BHAGWATIBEN SUMERMAL JAIN,VAPI V. INCOME TAX OFFICER, WARD-1, VAPI, VAPI

ITA 51/SRT/2024

AI Insights

The case involves appeals by Bhagwatiben Sumermal Jain against the orders of the Income Tax Officer (ITO), Ward-1, Vapi, concerning additions made under section 69A of the Income Tax Act, 1961, for the assessment years 2013-14 and 2016-17. The primary issues revolved around the additions made for unexplained cash deposits and unsecured loans. The Tribunal examined the evidence and arguments presented, including bank statements, cash flow statements, and the books of account maintained by the assessee. The Tribunal found that while some disallowances were justified to prevent revenue leakage, other additions lacked sufficient basis and were thus deleted.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26809 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-11-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 18-01-2024
• Other Referred Cases: CIT vs. Durga Prasad More, 82 ITR 504 (SC), Sumati Dayal vs. CIT, 1995 AIR 2109
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: RAJESH UPADHYAY
• Keywords: Set aside; Business income; Additional evidence; Revised return
• Section: 147; 250; 139(1); 22; 44AD; 69A

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.51 & 70/SRT/2024 Assessment Year: (2013-14 & 2016-17) (Physical Hearing) Bhagwatiben Sumermal Jain, B-604 / Pramukh Bill / Chharwada Road, Vapi - 396195 Vs. The ITO, Ward -1, Vapi èथायीलेखासं./जीआइआरसं./PAN/GIR No: AGNPJ7862L (Appellant) (Respondent) Appellant by Shri Rajesh Upadhyay, AR Respondent by Shri Mukesh Jain, Sr. DR Date of Hearing 18/11/2024 Date of Pronouncement 22/11/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: These two appeals by the assessee emanate from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 18.09.2023 and 27.12.2023 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment years (AYs) 2013-14 and 2016-17. 2. In these appeals, a common order was passed in ITA Nos.70 & 51/SRT/2024 on 21.05.2024 wherein the additional evidence submitted by the assessee for AY.2016-17 was admitted and the issue was remitted back to the file of AO to decide afresh in accordance with law. The appeal was allowed for statistical purpose. Following the decision in AY.2016-17, the appeal for 2 ITA Nos.51 & 70/SRT/2024/AY.2013-14 & 2016-17 Bhagwatiben Sumermal Jain AY.2013-14 was also set aside and allowed for statistical purpose. The appeal filed last MA No.23 & 24/SRT/2024 wherein it was contended that there were two grounds in ITA No.51/SRT/2024 for AY.2016-17 i.e., (1) addition u/s 69A for cash deposit of Rs.14,50,950/- and (2) addition of Rs.39,48,000/- u/s 69A for cash credit. The assessee had requested for admitting additional evidence in respect of ground No.2 on addition of unsecured deposit of Rs.39,48,000/-. The additional evidence was admitted and the issue was remitted back to AO to decide afresh in accordance with law. Neither any additional evidence was filed in respect of ground no.1 nor the ground was withdrawn. Hence, the Miscellaneous Application filed by assessee was allowed. The order was recalled to decide ground No.1. Therefore, the only ground which requires decision in ITA No.51/SRT/2024, is ground no.1. It reads as under: “1. Ld. CIT(A), NFAC, Delhi has erred in law and on facts to upheld AO’s addition u/s 69A of the I.T. Act, Rs.14,50,950/- on account of cash deposited in bank ignoring the fact that the appellant was having adequate cash on hand in form of cash withdrawals and cash sales, which have already been assessed, consequently, further addition amounts to double taxation.” 3. The facts of the case have been discussed in the original order of the Tribunal in ITA No.70 & 51/SRT/2024 dated 25.05.2024. However, the facts pertaining to ground No.1 may be is briefly discussed as follows: The assessee filed her return of income for AY.2016-17, declaring total income of Rs.6,97,790/-. Based on information received from the ADIT (Inv.), Vapi, notice u/s 148 was issued in response to which assessee filed return of income on 28.11.2018, declaring total income at Rs.7,32,430/-. Since the assessee have not given proper explanation or evidence regarding the identity and 3 ITA Nos.51 & 70/SRT/2024/AY.2013-14 & 2016-17 Bhagwatiben Sumermal Jain creditworthiness of the creditors and genuineness of the transaction, the AO had added the cash deposit of Rs.14,50,950/- as well as cash credit of Rs.39,48,000/- in the order u/s 147 of the Act. Before the CIT(A), the assessee submitted that cash deposit of Rs.14,50,950/- was out of cash withdrawal from bank and from the cash sales. The assessee also submitted cash flow statement. The CIT(A) did not accept the contention of assessee because in the original return of income, assessee had not shown any income from operation. Hence, the addition was confirmed. 4. Before the Tribunal, the Learned Authorized Representative (Ld. AR) submitted that the addition of Rs.14,50,950/- amounts to double taxation. He submitted that the ITR filed u/s 148 dated 28.11.2018 was accepted for the purpose of re-assessment. The total credits in all bank accounts were Rs.89,48,348/- and not Rs.56,37,720/- as stated by AO in para 6.2 of his order. The Ld. AR also submitted that total credits in all bank accounts are considered while filing ITR u/s 148 of the Act. In support, he has filed date-wise summary of each credit entries for all bank accounts at page 22 to 27 of the paper book. The cash flow statement is given at page 30 of the paper book. He has also submitted copies of daily cash book, sales register, purchase register and bank statements are in the paper book. The Ld. AR submitted that the AO has not rejected the books of account and no discrepancy has been pointed out by AO or CIT(A) in the sales, purchases, cash book and the bank book. The only reason for rejecting the claim of assessee was that she had not shown sales and 4 ITA Nos.51 & 70/SRT/2024/AY.2013-14 & 2016-17 Bhagwatiben Sumermal Jain purchases in the original return filed u/s 139(1) of the Act. The Ld. AR submitted that section 69A cannot be applied because cash deposits in the banks are recorded in the regular books of account. 5. On the other hand, learned Senior Departmental Representative (Ld. Sr. DR) of the revenue supported the order of lower authorities. He submitted that the assessee has not shown any sale or purchase in the original return as stated by the AO in his order. He further submitted that the CIT(A) in para 6.4 has observed that the conduct of appellant is suspicious because in the original return, she has not shown any revenue from operation but the same have been shown in the return filed in response to notice u/s 148 of the Act. The appellant has not given reasons for not showing these transactions in the original return. He submitted that CIT(A) has relied on the decision of Hon’ble Supreme Court in case of CIT vs. Durga Prasad More, 82 ITR 504 (SC) and Sumati Dayal vs. CIT, 1995 AIR 2109. He further submitted that assessee is not able to prove source of the cash deposits. 6. In the rejoinder, the Ld. AR stated that return u/s 139(1) was filed u/s 44AD of the Act. The turnover was Rs.56,07,540/- and the profit was Rs.5,39,250/-. The books were not rejected by the AO nor any deficiency was pointed out. Further, the assessee had given detailed explanation which is at pages 22 and 29 of the paper book. Therefore, the addition is not justified. 7. We have heard both the parties and perused the materials available on record. We have also deliberated on the decisions relied upon by the parties. In 5 ITA Nos.51 & 70/SRT/2024/AY.2013-14 & 2016-17 Bhagwatiben Sumermal Jain the original return u/s 139(1) of the Act, filed on 31.03.2017, the assessee had shown total income of Rs.6,97,790/- including profit from business at Rs.5,30,250/- u/s 44AD of the Act, which is placed at page 1 and 2 of the paper book. In the return filed u/s 148 of the Act, assessee has shown total income of Rs.7,32,430/- including income from business at Rs.5,39,250/-. There cannot be profit from business unless there are purchases and sales by the assessee. Moreover, assessee had computed profit u/s 44AD of the Act. Hence, it would not be correct to observe that assessee had not shown sales and purchases in original return. As there was not scrutiny, assessee had no occasion to explain the details in this regard. When the assessee was called in question during proceedings u/s 147, she has submitted various details including the bank book, cash book, sales register, purchase register, bank statement etc. These books have not been rejected by the AO. There is also no cogent reason as to why the evidences were not accepted. The reason given by the AO that assessee had not shown sales and purchases in the original return is not correct because she had offered income u/s 44AD of the Act. The turnover of the assessee was Rs.56,07,540/- which was below the limit prescribed in the said section. Therefore, the assessee cannot be faulted for preparing complete details in response to notice u/s 148 of the Act and submitting books of account and details before the AO in support of the return filed under said section. The AO has not discussed the details and evidences submitted by the assessee and why 6 ITA Nos.51 & 70/SRT/2024/AY.2013-14 & 2016-17 Bhagwatiben Sumermal Jain they are not accepted. He has also not rejected the books of account. Therefore, making addition of the total cash deposit is not proper. 7.1 Having held as above, let us consider explanation of assessee regarding the sources of cash deposits of Rs.14,50,000/-. The assessee has explained the source of cash deposits as under: Source of cash deposits Amount Opening Cash Balance 28,402 Add: Cash withdrawals from banks 5,73,000 Add: Business Surplus 10,32,552 Less: Withdrawals 1,66,912 Less: Cash Deposits in banks 14,50,950 Closing Cash Balance 16,092 7.2 Regarding business surplus of Rs.10,32,552/-, the assessee has stated that it was difference between “sales” and “purchase and expenses”. However, the assessee has not been able to correlate the date-wise cash deposit with the available cash balance on such date. The assessee has not been able to prove the nexus between cash deposit and its availability. The assessee has submitted purchase and sale bills on random basis which makes the explanation rather suspect and not fully acceptable. Therefore, keeping in view the facts that neither the assessee could satisfactorily prove the cash sales nor the AO rejected the books of account, we consider that a reasonable disallowance would meet the ends of justice. Considering the facts and circumstances of the case, disallowance of Rs.2,50,000/- would be reasonable to avoid the possibility of revenue leakage. Accordingly, the addition of Rs.12,50,950/- is deleted and addition of Rs.2,50,000/- is sustained. The ground is partly allowed. 7 ITA Nos.51 & 70/SRT/2024/AY.2013-14 & 2016-17 Bhagwatiben Sumermal Jain 8. In the result, the ground no.1 in ITA No.51/SRT/2024 is partly allowed. ITA No.70/SRT/2024 for AY. 2013-14: 9. The grounds of appeal raised by the assessee in ITA No.70/SRT/2024 are as under: “1. Ld. Addl., JCIT(A)-11, Delhi has erred in law and on facts to upheld AO’s addition u/s 69A of Rs.6,08,000/- made on account of cash deposit in bank overlooking the fact that the appellant was having adequate cash due to rent income, cash sales and cash withdrawal from bank. 2. Ld. Addl.,/JCIT(A)-11, Delhi has erred in law and on facts to upheld AO’s addition u/s 69A of the I.T. Act for Rs.1,50,000/- ignoring the fact that the said amount is genuine cash credit from appellant’s husband Sumermal Hiralal Jain [PAN – AFNPJ7408P], who was other evidences in support of his unsecured deposit to the appellant.” 10. Brief facts of the case are that assessee filed return of income on 05.02.2014, declaring total income at Rs.5,12,410/-. The case was reopened based on the information received from ADIT (Inv.), Vapi that the total credit in bank account of assessee was Rs.10,23,196/- whereas gross income was Rs.6,13,195/-. In response to notice u/s 148 of the Act, assessee filed income at Rs.5,15,310/-. The AO, after considering reply of assessee observed that there was unexplained cash deposit of Rs.6,08,000/- and unsecured loan of Rs.1,50,000/-. He added Rs.7,58,000/- (Rs.6,08,000 + Rs.1,50,000) u/s 69A of the Act. Aggrieved, the assessee filed appeal before the CIT(A). The CIT(A) issued two notices of hearing, which were not complied with by the assessee. Therefore, the CIT(A) confirmed the addition made by AO by observing that the assessee has failed to discharge the onus to explain the reason for discrepancy found in the original return and revised return. 8 ITA Nos.51 & 70/SRT/2024/AY.2013-14 & 2016-17 Bhagwatiben Sumermal Jain 11. Aggrieved by the order of the CIT(A), the assessee filed the appeal before the Tribunal. Regarding ground no.1, the Learned Authorized Representative (Ld. AR) of the assessee has made similar submission as was made in the earlier appeal for AY.2016-17, discussed above. He has submitted similar details in the paper book. He submitted that ITR filed u/s 148 of the Act was accepted and admitted for the purpose of reassessment. The original ITR was filed by computing income u/s 44AD of the Act, but the return u/s 148 was filed on the basis of complete set of account, which are at pages 8 to 14 of the paper book. The Ld. AR also submitted that date-wise summary of each credit entries for all bank accounts are given at pages 15 to 17 and cash flow statement is given at page 18 of the paper books. Copy of daily cash book, sale register with sample sale bills, purchase register with sample purchase bills and bank statements have also been given in the paper book. All these details were given to the AO and CIT(A) during the assessment and appellate proceedings. However, neither books are rejected nor any discrepancy was pointed out by the AO. Only reason for rejecting the claim is that assessee has not shown the sale and purchase data in original return filed u/s 139(1) of the Act. The Ld. AR further stated that section 69A of the Act has not application because cash deposits are duly recorded in the books. 12. On the other hand, Ld. Sr. DR for the revenue relied on the orders of the lower authorities. 9 ITA Nos.51 & 70/SRT/2024/AY.2013-14 & 2016-17 Bhagwatiben Sumermal Jain 13. We have heard both the parties and perused the materials available on record. The source of cash deposits as explained by the Ld. AR is as under: Source of cash deposits Amount (in Rs.) Opening Cash Balance 17,243 Add: Cash withdrawals from banks 3,67,000 Add: Rent Income 1,08,000 Add: Business Income 2,51,400 Less: Drawings 1,23,700 Available Cash 6,19,943 13.1 The appellant has shown cash sales of Rs.15,10,903/- as against which purchases and expenses are Rs.12,59,464/-. We find that there is not much difference between the business income shown in the original return u/s 139(1) and the return filed in response of notice u/s 148 of the Act. These were Rs.1,32,123/- and Rs.1,35,019/- respectively. The Ld. AR has submitted various details including the bank book, cash book, sales register, purchase register, bank statement etc. which have not been disputed by the AO. There is no cogent reason as to why the evidences were not accepted. The reason given by the AO that assessee had not shown sales purchases in the original return is not correct because she had offered income u/s 44AD of the Act. The turnover of the assessee was Rs.16,25,903/- which was below the limit prescribed in the said section. Therefore, the assessee cannot be faulted for preparing complete details in response to notice u/s 148 of the Act and submitting all the details before the AO in support of the return filed under the said section. The AO has not discussed the details and evidences submitted by the assessee and why they are not accepted. He has also not rejected the books of account. 10 ITA Nos.51 & 70/SRT/2024/AY.2013-14 & 2016-17 Bhagwatiben Sumermal Jain Therefore, making addition of the entire amount is not proper. However, we find that in the source of cash deposit, the assessee has taken business surplus of Rs.2,51,400/-, rent income of Rs.1,08,000/- and cash withdrawals from banks of Rs.3,67,000/-. These are for the full year, but the cash has been deposited on different dates. The assessee has not been able to correlate the date-wise cash deposits with cash balance in hand on the particulars date of deposit. The assessee has also given sample purchase and sale bills on random basis which makes the explanation rather suspect and not fully acceptable. Therefore, keeping in view the facts that neither the assessee could prove the cash sales nor the AO rejected the books of account, we consider that a reasonable disallowance would meet the ends of justice. Considering the facts and circumstances of the case, sdisallowance of Rs.1,50,000/- would be reasonable to avoid the possibility of revenue leakage. Accordingly, the addition of Rs.4,58,000/- is deleted and Rs.1,50,000/- is sustained. The ground is partly allowed. 14. In the result, the ground no.1 is partly allowed. 15. Ground No.2 pertains to addition of Rs.1,50,000/- towards unsecured loans. The Ld. AR submitted that there was no unsecured loan but the impugned amount was receipt of the advance given to Shri Sumerlal H. Jain, husband of the assessee. The assessee had given loan of Rs.2,00,000/- to Shri Sumerlal H. Jain, who returned Rs.1,00,000/- on 01.03.2013 and Rs.50,000/- on 11 ITA Nos.51 & 70/SRT/2024/AY.2013-14 & 2016-17 Bhagwatiben Sumermal Jain 05.03.2013. Both the loans and repayments were through banking channel. Confirmation of Shri Sumerlal Jain is at page 24 of the paper book. 16. On the other hand, the Ld. Sr. DR has not contested the claim of the assessee. 17. We have verified the details submitted by the assessee and find that the claim is correct. We find that it was repayment of loan advanced by the assessee and not unsecured loan accepted during the year. The assessee has received that Rs.1,50,000/- out of loan of Rs.2,00,000/- given to her husband. Hence, the addition is deleted. Accordingly, ground no.2 is allowed. 18. In the result, the ground no.2 is partly allowed. 19. In the combined result, the appeal of the assessee is partly allowed. Order is pronounced in the open court on 22/11/2024. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 22/11/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "