee regarding availability of cash deposits cannot be a sole basis for rejecting explanation of assessee regarding availability of cash deposits cannot be a sole basis for rejecting explanation of assessee regarding availability of cash in hand where there is no material that amount so withdrawn has been utilized somewhere else where there is no material that amount so withdrawn has been utilized somewhere else where there is no material that amount so withdrawn has been utilized somewhere else and thus supports case of assessee and thus supports case of assessee—Addition so made be deleted—Assessee’s appeal allowed. Assessee’s appeal allowed. This has again followed in the case of This has again followed in the case of Smt. Suraj Kanwar Devra vs ITO ITA 50/Jodh Smt. Suraj Kanwar Devra vs ITO ITA 50/Jodh/2021 dt. 23.11.2021 . 6. Further the ld.AO has not provided that where such withdrawals have been utilized nor there is Further the ld.AO has not provided that where such withdrawals have been utilized nor there is Further the ld.AO has not provided that where such withdrawals have been utilized nor there is any evidence on record that the earlier withdrawals have been utilized in any other assets or for any evidence on record that the earlier withdrawals have been utilized in any other assets or for any evidence on record that the earlier withdrawals have been utilized in any other assets or for any other purpose, other side the ass any other purpose, other side the assessee has submitted evidence in the form of bank statements essee has submitted evidence in the form of bank statements that the cash has been utilized in re that the cash has been utilized in re-depositing in the bank account and a documentary evidence depositing in the bank account and a documentary evidence cannot be discarded on the basis of assumption, presumption, suspicion and gu cannot be discarded on the basis of assumption, presumption, suspicion and gu cannot be discarded on the basis of assumption, presumption, suspicion and guess work.”

4.4 On the other hands the ld. DR supported the order of the lower authorities. the other hands the ld. DR supported the order of the lower authorities. the other hands the ld. DR supported the order of the lower authorities. 4.5 After carefully considering the After carefully considering the orders of the lower authorities orders of the lower authorities assessment order, CIT(A) order, written submission alongwith paper book of the ld. AR of the written submission alongwith paper book of the ld. AR of the written submission alongwith paper book of the ld. AR of the assessee, we observed that the AO has made the addition by drawing the rved that the AO has made the addition by drawing the rved that the AO has made the addition by drawing the inference that there is extra ordinary and abnormal rise in the cash deposit in his inference that there is extra ordinary and abnormal rise in the cash deposit in his inference that there is extra ordinary and abnormal rise in the cash deposit in his bank account during demonetization period, cash deposit made from the earlier bank account during demonetization period, cash deposit made from the earlier bank account during demonetization period, cash deposit made from the earlier cash withdrawals made from his bank acc cash withdrawals made from his bank account are also not acceptable as it is seen ount are also not acceptable as it is seen from the bank account for the F.Y. 2015 from the bank account for the F.Y. 2015-16 that the assessee has made total cash 16 that the assessee has made total cash withdrawal of Rs.16,00,000/ withdrawal of Rs.16,00,000/- during the whole year but deposited only during the whole year but deposited only Rs.1,10,000/- in his bank account hence most of the withdrawal in his bank account hence most of the withdrawals were utilized by in his bank account hence most of the withdrawal

9 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR the assessee himself. Similarly, the withdrawals as appearing in the bank account for the F.Y. 2016-17 upto November, 2016 are of Rs. 23,65,000/- and the same may be used for the purpose for which the withdrawals were made as the withdrawals were used in the earlier year. Assessee has not given any reason or explanation regarding holding such huge cash with him. It is noted that all these observation of the AO shows while making the addition by his own assumption, presumption and guess work and thus the AO failed to state that where the assessee has used the earlier withdrawals made from the bank account when the withdrawals are more than the deposits. There may be various reasons to withdraw cash from bank and it is not necessary that the withdrawals must been utilized, when the AO has failed to bring any documentary evidence that the earlier withdrawals has been used anywhere and the cash deposits were other than the cash withdrawals. It is not the case of trading additions where past history is used for estimations. Hence in this case, the past years withdrawals history cannot be used in this type of cases. It is the settled law that no addition can be made on the basis of assumption, presumption, suspicion and guess work, without any material evidences. Further the facts of the present case are similar to the judgment of Co- ordinate bench in the case of Krishna Agarwal vs. ITO in ITA No. 53/JODH/2021 dt. Sep 7, 2021 (2021) 63 CCH 0048 Jodh Trib wherein it has been held that “Income from undisclosed sources—Unexplained cash—Assessee

10 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR derives income from renting of commercial property and other income under head "income from other sources" and filed her return of income—Case of assessee was selected for limited scrutiny to verify "Cash deposits during year—AO treated cash deposits as undisclosed income of assessee by making addition as unexplained cash deposits in bank account u/s 69A—CIT(A) has confirmed addition made by AO—Held, it is not in dispute that bank account which is in name of assessee has been operated by her and cash has also been deposited by her—Thus, factum of bank account belonging to assessee and deposit of cash by assessee herself is not in dispute and therefore, in such circumstances, Assessing officer is well within his jurisdiction to enquire about source of such deposits and seek explanation from assessee and examine whether explanation so furnished is reasonable, appropriate and satisfactory in facts and circumstances of present case—Assessee has explained that out of earlier year's cash withdrawals from her bank account which were available as cash balance assessee had deposited a sum in her bank account during year under consideration—Assessee in her return of income for A.Y 2016- 17 has disclosed sale consideration on sale of plot of land for Rs 1,31,45,200/- and offered capital gains to tax—Sale consideration equivalent to stamp duty value has been duly disclosed by assessee and there is no finding that assessee has received any amount over and above declared sale consideration—Therefore, given that sale consideration has been received directly in assessee's bank account, source of cash

11 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR withdrawals in earlier two years has been clearly demonstrated by assessee and we withdrawals in earlier two years has been clearly demonstrated by assessee and we withdrawals in earlier two years has been clearly demonstrated by assessee and we see no reason but to accept said explanati see no reason but to accept said explanation which is clearly demonstrated through on which is clearly demonstrated through sale documentation and tax filings by assessee sale documentation and tax filings by assessee—Cash was withdrawn for purposes Cash was withdrawn for purposes of purchase of another property by assessee for her son however, transaction of purchase of another property by assessee for her son however, transaction of purchase of another property by assessee for her son however, transaction couldn't fructify and as a result, assessee decided to re couldn't fructify and as a result, assessee decided to re-deposit amount in bank eposit amount in bank account—In an ideal situation, such an explanation is expected to be supported by In an ideal situation, such an explanation is expected to be supported by In an ideal situation, such an explanation is expected to be supported by some documentary evidence some documentary evidence however, mere absence of supporting however, mere absence of supporting documentation cannot be a reason enough to allege any malafide in explanation so documentation cannot be a reason enough to allege any malafide in explanation so documentation cannot be a reason enough to allege any malafide in explanation so submitted especially where assessee has explained and duly disclosed source of d especially where assessee has explained and duly disclosed source of d especially where assessee has explained and duly disclosed source of deposits in bank account out of which withdrawals have been made and has thus deposits in bank account out of which withdrawals have been made and has thus deposits in bank account out of which withdrawals have been made and has thus established necessary linkage established necessary linkage and availability of cash in hand and availability of cash in hand—Mere time gap between withdrawals and deposi between withdrawals and deposits cannot be a sole basis for rejecting explanation ts cannot be a sole basis for rejecting explanation of assessee regarding availability of cash in hand where there is no material that of assessee regarding availability of cash in hand where there is no material that of assessee regarding availability of cash in hand where there is no material that amount so withdrawn has been utilized somewhere else and thus supports case of amount so withdrawn has been utilized somewhere else and thus supports case of amount so withdrawn has been utilized somewhere else and thus supports case of assessee—Addition so made be deleted Addition so made be deleted—Assessee’s appeal allowed see’s appeal allowed’’. We also find that the similar case has been followed by the Jodhpur Bench in the case of find that the similar case has been followed by the Jodhpur Bench find that the similar case has been followed by the Jodhpur Bench Smt. Suraj Kanwar Devra vs ITO ITA 50/Jodh/2021 Smt. Suraj Kanwar Devra vs ITO ITA 50/Jodh/2021 dt. 23.11.2021 . dt. 23.11.2021 . Thus looking to above observation and respectfully following the ratio laid down by the looking to above observation and respectfully following the ratio laid looking to above observation and respectfully following the ratio laid Co-ordinate Bench as above, the entire additions made by the AO is deleted. ordinate Bench as above, the entire additions made by the AO is deleted. ordinate Bench as above, the entire additions made by the AO is deleted.

12 ITA NO. 135/JP/2024 KAMAL DEWAN VS ITO, WARD 2(3), JAIPUR 5.0 In the result, the appeal of the assesee is partly allowed. Order pronounced in the open court on 22 /04/2024. Sd/- ¼lanhi xkslkbZ½ (Sandeep Gosain) U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 22 /04/2024 *Mishra आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Shri Kamal Dewan, Jaipur 2. izR;FkhZ@ The Respondent- The ITO, Ward 2(3),Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 135/JP/2024) vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेजज. त्महपेजतंत