ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE.1(3), AHMEDABAD V. M/S.AARYAVART INFRASTRUCTURE PVT. LTD., AHMEDABAD

ITSSA 70/AHD/2021

AI Insights

The case involves the Deputy Commissioner of Income-tax, Central Circle-1(3), Ahmedabad as the appellant and M/s. Aaryavart Infrastructure Pvt. Ltd. as the respondent. The dispute arose from the assessment year 2017-18, following a search and seizure operation and a survey at the premises of the assessee. The Assessing Officer made substantial additions to the income of the assessee based on unexplained cash deposits and investments in immovable properties, among other reasons. The CIT(A) later deleted most of these additions, leading to the Revenue's appeal before the Tribunal. The Tribunal's decision highlighted the need for further examination of the cash deposit issues while affirming other aspects of the CIT(A)'s order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470958 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASEEM L. THAKKAR
• Assessee Lawyers: V. NANDAKUMAR
• Keywords: Business income; Revised return; Revenue expenditure; Corroborative evidences; Unexplained cash credit; Unexplained investment; Document seized; Documents seized; TDS; Search and seizure; Source of fund; Loose papers; Assessment record
• Section: 143(3); 250; 132; 139(1); 131; 69B; 13; 153C; 133A; 244A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT MS. SUCHITRA KAMBLE, JUDICIAL MEMBER IT(SS)A No. 70/Ahd/2021 (Assessment Year: 2017-18) Deputy Commissioner of Income-tax, Central Circle-1(3), Ahmedabad Vs. M/s. Aaryavart Infrastructure Pvt. Ltd., 17-A, First Floor, Pariseema Complex, C.G. Road, Navrangpura, Ahmedabad-9 [PAN : AADCA 4844 Q] (Appellant) .. (Respondent) Appellant by : Shri Aseem L. Thakkar, AR Respondent by: Shri V. Nandakumar, CIT-DR Date of Hearing 20.11.2024 Date of Pronouncement 22.01.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT : This appeal has been filed by the Revenue against the order passed by the learned Commissioner of Income-tax (Appeals)-11, Ahmedabad (hereinafter referred to as \"CIT(A)\" for short) dated 18.03.2021 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Year (AY) 2017-18. 2. The brief facts of the case are that the assessee-company is engaged in executing government contracts obtained from Sardar Sarovar Narmada Nigam Ltd for construction of canals, laying of irrigation pipelines within Gujarat State, building of railway bridges at Chhota-udaipur, Dabhoi, Gujarat. The assessee-company is also engaged in trading of building materials like TMT bars, cement, pipes, grit-kapchi etc and investment in immovable properties. The assessee filed return of income u/s 139(1) of IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 2– the Act on 28.10.2017 declaring total income of Rs.45,69,480/-. The assessee-company subsequently filed the revised return of income u/s 139(5) of the Act on 18.07.2018 declaring same total income of Rs.45,69,480/-. 2.1 A search and seizure action was carried out in the case of Shri Mahendra Shantilal Patel and his group on 06.02.2017. A survey u/s 133A of the Act was also carried out at the office premises of the assessee company on 06.02.2017 and the statement of Shri Deep Sureshbhai Gadhecha, director of the company was recorded u/s 131 of the Act on 06.02.2017 and 07.02.2017. During the course of search and survey action, various materials/evidences were found and seized. The Assessing Officer finally completed the assessment proceedings and passed assessment order u/s 143(3) r.w.s. 153B(1)(b) of the Act on 28.12.2018 determining the total income at Rs.21,27,13,950/- as against the returned income of Rs.45,69,480/-, making following additions/disallowances:- Addition/disallowance Section Amount (Rs.) (i) Information available from Excel file in seized material 68 1,32,79,357/- (ii) Entries in material at the premises of appellant remains unexplained 292C and 68 11,30,93,578/- (iii) Entries of cash deposit in various bank accounts of assessee remains unexplained 68 4,95,26,262/- (iv) Income of interest from income tax refund u/s 244A 56 1,66,651/- (v) Late deposit of employee’s contribution to PF & ESI 2(24)(x) r.w.s. 36(1)(va) 13,074/- (vi) Deemed rent income on unsold finished units / flats / property 22 & 23 13,48,074/- (vii)Tax not deducted on interest payments 40(a)(ia) 6,20,000/- (viii) Source for purchase of immovable properties remains unexplained 69B 3,00,97,480/- Total addition / disallowance 20,81,44,470/- IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 3– 3. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who deleted most of the additions made by the Assessing Officer. 4. Aggrieved by the order of the Ld. CIT(A) deleting the additions made by the Assessing Officer, the Revenue is now in appeal before the Tribunal by raising following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.82,90,000/- made on account of transaction in MS Excel file name Book12.xlsx, holding that the transactions are in the name of Deep Gadhecha, Director of assessee company, without appreciating the fact during the course of assessment proceedings the assessee did not raise any such claim before the Assessing Officer. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition of Rs. 11,30,93,572/- made on account of unexplained entries contained in impounded materials, to Rs.7,55,748/- despite the fact that assessee remain non-cooperative during the course of assessment proceedings and failed to explain the transaction during the course of assessment proceedings satisfactorily. 3. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.4,95,26,262/- made on account of unexplained cash deposit as per bank statement / ITS data / AIIMS details, despite the assessee could not substantiate the reasons for such huge cash in hand for an exorbitant period and also failed to explain the source of cash deposits before the Assessing Officer during the course of assessment proceedings. 4. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.3,00,97,480/- made on account of unexplained source of investment for purchase of immovable property, without appreciating the fact that the assessee could not furnish any IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 4– cogent evidence regarding the source of such investment, at the time assessment proceedings.” 5. Ground No. 1 : Deletion of addition of Rs.82,90,000/- on account of transaction in MS Excel File 5.1 During the course of search at the residence cum office of Bharat P. Popat, Benefit Tradelinks Ltd and Ellegance Realty Pvt. Ltd. located at Benefit House, City Bank Street, Nr. Municipal Market, C.G. Road, Navrangpura, Ahmedabad, digital data seized; and after analysis of digital data, an excel file namely Book12.xlsx is located in Bharat Laptop of HP at Benefit House. The said MS excel sheet contains transaction of Rs.1,32,79,357/- of the following amounts:- Rs.3296857+Rs.1692500+Rs.20000+Rs.2500000+Rs.2500000+ Rs.150000+Rs.130000 +Rs.1990000+Rs.1000000. The assessee was directed by way of show-cause notice dtd. 05.12.2018 to furnish detailed explanation along with documentary evidence as to whether the transactions as mentioned in the above sheet were offered in assessee’s books of account for taxation purpose. In response to the same, the assessee submitted reply vide letter dated 11.12.2018 stating that the nature of transaction stated in SCN does not reveal whether the amounts mentioned were payments or receipts. Assessee submitted that ledger copy of SVP Corporation from the books of Aaryavart Infrastructure Pvt. Ltd. On receipt of the reply, Assessing Officer made addition of the amounts mentioned in the MS Excel File, holding as under: IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 5– a) The transactions recorded in seized material are between the assessee and SVP Corporation or Deep Gadhecha. It is for the assessee to clarify and explain in detail the nature, the need and the reason for such transactions and to substantiate the same with supporting evidence to prove that it was a genuine transaction duly recorded in books in normal course of business with supporting evidences. b) Assessee failed to clarify the transactions. Mere submission of ledger or cash books or bank book will not be sufficient to prove that income is accounted for with respect to the transaction in question. c) Assessee could not produce any evidence to show that the above mentioned transaction is accounted for and due taxes are paid on such transactions. 5.2 Aggrieved by the order of the Assessing Officer, the assessee has filed appeal before the Ld. CIT(A) who deleted the addition to the tune of Rs.82,90,000/- out of the amount of Rs.1,32,79,357/- made by the Assessing Officer. 5.3 Aggrieved by the order of the Ld. CIT(A), the Revenue filed appeal before the Tribunal. 5.4 Before us, the Ld. DR relied on the order of the Assessing Officer and the Ld. AR supported the order of the ld. CIT(A). 5.5 Heard both the parties and perused the material available on record. IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 6– 5.6 The Assessing Officer has made the impugned addition of Rs. 1,32,79,357/- on the basis of one excel file named ‘Book12.xlsx’ found from the laptop during the course of search u/s. 132 of the Act in case of Benefit Group. The contents of the said excel file reproduced by the Ld. CIT(A) are as hereunder: Date Bill No. Product Party Bill AMT 16-04-2016 T/2016/011 Steel Aaryavart Infrastructure Pvt Ltd 32,96,857.14 19-04-2016 T/2016/013 Steel Aaryavart Infrastructure Pvt Ltd 16,92,500.00 Date Details Party Income Exp / 19-04-2016 Cash Aaryavart Infrastructure Pvt Ltd 20,000/- 20-05-2016 Cash given against RTGS Deep Gadecha 25,00,000/- 21.05.2016 Cash given against RTGS in SVP Deep Gadecha 25,00,000/- 23-05-2016 Aangadiya Deep Gadecha (VIA Aangadiya) 10,00,000/- 24-05-2016 Against RTGS (Deep Gadecha) Against RTGS of 1,56,000/-) 1,56,000/- 25-05-2016 Deep Gadecha 1,30,000/- 31-05-2016 Cash Given Against RTGS Deep Gadecha 19,90,000/- 5.7 Before us, the Ld. DR argued that the assessee could not give any explanation about the entries in the excel sheet and hence, the Assessing Officer has rightly made the addition. On the other hand, Ld. AR argued that the Assessing Officer ought not to have made addition of receipts as well as payments. The Ld. AR submitted that the total purchases made were of Rs.49,89,357/- and the disallowance cannot be more than the purchases of Iron and Steel which have been debited in the books of accounts. We find that the total purchases were of Rs.49,89,357/- and receipt of cash by Deep Gadecha was shown at Rs.69,90,000/-. The cash given against RTGS in SVP IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 7– was Rs. 50,00,000/-. There has been another amount of Rs.20,000/- shown as expenses. Hence, keeping in view the entire facts, we hold that the Ld. CIT(A) has rightly confirmed the amount of Rs.49,89,357/- pertaining to the total purchase of Steel debited, the amount of which has been received back in cash. In the result, the decision of the ld. CIT(A) on this ground is affirmed. 6. Ground No. 2 : Restricting the addition of Rs.11,30,93,572/- made on account of unexplained entries to Rs.7,55,748/- 6.1 During the course of survey, documentary material was impounded from office premise of the assessee company which is a cash book annexed as Annexure - A3, Page 34A, 35A, 36A, 37A, 38A, 39A, 40A. The amounts mentioned on various pages pertaining to this AY are as under:- Sr. No. Annexure AY Amount 27 Page 28 2017-18 73324926 28 Page 29 2017-18 14879801 30 Page 31 2017-18 9948763 31 Page 32 2017-18 8372190 33 Page 34 2017-18 1269698 34 - 2017-18 208740 39 Page 50 2017-18 3453000 41 Page 59 2017-18 688739 43 Page 62 2017-18 199400 79 Page 78 2017-18 208745 80 Page 81 2017-18 245195 81 Page 83 2017-18 294375 Total 113093572 IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 8– 6.2 The total amount of these pages was Rs.11.30 crores. The Assessing Officer held that the assessee failed to substantiate the transactions with reference to the regular books of accounts and hence treated the amounts mentioned as unexplained. 6.3 The Ld. CIT(A) deleted the addition holding as under:- “(i) The addition of Rs. 7,33,24,926/- has been made by the AO on the basis of impounded page no. 28 of Annexure A/3. Copy of impounded page no. 28 of Annexure A/3 has been filed by the appellant. From the assessment order, it is observed that for each of the impounded page relied upon by the AO, he has given the description of loose paper and his findings in the form of table on page no. 63 to 65 of the assessment order passed for all the assessment years from AY 2011-12 to AY 2017- 18. The details are part of the show cause notice dated 05/12/018 issued by the AO, which has also been reproduced in the assessment order from page no. 53 onwards till page no. 66. In respect of page no. 28 of impounded Annexure A/3, the AO has considered the amount of Rs. 7,33,24,926/- found noted on said page for which he asked the appellant to furnish detailed explanation along with documentary evidence, whether it is offered in the books of account and paid tax on the same. Regarding the compliance by the appellant, the AO has observed in para no. 7.2.1 on page no. 67 and 68 of the assessment order that in response to the show-cause notice the assessee failed to substantiate the transactions reflected in seized documents along with documentary evidences in his books of accounts. On the other hand, the AR of the appellant submitted that the said observation of the AO is factually wrong and misleading. In compliance to the show-cause notice, the appellant company has duly filed its reply dated 11/12/2018, which was filed in the Tapal on 14/12/2018. Copy of the said reply has been filed in the paper book. Further, the appellant company has also filed supporting documentary evidences running into 1170 pages. On perusal of the impounded page no. 28 of Annexure A/3, it can be seen that the heading of the page is HES V/s. AIPL Account. No date has been mentioned on the page. It has been explained that HES stand for HES Infra Pvt. Ltd. HES is the main contractor of SSNNL (Sardar Sarovar Narmada Nigam Ltd.) and the appellant company has received sub-contract from said HES. Thus, all IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 9– the payments for contract work done as per the running bills are being received by HES from the SSNNL and the appellant company is receiving its payment from HES. The impounded page no. 28 shows the details of total amount paid by SSNNL upto 24th bill, HES Part, AIPL Part, paid by HES to AIPL and balance to be paid by HES to AIPL. The page is a working sheet prepared for the management information purpose. From the ledger account of HES Infra. Pvt. Ltd. for the FY 2016-17, it is seen total amount of R.A. bills raised during the FY 2016-17 is of Rs. 7,71,91,498/- (Rs.7,82,75,843/- less Op. debit balance of Rs. 10,84,345/-) and total payment received during the year is of Rs. 6,49,56,316/-. On the other hand, the total amount of AIPL part noted on page no. 28 is of Rs. 7,33,24,926/- and the amount of payment by HES to AIPL noted is of Rs. 6,46,86,297/-. Thus, in the books of account, the total amount of sales (bills raised) and receipts from HES Infra Pvt. Ltd. is more than the figures found noted on page no. 28. Considering the totality of the facts and supporting documentary evidences available on record, I am of the considered view that the appellant has duly explained the notings on the page no. 28 of Annexure A/3 and the same is also found recorded in the books of account of the appellant for the FY 2016-17. Accordingly, the addition made by the AO is unjustified and therefore, the same is directed to be deleted. (ii) The addition of Rs. 1,48,79,926/- has been made by the AO on the basis of impounded page no. 29 of Annexure A/3. Copy of impounded page no. 29 of Annexure A/3 has been filed by the appellant. The observations of the AO in respect of each of the impounded pages and the submission filed by the appellant company before the AO in compliance to the show-cause notice has been discussed hereinabove and therefore the same is not discussed herein again. In respect of page no. 29 of impounded Annexure A/3, the AO has considered the amount of Rs. 1,26,22,376/- and other total of Rs. 22,11,481/- for addition. On verification of the said page no. 29 of impounded Annexure A/3, it is seen that it is in respect of Creditors of Chhota-Udaipur site. The name of the creditors and the amount outstanding (debit or credit) has been mentioned against its name and the last column is meant for the follow up to be made with the creditors to settle its account with the appellant company. ^The sheet has been prepared for the purpose of reporting to the management. For IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 10– instance, where the payments have been made and bills not received from vendors, the same is brought to the notice of the management so that necessary follow-up can be made for obtaining the invoices from the site /contractors. It has been submitted that the appellant company has under taken government work at different sites and thus the creditors are located at different places. The copy of ledger accounts for FY 2016-17 of all the creditors named in the said page no. 29 have been filed by the appellant. On verification of the ledger account of respective creditors, it is seen that there are regular business transactions with them and are duly recorded and reflecting in the respective ledger accounts. Accordingly, it has been contended that all the notings on page no. 29 are duly accounted for in the books of account of the appellant company and therefore, the addition made by the AO on the basis of the page no. 29 of impounded Annexure A/3 is unjustified and therefore requires to be deleted. Considering the totality of the facts, submission and the supporting documentary evidences, I am inclined to accept the submission of the appellant. Since the notings of page no. 29 of impounded Annexure A/3 are duly explained and also found recorded in the books of account of the appellant for the FY 2016- 17, the AO was not justified in making the addition of Rs. 1,48,79,926/- as unexplained transactions. Accordingly, the addition of Rs. 1,48,79,926/- is directed to be deleted. (iii) The addition of Rs. 99,48,763/- has been made by the AO on the basis of impounded page no. 31 of Annexure A/3. Copy of impounded page no. 31 of Annexure A/3 has been filed by the appellant. The AO has considered the amount of Rs. 99,48,763/- which is in respect of Swarnim Payment details. On verification of said page no. 31 of impounded Annexure A/3, it is seen that the heading of the page is “Swarnim Payment Details”. In the table, there are total 13 entries of different dates totaling to Rs. 99,48,763/-. It has been submitted that this is the details of payment to be received by the appellant company for the materials supplied to the party in respect of Swarnim Site, which is developed by Golden Developers and Golden Infrastructure. The copy of ledger account of both the parties were filed with the AO and has been placed in the paper book. From the perusal of the ledger accounts, it has been seen that there are entries for receipt of payment by the appellant from the said parties and thus have been duly accounted for in the books of account. From the assessment order, it is IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 11– seen that there is no comments offered by the AO for the submission made by the appellant on this point. Considering to totality of the facts and supporting documentary evidences, I am of the considered view that the notings on page no. 31 of impounded Annexure A/3 are duly found recorded in the books of account and therefore, the addition made by the AO is unjustified and contrary to the facts and evidences available on record. Accordingly, the addition of Rs. 99,48,763/- is directed to be deleted. (iv) The next addition is of Rs. 83,72,190/-, which has been made by the AO on the basis of impounded page no. 32 of Annexure A/3. Copy of impounded page no. 32 of Annexure A/3 has been filed by the appellant. The AO has considered the amount of Rs. 83,72,190/- which is the difference of total sales for the first three quarters amounting to Rs. 4,09,91,249/- and total purchases of same period amounting to Rs. 3,26,19,059/- found noted on said page no. 32 of Annexure A/3. On verification of said Page no. 32 of impounded Annexure A/3, it is seen that there are details of purchase and sales in terms of value and quantity for Q1, Q2 and Q3. However, the year to which it relates, has not been written on this page. The AO has took the difference of Total Sales of three quarters and total purchase of these three quarters amounting to Rs. 83,72,190/- (Rs. 4,09,91,249/- Total Sales of three quarters Less Rs. 3,26,19,059/- total purchases of three quarter). During the course of assessment proceedings, it was explained to the AO that this sheet is projected figures to ascertain the VAT liability. Further, in absence of the date and period to which it relates, the AO has considered it for the FY 2016-17 and made the addition of Rs. 83,72,190/-. From the assessment order, it can be seen that there is no discussion by the AO as to why he made the addition of Rs. 83,72,190/- .It is submitted that actual sales and purchase for the FY 2016-17 is much higher than the figures found noted on the said page no. 32. Accordingly, no adverse inference could have been drawn on the basis of the notings on page no. 32. In support of the said contention, the appellant filed the monthly details of total sales and total purchases for the FY 2016-17. On perusal of the said details, it is observed that the total sales and purchases in the books of account are much more than the figures found noted on the page no. 32. IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 12– Considering the totality of the facts, details, explanation and supportings documentary evidences, I am inclined to accept contention of the appellant. Since AO has failed to controvert the fact that total sales and purchases recorded in the books of account are in excess of that found recorded in page no. 32 of the impounded Annexure A/3, the addition made by him for the difference between the total sales and purchases amounting to Rs. 83,72,190/- is unjustified and accordingly, directed to be deleted. (v) The addition of Rs. 12,69,698/- has been made by the AO on the basis of impounded page no. 34 of Annexure A/3. Copy of impounded page no. 34 of Annexure A/3 has been filed by the appellant. From the page no. 34, AO observed that it contains payment of Rs. 11,60,730/- (including cash payment of Rs. 7,27,000/-) against total amount of Rs. 12,69,698/-. The AO has further observed that as per the statement of Deep Sureshbhai Gadhecha, this page no. 34 is the statement showing details of payment made towards repairing and renovation work carried out at the registered office of the company during the current financial year. Accordingly, he asked the appellant company to furnish detailed explanation along with documentary evidences. The appellant company filed its reply, which doesn’t found favour with the AO and he made the addition of Rs. 12,69,698/-. During the course of appellate proceedings, appellant submitted that the notings on this page no. 34 are in respect of proposed repairs and renovation of the office premises of the appellant company situated at FF- 17/A, Pariseema, C. G. Road, Ahmedabad. It gives the details of party name, description of work to be done, total amount, amount paid etc. It has been further submitted that the appellant company has planned to carry out the repairs and renovation in its office premises and therefore the details of the same was prepared by some staff member./|However, it is submitted that all the planned repairs and renovation has not been executed and therefore, total expenses incurred is less than the details found noted on the said page no. 34 of impounded Annexure A/3. It has been submitted that the expenses actually incurred have been duly accounted for in the books of account either as addition to fixed assets or as business revenue expenditure. The details of the same and the reference of notings/details on page no. 34 of the impounded Annexure A/3 with explanation is as under: IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 13– Description of Fixed Assets / business revenue expenditure Addition / incurred during the FY 2016-17 Relevant details in page no. 34 of impounded Annexure A/3 Remarks Labour Work (Dhrangadhra) 70,000/- Amount has been paid by cheque to Shri Tejsingh, who is a site contractor at Dhrangadhra. The expenditure of Rs. 70,000/- has been duly accounted for in the books of account of the appellant for the FY 2016-17 as Labour Work (Dhrangadhra). Electric Goods purchase 21,950/- Amount has been paid by cheque to Bhavin Enterprise from whom electric goods has been purchased. The expenditure of Rs. 21,950/- has been duly accounted for in the books of account of the appellant for the FY 2016-17 as Electric Goods purchase. Furniture 3,50,000/- Rs. 3,50,000/- has been paid by cheque to S. V. Automation for furniture The purchase of Furniture has been duly accounted for in the books of account of the appellant company for FY 2016-17. Regarding other notings for cash payment, it is submitted that the same has not been done and accordingly, no payment of cash has been made to the said party / person. Air Condition 72,000/- Rs. 72,000/- has been paid by cheque to Prime Electronic for Window A.C. 2 Nos. The purchase of AC has been duly accounted for in the books of account of the appellant company for FY 2016-17. Total Rs. 5,13,950/- The appellant filed the ledger accounts of the parties fixed assets in respect of the above details. Accordingly, it has been submitted that out of the total planned repairs and renovation expenses, the expenses of Rs. 5,13,950/- only has been incurred by the appellant company. Regarding the balance amount, it is submitted that no such expenses have been paid I incurred by the appellant company. From the perusal of the notings of page no. 34 of impounded Annexure A/3, it is seen that for several payments, the amount, date and mode of payment i.e., cash has been stated for which it has been submitted that no such repairs and renovation expenses have been incurred. When part of the notings of the page are stated to be duly accounted for in respect of cheque as well as cash payment, the remaining part of cash payment cannot be accepted as not incurred or paid. No two view can be taken from the same page for payment made and payment not made when in both the cases, it has been stated as paid in cash. Accordingly, the submission of IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 14– the appellant that for the balance amount, no payment has been made is not found convincing and acceptable. Therefore, it is held that out of the total amount of Rs. 12,69,698/- noted on page no. 34 considered by the AO for addition, the amount of Rs. 5,13,950/- as per the above details is found as recorded in the books of account for the FY 2016-17 and the balance amount of Rs. 7,55,748/- is not recorded in the books of account. Therefore, the addition made by the AO to the extent of Rs. 5,13,950/- is held as unjustified and therefore directed to be deleted and the balance addition of Rs. 7,55,748/- is confirmed. (vi) The addition of Rs. 2,08,740/- has been made by the AO on the basis of impounded page no. 39A of Annexure A/3 on which cash receipts totaling to Rs. 2,08,740/- has been found noted. Copy of impounded page no. 39A of Annexure A/3 has been filed by the appellant. While explaining the said page no. 39A of impounded Annexure A/3, the AR of the appellant stated that similar notings have also been found on page no. 78 of impounded Annexure A/5 and on the basis of the said page no. 78 also, the AO has made addition of Rs. 2,08,745/-. It has been submitted that page No. 39/A is the copy of site petty cash book of Dhrangadhra site. On this page, total amount of cash of Rs. 2,08,740/- has been written, which has been considered by the AO as unexplained transactions and thereby undisclosed income. The break-up of the total figure of Rs. 2,08,740/- is as under: Amount Rs. Date Particulars 12,746/- 31-03-2016 Opening Balance 25,000/- 06-04-2016 M. B. Joshi A/c. 25,000/- 12-04-2016 M. B. Joshi A/c. 25,000/- 17-04-2016 M. B. Joshi A/c. 25,000/- 22-04-2016 M. B. Joshi A/c. 20,000/- AlokRai A/c. 51,000/- 22-04-2016 Angadia 25,000/- 30-04-2016 Angadia 2,08,740/- Total It has been submitted that there is an opening balance of cash on hand of Rs. 12,746/-, which is inclusive in the total figure of Rs. 2,08,740/- (correct total is 2,08,746/-). Therefore, the actual amount of funds sent to site is of Rs. 1,96,000/- (Rs. 2,08,746/- Less Rs. 12,746/- Op. Balance). However, the AO has made the addition of Rs. 2,08,740/-. The entries of Rs. 25,000/- each totaling to Rs. 1,00,000/- (25,000/- X 4) on different dates in the name of M. B. Joshi are debited to his account. Copy of his IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 15– ledger A/c. for the FY 2016-17 has been filed by the appellant in the Paper Book. Shri Mahesh Joshi is a site contractor working at Dhrngadhra Site as well as Chhota-Udepur site. The amount has been paid by cheques of The Mehsana Urban Co-Op. Bank Ltd. and corresponding entries are also reflecting in the Bank statements and the bank book for the relevant period. As and when he submits the statement of expenses incurred at the site, his account is credited. This fact can be? verified from his ledger account placed on the record. The another payment of Rs. 20,000/- in the name of Alok Rai is for electric connection at site. Alok Rai is a site contractor. The same has been given by cheque of The Mehsana Urban Co-Op. Bank Ltd. The ledger account of Shri Alok Rai for the FY 2016-17 is filed. The corresponding entry is also reflecting in the Bank statements and the bank book for the relevant period. As and when he submit the statement of petty cash expenses incurred at the site, his account is credited. This fact can be verified from his ledger account placed on the record. The entries of Rs. 51,000/- dated 22/04/2016 and Rs. 25,000/- dated 30/04/2016 are in respect of petty cash received from HO. The same is duly accounted for in the petty cash book and main cash book at HO. Thus, it is submitted that all the above entries are duly recorded in the books of account of the appellant company. The details noted on loose sheets at site are summarized into a single sheet and sent to the HO for accounting purpose. Therefore, these sheets are the primary record wherein all details of expenditure incurred at the site are recorded. The expenses incurred at site are accounted for in the books of account. The date-wise entry of cash receipts in the Petty cash book of Dhrangadhra site and cash payment (Cash sent to site) in the main cash book at HO can be verified from the copy of the Petty Cash Book as well as main cash book, which has been placed on the record. It has been submitted that the appellant company has duly furnished the petty cash book and cash book for the relevant period to the AO. Considering the totality of the facts and the supporting documentary evidences i.e. petty cash book and cash book for the FY 2016-17, it is seen that the entries found rioted on page no. 39A are duly recorded in the books of account of the appellant on respective dates. Therefore, the addition made by the AO seems to be without proper verification of the details and documents submitted by the appellant during the course of assessment proceedings. Since all the entries are duly explained and accounted for in the books of account for the previous year 20016-17 relevant to AY 2017-18, the AO was not justified in making the impugned addition of IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 16– Rs. 2,08,740/-. Further, it is also a fact that on the basis of similar notings on page no. 78 of impounded Annexure A/5, the AO has made another addition of Rs. 2,08,745/-. The same has been discussed and dealt with in subsequent paras. Accordingly, the addition of Rs. 2,08,740/- made by the AO on the basis of this page no. 39/A being factually wrong and without proper verification of the details and documents submitted during the course of assessment proceedings, the same is directed to be deleted. (vii) The addition of Rs. 34,53,000/- has been made by the AO on the basis of impounded page no. 50 of Annexure A/3. Copy of impounded page no. 50 of Annexure A/3 has been filed by the appellant. On the basis of this page no. 50, the AO has made total addition of Rs. 34,53,000/- which consist of following: Sr. No. Amount Rs. Particulars / details noted on page no. 50 1 33,00,000/- Megma BMW Car Laon 2 3,000/- Amit Mehta 3 1,00,000/- Rekhaben 4 50,000/- Amit Mehta 34,53,000/- Total The reply filed by the appellant in respect of the above page has not been accepted by him and the addition of Rs. 34,53,000/- has been made. The appellant has explained that the notings of the amount of 33,00,000/- is in respect of BMW Car’s quoted price. The said motor car has been duly accounted for in the books of account of Shri Deep Sureshbhai Gadhecha, one of the directors of the appellant company. The car has been purchased in his individual capacity and the appellant company has nothing to do with the same. In support of this fact, copy of the ledger account of the BMW Motor car and other relevant ledger account in that connection from the books of Deep Gadhecha have been placed on record. Accordingly, it has been submitted that the notings on page no. 50 of impounded Annexure A/3 are pertaining to Shri Deep Gadhecha in his individual capacity and not related to the appellant company. Therefore, no adverse inference should be drawn against the appellant company on the basis of page no. 50. IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 17– Considering the totality of the facts and supporting documentary evidences placed on record, I found that the purchase of BMW motor car is duly accounted for in the books of Shri Deep Gadhecha. The loan taken for purchase of the car is also reflecting in the books of said Shri Deep Gadhecha. Thus, the notings on page no. 50 of impounded Annexure A/3 are clearly related to Shri Deep Gadhecha and not pertaining to the appellant company. Accordingly, the addition of Rs. 34,53,000/- made by the AO is directed to be deleted. (viii) The addition of Rs. 6,88,739/- has been made by the AO on the basis of impounded page no. 59 of Annexure A/3. Copy of impounded page no. 59 of Annexure A/3 has been filed by the appellant. On perusal of the said page no. 59 of impounded Annexure A/3, it is seen that at the top of the page different amounts totaling to Rs, 6,88,739/- has been noted. Thereafter name of one Lilaben G. Patel with her address has been noted. Thereafter the name of Dhanraj Ent. P. Ltd. has been noted with shareholding at 51%. In view of the above notings, it has been contended that the same are rough notings and jottings in the nature of dumb document. On the basis of the notings on this page, it cannot be ascertained as to whether the figures noted are in the nature of income, expenditure, assets or liability. Further, on the basis of the individual name and company name, no adverse inference can be drawn since there is no financial implication. Accordingly, it has been contended that no addition can be made on the basis of such dumb documents, which is a well settled legal principle. Considering the totality of the facts and the notings on page no. 59, I am inclined to accept the view canvassed by the appellant that the notings are rough notings and jottings and the page is a dumb document. It is a settled law that no addition can be made on the basis of dumb document. The AO has also failed to establish with corroborative evidences that the notings on this page are in fact income or expenses of the appellant company. Accordingly, the addition of Rs. 6,88,739/- made by the AO is directed to be deleted. (ix) The addition of Rs. 1,99,400/- has been made by the AO on the basis of impounded page no. 62 of Annexure A/3. Copy of impounded page no. 62 of Annexure A/3 has been filed by the appellant. On perusal IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 18– of the said page no. 62 of impounded Annexure A/3, it can be seen that at the top, the name AIPL and against it the figure 1,99,800/- has been written and under it, it has been written as “pending”. Thereafter, name of one Shri “Samirbhai” has been noted. Thus, from the notings on this page, it has been submitted that the same are rough notings and jottings in the nature of dumb document. On the basis of the notings on this page, it cannot be ascertained as to whether the figures noted are in the nature of income, expenditure, assets or liability. Further, on the basis of the individual name and company name, no adverse inference can be drawn since there is no financial implication. Accordingly, it has been contended that no addition can be made on the basis of such dumb documents, which is a well settled legal principle. Considering the totality of the facts and the notings on page no. 62, I am inclined to accept the view canvassed by the AR of the appellant that the notings are rough notings ad jottings and the page is a dumb document. It is a settled law that no addition can be made on the basis of dumb document. The AO has also failed to establish with corroborative evidences that the notings on this page are in fact income or expenses of the appellant company. Accordingly, the addition of Rs. 1,99,800/- made by the AO is directed to be deleted. (x) The addition of Rs. 2,0.8,745/- has been made by the AO on the basis of impounded page no. 78 of Annexure A/5. Copy of impounded page no. 78 of Annexure A/5 has been filed by the appellant. While explaining the said page no. 78 of impounded Annexure A/5, the appellant stated that similar notings have also been found on page no. 39A of impounded Annexure A/3 and on the basis of the said page no. 39A also, the AO has made addition of Rs. 2,08,740/-. I have already given my decision in respect of the addition made on the basis of page no. 39A of impounded Annexure A/3 hereinabove. Since, the notings on page no. 78 of impounded Annexure A/5 are identical to that of page no. 39A of impounded Annexure A/3, the addition made by the AO is clearly duplicate / double addition. Further, since the addition made on the basis of page no. 39A of impounded Annexure A/3 has been directed to be deleted, the impugned addition of Rs. 2,08,745/- also deserves to be deleted. Accordingly, the AO is directed to delete the addition of Rs. 2,08,745/- made on the basis of page no. 78 of Annexure A/5. IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 19– (xi) The addition of Rs. 2,45,195/- has been made by the AO on the basis of impounded page no. 81 of Annexure A/5. Copy of impounded page no. 81 of Annexure A/5 has been filed by the appellant. It has been submitted that page No. 81 is the copy of site petty cash book of Dhrangadhra site. On this page no. 81, total amount of cash of Rs. 2,45,195/- has been written, which has been considered by the AO as unexplained transactions and thereby undisclosed income. The break- up of the total figure of Rs. 2,45,195/- is as under: Amount Rs. Date Particulars 18,645/- 30-04-16 Opening Balance 25,000/- 7-5-16 Angadia 25,000/- 17-5-16 Angadia 1,550/- Empty Bag Cement 1,00,000/- 21-5-16 Angadia 25,000/- 26-5-16 By R. P. Patel 50,000/- 31-5-16 Angadia 2,45,195/- Total It has been submitted that there is an opening balance of cash on hand of Rs. 18,645/-, which is also noted on earlier page no. 78 as closing balance. The total figure of Rs. 2,45,195/- in inclusive of the opening balance. Therefore, the actual amount of funds sent to site is of Rs. 2,26,550/- (Rs. 2,45,195/- Less Rs. 18,645/- Op. Balance). However, the AO has made the addition of Rs. 2,45,195/-. While explain the notings, it has been submitted that the entries with the narration “Angadia” totaling to Rs. 2,00,000/- as well as in the name of R. P. Patel are in respect of petty cash received from HO. The same is duly accounted for in the petty cash book and main cash book at HO. The name of R. P. Patel has been mentioned in the notings since the cash has been received through him. Thus, it is submitted that all the above entries are in respect of cash sent to the site office for petty cash expenses to be incurred at the site. The details noted on loose sheets at site are summarized into a single sheet and sent to the HO for accounting purpose. Therefore, these sheets are the primary record wherein all details of expenditure incurred at the site are recorded. It has been submitted that all the entries of cash sent to site on respective dates have been duly accounted for in the Petty cash book of respective site as well as in the main cash book maintained at Head Office. Similarly, the expenses incurred at site are also accounted for in the books of account. The date-wise entry of cash receipts in the Petty cash book of IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 20– Dhrangadhra site and cash payment (Cash sent to site) in the main cash book at HO can be verified from the copy of the Petty Cash Book as well as main cash book, which has been placed on the record. It has been submitted that the appellant company has duly furnished the petty cash book and cash book for the relevant period to the AO. Considering the totality of the facts and the supporting documentary evidences i.e. petty cash book and cash book for the FY 2016-17, it is seen that the entries found noted on page no. 81 are duly recorded in the books of account of the appellant on respective dates. Therefore, the addition made by the AO seems to be without proper verification of the details and documents submitted by the appellant during the course of assessment proceedings. Since all the entries are duly explained and accounted for in the books of account for the previous year 20016-17 relevant to AY 2017-18, the AO was not justified in making the impugned addition of Rs. 2,45,195/-. Accordingly, the addition of Rs. 2,45,195/- made by the AO on the basis of this page no. 81 being factually wrong and without proper verification of the details and documents submitted during the course of assessment proceedings, the same is directed to be deleted. (xii) Similar addition of Rs. 2,94,375/- has been made by the AO on the basis of impounded page no. 83 of Annexure A/5. Copy of impounded page no. 83 of Annexure A/5 has been filed by the appellant. It has been submitted that page No. 83 is the copy of site petty cash book of Dhrangadhra site. On this page, total amount of cash of Rs. 2,94,375/- has been written, which has been considered by the AO as unexplained transactions and thereby undisclosed income. The break-up of the total figure of Rs. 2,94,375/- is as under: Amount Rs. Date Particulars 44,375/- 31-5-16 Opening Balance 1,00,000/- 2-6-16 Angadia 1,00,000/- 11-6-16 Angadia 50,000/- 15-6-16 Angadia 2,94,375/- Total It has been submitted that there is an opening balance of cash on hand of Rs. 44,375/-, which is also noted on earlier page no. 81 as closing balance. The total figure of Rs. 2,94,375/- is inclusive of the opening balance. Therefore, the actual amount of funds sent to site is of Rs. IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 21– 2,50,000/- (Rs. 2,94,375/- Less Rs. 44,375/- Op. Balance). However, the AO has made the addition of Rs. 2,94,375/-. While explaining the notings, it has been submitted that the entries with the narration “Angadia” totaling to Rs. 2,50,000/- are in respect of petty cash received from HO. The same is duly accounted for in the petty cash book and main cash book at HO. Thus, it is submitted that all the above entries are in respect of cash sent to the site office for petty cash expenses to be incurred at the site. The details noted on loose sheets at site are summarized into a single sheet and sent to the HO for accounting purpose. Therefore, these sheets are the primary record wherein all details of expenditure incurred at the site are recorded. It has been submitted that all the entries of cash sent to site on respective dates have been duly accounted for in the Petty cash book of respective site as well as in the main cash book maintained at Head Office (HO). Similarly, the expenses incurred at site are also accounted for in the books of account. The date-wise entry of cash receipts in the Petty cash book of Dhrangadhra site and cash payment (Cash sent to site) in the main cash book at HO can be verified from the copy of the Petty Cash Book as well as main cash book, which has been placed on record. It has been submitted that the appellant company has duly furnished the petty cash book and cash book for the relevant period to the AO. Considering the totality of the facts and the supporting documentary evidences i.e. petty cash book and cash book for the FY 2016-17, it is seen that the entries found noted on page no. 83 are duly recorded in the books of account of the appellant on respective dates. Therefore, the addition made by the AO seems to be without proper verification of the details and documents submitted by the appellant during the course of assessment proceedings. Since all the entries are duly explained and accounted for in the books of account for the previous year 20016-17 relevant to AY 2017-18, the AO was not justified in making the impugned addition of Rs. 2,94,375/-. Accordingly, the addition of Rs. 2,94,375/- made by the AO on the basis of this page no. 83 being factually wrong and without proper verification of the details and documents submitted during the course of assessment proceedings, the same is directed to be deleted.” 6.4 After hearing the arguments of the Ld. DR who has taken us through the contents of the assessment order on the issue and also after hearing the IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 22– arguments of the Ld. AR and also after going through the ratio of the decision of Ld. CIT(A), we hold as under:-  The amount reflected on page No.28 of Rs. 7,33,24,926/- of the impounded material, we find that it pertains to the bills raised on the transactions between HES Infra Pvt Ltd and the assessee. The HES Infra Pvt Ltd is the main contractor and the assessee is the sub- contractor. The paper pertains to the bill raised by the assessee and payment by the HES Infra Pvt Ltd. Hence, no interference is called for in the order of the Ld. CIT(A).  The amount reflected on page No.29 of Rs.1,48,79,926/- of the impounded material, we find that it pertains to the details of creditors which have been duly reflected in the regular books. The creditors pertained to Chota-Udaipur site. Hence, no interference is called for in the order of the Ld. CIT(A).  The amount reflected on page No.31 of Rs.99,48,763/- of the impounded material, we find that it pertains to the details of the material supplied to the assessee in respect of Swarnim Site. The Ld. CIT(A) simply relied on the ledger account without examining whether the goods indeed are being received or not at the site. The Assessing Officer needs to examine this issue and take a decision after examination of the movement of goods.  The amount reflected on page No.32 of Rs.83,72,190/- of the impounded material, we find that it pertains to the difference of sales to the total purchases for three quarters. The Ld. CIT(A) deleted the addition on the grounds that the total sales and purchases were much more higher than the figures found in the books. The Ld. IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 23– CIT(A) has not examined the figures quarter-wise and how the difference in the three quarters have been arrived at. The Assessing Officer shall examine the figures quarter-wise.  The amount reflected on page No.34 of Rs.12,69,698/- of the impounded material, we find that it pertains to the repairing and renovation works and the Ld. CIT(A) deleted the addition of Rs.5,13,950/- and upheld the addition of Rs.7,55,748/- after due examination. Hence, no interference is called for on this issue.  The amount reflected on page No.39A of Rs.2,08,740/- of the impounded material, we find that it pertains to the details of funds sent to the site and have been duly reflected in the bank statement and bank book, hence calls for no interference.  The amount reflected on page No.50 of Rs.34,53,000/- of the impounded material, we find that it pertains to the car purchased by the Director from his capital account, hence calls for no interference.  The amount reflected on page No.59 of Rs.6,88,739/- of the impounded material, we find that it pertains to notings made on a paper giving the address of one Lilaben Patel. We have gone through the said page and find no correlation with Lilaben as to any payment or receipt or transaction made. In the absence of any correlation, we decline to interfere with the order of the Ld. CIT(A).  The amount reflected on page No.62 of Rs.1,99,400/-, page No. 78 of Rs.2,08,745/- and page No.81 of Rs.2,45,195/- of the impounded material, on going through the material, we find no reason to interfere with the decision of the Ld. CIT(A). IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 24–  The amount reflected on page No.83 of Rs.2,94,375/- of the impounded material which is a petty cash book/site, on going through the material, we find no reason to interfere with the decision of the Ld. CIT(A). Thus, the decision of the ld. CIT(A) on this ground is partly allowed for statistical purposes. 7. Ground No. 3 : Deleting the addition of Rs.4,95,26,262/- on account of unexplained cash deposit 7.1 An addition of Rs. 4,95,26,262/- was made by the Assessing Officer on account of unexplained cash deposits in two bank accounts of the assessee, i.e. (i) Kotak Mahindra Bank Ltd, and (ii) The Mehsana Urban Co- op Bank Ltd., treating the same as unexplained cash credit u/s. 68 of the Act. The Ld. CIT(A) deleted the aforesaid addition on the ground that each and every cash deposits into the aforesaid bank accounts of the assessee- company have been duly explained and recorded into the cash book of the relevant previous year. The cash deposits made in the Kotak Mahindra Bank Ltd were to the tune of Rs. 1.16 crores and in the Mehsana Urban Co- op Bank Ltd to the tune of Rs.3.56 crores. The cash withdrawals were of Rs.1.03 crores and Rs.3.81 crores respectively. The Ld. CIT(A) deleted the addition on the ground that Assessing Officer has not pointed any fault in the cash book maintained by the assessee. 7.2 We have gone through the details of cash withdrawals and cash deposits. We find that the assessee is in the business of real estate and govt. contractor for canal works. The assessee withdraws cash from bank IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 25– accounts and claimed that the amount is not spent immediately, then the same is deposited in another bank account or in the same bank account according to the business exigency. We have gone through the pattern of cash withdrawals and cash deposits. Generally, the cash is withdrawn based on the requirement of cash payments to labourers or to purchase of materials for the immediate requirements or for purchase of fuel at the site. Thus, there was always a purpose for cash withdrawals. Cash was never withdrawn without a specific purpose or without an anticipatory purpose. The cash deposits were to the tune of Rs.4.95 crores and cash withdrawals were Rs. 4.84 (1.03 + 3.81) crores. If we consider this proposition, the entire cash withdrawn was never utilized for any other purpose than depositing it again in different point of time and in different accounts. The vary purpose of withdrawals of cash has never been met. The assessee has to show how such purpose has been met if the same purpose has not been met by the payment of cash withdrawn. It cannot always be the same proposition that the cash has been withdrawn and entered in the cash book to be deposited again. That leads to a conclusion that the cash utilized at the site was meager and cash expenses were paltry. Assessee is not in the business of money lending or banking, but in the business of contract and real estate. Hence, by tallying the cash withdrawals with the cash deposits, it cannot be considered as cash deposits as explained disregarding the place of withdrawal, the account from which the amounts have been withdrawn, the accounts in which the amounts have been deposited, the time lags and the difference in place where the cash was required and where the cash is deposited and the mode of transport of the cash. The conclusion of the Ld. CIT(A) that cash withdrawals prove the cash deposits is on an incorrect appreciation of the facts which has got wider implications of financial and IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 26– forensic accounting. Just because cash has been withdrawn from a bank account does not mean that the same amount was deposited later on. The cash deposits can be from withdrawals, from cash in hand, from external credits, or from unexplained cash credits. Direct or indirect correlation has to be proved with tangible evidences. Merely citing previous withdrawals as the source in the specific background of the business of the assessee is not sufficient proof unless supported by documents proving requirement of cash withdrawals and how such requirements have been met in the absence of utilization of cash withdrawn, which left the assessee with cash in hand, to be deposited on a later date. The assessee has to furnish tangible evidence to substantiate claims that cash deposits are sourced from prior withdrawals. This ensures that the decision of the Revenue Authorities is not solely based on assumptions or generalizations. The Revenue Authorities also should understand business exigencies and the cash flow requirements of the industry. Hence, we are unable to affirm the order of the Ld. CIT(A) and, in the interests of justice, remand the matter to the Assessing Officer to afford an opportunity to the assessee to explain and then to take a decision to determine truthful cash credits. 8. Ground No. 4 : Deleting the addition of Rs.3,00,97,480/- made on account of unexplained source of investment for purchase of immovable property 8.1 An addition of Rs. 3,00,97,480/- was made by the Assessing Officer on account of unexplained source of investment for purchase of immovable properties. We find that the order of the Assessing Officer is very imprecise and wooly. The Ld. CIT(A) observed that the assessee-appellant company has duly accounted for the purchase of immovable properties in its books of account for FY 2016-17. The Ld. CIT(A) deleted the addition holding that IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 27– no adverse inference could be drawn for the payment made from the bank accounts in respect of the purchase of immovable properties since the cash deposits in the bank accounts for the year under consideration were duly explained. For the sake of ready reference, the relevant part of the order of the Ld. CIT(A) on this issue is reproduced which is as under:- “6.8 The Eighth Ground of Appeal is in respect of addition of Rs. 3,00,97,480/- on account of unexplained source of investment for purchase of immovable property. The details of such properties has been tabulated by the AO on page no. 91 of the assessment order, which is reproduced hereunder: Sr. No. Amount Purchase Date Remarks 1 1,30,00,000/- (Usha Society) Purchase (purchase from Bharat Popat) 24-May-2016 On verification of source of funds, unexplained cash deposit is noticed while trailing the funds 2 55,00,000/- (JankiNandan Society) Purchase (Purchase from HansaPopat) 25-May-2016 On verification of source of funds, unexplained cash deposit is noticed while trailing the funds 3 1,15,97,480/- (28,99,370X4) Flat No. A-203, A-204, B-1001, B-1002 Purchase (Purchase from Green Field Realty Pvt. Ltd. 27-Apr-2016 On verification of source of funds, unexplained cash deposit is noticed while trailing the funds and unaccounted entries Total 3,00,97,480/- The AO has observed that the appellant was given number of opportunities to explain source of funds with supporting documentary evidences, however it has failed to provide any cogent evidence or reply in this regard. The AO further observed that during the course of assessment proceedings, it has been gathered that the appellant was involved in transactions with parties who indulged in barter transactions. These parties accepted that it was involved in rotation of funds to get higher loans from banks and other financial institutions. The AO further relied on his findings in para no. 7.3 of assessment order for AY 2011-12 passed u/s. 143(3) r.w.s. 153C of the Act. Accordingly, the AO treated the source of purchase of immovable properties of Rs. 3,00,97,480/- as unexplained and added to the total income u/s. 69B of the Act. IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 28– During the course of appellate proceedings, the appellant company submitted that it has duly replied the query in respect of the purchase and sale of the immovable properties for all the years vide its submission dated 14/12/2018, which was filed in Tapal on same date. The copy of the said submission along with the copy of the purchase deeds for purchase of immovable properties during the FY 2016-17 has been placed on record in the paper book. Thus, it has been contended that the observation of the AO that the appellant has failed to reply is incorrect and misleading. lt has been submitted that the appellant company has purchased I acquired the immovable properties in the course of its business of real estate. The details of the purchase of immovable properties as per above table has been given by the appellant, which is as under: Sr. No. Description of the property purchased Purchased from Total amount Rs. Remarks 1(a) Flat No. A-203, Shiv Kartik Enclave, Vasu, Surat Greenfield Realty Pvt. Ltd. 27,37,500/- 1,34,150/- 27,720/- 28,99,370/- Purchase Consideration Stamp Duty Regn. Fees Total 1(b) Flat No. A-204, Shiv Kartik Enclave, Vasu, Surat Greenfield Realty Pvt. Ltd. 27,37,500/- 1,34,150/- 27,720/- 28,99,370/- Purchase Consideration Stamp Duty Regn. Fees Total 1(c) Flat No. B- 1001, Shiv Kartik Enclave, Vasu, Surat Greenfield Realty Pvt. Ltd. 27,37,500/- 1,34,150/- 27,730/- 28,99,380/- Purchase Consideration Stamp Duty Regn. Fees Total 1(d) Flat No. B- 1002, Shiv Kartik Enclave, Vasu, Surat Greenfield Realty Pvt. Ltd. 27,37,500/- 1,34,150/- 27,730/- 28,99,380/- Purchase Consideration Stamp Duty Regn. Fees Total Sub-total (1) 1,15,97,500/- 2 32, JankiNandan Society Smt. HarshabenBharatbhaiPopat 52,00,000/- 2,55,000/- 52,400/- 55,07,400/- Purchase consideration Stamp Duty Regn. Fees Total 3 16, Usha Society, Near Havmor Restaurant, Stadium six Shri Bharatbhai P. Popat AND Smt. Harshaben B. Popat 1,30,00,000/- 6,37,000/- 1,30,300/- 1,37,67,300/- Purchase consideration Stamp Duty Regn. Fees Total IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 29– Roads, Navrangpura, Ahmedabad- 380009 Grand Total (1+2+3) 3,08,72,200/- It is submitted that all the above purchase of the immovable properties have been duly accounted for in the books of account of the appellant company for FY 2016-17 relevant to AY 2017-18. As regards the source of the payment made for purchase of these immovable properties, it is submitted that the same is from the regular bank accounts of the appellant company. In support of the same, the appellant company filed the ledger account of relevant immovable properties, seller of the properties and the ledger account of the bank for the relevant period reflecting the payment made to the sellers by the appellant company. On verification of the ledger account of the respective banks, it is observed that immediate previous source of availability of the funds is the funds transferred from other bank accounts of the appellant company in most of the case and not the cash deposit as alleged by the AO. The same is tabulated as under: Details of property purchase d Name of party to whom payment made Total amount of payment Payment details Immediate previous source of funds in the said bank account Amt. Rs. Name of Bank Flat No. A- 203 (Shiv Kartik Enclave, Vasu, Surat) Greenfield Realty Pvt. Ltd. 27,37,500 27,37,500 Dated 6/4/2016 Kotak Mahindra Bank Ltd. Funds of Rs. 25,50,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. plus opening balance in the bank account. Flat No. A- 204 (Shiv Kartik Enclave, Vasu, Surat) Greenfield Realty Pvt. Ltd. 27,37,500 27,37,500 Dated 11/4/2016 Kotak Mahindra Bank Ltd. Funds of Rs. 27,50,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. Flat No. B- 1001 Greenfield Realty Pvt. 27,37,500 27,37,500 Dated Kotak Mahindra Funds of Rs. 44,00,000/- transferred rom the bank (Shiv Kartik Enclave, Vasu, Surat) Ltd. 07/5/2016 Bank Ltd. account with The Mehsana Urban Co-Op. Bank Ltd. plus amount of Rs. 6,00,000/- each received from Pradyuman Chemicals & Intermediates and AbhayChunibhai Shah IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 30– Flat No. B- 1002 (Shiv Kartik Enclave, Vasu, Surat) Greenfield Realty Pvt. Ltd. 27,37,500 27,37,500 Dated 07/5/2016 Kotak Mahindra Bank Ltd. Funds of Rs. 44,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. plus amount of Rs. 6,00,000/- each received from Pradyuman Chemicals & Intermediates and AbhayChunibhai Shah Bungalo w No. 32 (Jankinan dan Society) Harsha B. Popat 52,00,000 15,48,000 Dated 25/5/2016 Mehsana Urban Co- Op. Bank Ltd. The appellant company is enjoying credit facility in this bank account. 52,000 It is the amount of TDS 5,00,000 Dated 10/10/2016 Kotak Mahindra Bank Ltd. Funds of Rs. 10,00,028/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 10/10/2016 Kotak Mahindra Bank Ltd. Funds of Rs. 10,00,028/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 13/10/2016 Kotak Mahindra Bank Ltd. Funds of Rs. 12,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 09/1/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 11,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 6,00,000 Dated 09/1/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 11,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 31/1/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 10,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 31/1/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 10,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 31– Bungalo w No. 16 (Usha Society) Bharat Popat&Har shaPopat 1,30,00,000 25,00,000 Dated 24/5/2016 Mehsana Urban Co- Op. Bank Ltd. The appellant company is enjoying credit facility in this bank account. 33,70,000 Dated 25/5/2016 Mehsana Urban Co- Op. Bank The appellant company is enjoying credit facility in this bank account. 1,30,000 It is the amount of TDS 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated Kotak Mahindra Funds of Rs. 71,00,000/- transferred from the bank 27/2/2017 Bank Ltd. account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban CoOp. Bank Ltd. 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 32– 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The 5,00,000 Dated 27/2/2017 Kotak Mahindra Bank Ltd. Funds of Rs. 71,00,000/- transferred from the bank account with The Mehsana Urban Co-Op. Bank Ltd. On the basis of above tabular presentation, it has been contended that there is no immediate previous cash deposits in the bank account as allegedly observed by the AO for drawing adverse inference against the appellant company. It is a general allegation without bringing on record any instances for the previous year 2016-17 relevant to AY 2017-18. Here, it is important to note that the AO has made the addition on account of cash deposited in various bank accounts as discussed in the assessment order and disputed in the grounds of appeal hereinabove. At the same time, the AO has also made the addition in respect of purchase of immovable property treating the same as unaccounted investment alleging that the immediate previous source of payment of consideration for purchase, is cash deposited into the bank accounts. Thus, on one hand the cash deposited into various bank accounts during the year has been added as unexplained cash deposits and on the other hand, the total amount paid for purchase of immovable properties has also been treated as unexplained investment in those cases where there is immediate previous source is cash deposits. This has resulted in duplicate addition, which is unjustified, not permissible and therefore, even otherwise deserves to be deleted. In view of the above facts, submission and the evidences available on record, it is undisputedly proved that the addition made by the AO in respect of the alleged unaccounted investment in purchase of immovable properties amounting to Rs. 3,00,97,480/- is factually incorrect, without proper and correct verification of the details and supporting documents furnished during the course of assessment proceedings and also resulting into duplicate additions. It is further submitted that IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 33– out of the said purchases of different immovable properties, the appellant has sold the immovable properties at Sr. No. 1(a) to 1(d) during the FY 2016-17 itself and the profit / loss arising out of the same has been duly accounted for in the books of account of the appellant company. The necessary details of sale of the immovable properties and the profit / loss arising from the same has been given in the further written submission filed, which has been reproduced hereinbefore. Considering the totality of the fact and the supporting documentary evidences placed on record, I found that the appellant company has duly accounted for the purchase of immovable properties as per the above table in its books of account for FY 2016-17. Further, as regards the source of payment for the purchase of these immovable properties, from the details and supporting bank accounts and statements for the relevant period, it is observed that immediate previous source in the bank account is not the cash deposit as observed by the AO. Further, the AO has made such remarks in general without giving any specific instances in support of his observation. On the other hand, the appellant has demonstrated with the help of the bank ledger account and statements as tabulated hereinabove, that there is no immediate previous cash deposit in the bank account. Further, I have already held that the cash deposits in the bank accounts during the FY 2016-17 are duly explained and the addition for the same has been directed to be deleted. Therefore, even if, the immediate previous source in the bank accounts is cash deposits, then also, since the cash deposits is duly explained, no adverse inference can be drawn for the payment made from the bank accounts in respect of the purchase of immovable properties. Moreover, some of the immovable properties have been sold by the appellant during the FY 2016-17 itself and the profit I loss arising therefrom has been accepted and not been disputed by the AO. Accordingly, the addition of Rs. 3,00,97,480/- made by the AO is directed to be deleted.” 8.2 Since the sources of acquisition of all the immovable properties are being duly explained by the assessee, the order of the Ld. CIT(A) on this issue is hereby affirmed. 9. In the result, appeal of the Revenue is partly allowed. The order is pronounced in the open Court on 22.01.2025 Sd/- Sd/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 22/01/2025 btk IT(SS)A No. 70/Ahd/2021 ACIT Vs. Aaryavart Infrastructure Pvt Ltd Asst. Year :– 2017-18 - 34– आदेश की \u0007ितिलिप अ\rेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b\tथ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड\u001f फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation …….. 2. Date on which the typed draft is placed before the Dictating Member …15.01.2024 3. Other Member……20.01.2024…………… 4. Date on which the approved draft comes to the Sr.P.S./P.S ………20.01.2024……. 5. Date on which the fair order is placed before the Dictating Member for pronouncement …22.01.2024…….. 6. Date on which the fair order comes back to the Sr.P.S./P.S …22.01.2024……………. 7. Date on which the file goes to the Bench Clerk ……….…. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "