BALWANT POORANMAL TAYAL,VAPI vs. ITO, VAPI WARD - 1, VAPI, VAPI

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 181/Srt/2021 (Assessment Year: 2017-18) (Hearing in Virtual Court) Balwant Pooranmal Tayal, I.T.O., 1, Office No. 101, Gitanjali, Plot Ward-1, Vs. No. 32/D 1st Phase GIDC, Vapi. Vapi-396195. PAN No. AAAPT 5199 F Appellant/ assessee Respondent/ revenue

Appellant represented by Shri Lokesh Khadaria, AR Respondent represented by Shri Vinod Kumar, Sr.DR Date of hearing 31/05/2022 Date of pronouncement 13/07/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi (NFAC) dated 19/08/2021 for the Assessment year (AY) 2017-18. The assessee has raised following grounds of appeal: “1. The learned AO reopened the case under Section 147 of the Act without having reason to believe that income has escaped from assessment. 2. The Learned CIT(A) has erred in confirming addition made by Assessing Officer for Rs. 14,10,000/- u/s 69A of the Act for entire cash deposited in bank Account, without giving opportunity of hearing. 3. The appellant craves leave to add, alter, delete or vary any of the grounds either before or in the course of hearing of appeal.”

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO 2. Brief facts of the case are that the assessee filed his return of income for the A.Y. 2017-18 on 08/07/2017 declaring income of Rs. 6,80,930/-. The case of assessee was selected for scrutiny. During the assessment, the Assessing Officer noted that the assessee has shown cash deposited in his bank account. The assessee was asked to furnish the complete details of deposits alongwith source with documentary evidence. The assessee in response to show cause notice, furnished details of deposit of cash in his bank account and furnished copy of passbook in the manner shown below: Sr. Bank Account No. Date Amount Source No. (in Rs.) 1. Canara Bank 3890101000231 17/05/2016 10,65,000 Sale of car 2. Canara Bank 3890101000231 31/05/2016 30,000 Sale of Car 3. Canara Bank 3890101000231 03/06/2016 2,70,000 Sale of car 4. Canara Bank 3890101000231 09/06/2016 45,000 Reimbursement of car insurance 5. SBBP Bank 1000/2021 18/11/2016 10,000 Cash in hand 6. Canara Bank 3890101000231 21/12/2016 11,000 Cash in hand 7. Canara Bank 3890201000015 03/01/2017 50,000 Cash in hand 8. Canara Bank 3890101000231 25/01/2017 10,000 Cash in hand 9. Canara Bank 3890101000231 10/03/2017 30,000 Cash in hand 3. On considering the submission of assessee, the Assessing Officer took his view that the assessee’s deposits at Sr. No. 5 to 9 are convincing and no adverse inference is drawn. However, with regard to remaining deposits at Sr. No. 1 to 4, total Rs. 14,10,000/- which is claimed on account of sale proceed of car was not accepted. The Assessing Officer held that as per sale agreement, the Car/vehicle was sold by assessee to Dipeshbhai Patel for a sale consideration of Rs. 13,85,000/-. To ascertain the genuineness 2

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO of transaction, the assessee was asked to furnish other documentary evidence. The assessee furnished copy of Registration Certificate (RC) of vehicle showing the name of assessee and purchaser, copy of bank statement showing the payment of insurance policy. On perusal of such details, the Assessing Officer noted that the name of registered owner as mentioned on RC is of Narendrabhai, S/W/D of Babubhai Umreta, 15A Bhushan Bunglows, Sumul Diary Road, Katargam, Surat. As per sale agreement, the agreement was made in the name of Dipeshbhai Patel. However, the vehicle is in the name of Narendrabhai. The Assessing Officer tried to make contact to Dipeshbhai Patel on his mobile number (9824423000) mentioned in the sale agreement. However, the telephone was discovered in the name of Paresh Patel. Accordingly, the cash deposit of Rs. 14.10 lacs on account of sale of vehicle was not accepted by the Assessing Officer. 4. The Assessing Officer in his without prejudice contention also held that the assessee has made cash deposit of Rs. 49,000/- each on 21 times and Rs. 36,000/- on 17/05/2016 and Rs. 30,000/- on 31/05/2016. Thereafter Rs. 45,000/- each on six times on 30/06/2016 and Rs. 46,000/- on 09/06/2016. The motive behind depositing such cash is best known to the assessee. If the assessee has received cash from the purchaser, he ought to have deposited in his savings bank account maximum in one or two 3

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO transactions. The Assessing Officer after referring the provisions of Section 69A Income Tax Act, 1961 (in short, the Act) treated the cash deposit of Rs. 14.10 lacs as unexplained money on this ground as well, while passing the assessment order on 26/12/2019 under Section 143(3) of the Act. 5. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A), Surat. The appeal of assessee was transferred/migrated to National Faceless Appeal Centre (NFAC) in terms of notification of Central Board of Direct Taxes (CBDT) dated 25/09/2020. The assessee filed his detailed written submissions before the ld. CIT(A). In the submission, the assessee in sum and substance submitted that during the period under consideration, the assessee received cash of Rs. 13,85,000/- on account of sale of his Innova car/motor vehicle bearing registration No. GJ-15-CD-5129. The cash received later on deposited by assessee in his bank account. The vehicle was sold to Dipeshbhai Patel through sale agreement dated 16/05/2016. The assessee also handed over signed Form-30 (Transfer from of motor vehicle under Motor Vehicle Act) and received the consideration in cash. The cash was deposited in his bank account in Canara Bank. The cash was deposited after execution of agreement to sell on 16/05/2016. During the assessment, the assessee furnished all documents i.e. R.C. Book, sale agreement, vehicle loan statement, insurance payment etc. The assessee further explained that the 4

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO cash of Rs. 49,000/- on 20 times on 17/05/2016 and Rs. 45,000 on 6 times on 03/06/2016 as it was huge cash. The assessee has not gone personally to make deposited for security reason, the assessee preferred to deposit the cash in instalment through his office staff. On the objection of Assessing Officer on registration of car not in the name of person to whom the assessee claimed to have sold, the assessee submitted that in the normal course of transfer of vehicle, the seller while selling his motor vehicle, gave a transfer letter (Form No. 30) with his signature to the buyer for transfer of vehicle in the office of Regional Transport Office. For such, the assessee signed a mutual agreement. In case of assessee, the assessee sold vehicle to Dipeshbhai Patel under agreement. The Assessing Officer raised the question that on RC book, the name of Dipeshbhai Patel is not shown rather it shown the name of Narendrabhai Babubhai Umretia, Katargam, Surat. The assessee explained that his liability was until the possession of motor vehicle was with him, after possession was transferred to seller, the assessee has no responsibility. It is the duty of buyer to register the vehicle in his name or name of his family member or third party in whose name the ownership is required to be transferred. The assessee further explained that he assumes that Dipeshbhai Patel acted as a middle man and the vehicle was transferred in the name of Narendrabhai. On the objection of ownership of telephone number 5

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO mentioned on the sale agreement, discovered in the name of Paresh Patel, the assessee submitted that at the time of sale, the mobile number of Dipeshbhai Patel was mentioned. Due to change of ownership mobile number, the Assessing Officer stressed on the fact on the cash deposits out of sale proceed. The assessee explained that due to various reasons, Dipeshbhai Patel may have discarded of change his mobile number. The Assessing Officer ignored the documentary evidence about the transaction of sale of car. The assessee further explained that after sale of vehicle, the assessee purchased new car in the month of May, 2015 and paid Rs. 15.00 lacs. The assessee paid Rs. 15.00 lacs by including the sale consideration of his old vehicle and assessee claimed depreciation of Rs. 2,75,124/-. The assessee purchased another vehicle of Rs. 18,01,435/- and claimed depreciation which is evident in the income tax return. The assessee finally submitted that there is no unaccounted or unexplained cash deposit. Thus, the provision of Section 69A of the Act is not applicable. 6. The ld. CIT(A) after considering the submission of assessee and the contents of assessment order, upheld the order of Assessing Officer by taking a view that he is agree with the view taken by the Assessing Officer that the assessee failed to show the motive behind depositing cash of Rs. 49,000/- each on number of time on the same date. Further aggrieved the assessee has filed the present appeal before this Tribunal. 6

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO 7. We have heard the submissions of ld. authorised representative (AR) of the assessee and the ld. Senior Departmental representative (Sr. DR) for the revenue and have gone through the orders of the authorities below. The ld. AR of the assessee submits that the assessee was the owner of Innova Car which was purchased by him in May 2015 and the same was sold to Mr. Dipesh Bhai Patel for a consideration of Rs. 13,85,000/- as per Sale agreement dated 16th May 2016. In Form 30 the name of transferee (Buyer) was left blank and Mr. Dipesh Bhai Patel later transferred the car in favour of Mr. Narendra Bhai Umreatia as per Regional Transport Office (RTO) Record. There is no dispute on the fact that the car was sold by the assessee. The only issue raised by the Assessing Officer is that the car was sold to Mr. Narendra Bhai Umreatia and not to Mr. Dipeshbhai Patel. The ld. AR submits that as per the records of RTO office as on 27th October 2016, vehicle stands registered in the name of Mr. Narendra Bhai Umreatia, which is a date prior to filing of the return by the assessee. The ld. AR further submits that it is an accepted practice that after the receipt of consideration, the seller will handover keys, Insurance Papers, Original Purchase invoice, Registration certificate and blank signed Form 30 to buyer and the assessee followed the same practice prevailing in the market and handed over all relevant documents of the vehicle along with form 30. The Form 30 given by assessee to Mr. Dipesh Bhai was blank and 7

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO later the same car was sold to Shri Narendra Bhai Umreatia without knowledge of the assessee. From the above fact, it is very much clear that vehicle was sold, either to Mr. Dipesh Bhai or Mr. Narendra Bhai. When there was a sale of vehicle then there must be a consideration for sale of vehicle. The ld. AR submits that it does not matter whether the vehicle was transferred in the name of Mr. Dipeshbhai Patel or Mr. Narendra Bhai. It is most important to ascertain whether vehicle was sold or not and for how much consideration? It is very clear from the sale agreement, other documents and explanations produced during the course of assessment proceeding that the vehicle was sold and cash was received by the assessee. The ld. AR further submits that assessee had deposited cash of Rs.49,000/- each on 17.05.2016 in 21 transactions and Rs.36,000/- on the same day i.e. 17.0-5.2016, Rs.30,000/- on 31.05.2016 and thereafter Rs.45,000/- each on 03.06.2016 in 6 transactions and again Rs.46,000/- on 09.06.2016. 8. There is no valid reason for the Assessing officer to raise doubt regarding how the cash was deposited in the bank, as it is a liberty to the person, whether he deposits the cash in one time or multiple times, when the source is explained. The assessee has already explained during assessment proceeding that the cash was deposited by staff of the assessee and it was done so due to security reasons as well as bank was 8

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO also asking for a copy of PAN card every time when the deposit amount was more than Rs.50000/-, hence the assessee chose to deposit cash in multiples of Rs. 49000/- or in otherwise. There is nowhere mentioned in the Act that a person cannot deposit cash in bank multiple times. The ld. AR further submits that it is just an assumption of the Assessing Officer that the cash deposited by the assessee in the bank was from unexplained sources and he assumed so only because of multiple deposits of cash in the bank. There was no evidence at all that cash deposited by the assessee was unexplained cash credit. The Assessing Officer had not applied his mind on the fact that if vehicle was sold and transferred from the assessee then what would happen to the consideration received on transfer of vehicle if he assumes that cash deposited was from unexplained sources. The addition made by the Assessing Officer on the basis of his assumption, most important fact that vehicle was sold and ignoring the documents submitted during assessment proceedings including the sale agreement is bad in law. 9. On the other hand, the ld. Sr. DR for the revenue submits that the Assessing officer as well as the ld. CIT(A) has passed the detailed reasoned order by clearly holding that the assessee failed to explain the reason of cash deposits of Rs.49,000/- on a number of occasions on the same date. The conduct of the assessee in depositing such cash frequently 9

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO on the same day in the same branch. The source of cash, which was claimed on account of sale of vehicle was also found to be doubtful. The sale agreement was made in the name of one person and the vehicle was ultimately found in the name of some other person. 10. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. The assessing officer made addition of Rs. 14.10 lacks by taking view that as per sale agreement, the vehicle was sold to Dipeshbhai Patel for a sale consideration of Rs. 13,85,000/-. However, the name of registered owner of the vehicle after transfer as mentioned on RC if Narendrabhai. The assessing officer also treated the cash deposit in bank as an unexplained credit due to frequency of cash deposit on the same day. We find that the assessee right from the beginning, before Assessing Officer urged that the cash deposit was sale proceed of his Innova car which was sold by assessee under agreement to sell to one Dipeshbhai. The Assessing Officer has not disputed the ownership of vehicle in the name of assessee. The objection of Assessing Officer was that the vehicle was ultimately transferred in the name of Narendrabhai. The further objection of Assessing Officer was that on making telephonic call at telephone number 9824423000 it was discovered in the name of some other person. We find that the address of purchaser on the sale agreement is clearly mentioned 10

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO as of C-502, Royal Residency, Mota Varchha, Surat. Admittedly, no investigation or verification was carried out by Assessing Officer about the said address. The assessee also contended before the lower authorities he has given a signed form-30 for transfer of vehicle and that Dilipbhai might have got transferred the vehicle in the name of his family member or some third person. Such fact was not investigated by the Assessing Officer. From the facts and the material placed on record, the assessee has successfully discharged his onus in proving the fact that he was owner of vehicle/Innova car bearing registration No. GJ-15-CD-5129 and the same was transferred by him. The sale consideration of Rs. 13,85,000/- is also mentioned in the sale agreement. From the copy of registration certificate of vehicle it is evident that vehicle is of 2015 model and was sold on 16th May, 2016, thus, it can be reasonably assume that assessee certainly may have received Rs. 13,85,000/- as the vehicle was sold within one year. Now the question for our consideration is whether mere deposit of cash on a number of occasion on the same day can be treated as unexplained money when the assessee has shown the source of cash deposit. Moreover, when the cash deposit is subsequent to the sale of vehicle. As per agreement the vehicle was sold on 16/05/2016 and Rs. 10,65,000/- was deposited on 17th May, 2016 and remaining amount of Rs. 30,000/- on 31/05/2016 and 2,70,000/- on 03/06/2016 and further amount of Rs. 11

ITA No.181/Srt/2021 Balwant Pooranmal Tayal Vs ITO 45,000/- was received on account of reimbursement of insurance. Considering the fact that assessee has made huge cash deposit in a number of instances on the same date on many occasions which can be considered as irregular but not illegal. Particularly when the banker of assessee itself allowed for such cash deposit. Thus, in our view, the addition made by Assessing Officer is not sustainable. Hence, we direct the Assessing Officer to delete the entire addition. 11. In the result, this appeal of the assessee is allowed. Order pronounced in the open court on 13th July, 2022 at the time of hearing of this appeal.

Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 13/07/2022 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order

Sr.Private Secretary, ITAT, Surat