JYOTI GOYAL,BHOPAL vs. DCIT-1(1), BHOPAL

आदेश / O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by appeal-order dated 22.09.2023 passed by learned Commissioner of Income-Tax (Appeals), NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 30.11.2019 passed by learned DCIT, 1(1), Bhopal [“AO”] u/s 147 r.w.s. 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2012-13, the assessee has filed this appeal on following effective grounds:

“(1) That on the facts and in the circumstances of the case of the assessee the Ld. CIT(A), Delhi, was not justified in holding that the initiation of proceedings u/s 148 and subsequent order passed are legal and valid.

Page 1 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

(2) That on the facts and in the circumstances of the case of the assessee the Ld. CIT(A), Delhi, was not justified in confirming disallowance of addition of Rs. 90,75,000/- invoking provision of section 56(2)(vii) and or 28(iv) of the Act. (3) That on the facts and in the circumstances of the case of the assessee the Ld. CIT(A), Delhi, was not justified in confirming disallowance of addition of Rs. 50,25,000/- towards cash deposited in bank under section 69 treating the same as unexplained deposit. (4) That on the facts and in the circumstances of the case of the assessee the ld. CIT(A), Delhi, was not justified in confirming disallowance of addition of Rs. 15,50,000/- towards cash received by assessee treating the same on unexplained cash.” 2. The background facts leading to present appeal are such that the

assessee-individual filed her return for AY 2012-13 on 31.07.2012 declaring

a total income of Rs. 8,06,570/- which was duly assessed. Subequently, the

AO re-opened assessment through notice dated 29.09.2019 u/s 148. In

response to this notice, the assessee re-filed return repeating the same

income of Rs. 8,06,570/-. Then, the AO issued notices u/s 143(2)/142(1).

Ultimately, the AO completed assessment u/s 147 r.w.s. 143(3) vide order

dated 30.11.2019 after making certain additions. Aggrieved, the assessee

carried matter in first-appeal wherein the CIT(A) granted part-relief. Still

aggrieved, the assessee has come in next appeal before us.

Ground No. 1:

proceeding u/s 148 and the assessment-order passed by AO claiming the

same to be illegal and invalid. However, at the time of hearing, none of the

representatives has made any submission qua this ground. Therefore, the

same is treated as non-pleaded/non-pressed and dismissed.

Page 2 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

Ground No. 2:

confirming addition of Rs. 90,75,000/- made by AO u/s 56(2)(vii) or 28(iv).

noting made by AO on page 2, 4 to 6 of assessment-order, are such that the

assessee alongwith Shri Anchit Goyal (son of assessee) purchased an

immovable property for Rs. 1,81,50,000/- from Shri Gyan Singh and others

and the consideration was paid through cheques issued from bank accounts

of assessee and Shri Anchit Goyal. But since none of the cheques issued by

assessee was encashed, the AO observed that the assessee has not made

any payment for consideration towards purchase and therefore received the

immovable property amounting to Rs. 90,75,000/- (50% of Rs.

1,81,50,000/-) without consideration and therefore the transaction was

taxable u/s 56(2)(vii)(b). When the AO show-caused, the assessee submitted

that the section 56(2)(vii)(b) was not applicable because of two-fold reasons,

(i) a sum of Rs. 3,75,000/- was paid by cheque of her father-in-law Shri

Prahlad Goyal/P.D. Goyal towards consideration on assessee’s behalf.

Further, the assessee and Shri Anchit Goyal paid part of the consideration

through their post-dated cheques. Therefore, the purchase is made for

consideration and it cannot be said to be without consideration; (ii)

alternatively, the impugned property was a land forming part of stock-in-

trade of assessee and accordingly excluded from the definition of ‘capital

asset’ u/s 2(14). Therefore, it was not a ‘property’ as defined in Explanation

Page 3 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

4(d) to section 56(2)(vii)(b) and hence section 56(2)(vii)(b) is not applicable.

However, the AO rejected assessee’s twin-submissions and made addition by

holding that the transaction would attract section 56(2)(vii)(b) or 28(iv). The

AO’s order is extracted below:

“Regarding Land Purchase:

For the purchase of land, from the bank account of the assessee, cheques amounting to Rs. 64,45,029/- were issued. None of the cheques issued by the assessee was encashed. Therefore, the assessee did not pay any consideration for purchase of land. As per legal parlance, the term consideration in contract law refers to something of value given to someone in return for goods, services or some other promise. In the case of the assessee, the assessee has not paid any consideration for purchase of land, against which the assessee has received joint holding in land along with Shri Anchit Goyal, the market value of which stood at Rs. 1,81,50,000/-.

Therefore, the assessee has received immovable property amounting to Rs. 90,75,000/- without consideration.

The assessee has contended that Rs. 3,75,000/- has been paid by her father in law. The assessee claimed that in such circumstances, the purchase cannot be said without consideration.

The contention of the assessee has been considered. It is true that some consideration has been paid by Shri Prahlad Goyal, however, as per the provisions of the Act, the immovable property has been received without consideration by Smt. Jyoti Goyal i.e. no consideration has been paid by Smt. Jyoti Goyal for purchase of property.

Therefore, provisions of section 56(2)(vii) are squarely attracted in the hands of the assessee.

The assessee has contended that the assessee is dealing in real estate and land purchased is part of stock in trade of the assessee.

In this regard, the assessee has filed return of income u/s 44AD of the Act and not books of accounts have been submitted by the assessee. Even if it is accepted that books of accounts are being maintained and the land purchased is part of stock in trade of the assessee, as per section 28(iv) of the Act, the value of any benefit or perquisite whether convertible into money or not arising out of business and profession is income from business in the hands of the assessee. In this case, benefit of Rs. 90,75,000/- arose in the hands of the assessee on account of exercise of her business as no consideration was paid by her for purchase of such immovable property.

Therefore, Rs. 90,75,000/- is being added in the hands of the assessee under the head Profits and Gains of business and profession as the assessee has submitted that she is maintaining books of accounts and the property has been purchased as stock in trade.”

Page 4 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

which in re-produced in para 6.2 of CIT(A)’s order. However, the CIT(A)

rejected assessee’s submission and upheld AO’s action by observing and

holding thus:

“6.3 DECISION 6.3.1 The appellant’s submission is that (a) the property of Rs. 1,81,50,000/- is jointly purchased with her son Sri Anchit Goyal (b) the cheques paid for the same have not been encashed by the party (c) there is litigation on this property with the Bhopal Development Authority (d) that there is no benefit derived by the appellant from the purchase that is liable u/s 28(iv).

6.3.2 In this regard, the AO has considered the appellant’s submissions and taken the share of the appellant at 50% of Rs. 90,75,000/- only. The AO also considered the appellant’s submissions on how the payment was made – the appellant did not make the full payment in view of the pending litigation with Bhopal Development Authority. What the AO has argued is that the land is obtained by the appellant. Whether or not the stated development of plots are made or not, appellant has received the land as there is a registered sale-deed. When the appellant did not pay anything for receiving the land, which is shown in stock in trade, then there is a benefit accrued to appellant without payment and therefore, the AO considered the receipt of land without payment as a benefit u/s 28(iv) and brought to tax as income from business.

6.3.3 What the appellant has provided in the appeal proceedings, of writ filed and correspondence with the Bhopal Development Authority does not take away from the fact that the appellant got the land and as submitted by appellant, it is without payment. Outcome of litigation does not determine the ownership. Thus, the receipt of benefit is clear. As the said land is supposed to be part of the appellant’s business, the AO treated the same as benefit accrued liable to be taxed as income from business as per the section 28(iv). This action of the AO, is upheld.” 7. Before us, Ld. AR for assessee made a very forceful submission to

contest that neither section 56(2)(vii)(b) nor section 28(iv) was applicable to

the facts of case. Ld. AR submitted that the AO has wrongly observed that it

was a case of purchase without consideration. To buttress his point, Ld. AR

submitted that the land was purchased as per registered-deed dated

17.06.2011 for a consideration of Rs. 1,85,00,000/- and the consideration

was paid through various cheques the details of which are clearly mentioned

Page 5 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

on Page 2 and 3 of the registered-deed filed at Page 22-23 of Paper-Book.

Out of the consideration so agreed, a sum of Rs. 3,75,000/- was paid by

cheque of assessee’s father-in-law Shri Prahlad Goyal/P.D. Goyal on

assessee’s behalf which is mentioned in the registered-deed and also clearly

accepted by AO in assessment-order itself. Further, from the details of

cheques mentioned in the registered-deed, one can easily find that the

cheques were post-dated as 24.03.2012 (there are 4 cheques each of Rs.

1,25,000/- dated 24.07.2010 which are not post-dated but those cheques

were paid by Shri Anchit Goyal, son of assessee). So far as the non-clearing

of post-dated cheques is concerned, Ld. AR submitted that though the

sellers have mentioned in Para 2 / Page No. 6 of the registered-deed placed

at Page No. 26 of Paper-Book that the impugned property was free from all

charges, it was never sold to anybody or never litigated anywhere and it was

a clean property, etc., but the fact was such that the impugned land had

already been handed over by sellers to Bhopal Development Authority

(“BDA”) vide agreements dated 24.11.2010, prior to purchase by assessee on

17.06.2011 because the BDA had acquired impugned land in terms of a

notification dated 08.05.2009 for developing a scheme under Town

Development Scheme, 2005 of Govt. Therefore, the assessee and Shri Anchit

Goyal made only part-payment through cleared cheques and the rest of the

payment was made through post-dated cheques to be presented at a later

date. Ld. AR went on submitting further facts that as per Scheme, the BDA

was required to carry out development within 2 years and handover

Page 6 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

developed plots in return. But the BDA did not carry out any development

for more than 2 years and the assessee and Shri Anchit Goyal ultimately

issued a legal notice dated 28.03.2013 to BDA, copy at Page No. 41-45 of

Paper-Book. The names of assessee and Shri Anchit Goyal are appearing in

the first page of said legal notice as parties. Further, a Writ Petition No.

17615/2016 was also filed by assessee and Shri Anchit Goyal to Hon’ble

High Court of Madhya Pradesh against BDA, copy at Page No. 32-39 of

paper-book. Thus, from these clinching evidences, it is clearly evident that

the impugned property was not clean and free from encumbrance though it

was so stated by sellers in registered-deed. Ld. AR made an assertion

standing at the Bar that the BDA has not developed the Scheme even till

now. Thus, in these circumstances, the assessee and Shri Anchit Goyal

made payment through post-dated cheques and those cheques are also not

cleared till now. Ld. AR submitted that ultimately depending upon

development of scheme by BDA or outcome of the Writ Petition by Hon’ble

High Court, the assessee shall be either making payment as agreed to the

sellers or otherwise the deal itself would be cancelled. Therefore, it is not a

case of purchase ‘without consideration’ in terms of section 56(2)(vii)(b) nor

there is any benefit to assessee in terms of section 28(iv). Ld. AR submitted

that the revenue authorities have branded the transaction done by assessee

as ‘without consideration’ merely because the cheques given by assessee

were post-dated and not cleared but the authorities have ignored the

underlying facts as narrated. Ld. AR submitted that how could the sellers

Page 7 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

give a property having value as high as Rs. 1,85,00,000/- to the assessee

and Shri Anchit Goyal without consideration, is a question to be thought by

authorities before making addition?

Page No. 6 of the registered-deed, copy at Page No. 26 of paper-book, the

assessee has received all rights of ownership from the sellers. But as of now,

the assessee has not made payment to the seller, it is dependent upon the

action of BDA or decision of High Court. Therefore, it is certainly a case of

purchase ‘without consideration’.

under a scheme plan of BDA and the assessee is helpless and can do

nothing. He submitted that in the event, the decision of High Court or BDA

does not materialize in favour of assessee, there would be cancellation of

deal only and still if the assessee keeps the deal, the assessee would

necessarily release the amounts of post-dated cheques to the sellers. Thus,

the unpaid amount is a ‘liability’ of assessee and Shri Anchit Goyal.

Therefore, the deal of purchase undertaken by assessee cannot be said to be

‘without consideration’.

orders of lower-authorities as well as the material held on record to which

our attention has been drawn. The first undisputed fact is such that the

assessee alongwith her son Anchit Goyal has undertaken a deal for

Page 8 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

purchase of land vide registered-deed dated 17.06.2011 wherein the

consideration agreed upon is Rs. 1,85,00,000/- and the same has been paid

through cheques. The details of cheques paid by assessee and Shri Anchit

Goyal to the sellers are clearly mentioned in the registered-deed as under:

Page 9 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

Page 10 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

Further, the sellers have acknowledged receipt of full consideration through

aforesaid cheques in Para No. 3 of the registered-deed. The second

undisputed fact is such that the impugned property had, prior to purchase

by assessee, been taken over by BDA from the sellers for development of a

scheme in terms of Government rules. It is further manifest from the

evidences placed that the BDA has not developed scheme and therefore the

assessee has given a legal notice to BDA and also filed a Writ Petition before

Hon’ble High Court. From these facts and documents, firstly it is clear that

the assessee has not only agreed consideration with the sellers but also paid

the same through cheques and secondly there is a merit in assessee’s

submission that part of the cheques given to the sellers have not been

cleared for payment because of the litigation or uncertainty attached with

the property. Hence, the assessee is very much correct in claiming that it

cannot be said to be a case of purchase ‘without consideration’. The

assessee’s claim gets further strength from the assertion by Ld. AR that in

the event the decision of High Court or BDA does not materialize in favour of

assessee, there would be cancellation of deal only and still if the assessee

keeps the deal, the assessee would necessarily release the amounts of post-

dated cheques to the sellers. Therefore, in the situation, the purchase is

made for consideration and the unpaid amount is only a ‘liability’ of

assessee. Hence, without any lengthy deliberation, it can be easily

concluded that the purchase done by assessee cannot be said to be ‘without

consideration’. Accordingly, it is neither a case of section 56(2)(vii)(b) nor of

Page 11 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

section 28(iv) as perceived by the lower-authorities. Hence, the addition

made by AO and confirmed by CIT(A) is not justified. We, therefore, delete

the addition made by AO. This ground is allowed.

Ground No. 3:

confirming the addition of Rs. 50,25,000/- made by AO u/s 69 on account

of unexplained deposits in bank a/c.

assessee and found that the assessee made cash-withdrawals of Rs.

80,80,125/- from Bank of India and cash-deposits of Rs. 50,25,000/- in

Central Bank of India. The AO further noted that the assessee had shown

business-turnover of Rs. 45,54,000/- with gross-profit of Rs. 15,36,745/-

only, therefore the level of withdrawals from bank as well as deposits in

bank does not commensurate with the turnover/profit declared by assessee.

When the AO show-caused assessee to explain the withdrawals and

deposits, the assessee filed a cash-book and claimed that the cash

withdrawn from Bank of India was deposited in Central Bank of India. The

assessee further explained the necessity of withdrawal and re-deposit due to

cheques issued from another bank. However, the AO rejected assessee’s

submissions by observing that (i) the cash-book is not a sufficient evidence

to show that the deposits were made out of withdrawals, (ii) the quantum of

deposits is not same as the quantum of withdrawals, (iii) there was a time-

Page 12 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

lag between deposits and withdrawals, (iv) the deposits and withdrawals did

not commensurate with the turnover and gross-profit declared by assessee

and (v) the assessee has not submitted evidence of any transaction for which

she was necessitated to issue cheques from another bank a/c. With these

observations, the AO stated “Therefore, considering the above, the rationale

of the assessee for withdrawals and deposit of cash in the bank account does

not appear to be that of a prudent and rational person”. Ultimately, the AO

de-linked the withdrawals and deposits and made additions on both counts

i.e. (i) addition of Rs. 80,80,125/- qua cash-withdrawals and (ii) addition of

Rs. 50,25,000/- qua cash-deposits.

80,80,125/- qua cash-withdrawals by passing this order:

“5.3.2 Coming to the merits of the issue, the AO has simply added the cash withdrawals from the bank account. The withdrawals are from the deposits into the bank account and therefore, are not unexplained. If the deposits are not explained or sources not brought to tax, the AO has not discussed the same. Further, under what section of the IT Act, is withdrawal of cash from bank account taxable, is also not mentioned by the AO.” However, the CIT(A) upheld addition of Rs. 50,25,000/- qua cash-deposits

by passing following order:

“7.3.1 The AO’s main argument is that the cash withdrawn from one bank account cannot be considered as the source of cash deposit into another account in view of the lag between the dates, i.e. cash withdrawn is not immediately deposited into another account. On the other hand, the appellant only relied on its cash book, stating that books have not been rejected. 7.3.2 In this case, the appellant has relied on cash book, but has not produced the same to the appellate authority. No explanation of the cash deposits is also given. The AO has rejected the cash book as the basis. There is no merit in appellant’s argument that if a cash book is there, the same is to be accepted. As the Apex Court observed in case of Devas Multimedia P. Ltd. vs. Antrix Corpn. Ltd. & Anr. In civil appeal No. 5906 of 2021 SCC online Del 1608 2023 that the chartered accountants qualify their

Page 13 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

statements with riders such as ‘according to the information and explanation gives to us in the course of our audit’ or ‘to the best of our knowledge and belief and according to the information and explanations given to us’. Thus, the audit report does not become the gospel truth. On the veracity of audited books of accounts, the Hon'ble Supreme Court held that “It has been held repeatedly by the court that entries in the books of accounts are not determinative or conclusive and the matter is to be examined on the touchstone of the provisions contained in the Act.” The judgements referred to by the court were its previous decision in case of Kedarnath Jute Mfg. Co. Ltd. V. CIT (1971) 82 ITR 363 (S.C.), Sutlej Cotton Mills v. CIT (1979) 116 ITR 1 (S.C.), Tuticorin Alkali Chemicals and Fertilizers Ltd. V. CIT (1997) 227 ITR 172 (S.C.) and United Commercial Bank v. CIT (1999) 240 ITR 355 (S.C.). Thus, mere existence and audit of books of accounts does not mean the same are to be accepted as they are.

7.3.3 In this case, the veracity of the books is highly questionable when the appellant has no audited books and in fact, is declaring income u/s 44AD. The other argument is that the AO did not reject the books. There is no need for the AO to pass specific observations on rejections of books and estimation of income, as the income is returned by the appellant on basis of 44AD without the books of accounts. When AO did not accept the cash book as explaining the cash deposits, the rejection of the stated books is evidence and as the income is already on estimated basis, there was no necessity to mention the estimation of income again.

7.3.4 The appellant has not provided any explanation of the said sources for the cash deposits nor provided the cash book to the appellate authority. In the current case, the appellant has not offered a satisfactory explanation to the AO on the cash deposits into the bank account and hence, the addition to income u/s 69A is correct. In respect of section 69A, where the burden of proof lies, has been laid down by the Hon'ble Apex Court in the case of Chuharmul v. CIT (1988) 38 Taxman 190 (S.C.) / (1988) 172 ITR 250 (S.C.), wherein it was stated that once a person is in possession of the stated money, the burden of proof is on him to show he is not the owner. The Hon'ble Court laid down as under :-

“6….. There is a contention was raised that the provision in section 110 where a person was found in possession of anything, the onus of proving that he was not the owner was on the person who affirmed that he was not the owner, was incorrect and inapplicable to taxation proceedings. This contention was rejected. The Bombay High Court held that what was meant by saying that the Evidence Act did not apply to the proceedings under the Act was that the rigour of the rules of evidence contained in the Evidence Act, was not applicable but that did not mean that the taxing authorities were desirous of invoking the principles of the Act in proceedings before them, they were prevented from doing so. Secondly, all that section 110 does is that it embodies a salutary principle of common law jurisprudence which could be attracted to a get of circumstances that satisfy its condition.”

7.3.5 Thus, the court affirmed that as per the evidence act, a person in possession of anything has the onus of proving he is not the owner and that this is a common law jurisprudence which applies to taxing statute too. In this case while the assessee was acquitted under other acts finally by the courts concerned, as far as income of assessee taxable under IT Act, the court by above principle upheld the view of the revenue on taxing the assessee under section 69A. This principle was upheld by the Hon'ble Supreme Court in the case of Shashi Garg v. Pr. CIT (2020) 113 taxmann.com 93 (S.C.) / (2020) 269 Taxman 26 (S.C.), when the SLP against the Hon'ble High Court decision of upholding the Tribunal order of sustaining addition u/s 69A was dismissed. The Hon'ble High Court had held-

Page 14 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

“Burden to explain the source of cash deposit was on the appellant- assessee, who as per the finding has not been able to discharge this burden…” 7.36. This is law laid down by Apex Court that once in possession of the stated money, the burden is on the possessor as to prove he is not the owner. As the money was found with the appellant in his bank account, it is on the appellant to prove the money does not belong to him. Since this burden is not discharged by the appellant, there lies no further burden on the revenue to prove anything. Hence, the AO can make addition to the income u/s 69A. In view of the same, the addition of the AO is upheld.” 14. Before us, Ld. AR for assessee strongly assailed the orders of lower-

authorities on various counts as under:

(i) That the assessee filed cash-book to AO during assessment-

proceeding and copy is also filed at Page No. 66-68 of the Paper-Book.

Referring to same, Ld. AR showed that all entries of cash-withdrawals

and cash-deposits are duly recorded therein. He also pointed that

although the majority of transactions are such that the cash-

withdrawals from Bank of India have been deposited in Central Bank

of India but on a few occasions, the cash has also been re-deposited in

the Bank of India itself.

(ii) He submitted that it is a choice of assessee to withdraw from one

bank and re-deposit in another bank or same bank and issue cheques

from other bank a/c, how the department can interfere in assessee’s

decision?

(iii) He submitted that there are ‘n’ number of judicial rulings by different

forums where the cash-deposits in bank a/c from cash-withdrawals

made from bank a/c have been treated as explained and the additions

Page 15 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

made by assessing authority have been deleted. So far as quantum is

concerned, he submitted that total cash-withdrawals made by

assessee were Rs. 80,80,125/- as against which cash-deposits were

Rs. 50,25,000/- only, therefore the withdrawals are more than enough

for making deposits.

(iv) He submitted that the AO has not rejected assessee’s cash-book nor

found any discrepancy therein.

(v) He submitted that the AO was prompted to make addition by making

a wrong comparison of cash-withdrawals/deposits with turnover/

gross-profit of assessee whereas the fact is that cash-withdrawn from

one bank was re-deposited in another bank or same bank. When it so,

how the figures of cash-withdrawals/deposits will have any

commensuration with turnover/gross-profit?

(vi) He submitted that the AO has gone to the height that he made

additions for cash-withdrawals as well as cash-deposits. During first

appeal, the CIT(A) has though deleted addition qua cash-withdrawals

and while doing so, in Para No. 5.3.2 of his order re-produced above,

categorically noted “The withdrawals are from the deposits into the

bank account and therefore, are not unexplained”. But despite this, the

CIT(A) has not deleted the addition of cash-deposits which is very

wrong. He submitted that when the withdrawals are held to be

genuine, how can the cash-deposits be unexplained?

Page 16 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

authorities, emphasized the observations made by authorities therein and

prayed to uphold the addition.

orders of lower-authorities as well as the material held on record to which

our attention has been drawn. After a careful consideration, we find that it

is an undisputed fact that the assessee has made cash-withdrawals from

Bank of India during the year aggregating to Rs. 80,80,125/-. The revenue is

not disputing the factum of these cash-withdrawals in any manner and in

fact it has been accepted by CIT(A) in clear terms. Now, the assessee has

made cash-deposits of Rs. 50,25,000/- in bank for which the department

needs source. The assessee has explained that the cash withdrawn from one

bank was utilized for making cash deposits in other bank or same bank. The

assessee has also filed a cash-book or cash flow statement wherein datewise

entries of cash-withdrawals and cash-deposits as well as a few other entries

of cash inflows/outflows are duly recorded while showing balance in hand.

The AO has neither rejected this cash-book or cash flow statement nor

pointed out any single discrepancy therein. The quantum of cash-

withdrawals exceeds the quantum of cash-deposits made during the year.

The cash balance is not negative on any date. Further, there are regular

withdrawals and deposits on various dates. Therefore, in the situation, when

the assessee has undisputed cash-withdrawals from one bank, there is a

source available for making deposits in another bank. The AO has, however,

Page 17 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

rejected assessee’s submission on certain reasons which are not substantial

and more in the nature of conjecture or surmise. For instance, the AO has

stated that the cash-book is not a sufficient evidence to explain that the

source of deposits was the withdrawals. This itself is a vague point taken

into account by AO. Then, the AO says that there is a time-gap between

withdrawals and deposits or the amounts of withdrawals and deposits are

not same but by raising this point, one cannot say that the money

withdrawn by assessee was not available for re-deposit unless the AO could

point out any other utilization of money. It is nowhere a case of AO that the

assessee has utilized money for any other purpose. Even the time-gap in

withdrawals and re-deposits is a few days only. Then, the AO has made

comparison of turnover/profit of assessee with the quantum of

withdrawals/deposits but that comparison is also wrong when the assessee

claims that the moneys withdrawn were re-deposited. It is nobody’s case

that the business turnover was deposited. We also agree with Ld. AR that

there are numerous decisions wherein the cash-withdrawals from bank have

been accepted as source for re-deposit in bank and additions have been

deleted. Taking into account all these aspects, we are of the considered view

that the addition made by AO and upheld by CIT(A) is not correct.

Consequently, we delete the same. This ground is also allowed.

Ground No. 4:

Page 18 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

confirming the addition of Rs. 15,50,000/- made by AO towards cash-

receipts by assessee treating the same as unexplained.

shown cash-receipts of (i) Rs. 9,00,000 for land sold in Barkhedi + Rs.

4,00,000 for land sold in Pura Chindwara, (ii) Rs. 70,000 on account of

agreement of land for Godarmaru and (iii) Rs. 4,80,000 as advance received

for land at Badwai. Ld. AR pointed that the total of these receipts come to

Rs. 18,50,000/- but the AO has wrongly taken at Rs. 15,50,000/-. The AO

treated these receipts as unexplained and made addition of Rs. 15,50,000/-.

During first-appeal, the CIT(A) upheld addition made by AO.

and for the addition. After a careful consideration, we present our analysis

and adjudication as under:

(i) Receipt of Rs. 9,00,000/- for land at Barkhedi + Rs. 4,00,000/- for

land at Pura Chindwara:

Ld. AR firstly drew us to assessment-order and pointed that the assessee

filed sale-agreements of lands at Barkhedi and Pura Chindwara under which

these moneys were received but the AO rejected those agreements on the

footing that they were on a plain paper and unregistered. Then, Ld. AR

carried us to various pages of Paper-Book to show that the receipts shown

by assessee were genuine. He firstly referred Page 14 of Paper-Book where

Page 19 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

the “Computation of Total Income” filed by assessee is submitted wherein

taxable income of Rs. 15,36,745/- under the head “Income from Business or

Profession” was declared by assessee. He correlated this figure of business

income from Page 16 of Paper-Book where the “P&L A/c” of assessee shows

Profit of Rs. 3,68,627/- from land at Barkhedi (+) Profit of Rs. 11,69,826/-

from land at Pura Chindwara (-) Bank charges of Rs. 1,708/-, thus net

result comes to Rs. 15,36,745/-. Thereafter, to explain the cash-receipt of

Rs. 9,00,000/- for land at Barkhedi, Ld. AR carried us to Page 17 of Paper-

Book where the “P&L A/c of land at Barkhedi” is filed showing three cash-

receipts of Rs. 3,00,000/- each on 01.08.2011, 10.09.2011 and 25.09.2011,

aggregating to Rs. 9,00,000/- from Smt. Kaviti Indra to whom the assessee

sold land as well as cost of Rs. 5,31,373/- incurred by assessee, thus

leaving a net profit of Rs. 3,68,627/-. Next Ld. AR carried us to Page 70-71

of Paper-Book where the unregistered agreement entered by assessee with

the purchaser Smt. Kaviti Indra duly witnessed by two witnesses is filed

which contains the details of the payments of Rs. 9,00,000/- made by Smt.

Kaviti Indra to assessee. These receipts are also found recorded by assessee

in the cash-book filed at Page 66-68 of Paper-Book. In so far another receipt

of Rs. 4,00,000/- for land at Pura Chindwara is concerned, Ld. AR carried to

Page 18 of Paper-Book where the detailed “P&L A/c of land at Pura

Chindwara” is filed showing receipts/receivable of Rs. 36,54,000/- from Shri

Tarik to whom the assessee sold land. The sum of Rs. 36,54,000/- includes

the impugned receipt of Rs. 4,00,000/- in cash on 18.10.2011 and

Page 20 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

remaining portion was received through cheques or remained outstanding.

The assessee has incurred cost of land at Rs. 24,84,174/-, thus leaving a

net profit of Rs. 11,69,826/-. Next Ld. AR carried us to Page 73-76 of Paper-

Book where the agreement entered by assessee with the purchaser Shri

Tarik duly witnessed by two witnesses is filed which contains the details of

the payment of Rs. 4,00,000/- made by Shri Tarik to assessee. This receipt

is also recorded by assessee in the cash-book filed at Page 66-68 of Paper-

Book. By showing these documents, Ld. AR contended, that the assessee

has received the sum of Rs. 9,00,000/- from Kavita Indra and Rs.

4,00,000/- from Shri Tarik for the lands at Barkhedi and Pura Chindwara

respectively. Ld. AR submitted that the assessee has made this very

submission before both of the lower authorities with the documents

narrated. He submitted that the profit of Rs. 3,68,627/- from land at

Barkhedi (+) Profit of Rs. 11,69,826/- from land at Pura Chindwara as

offered by assessee in the return of income as ‘business income’ have been

duly assessed by AO. He contended that when the AO has already assessed

the profit resulting from sale-proceeds of the lands, how can he re-assess

the cash-receipts forming part of same sale-proceeds separately? He prayed

that the addition made by AO is very much wrong and must be deleted. Per

contra, Ld. DR for revenue iterated the same premise as taken by AO that

the agreements submitted by assessee are on plain paper as well

unregistered, therefore cannot be taken as genuine. He further relied upon

the order of CIT(A). We have given a thoughtful consideration to the

Page 21 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

submissions of both sides. We find certain vital aspects (i) that the assessee

is engaged in the business of purchase and sale of immovable properties, (ii)

that the impugned cash-receipts declared by assessee are relatable to the

sale of lands held by assessee, (iii) that the assessee has filed agreements for

sale of lands which are duly signed by assessee, purchasers and witnesses,

(iv) that the agreements contain full details of the assessee as seller, the

purchasers and the receipts shown by assessee towards sale consideration,

and (v) the receipts are also recorded in assessee’s cash-book. The only

defect noted by AO is that the agreements are on plain paper and

unregistered which is certainly a fact. But, however, we find that the

assessee has shown taxable receipts and not claimed deduction of any

expenditure on the basis of those agreements. Undisputably, those receipts

are part of sale-proceeds of the lands and the profit resulting therefrom has

been offered in assessee’s return as ‘business income’ and duly assessed by

AO. Thus, the AO has not doubted the cost, sale-proceeds and profits from

those lands. An additional fact in case of land at Pura Chindwara is such

that the major portion of sale-proceed has been received through cheques

and only a small portion of Rs. 4,00,000/- is received in cash. It is further

noteworthy that the AO has not made any effort from purchasers so as to

dislodge the impugned receipts declared by assessee. Therefore, in such a

case, even if the sale-agreements were on plain paper and not registered but

when the substantial profit arising therefrom is assessed by AO without any

questioning, the impugned cash-receipts forming part of sale-proceeds

Page 22 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

giving rise to the very same profit cannot be treated as ingenuine. In any

case, when the impugned receipts are part of the sale-proceeds, it amounts

to double taxation of the transactions when the AO has assessed profits

arising therefrom and at the same time added cash-receipts separately. This,

in our considered view, is not justified. Being so, we delete the additions of

Rs. 9,00,000 + 4,00,000 made by AO.

(ii) Receipt of Rs. 70,000/- on account of agreement for Godamaru:

Ld. AR drew our attention to Page 77 of Paper-Book where the assessee has filed a Ledger A/c of Shri Gorelal Newari according to which the assessee received a cash-advance of Rs. 70,000/- from Shri Gorelal Newari on 06.03.2012 against land but the same was refunded back on 10.03.2012 due to cancellation of deal. Ld. AR referred Page 85-87 where a letter dated 18.11.2019 filed by assessee to AO during assessment-proceeding is placed. In para 3(ii)(c), the assessee categorically informed to AO the same facts of advance-receipt and refund due to cancellation of deal. Further, the transactions of cash-receipt and refund are found recorded in assessee’s cash-book filed at Page 66-68 of Paper-Book. The AO has, however, made addition of Rs. 70,000/- on account of cash-receipt alone without giving any finding in assessment-order on other side of refund. We find that the addition made by AO is not in order when the assessee has refunded money back to the giver immediately within a period of four days due to cancellation of deal. Consequently, we delete the addition.

(iii) Receipt of Rs. 4,80,000 on account of advance for Badwai:

Ld. AR drew us to Page 85-87 where a letter dated 18.11.2019 filed by assessee to AO during assessment-proceeding is placed. In para 3(ii)(d) of letter, the assessee categorically informed to AO that she received advance of

Page 23 of 24

Jyoti Goyal, Bhopal ITA No. 380/Ind/2023 – AY 2012-13

Rs. 4,80,000/- for sale of land at Badwai but the advance was forfeited on purchaser’s failure to purchase land and the same had already been taxed in AY 2015-16. Relying upon this letter of assessee to AO, Ld. AR requested that no addition was warranted in present AY 2012-13 when the same has already been taxed in AY 2015-16. Since the point raised by assessee is a matter of record, we remit this issue back to the file of AO for verification of record of AY 2015-16 qua the claim of assessee and therefore make adjudication afresh. We direct the assessee to provide necessary assistance when called upon by AO. This issue is thus allowed for statistical purpose.

Order pronounced in open court on 20.05.2024.

Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 10.05.2024 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore

Page 24 of 24