SHRIKANT BHERULAL SHARMA LATE BHERULAL GIRDHARILAL SHARMA,WASHIM vs. INCOME TAX OFFICER WARD -3 , AKOLA

Date of Hearing – 12/06/2024 Date of Order – 12/06/2024

O R D E R PER K.M. ROY, A.M.

The present appeals have been filed by the assessee challenging the impugned orders of even dated 31/10/20237, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Center, Delhi, [“learned CIT(A)”], for the assessment year 2016–17.

./2023 Assessee’s Appeal – A.Y. 2016–17 2. The assessee has raised following grounds of appeal:–

“1] Learned CIT(A) erred in confirming the addition amounting to Rs.24,36,017/- u/s.69A without considering the fact of the case and material on record.

Shrikant Bherulal Sharma L/H of Late Bherulal G. Sharma ITA no.395/Nag./2023 2] Learned CIT(A) erred in not properly considering Assessee's various submissions and relevant documents filed before him and/or before A.O. 3] The learned A.O. has passed the order in pursuance to 263 order is bad in law and he has not applying his mind properly. 4] The learned CIT(A) erred in not giving proper opportunity to the Assessee for pleading his case before him. 5] The learned CIT(A) erred in not passing the order on merits. He has merely rely on A.O.'s order. 6] Assessee crave to urge additional grounds at the time of hearing, if necessary.”

“The Appellant-Assessee abovenamed submits as under :- The present appeal is against the order dated 31.10.2023 u/s.250 passed by CIT(A), NFAC, Delhi. The original assessment order in this case was a limited scrutiny assessment for cash deposits on bank which was passed by the A.O. u/s.143(3) on 24-08-2018. This order was set aside by the Pr.C.I.T, Nagpur-1 u/s. 263 by order dated 23.02.2021 with a direction to the A.O. to make a fresh assessment. In pursuance thereof, the A.O. made assessment order dt. 19.02.2022 passed u/s.143(3) r.w.s. 263 r.w.s. 144B. Against the said order dated 19.02.2022, the Assessee filed an appeal before the C.1.T(A), NFAC on 14.04.2022. The Ld. C.I.T (A) dismissed the Assessee's appeal by his order dated 31.10.2023. It is against this order passed by the Ld. C.I.T (A) that the present appeal is before the Hon'ble Tribunal. 2] The Appellant-Assessee herein is the legal heir of the deceased original Assessee i.e. Late Bherulal Girdharilal Sharma, who passed away on 30.07.2023. He was an astrologer by profession and his major income was from the Jyotish work since past several years. Apart from the said income earned from Jyotish work, he also earned certain income from interest, as also by way of agricultural income. The accounts of the Assessee i.e. Late Bherulal Girdharilal Sharma, were regularly maintained. Furthermore, the Assessee regularly filed his income tax returns along with balance sheet, profit and loss accounts, computation of income etc. The income declared by the Assessee was always accepted either by Section 143(1) or 143(3) assessment orders. For the relevant A.Y.2016-17, the Assessee filed his Income Tax Return on 30.07.2016 wherein the total income declared by the Assessee was Rs.2,75,350/- and agricultural income of the Assessee was Rs.70,000/-. 3] On 06.07.2017, the Assessee received a Notice u/s.143(2) by the A.O, Ward-3, Akola, for limited scrutiny under CASS. Under the said Notice mentioned hereinabove, the issue identified for examination was, Page | 2

Shrikant Bherulal Sharma L/H of Late Bherulal G. Sharma ITA no.395/Nag./2023 "whether the cash deposit has been made from disclosed sources". A detailed inquiry was carried out pertaining to the same by sending Notices to the Assessee dated 02.07.2018 and 19.07.2018 u/s.142(1) by the incumbent officer, thereby enquiring about "substantial increase in capital in a year" alongwith documentary proof of sources of cash deposit in bank particularly in the Akola Janta Commercial Cooperative Bank Ltd., Akola. 4] The Assessee submitted his reply to the aforementioned Notices alongwith Acknowledgement of his return, computation of total income, balancesheet from 01.04.2015 to 31.03.2016 i.e. for F.Y.2015-16 (A.Y.2016-17) and from 01.04.2014 to 31.03.2015 i.e. for F.Y.2014-15 (Α.Υ.2015-16), bank statements for Akola Janta Commercial Cooperative Bank Ltd., Akola alongwith cash flow statement, bank statement for SBI account and The Washim Urban Co-op. Bank Ltd., Washim. In the said reply, the Assessee explained that the multiple cash deposit in the Akola Janta Commercial Co-op Bank, Akola were out of earlier cash withdrawals as will be clear from the chart of cash withdrawals and cash deposits filed before A.O. Consequently, the A.O. passed order u/s.143(3) dated 24.08.2018 thereby accepting the said cash deposits under question after conducting a thorough inquiry. 5] On 04.02.2021, the Assessee received Notice u/s.263 from Pr.C.I.T. proposing to revise order u/s.143(3) dt. 24.08.2018. By the said notice of Pr.C.I.T., it was alleged that the A.O. did not verify the source of the cash deposits thereby passing an erroneous order. The Assessee was once again asked explain the source of cash deposits particularly pertaining to the total cash deposit of Rs.87,50,000/- in the Akola Janata Co-operative Bank Ltd. 6] On 23-02-2021, the Pr.C.I.T. Nagpur-1 passed an order u/s. 263 of the Act, setting aside the order dated 24-08-2018 passed by the A.O. u/s. 143(3) and ordered the reassessment of the said issue. However he added one more issue (which was not a part of limited scrutiny) viz. A.O. to examine cash balance of Rs.23,87,017/- and bank balance of Rs. 19,22,485/- in Akola Janta Coop. Bank Ltd. The Ld. Pr.C.I.T had passed the said order without properly applying his mind and without going through the records of the current and earlier years. The Ld. Pr.C.I.T failed to see from the records that the source of cash deposit in banks was properly explained so also the cash balance of Rs.23,87,017/- and bank balance of Rs.19,22,485/ were also explained. It was obvious from the records that there was in fact no increase in cash balance. It was almost the same as it was in earlier year so also the bank balance. The order of learned Pr.CIT was thus erroneous. 7] However, the Assessee did not file any appeal against the said order before ITAT and therefore the A.O. in compliance of the Order dt.23.02.2021 of the Pr.C.I.T. u/s.263, initiated reassessment proceeding against the Assessee for the A.Y.2016- 17. 7] In pursuance of proceedings taken up by A.O. after passing of an order u/s.263, he called upon the Assessee to prove the source of frequent deposits in Akola Janta Commerical Cooperative Bank during the year. Assessee filed online reply on 13.09.2021 and further reply Page | 3

Shrikant Bherulal Sharma L/H of Late Bherulal G. Sharma ITA no.395/Nag./2023 dt.28.09.2021. Relevant portion of replies dt. 13.09.2021 and 28.09.2021 are quoted by A.O. in para 3 and para 4 of the assessment order. Amongst other things it was explained that the frequent deposit in bank were related to withdrawals of almost identical amounts and the same cannot be said to be a fresh deposit. About frequency of deposits and withdrawals it was explained :- "The Assessee is an old age person. He is suffering from health disease. He was required to go out of station frequently in connection with his medical treatment. Besides he wishes to visit outstation relatives and religious places frequently. While going out of station he used to deposit cash money in bank account for security purposes and withdraw the same when he came back to his native place for mental satisfaction of having cash money with him." A.O. in para 5 of his order referred to files of earlier years viz. A.Ys.2013- 14, 2014-15 and 2015-16 where income shown was Rs. 10,10,360/-, Rs.6,18,550/- and Rs.2,80,620/- was declared; and current year's income i.e. A.Y.2016-17 at Rs.2,75,350/- plus agricultural income of Rs.70,000/-. He also referred to the closing bank balance of earlier year viz. year ending 31.03.2015 at Rs.20,70,234/-i.e. opening balance of current year 01.04.2015 and closing balance as on 31.03.2016 at Rs. 19,22,485/-. He also referred to frequent deposit and withdrawals. He stated that since Assessee has explained the source of Rs.87,00,000/- against total deposits during the year at Rs.87,50,000/- he treated the balance Rs.50,000/- as unexplained and added to the total income. 8] The only mistake committed by A.O. in this regard is that he has considered the withdrawal at Rs.87,00,000/- while the actual withdrawals are Rs.90,00,000/- as per chart below. Thus actually the funds available from withdrawals being Rs.90,00,000/- the source of deposit of Rs.87,50,000/- stands fully explained and accordingly the addition of Rs.50,000/- made by A.O. and confirmed by CIT(A) needs to be deleted. CHART / TABLE

Sr. Withdrawal Date Credit (Cr.) Balance Total no. (Dr.) 1. 13.04.2015 7,00,000 13,17,233 2. 22.04.2015 7,00,000 20,70,233 3. 24.04.2015 10,00,000 10,70,233 4. 17.04.2015 10,00,000 20,70,233 5. 06.05.2015 10,00,000 10,70,233 6. 12.05.2015 10,00,000 67,233 7. 08.09.2015 15,50,000 19,07,213 8. 29.09.2015 10,00,000 9,07,213 9. 12.10.2015 8,00,000 1,17,253 10. 12.10.2015 3,00,000 4,17,253 Page | 4

Shrikant Bherulal Sharma L/H of Late Bherulal G. Sharma ITA no.395/Nag./2023 11. 14.10.2015 3,00,000 1,17,253 12. 06.11.2015 18,00,000 19,16,277 13. 27.11.2015 15,00,000 4,16,277 14. 09.12.2015 15,00,000 20,58,256 15. 21.12.2016 15,00,000 5,58,256 16. 18.01.2016 2,00,000 3,05,256 17. 01.02.2016 14,00,000 17,02,256 18. 25.02.2016 2,00,000 19,02,186 TOTAL 90,00,000 87,50,000

9] The second addition made by A.O. is with regard to the cash balance of Rs.23,86,017/- as on 31.03.2016 (F.Y.2015-16 A.Y.2016-17). This addition is wholly unjustified and contrary to record. The only reason for making addition of Rs.23,86,017/- is stated by A.O. in para 5.4 of the assessment order, quoted below for ready reference. “5.4 The Assessee in justification of cash deposit of Rs.87,00,000/- submitted that he was required to go out of station in connection with his medical treatment (heart disease) or to visit out station relatives and religious places frequently and while going out of station he used to deposit cash money in bank account for security purposes and withdraw the same when he came back to his native place for mental satisfaction of having money with him. In other words the Assessee did not keep any huge cash in house while going out. Then how it is possible that the Assessee have Rs.23,86,017/- as cash at his house for entire year. Certainly the cash was not available with the Assessee at the beginning of the year and certainly it was earned by him from the sources best know to him only." On such assumption and surmises and contrary to record of earlier years and considered by A.O. and accepted by him in earlier years he held the cash balance as on 31.03.2016 at Rs.23,86,017/ as unexplained money and added the same to total income under section 69A of the Act. The said addition is erroneous and contrary to the records of earlier years accepted by Dept. 10] Assessee had stated that when he went out he deposited cash in bank for security but when he came back he withdrew money and preferred to keep cash with him for his satisfaction of having money with him. Even in emergency it is the cash available on hand that only helps. In case of emergent need neither the bank balance nor any other asset is useful. In period of COVID epidemic the importance of having cash on hand was realized by the people. The Assessee being of an old man of conservative thoughts and to the extent right too, always kept cash of about Rs.20,00,000/- at safe place, readily available especially to meet costly medical emergency. Further and most important thing is that the cash of Rs.23 Lakh and odd has not surfaced for the first time on 31.03.2016. Records of earlier years will show that the Assessee always Page | 5

Shrikant Bherulal Sharma L/H of Late Bherulal G. Sharma ITA no.395/Nag./2023 had large cash balance on hand at any point of time. Looking to the balancesheet and capital account of last few years will show as on 31.03.2013 Assessee had cash balance of Rs.17,62,164/-, as on 31.03.2014 it was RS.19,27,878/-, as on 31.03.2015 it was Rs.20,55,112/ as on 31.03.2016 it was Rs.23,86,017/–. Similarly looking to the bank balance of the assessee for earlier years was as follows:–

Sr. Withdrawal Date no. (Dr.) 1. 31.03.2013 13,48,892/– 2. 31.03.2014 20,41,868/– 3. 31.03.2015 20,70,234/– 4. 31.03.2016 19,22,485/–

Looking to the capital of the assessee for earlier years and current year the position is as under:–

Sr. Date Withdrawal (Dr.) no. 1. 31.03.2013 41,00,433/– 2. 31.03.2014 50,25,960/– 3. 31.03.2015 52,26,575/– 4. 31.03.2016 53,71,925/–

From the above facts it will be seen that net worth of the Assessee over a period has remained the same. All the above facts are as per the material on record and accepted by the Department. For ready reference the capital account and balancesheet for Y.E.31.03.2013, 31.03.2014, 31.03.2015 and 31.03.2016 is filed herewith. In the face of these facts on record the learned A.O. cannot assume that the cash was not available with the Assessee at the beginning of the year or earlier years. Revenue having accepted the cash balances as on 31.03.2013, 31.03.2014, 31.03.2015 cannot now assume on some flimsy ground that cash of Rs.20,55,112/ was not available at the beginning of the year or in earlier years as per records accepted by them. It cannot be said 'Head I win and Tail you lose'. It cannot take contradictory stand and say that the Assessee owned money the source of which was not explained and make addition under section 69A and at the same time say that the Assessee did not own money at the beginning of the year or earlier years as per records accepted by Revenue. It may also be seen that the net worth of the Assessee over years has almost remained the same, consistent with his income. There is no undue or unaccounted enrichment. Looking to all the facts and circumstances and evidence and material on record the addition of Rs.23,86,017/- as made by A.O. needs to be deleted. 11] Learned CIT(A) has just repeated the facts and reasoning of A.O. and has dismissed the appeal. It is stated by CIT(A) that the Assessee has Page | 6

Shrikant Bherulal Sharma L/H of Late Bherulal G. Sharma ITA no.395/Nag./2023 not responded to various notices through ITBA Portal but Assessee did not respond because Not a single notice was sent physically. The Assessee being not computer savy and for the same he is dependent on others that he did not come to know any of the notices. However the replies filed before A.O. and assessment record was always available with the Ld. CIT(A). In view the above facts the findings of A.O. and Hon'ble CIT(A) deserves to be cancelled and the addition made by A.O. and confirmed by CIT(A) be kindly deleted.”

Shrikant Bherulal Sharma L/H of Late Bherulal G. Sharma ITA no.395/Nag./2023 ./2023 Assessee’s Appeal – A.Y. 2016–17