BHANWAR SINGH,SIKAR V. CIRCLE (INTL TAX), JAIPUR, JAIPUR

ITITA 1/JPR/2025

AI Insights

The case involves Shri Bhanwar Singh, a non-resident Indian, who faced an addition of Rs. 90,25,000 in his income for the assessment year 2017-18, attributed to unexplained cash deposits in his bank account. The Income Tax Department initially treated the entire amount as unexplained income. However, upon appeal, the Dispute Resolution Panel (DRP) reduced the addition to 25% of the total amount, acknowledging some of the deposits as explained by the assessee. The Tribunal further examined the evidence and arguments presented by both parties, including the assessee's explanation of the source of the deposits and the legal applicability of section 115BBE, and ultimately decided in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775472 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 09-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 08-02-2025
• Other Referred Cases: Hersh Win Chadha vs DDIT, Karishma Sharma Vs. ITO (Intl. Taxation), CIT vs. Smt. P.K. Noorjahan, CIT vs. Vatika Township Private Limited, Jignasha Vishal Patel vs. DCIT-1(1), Raipur
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H
• Assessee Lawyers: P.C. PARWAL
• Keywords: Retrospective amendment; Fair market value; Salary income; Capital Gains; Block assessment
• Section: 143(3); 132; 68; 69; 69C; 145

Judgement Text

"vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,’’A” JAIPUR Mk0 ,l- lhrky{eh]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM IT (IT)A No. 01/JP/2025 AssessmentYear : 2017-18 Shri Bhanwar Singh Kalani & Co. 5th Floor, Milestone Building Gandhi Nagar Mod, Jaipur- 302 015 cuke Vs. The DCIT (Intl.Tax) Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: CIGPS 1427 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby :Shri P.C. Parwal, CA Shri Yogesh Parwal, CA jktLo dh vksjls@Revenue by: Mrs. Anita Rinesh, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 08/07/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: : 09/09/2025 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal filed by the assessee is directed against the assessment order dated 21-01-2025 passed by Income Tax Department, Circle (Intl.Tax), Jaipur for the assessment year 2017-18, raising therein following grounds of appeal. ‘’1. Based on facts and circumstances of the case and in law, the Ld. AO/ DRP have erred in confirming the addition of Rs.22,56,250/- out of total cash deposit of Rs 90,25,000 in the bank account u/s 69A of IT Act being 25% of the total cash deposit in the bank account by holding that cash in hand in form of capital was available with the Assessee to Printed from counselvise.com 2 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur claim that as source of cash deposit in the bank account but presuming that considering the circumstantial evidence, earning of some revenue income i.e. interest through circulation of this capital cash in hand cannot be rejected without bringing on record any evidence of circulation of cash in hand for earning of alleged interest income. The DRP has further erred in not accepting the explanation of assessee that out of the above cash deposit, cash of Rs.6,50,000/- deposited on 12.11.2016 is out of cash withdrawal made on 07.11.2016. 2. The Ld. AO/ DRP have erred in facts and in law in taxing alleged unexplained cash deposit in the bank account u/s 115BBE @ 60% instead of taxing the same @ 30% by ignoring that section 115BBE substituted by Taxation Laws (Second Amendment Act), 2016 which received the assent of President on 17.12.2016 and made applicable from 01.04.2017 is not applicable to AY 2017-18. ‘’ 2.1 The brief facts of the case is that assessee is a non-resident who filed the return of income in India declaring total income of Rs.5,08,870/- & agricultural income of Rs.3,09,600/-. In the assessment made u/s 143(3) dt.24.12.2019, the AO made addition of Rs.90,25,000/- buy treating the cash deposit in the bank account as unexplained. The addition was confirmed by ld. CIT(A) vide order dt.04.07.2022. However the Hon’ble ITAT vide order dt.17.02.2023 remanded the matter back to the file of AO for necessary adjudication after giving opportunity of hearing to the assessee. 2.2 In course of the remand proceedings, the assessee explained the source of cash deposit as out of cash withdrawal from the bank account and in the bank account the source of deposit is out of conversion of Euros Printed from counselvise.com 3 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur into INR. The AO however did not accept the explanation and the evidence field for the source of credit in the bank account and passed the draft assessment order dt.22.03.2024 u/s 144C(1) of the Act by again proposing addition of Rs.90,25,000/- u/s 69 of the Act. It is pertinent to mention that the AO reproduced the draft assessment order in his final assessment order dated 21-01-2025 which is not imperative to repeat it. 2.3 Against the draft assessment order dt.22.03.2024 assessee filed appeal before DRP. Hon’ble DRP after considering the evidences and the explanation filed by the assessee vide order dt.23.12.2024 directed the AO to assess 25% of the cash deposit in the bank account that is Rs.22,56,250/- as income of the assessee as attributed to the capital cash in hand out of the disclosed source of income, earned abroad. The relevant para 3.12 of the DRP-1 is reproduced as under:- ‘’3.12 In support of his claim that it was social custom amongst his clan to keep cash at home, assessee has not furnished any evidence in support of his contention. As far as quantification of income liable to tax under section 69A of the Act is concerned, upon consideration of factual matrix of the case, the Panel hereby holds that 25% of the cash deposited in bank account during F.Y. 2016-17 i.e. (25% of Rs. 90,25,000 = Rs.22,56,250/-) represented income of assessee that was liable to tax under section 69A of the Act while the remaining sum can be attributed to the capital cash-in-hand out of disclosed source of income, earned abroad. The AO is hereby directed to modify Printed from counselvise.com 4 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur the computation accordingly. The ground of objection is partly allowed.’’ Accordingly, AO in the final assessment order dt.21.01.2025 made addition of Rs.22,56,560/- u/s 69A of the Act. Against this order the assessee has filed appeal before the Hon’ble ITAT. 2.4 During the course of hearing, the assessee has filed the following written submission to counter the assessment order dated 21-03-2024. Ground No.1 Based on facts and circumstances of the case and in law, the Ld. AO/ DRP have erred in confirming the addition of Rs.22,56,250/- out of total cash deposit of Rs 90,25,000 in the bank account u/s 69A of IT Act being 25% of the total cash deposit in the bank account by holding that cash in hand in form of capital was available with the Assessee to claim that as source of cash deposit in the bank account but presuming that considering the circumstantial evidence, earning of some revenue income ie interest through circulation of this capital cash in hand cannot be rejected without bringing on record any evidence of circulation of cash in hand for earning of alleged interest income. The DRP has further erred in not accepting the explanation of assessee that out of the above cash deposit, cash of Rs.6,50,000/- deposited on 12.11.2016 is out of cash withdrawal made on 07.11.2016. Facts:- 1. The Assessee is a resident of Italy and a non-resident for Indian income tax purpose for the subject AY. The Assessee is employed with M/s Cerzoo Centro Di Recerche Per La Zootecniae Lambiente, Italy, a research institute for livestock and environment since 2002 and earns salary income in Italy and agriculture and interest income in India. The Assessee filed return of income in India on 8 January 2018 (PB 62-65) declaring total income of Rs 5,08,870 and agriculture income of Rs 3,09,600. 2. Assessment order under section 143(3) of the Act dated 24 December 2019 was passed in the case of the Assessee making addition of Rs 90,25,000 (PB 1-15). The Assessee filed an appeal before the Commissioner of Income Tax (Appeals) [“CIT(A)”] against the said assessment order and the CIT(A) vide order dated 4 July 2022 confirmed the addition made by the AO (PB 16-25). Against the CIT(A) order, the Assessee filed appeal before the Jaipur Bench of Income Tax Appellate Tribunal (“ITAT”) who vide order dated 17 February 2023 (PB 26-51) remanded the matter back to the file of the AO for necessary adjudication after giving opportunity of hearing to the Assessee. Printed from counselvise.com 5 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur 3. During the course of original and remand back assessment proceedings, the Assessee submitted that cash deposit of Rs 90,25,000 in his PNB A/c during the subject AY was out of cash in hand available as on 1 April 2016 which was out of cash withdrawn by the Assessee from the bank account. The Assessee vide letter dated 12 October 2023 (PB 52-61) explained the background in which the cash withdrawn remained accumulated and lying with his uncle out of which Rs 83,75,000 was deposited between 22 August 2016 to 07 September 2016, i.e. before demonetization and Rs 6,50,000 deposited on 12 November 2016 during demonetization period which was from the amount of Rs 6,50,000 withdrawn on 7 November 2016. In support of accumulation of cash, the Assessee filed cash book, balance sheet and capital account for FY 2012-13 to 2016-17 (PB 62-101). 4. Draft assessment order dated 22 March 2024 was passed by the Ld. AO proposing addition of Rs 90,25,000. Against the draft assessment order, the Assessee filed objections before the Hon’ble Dispute Resolution Panel (“DRP”). The DRP vide directions dated 23 December 2024 granted partial relief to the Assessee of Rs 67,68,750 and confirmed addition of Rs 22,56,250, being 25% of total cash deposited of Rs 90,25,000 during the year holding that cash-in-hand in form of capital was available with the Assessee to claim that source of cash deposit in bank account in FY 2016-17, but considering the circumstantial evidence, earning of some revenue income ie interest income through circulation of capital cash in hand, cannot be rejected (para 3.10 of the DRP directions). Submission:- Source of cash deposit of Rs.83,75,000/- between 22.08.2016 to 07.09.2016 Background of the Assessee 5. The parents of the Assessee and his uncle (who has no children) hails from village Tatanwa, Sikar, Rajasthan. The father of Assessee expired in the year 1986 and mother expired in the year 2014. Since uncle of Assessee Sh. Chog Singh has no children, he considered the Assessee as his son. The Assessee used to transfer his foreign savings in the NRE A/c maintained with PNB and Axis Bank. 6. In respect of his transaction in the bank account and income from agriculture and interest in India, the Assessee has maintained books of accounts consisting of cash book, bank book and ledgers. In course of assessment proceedings, the Assessee filed Balance Sheet and capital account for the period FY 2010-11 to 2016-17 (PB 66-79), cash book for the period FY 2006-07 to FY 2016-17 (PB 81-91) and bank statements (PB 92-101) in support of cash balance available with him which was deposited by his uncle in his bank account. During the DRP proceedings, the Assessee submitted evidences (PB 102-125) of earning income in foreign currency (Euro), declaration of currency notes brough in India at the Custom Department in Currency Declaration Form, exchange of Euro into INR through RBI authorized currency exchanger and deposit of cheque received from authorized currency exchanger into the bank account of the Assessee from where the amount was withdrawn. This process has duly been accepted and noted by the Hon’ble DRP along with a table of foreign currency converted at para 3.5 of its directions. Screenshot of the same is as under: 7. As evident above, the Hon’ble DRP accepted the source of cash deposited by the Assessee but made addition of 25% of Rs 90,25,000 on the following basis: Printed from counselvise.com 6 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur a. The Assessee was earning interest and agricultural income as per the ITR. It is probable that as the Assessee is relatively from a sound financial background, the Assessee was providing financial accommodation to his acquaintances on which he would have earned interest income through circulation of money kept in form of cash (para 3.7 of DRP directions.) b. As per AO, the Assessee has withdrawn Rs 1,48,78,500 from NRI A/c and Rs 46,69,600 from savings account during the period 2006-07 to 2016-17. Thus, it is clear that cash-in-hand in form of capital was available with the Assessee to claim that as source of cash deposit in bank account in FY 2016-17. However, considering circumstantial evidence, earning of some revenue income ie interest income through this capital cash-in-hand cannot be rejected (para 3.10 of the DRP directions). c. The Hon’ble Panel relied on decision of Delhi Bench of ITAT in the case of Hersh Win Chadha in ITA No 3088 to 3098 & 3107/Del/2005 to rely upon usage of circumstantial evidence in income tax proceedings. 8. It is submitted that the circumstances as assumed by the Hon’ble DRP do not suggest earning of interest income from cash in hand which was withdrawn from the bank account of the Assessee. The Hon’ble DRR / AO has not bought on record any such evidence of earning interest income in cash through circulation of cash-in-hand. Contrary to it, the Assessee has filed complete cash book from FY 2006-07 to FY 2016-17 (PB 81-91) evidencing how the cash withdrawn from bank account was utilized by the Assessee ie for purchase of immovable property, purchase of vehicle, purchase of ornaments and deposit back in the bank account. Thus, without bringing anything on record, much less the circumstantial evidence, addition on presumption of 25% of cash deposit made by the Ld AO is unjustified and be directed to be deleted. 9. The decision of Delhi Bench of ITAT in the case of Hersh W. Chadha vs DDIT [2011] 43 SOT 544 (Delhi) (PB 126-172) is not applicable to the facts of the present case as in that case the income tax department had evidence that audit department of Swedish Government had confirmed that Bofors company had made payment of commission to the taxpayer and also relying upon other evidences and own admission by the taxpayer, the ITAT confirmed the addition made by the AO. The head note of the decision is as under: “Section 69A of the Income-tax Act, 1961 - Unexplained moneys - Assessment years 1987-88 to 1993-94 and 1995-96 to 1999-2000 - Bofors, a swedish company, was dealing in arms and ammunition - Assessee was representing Bofors as its agent in India - Indian defense purchase policy, till 1984, allowed foreign bidders to have their Indian agents - Subsequently, Government of India in consultation with Defence Department, made a uniform policy, prescribing that agents were not to be allowed in Indian defence purchases - Consequent to changed defence purchase policy, Defence Department, asked Bofors to dispense with services of its declared agent and comply with such Indian Defence policy requirements - Bofors informed Defense Secretary that it did not have any representative/agent especially employed in India - However, for administrative services, such as hotel bookings, transportation, forwarding of letters, telexes, etc., they were using a local firm having assessee's address - On 24-3-1986, a contract was entered into between Government of India and Bofors, for supplying four hundred gun systems along with vehicles, ammunition and other accessories - Over a year after said contract was executed, a Radio Broadcasting Channel in Sweden unfolded that Bofors had violated Swedish Law by managing to obtain gun supply contract form Government of India amongst other things, due to fact that local agents had been paid large Printed from counselvise.com 7 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur amounts in 'bribes' - Swedish Government ordered an enquiry by its organisation, Swedish National Audit Bureau (SNAB) - SNAB confirmed that payments to tune of SEK 170-250 million were indeed made by Bofors in connection with defence contract to its previous agent in India, but names of recipients were not mentioned - In wake of these revelations, documents and evidences, Income-tax Department commenced assessment proceeding in assessee's case - Thereupon Assessing Officer in detailed orders for assessment years 1987-88 and 1988-89, held that assessee received commission from Bofors over and above commission shown in his returns of income and made additions - On appeal, Commissioner (Appeals) confirmed addition - On instant appeal, it was noted that assessee's long-standing connections as a representative of Bofors and its looking after sales promotion and their interests in India were not denied - Further, assessee's own admission and observations of Commissioner (Appeals) clearly showed that assessee was very much representative of Bofors and, accordingly, Bofors had deputed him to attend a principal to principal Defence Suppliers Conference on its behalf - It was also noted that audit department of Swedish Government had confirmed that Bofors company had made payment of commission - Besides, assessee's dominant position at time of ripening of prestigious defence deal, maintaining/operating key bank accounts, and his capacity to transfer funds, trail whereof had been demonstrated by Assessing Officer, was not in dispute - Whether in aforesaid circumstances, assessee could not be regarded as a mere booking agent of Bofors rather he was acting as a representative of foreign company - Held, yes - Whether, therefore, Assessing Officer was justified in adding amount of commission to assessee's income - Held, yes” 10. As mentioned above, in the instant case, the Ld AO/ DRP have no evidence to prove that interest income from cash in hand was earned by the Assessee. The Assessee has also filed complete cash book which has not been disputed by the DRP. Thus, addition of Rs 22,56,250 being 25% of total cash deposit of Rs 90,25,000 in the bank account u/s 69A of IT Act be deleted. Source of cash deposit of Rs.6,50,000/- on 12.11.2016 11. In relation to cash deposit of Rs 6.50 lacs on 12.11.2016, it is submitted that the Assessee had withdrawn Rs 6.50 lacs from his NRE A/c on 07.11.2016, i.e. just one day before the date of demonetization. After demonetization on 08.11.2016, the uncle of Assessee deposited the same amount on 12.11.2016 which was withdrawn on 07.11.2016. The source of cash deposit of Rs 6.5 lacs is fully explained and evidenced. However, the DRP on a presumption, applied 25% rate on the entire cash deposit of Rs 90,25,000 (which includes Rs 6,50,000 as well) and therefore the addition made of Rs 1,62,500 (Rs 6,50,000 * 25%) which forms part of total addition of Rs 22,56,250 is incorrect and therefore be deleted. Section 69A is not applicable 12. It is further submitted that the lower authorities have has made the addition u/s 69A. Section 69A reads as under:- Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. Printed from counselvise.com 8 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur 13. From the plain reading of the section, it can be noted that AO may deem the money as income of the assessee if the same is not recorded in books of accounts and the assessee offers no explanation or the explanation offered by him in the opinion of AO is not satisfactory. In the present case, the amount is recorded in the books and the assessee has offered the explanation. Only because the explanation is not found satisfactory by the AO, it does not give him unfettered right to make the addition since the section uses the word ‘may’ which gives discretion to the AO not to make the addition even if he is not fully satisfied with the explanation of assessee. This principal is approved by Hon’bleSupreme Court in case ofCIT vs. Smt. P.K. Noorjahan (1999) 237 ITR 570.In this case, assessee was a Muslim lady aged 20 years. She made certain investments in land. The explanation of assessee regarding the source of the purchase money for these investments was that the same were financed from out of the savings from the income of the properties which were left by her mother’s first husband. The said explanation offered by the assessee was rejected and addition was made u/s 69. The Tribunal, however, held that even though the explanation about the nature and sources of the purchase money was not satisfactory but in the facts and circumstances of the case it was not possible for the assessee to earn the amount invested in the properties and that by no stretch of imagination could the assessee be credited with having earned this income in the course of the assessment year or was even in a position to earn it for a decade or more. The Tribunal took the view that although the explanation of the assessee was liable to be rejected, s. 69 of the Act conferred only a discretion on the ITO to deal with the investment as income of the assessee and that it did not make it mandatory on his part to deal with the investment as income of the assessee as soon as the latter’s explanation happened to be rejected. According to the High Court, the Tribunal had not committed any error in taking into account the complete absence of resources of the assessee and also the fact that having regard to her age and the circumstances in which she was placed she could not be credited with having made any income of her own and in these circumstances the Tribunal was right in refusing to make an addition of the value of the investments to the income of the assessee. Ld. counsel appearing for the Revenue, has urged that the Tribunal as well as the High Court were in error in their interpretation of s. 69 of the Act. It was held by Hon’ble Supreme Court as under:- “We are unable to agree. As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word \"shall\" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word \"may\". This clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under s. 69 of the Act to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. In the instant case, the Tribunal has held that the discretion had not been properly exercised by the ITO and the AAC in taking into account the circumstances in which the assessee was placed and the Tribunal has found that the sources of investments could not be treated as income of the assessee. The High Court has agreed with the said view of the Tribunal. We also do not find any error in the said finding recorded by the Tribunal. There is thus no merit in these appeals and the same are accordingly dismissed.” In the present case, Assessee is a non-resident and has no source of income in India other than agricultural and interest income. Therefore, even if the explanation of Assessee in the opinion of lower authorities is not satisfactory, it cannot be presumed that the amount deposited in the bank account is out of the undisclosed income of Assessee without bringing on record an iota of evidence. Further, once the Hon’ble DRP has held that Rs 22,56,250 represented income of the Appellant, the same cannot be taxed under section 69A of the Act as this section can be invoked to tax undisclosed Printed from counselvise.com 9 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur investment money and not undisclosed income. Hence, the addition made by AO u/s 69A is otherwise not as per law. 14. In case of Karishma Sharma Vs. ITO (Intl. Taxation), the Hon’ble ITAT, Bangalore Bench (2022) 98 ITR(Trib.) 65 where AO made the addition in respect of cash deposit in the bank account after demonetization which was claimed to be out of the amount received against agreement to sale in respect of flat in 2013, deleted the same by giving the following findings at Para 11 & 12 of the order:- 11. I have heard rival submissions and perused the material on record. The undisputed fact is that flat belonging to the assessee has been sold as per the registered deed dated 14.08.2013. According to the assessee, this flat was sold for Rs.44,70,000, whereas, the sale deed reflected only an amount of Rs.27,00,000. The assessee claims that she has received balance consideration of Rs.17,70,000 in cash. It is an undisputed fact that the assessee has entered into a sale agreement of the said flat for an amount of Rs.39,00,000 plus additional consideration of Rs.6,00,000, which is reflected in the agreement of sale dated 24.04.2013. Copy of the sale agreement is on record at pages 95 to 107 of the paper book filed by the assessee. It is an undisputed fact that the property sold by the assessee and her mother in the very same apartment complex in the earlier AY 2013-14 are in the range of 44 lacs (for each of the flats). The entire sale consideration which is in the range of Rs.44 lakh for each of the flats, has been offered to tax by the assessee and her mother in their respective income tax returns, which find place in the paper book compilation filed by the assessee. It is also an undisputed fact that the assessee has in her return of income has declared the total sale consideration at Rs.44,70,000/- as being the full sale consideration for sale of property. The return of income filed by the assessee is prior to demonetization period. This demonstrates the bonafides of the assessee in declaring the entire receipts, i.e. both in cheque and cash. In view of the above, it is clear that FMV of flat sold is Rs.44.70 lakh as disclosed in the return of income filed by the assessee. Therefore, cash receipt of Rs.17,70,000 on sale of flat on 14.08.2013 cannot be brushed aside as untrue. 12. Further question is, why the delay in depositing the above cash receipt on account of sale of flat. In respect of the inordinate delay in depositing the cash into the bank account, the argument of the assessee is that the revenue has not brought anything on record to suggest that the cash was utilised or put to use in any other manner. It is further stated that the assessee was not present in India to spend the money and same was lying with her father. It was stated that only on annual visits to India, the assessee used to spend money for her personal purposes. The balance cash remaining with her father was deposited into bank account after demonetization (After assessee specifically came down to India for depositing balance cash which was available with her father). The above submission of the assessee on surrounding circumstances, cannot be stated to be untrue. The sale of flat itself was through assessee's father, the Power of Attorney Holder. The cash was received by the assessee's father and has been in his possession. The assessee being an NRI visits India very rarely and spends money for her personal purposes on such visits. On perusal of the assessee's bank statement, I find that there is hardly any cash withdrawal for the period September 2013 (i.e., the period of sale of second flat) upto the date of cash deposits. Therefore, an inference can be drawn that a small portion of cash was utilized out of cash which was in the possession of the assessee's father, whenever she visits India. Moreover, the Revenue has not brought anything on record to suggest that the cash which was received for the sale of flat was utilized or put to use in any other manner. Further, the Revenue has not been able to bring on record that the assessee being an NRI, has any other source of income, not disclosed to the Department. Considering the overall facts, the surrounding circumstances and the explanation given by the assessee, I am of the view that the cash deposits are out of sale proceeds received by the assessee from the sale of the property and the same was available for making deposit to the extent of Rs.14,41,000 during the period of demonetization. Therefore, the addition made u/s 69A of the I.T.Act is hereby deleted. It is ordered accordingly. Printed from counselvise.com 10 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur In the present case, the major amount was deposited prior to demonetization which is supported by the cash balance available as per the cash book. No defect is pointed out in the cash book filed by Assessee and therefore, addition made by the AO under section 69A of the Act be deleted. Ground No.2 The Ld. AO/ DRP have erred in facts and in law in taxing alleged unexplained cash deposit in the bank account u/s 115BBE @ 60% instead of taxing the same @ 30% by ignoring that section 115BBE substituted by Taxation Laws (Second Amendment Act), 2016 which received the assent of President on 17.12.2016 and made applicable from 01.04.2017 is not applicable to AY 2017- 18. Facts & Submission:- 15. The lower authorities have taxed the alleged unexplained cash deposit in the bank account @ 60% u/s 115BBE. It is submitted that substituted section 115BBE by Taxation Laws (Second Amendment Act), 2016 received the assent of President on 17.12.2016. The section is made applicable w.e.f. 01.04.2017. Hence, this section will operate on the income referred to in sections 68, 69, 69A, 69B, 69C or 69D which accrues or arises on or after 01.04.2017. For this reliance is placed on the decision of Supreme Court in case of Karimtharuvi Tea Estate Ltd. Vs. State Of Kerala 60 ITR 262 wherein it is held that it is well-settled that the IT Act, as it stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force. In the instant case, there is no escape from the conclusion that the Surcharge Act not being retrospective by express intendment, or necessary implication, it cannot be made applicable from 1st April, 1957 as the Act came into force on 1st September of that year. Since the Surcharge Act was not the law in force on 1st April, 1957 no surcharge could be levied under the said Act against the appellant in the asst. yr. 1957- 58.” 16. The Hon’ble Madurai Bench of Madras High Court in the case of S.M.I.L.E Microfinance Limited vs ACIT dated 19 November 2024 (PB 173-198) has held that section 115BBE is applicable from 1 April 2017 and not prior to that date. Relevant extracts of the decision are as under: “17. In the aforesaid objects and reasons nowhere it is stated that due to “demonetization” the unaccounted money ought to be charged 60% rate of tax. It only states that step had been taken to curb black money by withdrawing Specified Bank Notes of denomination of Rs.500 and Rs.1000. And also states the people may find illegal ways of converting their black money into black again, hence as per experts advice heavy penalty ought to be levied. From the language of the object “that instead of allowing people to find illegal ways of converting their black money into black again”, it is evident that the government is intended to impose the same for future transactions. Especially the use of word “again” in the object would clearly indicate it is for future transactions i.e. from 01.04.2017. Therefore this Court is of the considered opinion that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date. And for prior transaction the revenue is empowered to impose only 30% rate of tax.” 17. In the present case also, section 115BBE was substituted by Taxation Laws (Second Amendment Act), 2016 whereby the tax rate under this section was increased from 30% to 60%. This amendment received the assent of President on 17.12.2016. The section is made applicable w.e.f. 01.04.2017. Hence this section will operate on the income referred therein which accrues or arises on or after 01.04.2017. In Printed from counselvise.com 11 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur the present case, cash of Rs.83,75,000/- was deposited between 22.08.2016 to 07.09.2016, i.e. before demonetization and Rs.6,50,000/- was deposited on 12.11.2016, i.e. after demonetization. During this period the substituted section 115BBE was not in the Statute. Hence, even if section 115BBE is applied, the pre-substituted section 115BBE would be applicable and not the substituted section and therefore, even u/s 115BBE, the cash deposit would be subjected to tax @ 30% and not 60%. 18. It may also be noted that Taxation Laws (Second Amendment Act), 2016 also inserted a new sub clause (1A) to section 271AAB whereby the liability of penalty in case of searches was increased. However, this clause was specifically made applicable only where searches has been initiated on or after the date on which the Taxation Laws (Second Amendment Act) Bill, 2016 receives the assent of President and thus this clause was specifically made effective only where the searches took place on or after 15.12.2016. Section 115BBE inserted by the same Amendment Act is specifically made effective from 01.04.2017. Thus, from the analogy of section 271AAB it is evident that section 115BBE is also applicable where income referred to in that section is assessed on or after 01.04.2017 i.e. AY 2018-19. Hence the substituted section 115BBE is not applicable for AY 2017-18. 19. It is a settled proposition of law that legislations which modify accrued rights or which impose obligations or imposed new duties or attach a new disability have to be treated as prospective. This is so held by the Hon’ble Supreme Court in case of CIT Vs. Vatika Township Private Limited (2014) 109 DTR 33 where the Hon’ble court has given the following finding for deciding whether a provision has prospective operation or retrospective operation:- “39(e) There is yet another very interesting piece of evidence that clarifies the provision beyond any pale of doubt, viz. understanding of CBDT itself regarding this provision. It is contained in CBDT circular No.8 of 2002 dated 27th August, 2002, with the subject “Finance Act, 2002 – Explanatory Notes on provision relating to Direct Taxes”. This circular has been issued after the passing of the Finance Act, 2002, by which amendment to Section 113 was made. In this circular, various amendments to the Income Tax Act are discussed amply demonstrating as to which amendments are clarificatory/retrospective in operation and which amendments are prospective. For example, explanation to Section 158BB is stated to be clarificatory in nature. Likewise, it is mentioned that amendments in Section 145 whereby provisions of that section are made applicable to block assessments is made clarificatory and would take effect retrospectively from 1st day of July, 1995. When it comes to amendment to Section 113 of the Act, this very circular provides that the said amendment along with amendments in Section 158BE, would be prospective i.e. it will take effect from 1st June, 2002. Finance Act, 2003, again makes the position clear that surcharge in respect of block assessment of undisclosed income was made prospective. Such a stipulation is contained in second proviso to sub-section (3) of Section 2 of Finance Act, 2003. This proviso reads as under: “Provided further that the amount of income-tax computed in accordance with the provisions of section 113 shall be increased by a surcharge for purposes of the Union as provided in Paragraph A, B, C, D or E, as the case may be, of Part III of the First Schedule of the Finance Act of the year in which the search is initiated under section 132 or requisition is made under section 132A of the income-tax Act.” Addition of this proviso in the Finance Act, 2003 further makes it clear that such a provision was necessary to provide for surcharge in the cases of block assessments and thereby making it prospective in nature. The charge in respect of the surcharge, having been created for the first time by the insertion of the proviso to Section 113, is clearly a substantive provision and hence is to be construed prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended by Parliament. Furthermore, an amendment made to a taxing statute can be said to be intended to remove 'hardships' only of the assessee, not of the Department. On the contrary, imposing a retrospective levy on the assessee would have caused Printed from counselvise.com 12 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1.6.2002. 40. The aforesaid discursive of ours also makes it obvious that the conclusion of the Division Bench in Suresh N. Gupta treating the proviso as clarificatory and giving it retrospective effect is not a correct conclusion. Said judgment is accordingly overruled.” In view of the above discussion, it is clear that the amendment made in section 115BBE by Taxation Laws (second Amendment) Act 2016 which received the assent of President on 17.12.2016 and made effective from 01.04.2017 would apply in FY 2017-18 i.e. AY 2018-19. Thus, the amended section is not applicable for AY 2017-18 and therefore tax charged by AO @ 60% instead of taxing it under the regular provisions of the Act is not as per law. To support his submission, the ld .AR of the assessee has filed following paper book. S.N. Particulars Page No. 1. Assessment order u/s 143(3) of theAct dated 24-12- 2019 1-15 2. CIT(A) vide order dated 4th July, 2022 16-25 3. ITAT order dated 17th Feb. 2023 26-51 4. Reply of the assesee filed 12 October 2023 containing the following documents.  Acknowledgement of ITR with computation of Income  Copy8 of balance sheet and capital account for F.Y. 2010-11 to F.Y. 2016-17  Statement showing yearwise cash withdrawal from FY 2006-07 to 2016-17  Copy of cash book from FY 2006-07 to FY 2016-17 52-61 62-65 66-79 80 81-91 5. Axis Bank NRO account for the period 01-04-2011 to 31- 03-2017 92-94 6. Axis Bank NRE account for the period 01-05-2012 to 31- 03-2017 95-96 Printed from counselvise.com 13 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur 7. PNB Bank NRE account for the period 01-04-2011 to 31- 03-2017 97-98 8. Axis Bank NRO account for the period 29-08-2011 to 1- 03-2017 99-101 9. Declaration of currency notes brought in India at the Custom Department in currency declaration form, exchange of Euro into INR and deposit of cheque in bank account, on same basis 102-125 10. Decision of Delhi Bench of ITAT in the case of Hersh W Chadha vs DDIT [2011] 43 SOT 544 (Delhi) 126-172 11. Decision of Hon’ble Madurai Bench of Madras High Court in the case of S.M.I.L.Microfinance Ltd vs ACIT 173-198 2.5 It is pertinent to mention that Sr. DR-I vide her letter dated 26-05- 2025 filed the following written submission to counter the written submission of the assessee. ‘’IT(IT)A No. 1/JPR/2025 Assessment Year: 2017-18, Date of hearing 27/05/2025 REJOINDER ON BEHALF OF THE REVENUE Respected Members, The following rejoinder is respectfully submitted on behalf of the Revenue in response to the contentions raised by the assessee in the present appeal challenging the addition of Rs. 90.25,000/- under section 69A of the Income Tax Act, 1961. 1. Conversion of Euro into Indian Currency Does Not Justify Cash Deposits While the assessee has submitted conversion slips showing Euro-to-INR transactions, this only establishes that foreign exchange was converted through authorised dealers. It does not explain:  Why nearly the entire converted amount was withdrawn in cash,  Who withdrew this amount while the assessee was abroad, Printed from counselvise.com 14 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur  Why it was retained in physical form for several years without investment or banking.  How this cash was tracked or stored. 2. No Confirmation from Relatives or Custodians of Cash * The assessee claimed that the withdrawn cash was kept with his uncle or family members in India. However: * No affidavit, confirmation, or statement from such individuals has been filed, * No proof of custody, such as delivery records or receipts, is on record, * There is no evidence to rule out the possibility that the cash was used for the assessee's own expenses during his visits to India. * Not declared any cash loan in the ITR. * On one hand assessee is saying that it gave loan to known and on other hand entire loan was received in a year without any income and deposited in cash to provide loan through banking channel. 3. No Wealth Tax Return or Balance Sheet The assessee alleged high cash-in-hand (Rs. 90- lakh) over several years  No Wealth Tax Return was ever filed despite this being an assessable asset,  No balance sheet was filed along with ITR to reflect this cash, indicating non-disclosure 4. CIT(A) rightly noted potential violations of Sections 269SS and 269T 5. Demonetization Deposit Explanation Contradicted by Own Records * Cash book showed Rs. 32 lakh cash-in-hand on 07.11.2016; * Still, assessee withdrew Rs. 6.5 lakh on the same day and deposited on 12.11.2016; * This withdrawal was unnecessary and appears to be a contrived explanation post- facto. 6. Relevant Case Law Supports Revenue's Stand In support of the addition made under section 69A, the Revenue also relies on the recent decision of the Hon'ble ITAT, Raipur Bench in the case of Jignasha Vishal Patel vs. DCIT-1(1), Raipur, ITA No. 353/RPR/2023 dated 24.01.2024. Printed from counselvise.com 15 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur In that case, the assessee had deposited Rs. 65,00,000/- in cash during the demonetization period and claimed that the same was disclosed in the return of income under the head \"income from other sources\". However, the Iribunal upheld the AO's action of making addition under section 69A on the following legal grounds:-  That the assessee failed to substantiate the source and nature of the cash despite disclosing it under 'income from other sources\"  That mere inclusion of an amount in the return of income does not bar the AO from invoking section 69A. if the amount is not supported by entries in the regular books of account.  The Tribunal observed that the cash deposit was not recorded in the assessee's books of account, and there was no evidence of how the alleged income had been generated.  In fact, the assessee did not produce any books of account that could corroborate the presence of such cash before the AO or during appellate proceedings.  It further held that the applicability of section 69A is valid even in cases where the income is reflected in the return but remains unexplained in terms of books or trail Here too, the assessee claims remittance from abroad and reflects conversion into INR, but the corresponding withdrawals, custody, retention, and subsequent loan have no basis in formal books of account. The explanation is unsupported and fails the test laid down under section 69A. Additionally, reliance is placed on: CIT v. D.P. Sandu Bros. Chembur (P.) Ltd. (2005) 273 ITR 1 (SC): Although dealing with capital gains, the Supreme Court held that income must be real and ascertainable to be taxed or excluded. If the assessee's explanation is vague or theoretical and not backed by facts or accounting entries, the Revenue is entitled to reject it. These rulings support the Revenue's contention that unexplained deposits even if declared in the return require factual support, books of account, and credible narrative. In their absence, addition under section 69A is fully justified. Printed from counselvise.com 16 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur CIT v. D.P. Sandu Bros. (2005) 273 ITR 1 (SC) Indra Sharma v. ITO [2023] TAXSCAN (ITAT) 1661 Karthick Natarajan v. DCIT (ITAT Chennai) Jignasha Vishal Patel v. DCIT (ITAT Raipur) All of these judgments confirm that mere remittance, or partial documentation, is insufficient to rebut additions under section 69A where actual custody, trail, and economic purpose remain unsubstantiated. 7. Section 115BBE-Application and Rate of Tax The assessee has argued that the amended provisions of section 115BBE (increased tax rate to 60%) apply prospectively from AY 2018-19. The Revenue respectfully submitted that:  Even prior to amendment, Section 115BBE applied to additions made under section 69A;  The rate of tax for AY 2017-18 would be 30%, and the addition would still be subject to tax under the said provision;  Thus, the nature and validity of the addition under section 69A remains unaffected by the assessee's argument. 8. Prayer  In light of the above, it is humbly prayed that:  The addition of Rs. 90,25,000/- under section 69A may kindly be upheld,  The assessee has failed to provide any credible, consistent, or legally sustainable explanation,  The appeal may kindly be dismissed in full.’’ 2.6 It is also pertinent to mention that the ld. AR has filed following rejoinder submission against submission of the Department. ‘’Rejoinder submission against submission of the department Printed from counselvise.com 17 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur Addition under appeal is Rs 22,56,250 and not Rs 90,25,000 At the outset, it is submitted that the department has placed its rejoinder submission against addition of Rs 90,25,000 under section 69A of the Income-tax Act, 1961 (“Act’) which is incorrect as the addition under dispute in the subject appeal is of Rs 22,56,250 and not Rs 90,25,000. Against amount of Rs 90,25,000, the Hon’ble Dispute Resolution Panel (“DRP”) by directions dated 23 December 2024 granted relief of 75% and confirmed addition for 25% of Rs 90,25,000 ie Rs 22,56,250 which was finalized in the final assessment order dated 21 January 2025 as well. As per section 144C(10) of the Act, every direction issued by the DRP is binding on the assessing officer and no appeal can be filed by the department before the ITAT against the directions of the DRP – subsection 2A of section 253 which empowered department to file appeal before the ITAT has been deleted by Finance Act 2016 w.e.f 1 June 2016. Thus, the addition under dispute is of Rs 22,56,250 and not Rs 90,25,000. Rejoinder to D/R submission placed at point no 1 to 5 In relation to submission of the department placed at point no 1 to 5 raising questions on the facts of the case like why the foreign currency converted was withdrawn in cash, who withdrew the amount while the assessee was abroad, why money was retained in physical form for several years without investment or banking, where was cash stored etc, it is submitted that basis the same facts, the Hon’ble DRP has allowed relief to the Appellant in relation to 75% of the amount of Rs 90,25,000 and therefore raising questions on the same facts which have been accepted by the Hon’ble DRP and the Assessing Officer is unwarranted and does not support the case of the department. The Hon’ble DRP at page number 7 of its directions (screenshot below), basis the documents and evidences filed, has clearly held that cash in form of capital was available with the assessee to claim that as source of cash-deposit in bank account in FY 2016- 17. Thus, the established fact is cash-in-hand in form of capital was available with the assessee at the start of FY 2016-17, which was out of cash withdrawn from the bank accounts of the assessee. The amount in bank account of the assessee was generated from cheques received from authorized money exchanges on conversion of foreign currency notes into Indian currency, earned abroad through employment, which was duly declared by the assessee with the customs department on his arrival in India. Thus, the questions raised by the department in its rejoinder submission does not support the case of the department and is only on the basis of mere suspicion and without any evidences. In relation to point no 3 on the question on declaration of cash balance in income tax return, it is submitted that in the ITRs for AY 2011-12 to AY 2015-16, there was no requirement to mention the cash amount or provide balance sheet details in the return of income. For AY 2016-17 and AY 2017-18, the asset/ liabilities details including cash in hand details were required only where total income exceeds Rs 50 lakhs. As the total income did not exceed Rs 50 lakhs, there was no requirement on the Assessee to furnish any such details and therefore there is no non-disclosure by the assessee as alleged by the department. Copy of income tax return forms for AY 2015-16 and AY 2016-17 are enclosed. Printed from counselvise.com 18 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur In relation to point no 4 wherein the department representative has referred actual loan transaction of Rs 82.5 lacs as fabricated loan transaction, it is submitted that loan was given through banking channel, interest of Rs 4 lakhs received on loan given to Mr Virendra Singh was offered to tax (PB 63) and therefore the allegations of the department that no interest income declared in ITR, violation of section 269SS are baseless and incorrect. In relation to point no 5, it is submitted thatout of90,25,000, amount of Rs 83,75,000 was deposited before the demonetization period and balance Rs 6,50,000 was deposited during demonetization period. This amount was withdrawn on 7 November 2016 and deposited on 12 November 2016. Thus, the source of cash deposit in bank account is clearly explained. Availability of cash balance does not mean that the an assessee cannot withdraw cash from bank account more so when the department has not brought any evidence on record on utilization of cash for any other purpose and is only alleging basis suspicion and without evidence. Rejoinder to D/R submission placed at point no 6 The case laws relied upon by DR are not applicable and are distinguishable. In the case of Jignasha Vishal Patel vs DCIT, Raipur, the case was on cash deposited during demonization period and in the instant case, the majority of cash was deposited prior to demonetization period. Also, in the said case, cash deposit was not recorded in the books of assessee and no evidence on how the income was generated was submitted. Contrary to it, the assessee has established the fact with evidence that cash was generated out of income earned abroad and has also entered the cash deposit in the cash book which has already been furnished. The said cash book has been duly accepted by the Hon’ble DRP and the addition of 25% of cash deposit was made basis assumption of circumstantial evidence of earning some revenue income. In relation to other cases, the same related to section 68 and therefore not applicable. Rejoinder to D/R submission placed at point no 7 In point no 7, the department has accepted that section 115BBE (increased rate of tax of 60%) is applicable from AY 2018-19 and not AY 2017-18. The Appellant has also submitted the same thing that tax rate applicable for this AY ie AY 2017-18 for section 115BBE is 30% and not 60%. The Ld. AO has wrongly applied tax rate of 60% instead of 30%. As submitted by the Appellant in ground of appeal no 1, addition of Rs 22,56,250 made is incorrect more so when no circumstantial evidence are on record to prove earning of any interest income from available cash in hand. Hence, even if decided otherwise, the tax rate on the addition cannot be 60%. Additionally, it is submitted that the Hon’ble DRP has held that the Appellant has earned interest income through circulation of capital cash-in-hand. The earning of interest income is taxable as per the normal provisions of the Act and not as per section 115BBE of the Act. Thus, even if decided otherwise, the tax is applicable as per applicable slab rate of individual and not at flat rate of 30% under section 115BBE of the Act.’’ 2.7 We have heard the both the parties and perused the material available on record. We note that the Assessee is a resident of Italy and a non-resident forthe subject AY. The Assessee deposited cash in the PNB Printed from counselvise.com 19 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur bank account of Rs 90,25,000 during the period 22 August 2016 to 12 November 2016. Out of this, amount of Rs 83,75,000 was deposited before the demonetization period and balance amount of Rs 6,50,000 was deposited on 12 November 2016 i.e. during the demonetization period which was the amount withdrawn from the same bank account on 7 November 2016. The AO in the draft assessment order proposed to make addition of the entire cash deposit of Rs 90,25,000 under section 69A of the Act. The Assessee filed objections against the draft assessment order before the Dispute Resolution Panel (DRP) and the DRP at para 3.10 of its directions held that cash-in-hand in the form of capital was available with the assessee to claim that as source of cash-deposit in the bank account in FY 2016-17. The Assessee submitted evidences of earning income in foreign currency (Euro), declaration of currency notes brought in India at the Custom Department in Currency Declaration Form, exchange of Euro into INR through RBI authorized currency exchanger and deposit of cheque received from authorized currency exchanger into the bank account of the Assessee from where the amount was withdrawn. Further, the Assessee also submitted Balance Sheet and capital account for the period FY 2010- 11 to 2016-17, cash book for the period FY 2006-07 to FY 2016-17 and bank statements to support cash balance available with him which was Printed from counselvise.com 20 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur deposited in his bank account. The documents are placed at pages 66-125 of the paperbook filed before us. It is pertinent to mention that on the basis of these documents, the Ld. DRP granted relief for 75% of the cash deposit made by the Assessee i.e. of Rs 67,68,750 and made addition of 25% of Rs 90,25,000 i.e. of Rs 22,56,250 which was added by the AO while passing the final assessment order. The basis for making addition of 25% was that the DRP assumed that it is probable that as the Assessee is relatively from a sound financial background, the Assessee was providing financial accommodation to his acquaintances on which he would have earned interest income through circulation of money kept in form of cash and by considering circumstantial evidences, earning of some revenue income i.e. interest income through this capital cash-in-hand cannot be rejected. The DRP relied on decision of Delhi Bench of ITAT in the case of Hersh Win Chadha in ITA No 3088 to 3098 & 3107/Del/2005.The Assessee has objected to the addition of Rs 22,56,250 made by the DRP/ AO in this appeal and has submitted that DRP / AO has not bought on record any such evidence of earning interest income in cash through circulation of cash-in-hand. Further, the Assessee has submitted that he has filed complete cash book from FY 2006-07 to FY 2016-17 (PB 81-91) evidencing as to how the cash withdrawn from bank account was utilized Printed from counselvise.com 21 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur by the Assessee i.e. for purchase of immovable property, purchase of vehicle, purchase of ornaments and deposit back in the bank account. Thus, without bringing anything on record, much less the circumstantial evidence, addition on presumption of 25% of cash deposit made by the AO is unjustified and be directed to be deleted. Further, the decision relied upon has also been differentiated and submitted to be not applicable in the facts of the case. 2.8 On the other hand, the Ld DR in the rejoinder submission has submitted that conversion slips showing conversion of Euro to INR only establishes that foreign exchange was converted through authorized dealer and does not explain why the converted currency was withdrawn in cash and why the same was physically retained. Further, no confirmation has been filed by the relative of the Assessee who has been stated to be holding the cash, the cash has not been declared in the income tax return form, the Assessee has not filed any wealth tax return. Further, the Ld DR has also mentioned that cash loan was given to Mr Virendra Kumar of Rs 82.50 lakhs and interest income earned on it was not offered to tax. Basis this, the Ld DR submitted that the entire cash deposit of Rs 90.25 lakhs should be added to the income of the Assessee. Printed from counselvise.com 22 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur 2.9 The A/R of the Assessee filed rejoinder submission to the rejoinder filed by the Ld. DR and submitted that the Ld. DRP has categorically held cash-in-hand in form of capital was available with the assessee to claim that as source of cash deposit in the bank account. Basis these documents, the Ld DRP has granted relief to the extent of 75% of the cash deposit made in the bank account and no contrary evidences have been filed by the Ld. DR proving the allegation of earning of interest income through circulation of cash-in-hand in form of capital. Considering the facts of the case and submissions made including the rejoinder submission, we are of the view that the assessee, an individual, and a non-resident worked outside India and earned salary income. The salary income earned was bought to India in form of currency notes which was declared by the assessee at the Custom Department in Currency Declaration Form and the same were duly exchanged into INR through RBI authorized currency exchanger and the cheque received was deposited into the bank account of the Assessee from where the amount was withdrawn. The Assessee has also filed cash book for the FY 2006-07 to FY 2016-17 evidencing the accumulation of the cash balance which was deposited back in the bank account. Thus, the Assessee has demonstrated that cash which was deposited in the bank account was out of cash withdrawn from the bank Printed from counselvise.com 23 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur account which was generated on account of exchange of currency notes bought into India. The same has also been accepted by the DRP. Further, no evidence has been brought on record to otherwise prove that the Assessee was earning interest income through circulation of capital cash- in-hand.The earning of interest income through circulation of capital cash in hand is only an assumption of the Ld DRP and not backed by any evidence. Further, if the Assessee has not filed any wealth tax return, it is a violation under the erstwhile wealth tax law but that would not make cash- in-hand as unexplained. Also, the Assessee was not required to disclose cash in hand in income tax returnsince the income tax form require such disclosure in case of those assessees whose total income is of Rs 50 lakhs or more. Further, we note that the loan given to Virendra Singh was though banking channel and was not a cash loan (bank statement evidencing giving of loan is placed on record) and the interest income earned on said loan has been offered to tax by the assessee. Thus, considering the facts of the case and in absence of documents to otherwise prove that the Assessee earned interest income out of capital cash-in-hand, we direct to delete the balance 25% addition of Rs 22,56,250. Thus, this ground of appeal of the assessee is allowed. Printed from counselvise.com 24 ITA(IT) Appeal NO. 01/JP/2025 Shri Bhanwar Singh vs DCIT, Circle (Intl.Tax), Jaipur Ground no 2: 3.1 As the Ground No 1 has been decided in favour of the Assessee, this ground of appeal No. 2 becomes infructuous. 4.0 In the result, the appeal of the assesee is allowed Order pronounced in the open court on 09 /09/2025. . Sd/- Sd/- ¼ jkBkSM+ deys'kt;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;dlnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 09/ 09/2025 *Mishra vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Bhanwar Singh 2. izR;FkhZ@ The Respondent- The DCIT, Circle (Intl. Tax),Jaipur 3. vk;djvk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File (IT(IT)Appeal No.01/JP/2025) vkns'kkuqlkj@ By order, lgk;diathdkj@Asstt. Registrar Printed from counselvise.com "