ABDUL WAHB,JAIPUR V. ITO WARD 5(1), JAIPUR, JAIPUR

MA 39/JPR/2024

AI Insights

The case involves Shri Abdul Wahb, a small trader of quilts, who faced an addition of Rs. 10,30,000/- to his income for unexplained cash deposits during the demonetization period. The ITAT initially dismissed his appeal due to a procedural adjournment request but later recalled the order and examined the merits. The CIT(A) had earlier reduced the addition to Rs. 7,80,000/- after allowing some relief based on the family's affidavits about their savings. The ITAT found that the AO and CIT(A) did not adequately address the affidavits and the principles of natural justice were not fully observed, leading to the decision to set aside the matter for a fresh examination by the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 103621 (ITAT-JAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: Sumati Dayal [1995] 214 ITR 801(SC), CIT V/s T.I. & M. Sales Ltd. [1987] 31 Taxman 505 (SC), Mehta Parikh & Co. Versus CIT [1956] 30 ITR 181 (SC), Karuna Singh Versus State of NCT of Delhi & Anr, Writ Petition (CRL) No. 31 of 2012, CIT vs. Orissa Corporation Pvt. Ltd. [(1986) 159 ITR 78 (SC)], Sreelekha Banerjee Vs CIT [1963] 49 ITR 112 (SC), Uma Charan Shaw & Bros Co Vs CIT 37 ITR 271, CIT Vs Anupam Kapoor (2008) 299 ITR 179 (P&H), Ashok Kumar Banthia v. DCIT, Kuldeep Kumar Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: DEV ARORA
• Keywords: Set aside; Business income; Opportunity of being heard; Bogus purchase; Principle of natural justice; Search and seizure; Source of fund; Bogus
• Section: 142(1); 254(2); 131; 22; 133(6); 13; 69A; 234B; 10; 20

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM MA No. 39/JP/2024 (Arising out of vk;dj vihy la- ITA No. 865/JP/2024) fu/kZkj.k o\"kZ@Assessment Year : 2017-18 Shri Abdul Wahb 800, Taswir Walo Ki Gali, Bagru Walo Ka Rasta, Chandpole Bazar, Jaipur cuke Vs. The ITO Ward 5(1), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAUPA 7368 P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Dev Arora, Adv. jktLo dh vksj ls@ Revenue by : Shri Gautam Singh Choudhary, Addl. CIT-DR a lquokbZ dh rkjh[k@ Date of Hearing : 07/04/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 17/04/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The Present Miscellaneous Application has been filed by the assessee u/s 254 of the Act against the order of ITAT, Jaipur Benches, Jaipur in ITA No. 865/JP/2024 dated 20.08.2024 praying therein following reasons to suitably modify or recall of its order as under: May it please your Honours, MA No. 39/JP/2024 Abdul Wahb vs. ITO 2 That an appeal against the order passed by the Ld. CIT(A) dated 30.04.2024, National Faceless Appeal Centre, Delhi for the assessment year 2017-18 was filed before this hon'ble Bench on 12.06.2024. That the case was listed for hearing for 23.07.2024. But our counsel was engaged in Income Tax Return filling as due date was 31.07.2024. Hence he seek adjournment through email dated 21.07.2024. Copy of the adjournment application is enclosed herewith for your kind perusal. However the appeal was decided by this Hon'ble Bench vide an order dated 20.08.2024 on the ground that no reason was mentioned in the adjournment application. That we apologize for non-attending the appeal physically before the bench. That the appellant is a small trader of Quilts and running a small shop. That the Ld. CIT(A) has grossly erred in law and facts in confirming addition of Rs. 7,80,000/- without challenging the affidavits filed by the appellant and his family members and without following the Standard Operating Procedure (SOP) prescribed by the CBDT Instruction No. 03/2017 dated 21.02.2017. Hence the appellant filed the appeal before this bench. But due to small mistake such appeal was dismissed. It is submitted that non consideration of a plea or even of vital important arguments of fact and law, constitute a mistake, rectifiable u/s 254(2) of the Act. Hence suitable rectification may kindly be carried out by recalling this part of the subjected ITAT order in the interest of justice and oblige. A challan of Rs. 50/- is enclosed. Hope your honour shall be kind enough in accepting our request. 2. Ld. AR of the assessee in addition to the prayer so made in the Miscellaneous Application vehemently submitted that the Co- ordinate Bench of ITAT, Jaipur Benches dismissed the appeal of MA No. 39/JP/2024 Abdul Wahb vs. ITO 3 the assessee ex-parte on the day of first hearing. Assessee was in the process of collecting the information in respect of the issue raised before ITAT. This fact is evident from the various affidavits of the family members placed on record from page No. 27 to 38. All these affidavits were between date of notice to the various date in the month of May & June, 2023 and the appeal of the assessee disposed off and heard ex-party on 23.07.2024 and thereby though the assessee has collected various evidences in the month of May & June could not be placed on record and that day of first hearing the appeal was dismissed. The ld. AR of the assessee through an e-mail and sought adjournment which was not granted by the bench and the appeal has been disposed off without discussing the merits of the case and therefore, considering the principle of natural justice, the assessee may be given one chance to place on record factual aspects of the matter. 3. On the other hand, ld. DR supported the order of ITAT, Jaipur (supra) praying that the assessee wants to get ITAT ’s order reviewed in the grab of Misc. Application and the Co-ordinate Bench has rightly dismissed the appeal of the assessee. MA No. 39/JP/2024 Abdul Wahb vs. ITO 4 4. Heard the parties and perused the records. The bench prima facie noticed that the case was fixed for hearing on 23.07.2024 on that day in an e-mail the assessee requested for adjournment of the case. That adjournment application was dismissed as the assessee has not mentioned any specific reason of seeking adjournment and therefore, the appeal of the assessee decided without giving him an opportunity of being heard. Considering that aspect of the matter, the bench noticed that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing the opportunity of being heard to the assessee. The bench also noted that the case of assessee which was fixed for hearing being the first date of hearing the assessee well in time taken the adjournment which was not considered and matter was heard expate. In the light of those facts we hold that nobody’s right is scuttled down and that too without giving the assessee proper opportunity of being heard and therefore, considering that aspect of the matter, we recall the order dated 20.08.2024. MA No. 39/JP/2024 Abdul Wahb vs. ITO 5 5. Now after recalling the order the case needs to be decided on merits afresh. But in the present case, the assessee has already placed on record all the material so as to decide the issue on hand in ITA No. 865/JP/2024. Therefore, with consent of both the parties, the bench proceeded to consider the appeal of the assessee on its merits on the same day after recalling the order. 6. The assessee in this appeal has raised following grounds: - “1. That the learned Authorities below have grossly erred in law and facts in passing the order which is bad in law and facts. Hence liable to be quashed. 2. That the learned Authorities below have grossly erred in law and facts in making/confirming addition of Rs. 7,80,000/- without challenging the affidavits filed by the appellant and his family members. Hence the addition of Rs. 7,80,000/- is liable to be deleted. 3. That the learned Authorities below have grossly erred in law and facts in making/confirming addition of Rs. 7,80,000/- without following the Standard Operating Procedure (SOP) prescribed by the CBDT Instruction No. 03/2017 dated 21.02.2017. 4. The appellant has reserved a right to add, amend or alter any ground or grounds of appeal on or before the appeal hearing.” 7. The brief facts of the case are that the assessee has deposited cash of Rs. 10,61,650/- in Punjab National Bank, account No. 355300210007713 and 3553002100020333 during demonetization period but has not filed ITR for the year under consideration. Therefore, notices u/s 142(1) of the Income Tax Act, 1961 was issued to the assessee on 08.03.2018 requesting the MA No. 39/JP/2024 Abdul Wahb vs. ITO 6 assessee to file return of income for the year under consideration and same were duly served upon the assessee but the assessee has failed to file ITR for A.Y. 2017-18. Further change of incumbent notice u/s 142(1) of the IT Act, 1961 was issued to the assessee on 04.06.2019 which was duly served upon the assessee though speed post but assessee has not made compliance. Further a show cause notice alongwith notice u/s 142(1) was issued to the assessee on 17.07.2019 which was duly served upon the assessee through notice server in said notice the assessee has partly compliance through by dak and Mail ID. Further notice u/s 142(1) was issued on 30.07.2019 which was duly served upon the assessee. In compliance to said notice the assessee furnish the partly reply though Mail. Further notice u/s 142(1) was issued on 02.09.2019 fixing for the hearing on or before 09.09.2019 but the assessee has not made compliance. Further notice u/s 142(1) was issued on 24.10.2019 but the assessee has not compliance. Finally a show cause notice was issued on 16.11.2019 in compliance to same the assessee furnish the reply. Notice u/s 133(6) of the I.T. Act, 1961 was issued to bank agency for calling Information and accounts statements in the case of the assessee which was received by ld. AO in on MA No. 39/JP/2024 Abdul Wahb vs. ITO 7 21.06.2019. The assessee in compliance of above notices the assessee's A/R furnished the reply/information with bank statement month wise sale and purchase P/L account and cash flow statement. The information filed by the assessee examine, it is notice that the assessee has cash deposit in two bank accounts from 09.11.2016 to 30.12.2016. Further the assessee has submitted month wise sale and purchase perusal of information submitted the assessee it is notice that the assessee has total purchase upto end of the October Rs. 5,71,882/- and sale upto end of the October only Rs. 1,05,565/- balance stock end of the October Rs. 5,71,882/-. The balance stock as on 01.11.2016 is Rs. 4,66,317/- and purchase during the November Rs. 2,53,985/- total stock for the November 2016 comes to Rs. 7,20,302/- when the assessee was shown total sale at Rs. 11,42,019/-. How is possible when the stock Rs. 7,20,302/- and sale Rs. 11,42,019/- and GP shown 21%. It is no possible. Further the assessee has submitted the copies of bills and its details where in ld. AO noted that purchase name were not mentioned. Thus, ld. AO noted that the assessee furnished information/details are not correct. The assessee has deposited the cash in bank earned from undisclosed sources. Hence this amount was treated as unexplained money of MA No. 39/JP/2024 Abdul Wahb vs. ITO 8 the assessee and added to the total income of the assessee u/s 69A of the I.T. Act and thereby the assessment was completed. 8. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below:- “4.3 Decision 4.3.1 The appellant was non filer for the assessment year and also for the earlier years. Thus, there is no evidence of any business activity for the money deposited into the bank account. The appellant’s contention is that he is in the business of trading of quilts and the savings are in the bank account. The appellant submitted certain sale bills during the assessment. However, apart from reference to sale receipts, no other evidence is referred to either by the AO or the appellant. How these cash sales translated into Rs. 10,30,000/- savings for the family is not explained. The appellant family members also does not individually have sufficient sources of income for accumulating such savings. Further, it is not felt reasonable that savings of many years were lying at home to be deposited into bank account in the demonetization period. The accumulation of cash should also be within reasonable time. The appellant submitted affidavits of family members that each of their savings. Sources of their savings have not been explained in the affidavits nor any proof of the income source is submitted. 4.3.3. There are no previous ROIs available hence, the cash in hand as savings of previous years remains unexplained. As per the CBDT instruction 3/2017 in F No 225/100/2017/ITA-II dated 21.02.2017 para 1.1 regarding cash out of earlier income or savings, upto Rs. 2.5 lakh can be considered as the savings with no further verification. Thus, even if a liberal view is taken, the appellant cannot be given lee way for Rs. 10,30,000 lakhs. Considering this, the AO is directed to allow Rs. 2.5 lakhs as accumulated savings of the family in cash and addition of unexplained cash deposits is sustained to extent of Rs. 7,80,000/-. MA No. 39/JP/2024 Abdul Wahb vs. ITO 9 4.3.4 As mentioned in the remand report, returned income of Rs.2,72,680/- was inadvertently taken by the AO hence, the AO is directed to not to take the returned income as the appellant has not filed return of income for the AY. 5. ISSUE 2: CHARGING INTEREST U/S. 234A AND 234B OF THE IT ACT. PART OF THE GROUND 2 IS COVERED IN THIS ISSUE. 5.1. AO'S OBSERVATION: The AO Charged interest u/s 234A and 234B of the Act. 5.2. APPELLANT'S SUBMISSION: The appellant prayed to delete the interest charged u/s. 234A, 234B and 234C of the Act 5.3 DECISION 5.3.1. Charging of interest is consequential to the determination of tax payable in view of income assessed. This is automatic in nature and no exemptions are provided except for special provisions in discretion of jurisdictional authorities. Therefore, there is no specific finding that can be given in this ground by the first appellate authority. 6. ISSUE 3: PROVISION OF SECTION 115BBBE. PART OF THE GROUND 2 IS COVERED IN THIS ISSUE. 6.1. AO'S OBSERVATION The AO taxed at special rate 60% as per the provision of section 115BBE of the IT Act. 6.2. APPELLANT'S SUBMISSIONS The appellant is challenging the application of provisions of sec 115BBE of the Act. 6.3. DECISION MA No. 39/JP/2024 Abdul Wahb vs. ITO 10 6.3.1. Section 115BBE is applicable to the A.Y. 2017-18 with the special rate of taxation of 60% on additions made u/s 68, 69A of cash credits. Therefore, this action of the AO is upheld. 7. In the result, the appeal is Partly Allowed.” 9. As the assessee did not get the much relief the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds raised by assessee, ld. AR of the assessee, has filed the written submissions in respect of the various grounds raised by the assessee and the same is reproduced herein below: “May it please your Honor, The humble appellant most respectfully submits as under: That the appellant is engaged in the business of trading of Quilts (Rajaiya) and was running a small shop. That in the evening of 08 th November 2016, our Prime Minister Shri Narendra Modi announces the Demonetization. On that day appellant was holding a sum of Rs. 2,70,500/- (in the form of 500 and 1000 notes). The said amount was belongs to his accumulated savings and advance business receipts from the buyers. Further on that day appellant’s family members were having accumulated saving of Rs. 7,59,500/-, of which detail is as under: My family members are as under: 1. Jamila (Mother) 2. Ruksana (Wife) 3. Arif Mansoory (Son) 4. Rizwan mansoori (Son) 5. Khushnuma Mansuri (Daughter) 6. Alina (Daughter) 7. Kadar Bux (Son) MA No. 39/JP/2024 Abdul Wahb vs. ITO 11 That my family members don’t have any bank account at the time of Demonetization i.e. period between 08.11.2016 to 31.12.2016. That my mother was having an accumulated saving of Rs. 2,05,000/-, which she saved for Haj. That my wife was having an accumulated saving of Rs. 2,10,000/-, which was saved by her on routinely basis in small quantities for any future emergency and for our daughter’s marriage. That I was also having cash in hand, which was of business receipts and my personal saving (which I kept for my family wishes like haj for my mother, marriage of daughter, education of my children and any medical emergency). That my children were having the following accumulated savings: Arif Mansoory (Son) Rs. 92,500/- Rizwan Mansoori (Son) Rs. 102,500/- Khushnuma Mansuri (Daughter) Rs. 98,000/- Alina (Daughter) Rs. 32,000/- Kadar Bux (Son) Rs. 19,500/- That the above family members were holding a sum of Rs. 7,59,500/- as their accumulated savings. That I started to visit banks to open new bank accounts of my family members, but couldn’t get proper response as the bank officials were busy in other things. That at that time many rumors were circulating in market, according to them if someone deposit more than 50,000/- in bank account, then Income Tax Department will issue Notice to him. That I am an uneducated person and afraid of government notices. Hence I started to deposit money in bank account below 50,000/- and was also trying to open new bank account of my family members, so that their cash can be deposited in their accounts respectively. Soon I informed that this is only rumor. That on 19.11.2016 I was having Rs. 92,000/- and my daughter handed over me Rs. 98,000/- to deposit the said amount in my bank account. MA No. 39/JP/2024 Abdul Wahb vs. ITO 12 Accordingly, on 19.11.2016 I deposited Rs. 1,90,000/- in my bank account, which were of my children saving and my sale proceeds. That on 23.11.2016 my both the sons (Arif Rs. 92,500/- and Rizwan Rs. 1,02,500/-) also handed over me their accumulated savings to deposit the said amount in my bank account as they failed to open their new bank account. Accordingly, on 23.11.2016 I deposited Rs. 1,95,000/- in my bank account, which were of my sons money. That on 25.11.2016 my wife also handed over me Rs. 2,10,000/- her accumulated savings to deposit the said amount in my bank account as she also failed to open her new bank account. Accordingly, on 25.11.2016 I deposited Rs. 2,10,000/- in my bank account, which was of my wife money. That on 30.11.2016 my mother handed over me Rs. 2,05,000/- her accumulated savings to deposit the said amount in my bank account. Accordingly, on 30.11.2016 I deposited Rs. 2,05,000/- in my bank account, which was of my mother money. That my mother wants to visit haj (for which she was saving money), but due to health problems she couldn’t go there. However as per her instruction and to fulfil her wish I visited haj with my wife on 13.08.2017. Copy of VISA and boarding passes and other documents related to visit of haj are enclosed. Unfortunately my mother died on 28.04.2018. copy of death certificate and aadhar card copy is enclosed. That the summary of cash flow is as under: Date Particular Amount Cumulative Balance 08.11.2016 Cash available with mine 270500 09.11.2016 Cash received from Alina (daughter) 32000 09.11.2016 Cash received from Kadar bux (Son) 19500 3,22,000/- 10.11.2016 Cash deposited in Bank (46000) 2,76,000/- 11.11.2016 Cash deposited in Bank (45000) 2,31,000/- 13.11.2016 Cash deposited in Bank (48000) 1,83,000/- 15.11.2016 Cash deposited in Bank (48000) 1,35,000/- 18.11.2016 Cash deposited in Bank (43000) 92,000/- 19.11.2016 Cash received from Khushnuma (daughter) 98000 1,90,000/- 19.11.2016 Cash deposited in Bank (190000) 0 23.11.2016 Cash received from Arif (Son) 92500 92,500/- 23.11.2016 Cash received from Rizwan (Son) 102500 1,95,000/- 23.11.2016 Cash deposited in Bank (195000) 0 25.11.2016 Cash received from Ruksana (Wife) 210000 2,10,000/- 25.11.2016 Cash deposited in Bank (210000) 0 30.11.2016 Cash received from Jamila (Mother) 205000 2,05,000/- 30.11.2016 Cash deposited in Bank (205000) 0 MA No. 39/JP/2024 Abdul Wahb vs. ITO 13 That I tried many a times to open saving bank account of my family members and visited various bank branches, but all of them denied to open new account at that time. Hence there was no option left except to deposit cash in my bank account. That our daughter Khushnuma Mansuri got married on 29.01.2018, for which me and my wife were saving the money and my daughter was also saving money. Copy of marriage certificate is enclosed. That the Ld. AO arbitrary treated the said amount as undisclosed cash deposit and added to the income of the appellant. That being aggrieved from the assessment order, appellant filed the appeal before the Commissioner of Income Tax (Appeals) and submitted the following documents: 1. Affidavit of the appellant 2. Affidavit and aadhar card of Ruksana (wife of the appellant) 3. Affidavit and aadhar card of Arif Mansoory (Son of the appellant) 4. Affidavit and aadhar card of Rizwan Mansoori (Son of the appellant) 5. Affidavit and aadhar card of Khushnuma Mansuri (Daughter of the appellant) 6. Affidavit and aadhar card of Alina (Daughter of the appellant) 7. Affidavit and aadhar card of Kadar Bux (Son of the appellant) 8. Copy of Death Certificate and aadhar card of Jamila Begum (mother of the appellant) 9. Copy of Marriage Certificate of Khushnuma Mansuri (Daughter of the appellant) 10. Copy of VISA, Boarding passes and all other haj related documents of appellant and his wife That the Ld. CIT(A) referred the documents to the Ld. AO for comments/ Remand Report. Accordingly, the Ld. AO issued notice on 14.12.2023, asking to submit details. In response to the same appellant submitted documents electronically on 15.12.2023 with a request that if any further documents required or any clarification required then kindly intimate the appellant, so that we can submit or explain to the AO. However the Ld. AO didn’t raise any query nor any explanation sought. That thereafter appellant visited 2-3 times to the Income Tax Department regarding to confirm whether any further documents required, but fails to meet with the AO. The staff informed that if anything will be required, they will inform them. That on 01.02.2024, we came to know that the Ld. AO has prepared the remand report and send it to the Appeal Unit and copy of the same was also send to us on 01.02.2024. Relevant extract of the Remand Report is as under: “Assesse has stated that deposits in cash made in the bank account are out of his previous and current year business receipts and out of accumulated savings of his family members for which the assesse has produced copies of affidavits of his family members. On examination affidavits of his family members, it has been found that same reasons MA No. 39/JP/2024 Abdul Wahb vs. ITO 14 has been given of holding cash and the source of cash in hand are stated to have been out of personal savings.” That every members has confirmed these facts through affidavits. Hence it clearly shows that the Ld. AO didn’t examine the affidavits properly and without reading the complete facts of the affidavits, comment in single line that it is found that same reasons for holding cash was given by the family members. It is a matter of gross negligence at the part of AO. That the Ld. CIT(A) allowed Rs. 2,50,000/- as accumulated savings of the family in cash and addition of unexplained cash deposits sustained to extent Rs. 7,80,000/-. That being aggrieved from the order of the Ld. CIT(A), appellant preferred an appeal before this Bench. GROUNDS OF APPEAL 1. That the learned Authorities below have grossly erred in law and facts in passing the order which is bad in law and facts. Hence liable to be quashed. That the appellant deposited the cash of family members in his bank account, due to the following reasons: i. Nobody has the bank account in the family except the appellant. ii. Appellant and family members visited various bank branches to open new bank account of the family members, but couldn’t get proper response as the bank officials were busy in other things at that time. iii. 31st December 2016 was last date to deposit the old currency notes in bank. CASE LAW: • The Hon'ble Supreme Court has held in several cases such as Sumati Dayal [1995] 214 ITR 801(SC) that while deciding any issue surrounding circumstance/evidence and test of human probabilities should also be looked into. 2. That the learned Authorities below have grossly erred in law and facts in making/ confirming addition of Rs. 7,80,000/- without challenging the affidavits filed by the appellant and his family members. Hence the addition of Rs. 7,80,000/- is liable to be deleted. That all the family members submitted an affidavit by confirming and accepting that these amount were belongs to them. That to prove creditworthiness and genuineness of such small amounts, appellant submitted the affidavits of the family members. Hence it was the duty of the AO to make an enquiry and examine the contents of the affidavits, but the Ld. AO without making any enquiry, concluded that creditworthiness and genuineness of the cash deposits from the family members of the assesse are not proved. MA No. 39/JP/2024 Abdul Wahb vs. ITO 15 That the Ld. AO neither challenged the affidavits nor submitted any adverse proof. Further, the Ld. AO didn’t mentioned the following points in his Remand Report, which are very important aspects: i. What enquiry was made by the AO on the affidavits of the family members submitted by the appellant? ii. Not a single document was challenged by the AO. iii. AO never asked anyone to appear before him and not tried to take statement. CASE LAW: • Hon’ble Supreme Court in the case of CIT V/s T.I. & M. Sales Ltd. [1987] 31 Taxman 505 (SC) held that By its conduct revenue waived its right to dispute the facts asserted in affidavit on one hand by not challenging its admissibility and on other, by not disputing the contents thereof. • Hon’ble Supreme Court in the case of Mehta Parikh & Co. Versus CIT [1956] 30 ITR 181 (SC) held that The assessee took it that the affidavits of these parties were enough and neither the AAC, nor the ITO considered it necessary to call for them in order to cross- examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits. • Hon’ble Supreme Court in the case of Karuna Singh Versus State of NCT of Delhi & Anr, Writ Petition (CRL) No. 31 of 2012 held that A person, who preferred his evidence on affidavit, need not make oral deposition in court, before the accused is summoned or required to cross-examine. • Hon’ble Supreme Court in the case of CIT vs. Orissa Corporation Pvt. Ltd. [(1986) 159 ITR 78 (SC)], held that assessee provided affidavits to corroborate the identity of creditors, the genuineness of the transactions, and the creditworthiness of the creditors, which were key issues in the matter of bogus purchases. The Court held that the Income Tax Officer could not merely ignore the affidavits; instead, he was obliged to examine the veracity of the statements made in the affidavits and could not reject them without conducting a thorough inquiry. • Hon’ble Supreme Court in the case of Sreelekha Banerjee Vs CIT [1963] 49 ITR 112 (SC); 120 observed that the Income Tax Department cannot by merely rejecting unreasonably a good explanation, convert good “proof into no proof”. MA No. 39/JP/2024 Abdul Wahb vs. ITO 16 • Hon’ble Supreme Court in the case of Uma Charan Shaw & Bros Co Vs CIT 37 ITR 271 has held that the surmises and conjectures, and the conclusion are the result of suspicion which cannot take the place of proof. • Hon’ble Punjab & Haryana High Court in the case of CIT Vs Anupam Kapoor (2008) 299 ITR 179 (P&H) also held that suspicion, howsoever strong cannot take the place of legal proof. • In the case of Ashok Kumar Banthia v. DCIT, Hon’ble ITAT Jodhpur Bench held that Affidavit submitted by Assessee cannot be rejected without any plausible reason - Averments contained in duly sworn affidavit are to be accepted as a correct unless the same are rebutted by the evidence. • In the case of Kuldeep Kumar Vs. ITO, Hon’ble ITAT Jodhpur Bench held that Once an affidavit is filed by assessee to demonstrate the source of cash deposits, the onus shifted on the Income-tax department. If ld. CIT(A) wanted any further clarification, he could have asked the assessee to file the same. Ld. CIT(A) could have recorded the statements under section 131 of the Act however, instead of carrying out proper investigation, ld. CIT(A) merely rejected the affidavits. 3. That the learned Authorities below have grossly erred in law and facts in making/ confirming addition of Rs. 7,80,000/- without following the Standard Operating Procedure (SOP) prescribed by the CBDT Instruction No. 03/2017 dated 21.02.2017. That the family members of the appellant stated in their affidavits that they don’t have any bank account at the time of Demonetization and after the announcement of the Demonetization, they visited various bank branches to open new bank account, but the officers evades their request and suggested them to come after few days. Further there was no such big amount with any family members, for which they need to have bank account and it was not a violation of any law to keep such small amount at home. That as per Hon’ble CBDT Instruction No. 3/2017 dated 21.02.2017, in case of an individual having no business income, no verification is required to be made, if the total cash deposits during the demonetization period does not exceed the threshold limit of Rs. 2.50 lakhs. That following the said circular it has been decided by the various courts that cash below Rs. 2,50,000/- per person should not be questioned. MA No. 39/JP/2024 Abdul Wahb vs. ITO 17 The extract of the CBDT Instruction No. 3/2017 dated 21.02.2017 is as under: In this case also, cash of family members were owned by them and it was their personal income as accepted by them and affidavit in this relation is already filed before the AO. Thus family members are duly covered by the Instruction No. 3/2017 dated 21.02.2017 issued by the Hon’ble CBDT. It is not the income of the assesse. The appellant only deposited their cash in his bank account, just because they don’t have the bank accounts at the time of demonetization. CASE LAW: • In the case of Amar Singh V/s ACIT, International Taxation, Gurgaon (ITA No. 1716/Del/2020), Hon’ble ITAT Delhi Bench held that Persons having no business income. Further, the cash deposited during the demonetization period, does not exceed the threshold limit of Rs.2.50 lacs in terms with the CBDT Instruction noted above. The CBDT instruction being beneficial to assessee, has to be applied. • In the case of Uma Agrawal V/s ITO Ward 1(3), Gwalior [2021] 127 taxmann.com 735, Hon’ble ITAT Agra Bench held that As per Instruction No. 3/2017, dated 21-2-2017, housewife having no business income would not be questioned if bank deposits made by her during demonetization were found to be less than Rs. 2.50 lakhs. 4. The appellant has reserved a right to add, amend or alter any ground or grounds of appeal on or before the appeal hearing. Looking to the above facts and circumstance of the case your honor is requested to kindly allow this appeal in the interest of justice and oblige.” 10. To support the contention so raised in the written submission reliance was placed on the following evidence / records : MA No. 39/JP/2024 Abdul Wahb vs. ITO 18 S No Particular Pages Cumm. Page No. 1 Written Submission 11 1-11 2 Written Submission filed on 20.06.2023 before CIT(A) 11 12-22 3 Affidavit of appellant Mr. Abdul Wahb with Aadhar Card 4 23-26 4 Affidavit and Aadhar Card of Mrs. Ruksana (appellant’s wife) 2 27-28 5 Affidavit and Aadhar Card of Arif Mansoory (appellant’s son) 2 29-30 6 Affidavit and Aadhar Card of Rizwan Mansoori (appellant’s son) 2 31-32 7 Affidavit and Aadhar Card of Khushnuma Mansuri (appellant’s daughter) 2 33-34 8 Affidavit and Aadhar Card of Alina (appellant’s daughter) 2 35-36 9 Affidavit and Aadhar Card of Kadar Bux (appellant’s son) 2 37-38 10 Copy of Death Certificate and aadhar card of Jamila Begum (mother of the appellant) 2 39-40 11 Copy of Marriage Certificate of Khushnuma Mansuri (Daughter of the appellant) 1 41-41 12 Copy of VISA, Boarding passes and all other haj related documents of appellant and his wife 14 42-55 13 Copy of Notice issued by Ld. AO on 14.12.2023 in Remand Proceedings 1 56-56 14 Copy of reply filed on 15.12.2023 before AO in Remand Proceedings 2 57-58 15 Remand Report dated 28.12.2023 2 59-60 16 Written Submission on Remand Report filed on 19.02.2024 before CIT(A) 10 61-70 11. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee has deposited cash of Rs. 10,30,000/- into the bank account. When the MA No. 39/JP/2024 Abdul Wahb vs. ITO 19 matter raised before ld. CIT(A), he has reduced the addition of Rs. 10,30,000/- to Rs. 7,80,000/-. On that sustained addition the ld. AR of the assessee vehemently argued that at Rs. 7,80,000/- amount represent cash of assessee’s wife, his son and daughter were deposited by the assessee as person listed in the paper book of Sr. No. 4 to 9 were not having bank account. As on the date of demonetization period considering that aspect of the matter and assurance given by Hon’ble Prime Minister that per person to the extent of Rs. 2.5 lakhs, no addition can be made and his wife and son and daughter do not have any bank account and therefore, the addition is required to be deleted. 12. Per contra, ld. DR relied on the order of lower authorities and submitted that ld. CIT(A) has considered the contention of the assessee which they have raised which were not considered because the same were different to those submitted to the ld. AO. The relevant part of the discussion is recorded at para 4.3.1 of the order of ld. CIT(A). As ld. CIT(A) has already given substantial relief to the assessee and now there is no merit in the arguments raised by Ld. AR of the assessee and the appeal is required to be dismissed. MA No. 39/JP/2024 Abdul Wahb vs. ITO 20 13. We have heard the rival contentions and perused the material placed on record. Though the assessee has raised four grounds of appeal but in effect there is only solitary issue of confirming the addition of Rs. 7,80,000/- in the hands of the assessee out of the total addition of Rs. 10,30,000/- made on account of deposit of cash into the bank account by the assessee. Record reveals that the assessee has deposited cash of Rs. 10,61,650/- in Punjab National Bank, account during demonetization period but has not filed ITR for the year under consideration. Therefore, notices u/s 142(1) of the Income Tax Act, 1961 was issued to the assessee on 08.03.2018 requesting the assessee to file return of income for the year under consideration and same were duly served upon the assessee but the assessee has failed to file ITR for A.Y. 2017-18. Various other notices were issued to the assessee. In compliance to said notice the assessee furnish the partly reply though Mail. Finally, a show cause notice was issued on 16.11.2019 in compliance to same the assessee furnish the reply and furnished the month wise sale and purchase profit and loss account and cash flow statement. The information filed by the assessee was examined, ld. AO noticed that the assessee has cash deposit in two bank accounts from 09.11.2016 MA No. 39/JP/2024 Abdul Wahb vs. ITO 21 to 30.12.2016. Further the assessee has submitted month wise sale and purchase perusal of information submitted the assessee and those records shows that the assessee has total purchase upto end of the October Rs. 5,71,882/- and sale upto end of the October only Rs. 1,05,565/-. The assessee shows possess stock end of the October Rs. 5,71,882/-. The balance stock as on 01.11.2016 is Rs. 4,66,317/- and purchase during the November Rs. 2,53,985/- total stock for the November 2016 comes to Rs. 7,20,302/- when the assessee was shown total sale at Rs. 11,42,019/-. How is possible when the stock Rs. 7,20,302/- and sale Rs. 11,42,019/- and GP shown 21%. Therebefore, ld. AO did not believe what has been submitted as those information/details were not correct and hence the cash deposit in bank was considered as undisclosed income u/s 69A of the Act for an amount of Rs. 10,30,000/-and thereby the assessment was completed. When the matter carried before the ld. CIT(A) he has granted relief to the assessee upto Rs. 2,50,000/- and balance amount of Rs. 7,80,000/- was confirmed. In that proceeding the assessee filed the affidavit of the family member which were forwarded to the AO in the remand proceeding. The ld. AO vide report dated 28.12.2023 stated that the credit worthiness of the MA No. 39/JP/2024 Abdul Wahb vs. ITO 22 cash deposits from the family members of the assessee are not proved and therefore, the ld. CIT(A) also did not give cognizance of those affidavits. Before us ld. AR of the assessee submitted that ld. CIT(A) has not given any finding as to affidavits of the family members and for that relied upon the decision of Mehta Parikh & Co. wherein the apex court held that affidavit has evidentiary value and since the ld. AO has not placed on record what has been declared in the affidavit and therefore, the credit of that money belonging to the family members be given. But the ld. DR heavily stated that the assessee remained non co-operative before the ld. AO and therefore, the benefit is rightly denied. However, the Bench is of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee in that perspective of the matter and since the ld. AO and ld. CIT(A) did not commented upon the contention raised in the affidavit and therefore, the matter is required to be set aside to the file of ld. AO who will examine the issue in accordance with law and decide the issue of balance amount of Rs. 7,80,000/-. However, the assessee will not seek any adjournment on shallow ground and remain cooperative during proceedings before the ld. AO. MA No. 39/JP/2024 Abdul Wahb vs. ITO 23 14. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. AO independently in accordance with law. In the result, Miscellaneous Application as well as appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 17/04/2025 Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 17/04/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Abdul Wahb, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward 5(1), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (MA No. 39/JP/2024) vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar "