SHRI ADARSH KUMAR NAGPAL,ABOHAR vs. INCOME TAX OFFICER WARD-2 (3), ABOHAR

Per Dr. M. L. Meena, AM:

This appeal has been filed by the assessee against the order of the Ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated

06.05.2022 in respect of Assessment Year 2017-18.

2 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 2. The assessee has raised the following grounds of appeal:

“1. That the Ld. CIT(A) erred in passing an order u/s 250 of the Income Tax Act, 1961 without appreciating facts of the case on record.

Rs.34,85,100/- made u/s 69A r.w.s. 115BBE of the Act.

appellant had made payments of Rs.34,85,100/- for credit cards in

cash, although the appellant stated vide reply dated 27.12.2019 that

he has paid only Rs.5,18,150/- in cash for Credit Cards out of cash

available with him from personal savings, agricultural income and

cash withdrawals. However, the AO being not satisfied, has stated

that no documentary evidence in support of this claim was filed and

3 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO accordingly, treated this amount of Rs.34,85,100/- as assessee’s

income from undisclosed sources and added u/s 69A r.w.s 115BBE

beside some other additions to Total Income of Appellant.

been filed by the Appellant before the CIT(A) who has granted part

relief by observing vide para 7.3 & 7.4 of the impugned order as under:

“7.3 After examining the assessment order and written submissions filed by Appellant, the Grounds of Appeal No. 2 is discussed and decided as under:-

a) As discussed in para 7.2(a), the Total cash deposits in Appellant’s bank account is Rs.51,21,000/- and not Rs.45,59,700/- as held by AO.

b) The Appellant has contended that he deposited Motor Vehicle Tax on behalf of his company namely M/s Fazllka Dabwaii Transport Company to tune of Rs.22,27,587/- and on behalf of his firm namely M/s Nagpal Transport Co to tune of Rs.8,26,893/- totaling Rs.30,54,480/-. It was contended that these parties did not have online banking facility and Appellant used his personal internet banking to make these payments. Copies of challans evidencing deposit of Motor Vehicle Tax and summary was furnished. Confirmation from these two parties were also filed that Motor Vehicle Tax for these parties was deposited by the Appellant from his net banking during FY. 2016-17.

However, the crucial issue remains unresolved i.e. what was the source of these cash deposits. No documentary evidence in this regard was filed. These two parties have given a general statement that “we have given him this sum in cash on periodic basis during the year to deposit Motor Vehicle Tax on our behalf”. They have neither given copies of their cash books or bank books or bank statements supporting the above statements. No evidence was filed to show that these parties had adequate cash in hand on these dates and said cash in hand was

4 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO transferred to the Appellant who deposited it in his bank account and made the online payment.

It is further noted that these are 12 such payments made of each party during the year starting from 30.04.2016 to 19.03.2017. The issue of starting online/internet banking is a small Issue. This service can be activated by the bank on a request by the Account Holder. The banks on the other hand are encouraging the online/internet banking. Thus, the said two parties could have easily activated their online/internet banking by making a request to their bank branch and paid Motor Vehicle Tax through their own account instead of routing it through the Appellant’s account. In view of the above facts and in absence of any documentary evidence in support of “source of cash deposit” the contention of Appellant is not accepted and the addition made by AO of Rs.30,73,100/- is confirmed.

c) Appellant has contended that source of cash deposits is from the cash withdrawals made from the below mentioned bank accounts on earlier dates.

UCO Bank - Rs.1,96,000/- HDFC Bank - Rs.15,800/- Canara Bank - Rs.1,41,200/- Total Rs.3,53,000/-

The Appellant filed copies of bank accounts of the above accounts.

This contention of Appellant is acceptable and relief of Rs.3,53,000/- is allowed to the Appellant,

d) Appellant has contended that he receives rental income in a Joint bank account held with his brothers. It was contended that his share of rental income of Rs.8,94,550/- is received by him in cash and this cash was deposited in his bank account. This contention of the Appellant does not emanate from the assessment order. There is no mention of rental income being received in cash and the cash being deposited in Appellant’s bank account in the assessment order. There is not even on

5 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO iota of documentary evidence in support of this contention except the above mentioned reply. The Appellant has not identified the specific cash deposits in his bank account which related to such rental income. Appellant has given confirmations in writing from his brother Sudhir Nagpal that cash deposits of Rs.1,95,000/- dated 10.11.2016 and 23.11.2016 in their Joint bank account with UCO Bank belongs to Sudhir Nagpal and not to Appellant. However, no such confirmation was filed by his brothers that the Appellant’s share in rental income was given to him in cash on monthly/quarterly basis, in absence of any satisfactory/valid documentary evidence this contention of the Appellant does not hold any ground and is not acceptable.

e) Appellant has contended that he owns 8 acre of Agricultural land in Abohar with gross agricultural income of Rs.8,00,000/- which is deposited in cash in his bank account. Appellant has shown net agricultural income of Rs.5,00,000/- in his ITR. The difference in gross and net agricultural income of Rs.3,00,000/- must relate to the Agricultural expenses incurred by the Appellant in cash like seed money, pesticide, labour cost, diesel cost etc. This contention of Appellant is partly acceptable e Appellant is given credit of net agricultural income of Rs.5,00,000/- as being deposited in cash in his bank account. Accordingly, relief of Rs.5,00,000/- is allowed to the Appellant.

f) Appellant has contended that UCO Bank account No. xxxx3661 is Joint bank account in names of Appellant and his three brothers. It was contended that cash deposits of Rs.1,50,000/- dated 10.11.2016 and Rs.45,000/- dated 23.11.2016 during demonetization period relates to his brother namely Sudhir Nagpal and should not be considered as cash deposits made by Appellant. In support the Appellant has filed confirmation from his brother namely Sudhir Nagpal (PAN: ABIPN8138R) stating that cash deposit of Rs.1,95.000/- was made by him out of his own funds and these deposits do not relate to Appellant. This contention of Appellant is acceptable in view of the confirmation filed by Sudhir Nagpal owing up the cash deposit of Rs.1,95,000/-. Accordingly, the Appellant is allowed relief of Rs.1,95,000/-. g) Appellant has contended that a sum of Rs.2,00,000/- each was deposited out of old savings held in cash by the Appellant and his wife. However, no documentary evidence in this regard was filed. The Appellant operates: 7 bank accounts then what was the need of keeping

6 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO such cash in hand. However, it is a fact that people in general keep cash in hand out of old savings at home in order to meet any uncalled for emergency situations. There is a concept of “Stree Dhan” is also followed in our customs. In view of these facts the contention of Appellant is partly acceptable and Appellant is allowed relief of Rs.2,00,000/- on account of cash deposits being made from old personal savings held in cash by the Appellant and his wife.

7.4. In view/ of the facts outlined in para 7.3 above the Appellant is allowed relief of Rs 12,48,000/- (Rs.3,53,000/- + Rs.5,00,000/- + Rs. 1,95,000/- + Rs 2,00,000/-) out of the total addition made on account of unexplained cash deposits made in the Appellants bank and the balance addition s confirmed. Ground of Appeal No. 2 is partly allowed.”

confirming the addition without appreciating facts of the case on record that

the payment of Motor Vehicle Tax was made on behalf of the business

concern and that part of cash was received as rent receipt and pertains to

personal savings and payment of credit card bills amounting to Rs.

5,18,150/- as well. He has files a brief synopsis in tabular form as under:

Nature of Amount Remarks Source of Relief Our Submissions before Addition of cash given by Hon’ble ITAT Addition made by Addition deposits the challenged the AO made by of Rs. CIT(A) (in before the the Ld. 51,21,000/- Rs.) Hon'ble ITAT AO (in (in Rs.) Rs.) Cash 45,59,700 1. The 1. Rs. 1. Rs. (Rs. 1. The Ld. CIT(A) has not doubted Deposits summary 22,27,587/- 3,53,000/- (ii) Minus the land holding of 8 acres and made in of cash is related to on further, the agriculture income of 12,48,000) the deposits M/s Fazilka account Rs. 5 lacs was disclosed and various questione Dabwali of cash accepted by the CIT(A) while bank d by the transport withdrawa passing the order and CIT(A) has accounts AO Co. P Ltd. ls from given a set-off of Rs. 5 lacs of net of the contains + Rs. own bank agriculture income while

7 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO assessee totalling 8,26,893/- accounts adjudicating the issue of availability error. The is related to + Rs. of cash with the assessee. total of the M/s Nagpal 1. However, the CIT(A) has failed to 0 summary Transport consider that beside Rs. 5 lacs, the 00/- of cash Co. + Rs. assessee had Rs. 3 lacs of savings o deposits 3,53,000/- of agriculture income for the earlier n account of Rs. is out of years and which benefit ought to of 49,59,700/ bank have been given and, for which, it agricultur - as withdrawals is requested that the same benefit e Income against form own may please be given. + Rs. Rs. bank 1,95,000/- 45,59,700/ accounts + cash - Rs. deposited questione 8,94,550/- by the d by the is out of brother of Ld. AO. share of the rental assessee in the joint account with the assessee + Rs. (i) 0 00/- o n account of past savings of assessee and his wife. 3. Other Income in 2. In nut 2. Against the claim of Rs. 2 lacs + cash each by the husband & wife, the than that, shell, total Rs. CIT(A) has given a benefit of Rs. 1 in actual relief 8,00,000/- lac each which is purely on total cash given to from surmises & conjectures and there is deposits in the Agriculture always a ‘Istridhan’ with the ladies income + and savings of the ladies and which various assessee Rs. benefit is ought to be given. bank by the 1,95,000/- is accounts CIT(A) is related to of the Rs.12,48, brother of 3. Regarding cash deposit of Rs. assessee 000/- the 22,27,587/- and Rs. 8,26,893/- as assessee + are Rs. received from Company namely Rs.2,00,00 51,21,000/ M/s. Fazilka, Dabwali Transport of 0/-out Company Pvt. Ltd. and M/s. Nagpal - which past savings Transport Company (Regd.) have been of respectively, it is submitted that the explained assessee+R assessee is a Director and partner s. by the in these two concerns respectively Rs. assessee. and cash has been deposited on

8 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 2,00,000/- account of Motor Vehicle Tax paid out of by the assessee on behalf of these past savings two concerns. of wife of the 4. These two concerns were not assessee. having net banking facility 2. Against connected with their bank account cash and therefore, payment has been deposits of made by the assessee on their Rs. behalf. To prove the same, affidavits 51,21,000/-, of the authorized persons of these sources two concerns were filed before the available AO as well as CIT(A) confirming the with the fact that Motor Vehicle Tax assessee deposited by the assessee on are behalf of these two concerns out of 56,97,030/- his personal internet banking which has not been considered by them and the same are forming part of paper book II (Pg 294-295).

9 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO be allowed to the assessee. The plea with evidence and certificate were given to the lower authorities and they had not accepted without assigning any valid reason. The balance sheets of the concerns stood filed and as such, same is not new evidence.

Addition 34,85,100 Rs. Rs.5,18,150 29,66,950/ 5,18,150/- The said cash deposit of has been Rs.5,18,150/- is out of sources - on 14,12,500/ deposited explained above which benefit is account - is related out of cash ought to be given. The finding of of cash to AY sources CIT(A) that no evidence was given payment 2018-19 mentioned for such claim is not correct. The of credit and above. computation of income stood filed. bills Rs.15,54, 450/- have been mentioned repeatedly by the reporting bank and in actual, only balance amount of Rs.5,18,1 50- has been made against credit payment.

10 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO Conclusion:

In the light of above facts and documentary evidences, the assessee prayed for the following relief from your goodself:

Thus, the balance sheets of both concerns were already with the same AO and confirmation along with the chart stood filed and, as such, the issue may be decided on merits.”

order, written submission filed before us. Admittedly, the total of the

11 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO summary of cash deposits of Rs. 49,59,700/- as against Rs. 45,59,700/-

questioned by the Ld. AO; although alleged to be at Rs.51,21,000/-. It is

seen that the appellant has filed details of the bank a/c’s and corroborative

documentary evidence on source of cash deposit but neither of the lower

authorities has rebutted the contention of the Ld. AR that total cash deposit

was Rs. 49,59,700/- in appellant’s bank account.

to M/s Fazilka Dabwali transport Co. P Ltd.; Rs. 8,26,893/- is related to M/s

Nagpal Transport Co.; Rs. 3,53,000/- is out of bank withdrawals from own

bank accounts; Rs. 8,94,550/- is out of his share of rental Income in cash;

Rs. 8,00,000/- from Agriculture income; Rs. 1,95,000/- is related to brother

of the assessee; Rs.2,00,000/-out of past savings of assessee and Rs.

2,00,000/-out of past savings of wife of the assessee. Thus, the appellant

assessee has explained the sources of available cash with him to the

extent of Rs. 56,97,030/- as against alleged unexplained disputed cash by

the AO of Rs. 51,21,000/-.

of 8 acres and that the agriculture income of Rs. 5 lacs disclosed by the

appellant has been accepted while giving a set-off of Rs. 5 lacs of net

12 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO agriculture income while adjudicating the issue of availability of cash with

the assessee during the year under appeal. However, the CIT(A) has failed

to consider the fact that beside Rs. 5 lacs agricultural income for the year

relevant, the assessee had Rs. 3 lacs out of agriculture income for the

earlier years and benefit for the same, ought to have been given based on

agricultural income shown in the return of income of those earlier years.

Accordingly, this request of the appellant is justified and the same benefit

ought to be given. Similarly, 2 lacs claimed in hands of each husband and

wife, the Ld. CIT(A) has reduced to 1 Lac in each hands based on surmises

& conjectures ignoring the concept of ‘Istridhan’ to extent of Rs 2,50,000/-

with the ladies and savings of the ladies and which benefit is ought to be

given.

explained as received from the Company namely M/s. Fazilka, Dabwali

Transport Company Pvt. Ltd. and M/s. Nagpal Transport Company (Regd.)

respectively, where the assessee is a Director and partner and cash has

been deposited on account of Motor Vehicle Tax paid by the assessee

through net banking on behalf of these two concerns because these two

concerns were not having net banking facility with their bank account and

13 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO therefore, Tax payments had been made by the assessee on their behalf.

In order to prove the same, affidavits of the authorized persons of these

two concerns were filed before the AO as well as CIT(A) confirming the fact

that Motor Vehicle Tax deposited by the assessee on behalf of these two

concerns out of his personal internet banking which has not been

considered by them (APB-II, Pgs. 294-295). The Ld. AR has further filed a

compilation sheet of Motor Vehicle Tax paid on behalf of these two

concerns (APB-I) before the AO/CIT(A) and if, there was any doubt, the

same could have been verified from the concerned banks or further details

ought to have been called for (APB-I, Pgs 1 to 2). The copy of cash book,

bank statement, audited balance sheet of Fazilka Dabwali Transport

Company Pvt. Ltd. (APB-I, Pgs. 3 to 137) along with copy of cash book, of

Fazilka Dabwali Transport Company Pvt. Ltd. (APB, Pgs.138 to 195) are

filed on record, before authorities below to prove the availability of cash in

the hands of these two concerns. Without prejudice to above, both these

concerns were filing return with the same AO, however, AO never asked for

these details or verified from its office records and thus, assessee was

under bonafide belief that affidavit filed by the authorized persons of above

mentioned two concerns is sufficient to prove his contention. Therefore, the

benefit of the same ought to be allowed to the assessee. In our view, the

14 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO evidence and certificate were being given to the lower authorities had not

been accepted without assigning any valid reason is not justified and

accordingly the disputed amount of aforesaid cash deposit stands

explained.

duly declared in his Income Tax Return under the head Income from house

Property (Rs.1,38,375+3,75,194) and income from other sources

(Rs.3,80,981) which is evident from the computation of income forming part

of paper book –II at Pg. 296-298 which is self explanatory.

from credit card stand explained out of sources explained above which

benefit is ought to be given to the appellant. The finding of CIT(A) that no

evidence was given for such claim is factually incorrect. The amount of Rs.

14,12,500/- is related to AY 2018-19 and Rs.15,54,450/- have been

mentioned repeatedly by the reporting bank and in fact, the actual, balance

amount was of Rs.5,18,150- has been made against credit card payment.

The computation of income stood filed by the appellant. The Ld DR failed to

rebut the contentions of the ld. AR before us.

15 I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 14. In view of the above discussion, we hold that the findings of the Ld.

CIT (A) are perverse to the facts on record. We, therefore set aside the

impugned order and delete the addition confirmed by the CIT(A) in arbitrary

manner.

assessee is disposed of in the terms indicated as above.

Order pronounced in the open court on 24.05.2023

Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr./P.S.* Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order