MAHAVIR PRASAD JAT,JAIPUR vs. ITO WD, BEHROR, BEHROR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC ” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Mk0 ehBk yky ehuk] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & DR MITHA LAL MEENA, AM vk;dj vihy la-@ITA No. 662/JP/2023 fu/kZkj.k o"kZ@Assessment Year : 2011-12 Shri Mahavir Prasad Jat cuke The ITO Vs. S/o Narayan Mal Jat Ward-Behror Let Ka Bas Shahpura, Jaipur Behror LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHPPJ 5461 J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Mrs. Suhani Maharwal, CA jktLo dh vksj ls@Revenue by: Mrs. Monisha Choudhary, Addl. CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 08/02/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 10 /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 30-10-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2011-12 wherein the assessee has raised the following ground of appeal. ‘’1. On the facts and in the circumstances of the case, the AO as well ld. CIT(A) erred in invoking the provisions of Section 148 of the Act without any reason which is unjustified and liable to be quashed.

2 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR 2. On the facts and in the circumstances of the case, the AO as well ld. CIT(A) erred in adding Rs.26,28,500/- of IT Act on account of cash deposit of Rs.26,28,500/- into bank account without appreciable income and cash withdrawal from bank which is unjustified and liable to be quashed.’’

2.1 Apropos Ground No. 1 and 2, the facts as emerges from the order of the ld. CIT(A) are as under:- For Ground No. 1 5.1 I have gone through the facts of the case and have the following observations The case was re-opened u/s 147 of the Act aftor recording reasons that appellant had deposited cash amounting to Rs. 26.28.500/- in his bank account maintained with UCO Bank during the year and no ITR has been filed The assessment proceedings were concluded by passing order uis 147 of the Act on 13.12.2018. The total income of the appellant was determined at Rs. 27,78,500/- The appellant has filed this appeal against the order passed u/s 147 of the Act dated 13.12.2018. 5.2 On perusal, it is observed that the instant case was reopened on the basis of information of cash deposit amounting to Rs. 26,28,500/- in his bank account maintained with UCO Bank during the year. The appellant had not filed his ITR for the year under consideration. As per information, cash of Rs 26,28,500/- was deposited in bank account of UCO Bank and source of cash deposits remain unexplained in the hands of the appellant and thus there was sufficient reason as well as data with AO which led to invoke the provisions of section 147 of the Act. Accordingly, I am of the view that AO has rightly invoked the provision of section 147 of the Act in this case. Hence the grounds of appeal are dismissed. The ground no. 1 of appeal is dismissed.

3 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR 5.3 The ground No. 2 pertains to addition of Rs. 26,28,500/- on account of cash deposit in bank account. During appellate proceedings, the appellant has submitted that he works as a commission agent to sale and purchase of trucks. The appellant has submitted copy of bank statement of SBI and cash book and argued that the cash deposits were made out of cash withdrawals from the same bank or from another bank

The submission of the appellant is considered. It is necessary to mention here that bank statement of SBI bank only is furnished. The bank statement of the UCO bank wherein cash was deposited has not been furnished by the appellant. However multiple opportunities have been provided to the appellant On perusal of bank statement of SBI, it is found that cash withdrawals have been made on various date in small quantity ranging from 1000/- to 25000/- during the year. However, the appellant has nowhere mentioned the purpose and utilization of these cash withdrawals: On further verification of bank statement and cash book, no instance has been noticed wherein some big amount had been received and paid by the appellant as claimed. On verification of reply submitted before AO, it was noticed that following facts were submitted before AO that ‘’2. total income for the AY 2011-12 was Rs. 1.50,000/- and the same was derived from working as mediatory in transaction of sale and purchase of old vehicles. 3. cash deposited in the bank account represented receipts from transaction of sale of old vehicles, Assessee withheld his commission amount and transferred the balance amount to owner

4 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR 4. there was no other income in the relevant year neither there was any sale nor purchase of immovable property."

In appellant proceedings, appellant has submitted that: ‘’The cash deposits in banking account had immediate sources of cash withdrawals from same bank or from another Bank. No amount was received in cash from any other person by way of borrowing or by way of income.’’ Considering both the replies of the appellant, submitted in assessment proceedings and in appellate proceedings, the same are found contradictory, it is further noticed that appellant has claimed that regular books of accounts is maintained, however, no evidence has been provided to substantiate the source of cash receipts as well as claim of cash expenses. Even, no evidence has been furnished to prove the activities carried out during the year. Thus, appellant has failed to submit any cogent evidence in support of grounds. In absences of corroborative evidences, the grounds are not found supported and property backed. The explanation offered by the appellant does not justify the nature and source of cash deposits made in bank account. It proves that the appellant is misleading and has nothing to submit which could substantiate and justify the nature and source of cash 4.4 In view of the above discussion and considering the facts of the case. I am of view that the cash deposit represents the income of the appellant during the year from undisclosed sources. Therefore, the addition of Rs. 26,28,500/- on account of cash deposit in bank account is upheld and ground of appeal is dismissed. The Ground No. 2 is dismissed.

2.2 During the course of hearing the ld.AR of the assesee prayed before the Bench to allow the appeal by submitting the following written submission .

5 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR

‘’Before ITAT Jaipur Written submission in case of Mahaveer Prasad Jat, Shahpura A.Y. 2011-12. May I please your honour In this case, a notice u/s 148 was received for the year under consideration, which was complied with by the assessee through the filing of a return declaring income of Rs. 150000/- declaring commission income derived from assisting with sales and purchases of trucks and saving account interest. The assessment was made by making the addition of the sentire amount of cash deposits in the banking account amounting to Rs, 2628500/- treating it unexplained. Ld. CIT (A), also sustained the addition. Aggrieved with the order assessee preferred this appeal as many as taking three grounds of appeal. Your honour, the grounds of appeal as under:

6 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR the above transaction has not verifiable. Accordingly, the reason for escapement has been recorded and notice u/s 148 is issued.” Your honour, the section empowers AO to re-open the completed assessment where any income has escaped assessment for which AO must have a belief of escapement. He must have reasonable belief and such belief must have been recorded before taking action. Further, explanation 2, provides the deemed escapement where ITR was not filed and the income of the assessee exceeded the maximum amount not chargeable to tax. Your honour the above statement of AO categorically establishes the facts that the very powers given u/s 148 were used by him for verification of transaction. He himself, did not have any clue, any reason, any belief of escapement of income. If this type of case is selected for reopening then each and every person`s assessment could be reopened if the return of income is not filed. Your honour, filing of return is compulsory only where the gross income is in excess than maximum amount which is not chargeable to tax. And that`s why only a few people among all national file their returns. As per AO, where 95% of persons who choose to not file their return in view of provision of section 139(1) their cases could be re-opened for verification of certain financial transactions by resorting powers u/s 148. For verification of transactions, the statute provides some other section i.e., 142, 133(6), 131A, 133A 132 etc. But the powers of section 148 can only be taken where AO has reason to believe that any income has escaped assessment. And for such belief, he has compulsorily recorded the reason for belief of escapement. Hon’ble Gujarat High Court in Hotel Oasis (Surat) (P) LTD. v. DCIT (2011) 57 DTR (Guj) 378, has held that that assessment cannot be reopened merely to make inquiries. Hon’ble High Court of Gujarat in case of Bakulbhai Ramanlal Patel Vs. ITO (2011) 56 DTR 0212, Special Civil Appln. No. 12853 of 2010, Mar 4, 2011 has held that where the reasons recorded reflect that the matter requires detailed investigation and further verification, the AO has reason to suspect and not reason to believe that income chargeable to tax has escaped assessment and therefore, the assumption of jurisdiction by the AO is invalid and as such, the impugned notice under s. 148 is not sustainable and is quashed.

7 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR Hon’ble Supreme Court in ITO, & Ors v. Lakhmani Mewal DAS (1976) 103 ITR 437(SC), held that wherein it was observed that for reopening of assessment, there must be a rational connection or relevant bearing on the formation of the belief that income chargeable to tax has escaped assessment. In an identical case Hon'ble ITAT Agra in appeal no 393/Agra/2018 dated 23.09.2019 held in the case of Premwati Suman vs ITO pronounced detail order for which the ratio of judgment is as under:- 1. In this case property was purchased but ITR was not filed u/s 139 of the Income Tax Act, 1961. 2. AO issued a re-assessment notice after recording the reason for escapement stating that investment in house property is not explainable for want filing of return. 3. Ld. DR argued that Explanation-2 to section 147 does provide the presumption of deemed escapement where ITR is not filed. Hon’ble ITAT held that to presume the deemed escapement under Explanation 2, there has to be satisfied two conditions.

8 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR amount was received in cash from any other person by way of borrowing or by way of income. regular books of accounts are maintained and produced. Ld AO did not appreciate the nature of cash deposits and made the addition of the entire amount treating it unexplained. During the course of the appeal proceeding, the assessee filed cash book, bank accounts, and bank statement. Ld CIT appeal was rejected saying that the bank statement of UCo bank was not filed. This statement was left to file due to omission. Still, it was available on his record being filed with AO during assessment proceedings. (Copies of bank statements, bank ledger, and cash book are placed on page No 14- 49 .of paper book). It was explained that the assessee is an agent and broker, who assists buyers and sellers of vehicles. (Copy of Letter to AO evidencing the filing of Bank Statements on page no 50-52 of PB) It was explained to AO that the nature of business forces to assessee to keep a sufficient balance of cash on hand to allow him to make immediate payment to a seller of the vehicle. Such cash is forthwith recovered from the buyer on the same day. This is just like the arhat business in Grain Mandies, where the farmers are in need of immediate cash from the Arhatia. Your honour the entire addition was made without application of mind on the fact. I request your honour to please quash the entire disallowance. ‘’ 2.3 During the course of hearing, the ld. DR supported the order of the AO. 2.4 We have heard both the parties and perused the materials available on record. Brief facts of the case are that the AO on the basis of information in his possession observed that the assessee had deposited a sum of Rs.26,28,500/- during the F.Y. 2010-11 in his saving bank account held with UCO Bank a total receipt of Rs.4 000/- as per 26AS. The assessee had not filed his return of income for te year under consideration and thus in the absence of return of income, the transaction was not verifiable. Accordingly, reasons for reopening of the case were recorded and notice u/s 148 of the Act was issued on 28/30.03.2018 which was

9 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR duly served upon the assesee through registered post. Notice u/s 142(1) was issued on 15-05-2018 alongwith detailed questionnaire letter fixing the case for hearing on 24-05-2018 but no compliance was made by the assessee. Further notice u/s 142(1) was issued on 01.08.2018 fixing the case for hearing on 16-08-2018. No compliance was made by the assesee. Further notice u/s 142(1) was issued on 11.09.2018 fixing the case for hearing on 20-09-2018. No compliance was made by the assesee. Thereafter notice u/ 144 of the Act was issued on 28-09-2018 fixing the case for hearing on 12-10-2018. In response to the notice u/s 148, the assessee had filed his return of income on 09-10-2018 declaring total income of Rs.1,50,000/- as income from other sources. Notice u/s 142(1_)/143(2) was issued on 15-10-2018 fixing the case for hearing on 22-10-2018. In response to the queries raised, the ld. AR of the assessee attended the hearing and produced relevant documents which were test check by the assessee as to the case of the assesees. During the course of assessment proceedings, the assessee was asked to produce justification for verification as to deposition of sum of Rs.26,28,500/- during the F.Y. 2010-11 in his saving bank account held with UCO Bank and total receipt of Rs.4000/- as per 26AS for which the reply of the assessee is as under:- ‘’1. All the relevant documents have been submitted . 2.Total income for the A.Y. 2010-11 was Rs.1,50,000/- and the same was derived from working as intermediary in transaction of sale and purchase of old vehicles.

10 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR 3. Cash deposited in the bank account represented receipts from transaction of sale of old vehicles. Assessee withheld his commission amount and transferred the balance amount of owner. 4. There was no other income in the relevant year neither there was any sale nor purchase of immovable property.’’

It is noted that the AO disallowed the amount of Rs. 26,28,500/- in the hands of the assessee by observing as under:- The assessee deposited of Rs.26,28,500/- in the saving bank account in this regard the assessee has replied on 15-1-2-18. I have carefully considered the explanation made by the assessee, the assesee reply has not fully justified the deposits. In view of the above facts, I have disallowed of Rs.26,28,500/- past savings as undisclosed income an addition of Rs.26,28,500/- added to the total income of the assessee’’

The ld. CIT(A) has dismissed the appeal of the assesse. It is noted the Section 148 empowers the AO to reopen the completed assessment where any income has escaped assessment for which AO must have belief of escapement and he must have reasonable belief and such belief must have been recorded before taking action. The powers of Section 148 can only be taken where AO has reason to believe that any income has escaped assessment and for such belief he has compulsorily recorded the reason for belief of escapement. We also note from the decision of Hon’ble High Court of Gujarat in case of Bakulbhai Ramanlal Patel Vs. ITO (2011) 56 DTR 0212, Special Civil Appln. No. 12853 of 2010, Mar 4,

11 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR 2011 where it has been held that where the reasons recorded reflect that the matter requires detailed investigation and further verification, the AO has reason to suspect and not reason to believe that income chargeable to tax has escaped assessment and therefore, the assumption of jurisdiction by the AO is invalid and as such, the impugned notice under s. 148 is not sustainable and is quashed. Further we also note from the decision of Hon’ble Supreme Court in ITO, & Ors v. Lakhmani Mewal DAS (1976) 103 ITR 437(SC), wherein it was observed that for reopening of assessment, there must be a rational connection or relevant bearing on the formation of the belief that income chargeable to tax has escaped assessment. Hence, we do not concur with the findings as to the Ground No. 1 and thus the same is allowed. As regards the Ground No. 2. It is noted the assessee had filed the cash, bank account and bank statement which is placed at pages 14 to 52 of the paper book. It may be noted that during the course of hearing, the ld. AR of the assessee submitted the detailed table of cash deposited and withdrawal from the bank during the A.Y. 2011-12 which is mentioned as under:- Bank Deposits Withdrawal SBI 8,76,500 14,29,300 UCO 26,28,500 2043,400 Total 35,15,500 34,72,700

It is noted that the assessee is doing commission income by assisting and intermediating to buyers and sellers of trucks. The assessee is maintaining two

12 ITA NO. 662/JP/2023 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR bank accounts in UCO Bank and SBI. The cash deposits in the banking account had immediate sources of cash withdrawals from the same bank or from another bank. It is also noted that no amount was received in cash from any other person by way of borrowing or by way of income and the regular books of accounts are maintained. We find that the submissions filed by the assessee has merit and we do not concur with the findings of the ld.CIT(A). Thus the Ground No. 2 of the assessee is allowed. 3.0 In the result, the appeal of the assesee is allowed Order pronounced in the open court on 10/04/2024. Sd/- Sd/- ¼ Mk0 ehBk yky ehuk ½ ¼lanhi xkslkbZ½ (Dr. Mitha Lal Meena) (Sandeep Gosain) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 10 /04/2024 *Mishra आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Shri Mahavir Prasad Jat,Japur 2. izR;FkhZ@ The Respondent- The ITO, Ward , Behror 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. 662/JP/2023) vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेजज. त्महपेजतंत