DASHRATH KUNWAR,JALORE V. ITO, WARD-2, JALORE

ITA 32/JODH/2024

AI Insights

The case involves an appeal by Dashrath Kunwar against the order of the National Faceless Appeal Centre (NFAC), which upheld the addition of Rs.30,00,000 to his income for the Assessment Year 2013-14. This addition was initially made by the ITO, Ward-2, Jalore, under sections 147/143(3) of the Income-tax Act, 1961, due to unexplained cash deposits in the assessee's bank account. The assessee contended that these deposits were from agricultural income, supported by various documents including an affidavit and land cultivation reports. The tribunal, referencing a similar case and the Supreme Court's decision in CIT vs. Smt. P. K. Noorjahan, found that the ITO had not properly exercised his discretion under section 69 of the Act and allowed the appeal, deleting the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396685 (ITAT-JODHPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Other Referred Cases: Shabnam vs. ITO, CIT vs. Smt. P. K. Noorjahan
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARNI DAN
• Assessee Lawyers: RAJENDRA JAIN
• Keywords: Gift
• Section: 147; 148; 143(3); 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFOREDR. MITHA LAL MEENA, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No.32/JODH/2024 (Assessment Year: 2013-14) Dashrath Kunwar C/o Rajendra Jain Advocate, 106, Akshay Deep complex, 5th B Road, Sardarpura, Jodhpur- 342 001 PAN: GDTPK1650N vs ITO, Ward-2, Jalore APPELLANT RESPONDENT Assessee by : Shri Rajendra Jain, Advocate / Smt. Rekha Birla / Shri Mehul Jangir, Advocate Respondent by : Shri Karni Dan, Addl.CIT (Sr.DR.) Date of hearing : 28/05/2025 Date of pronouncement : 29/05/2025 O R D E R PerAnikesh Banerjee: The instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi *in short, ‘Ld.CIT(A)+ passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for the Assessment Year 2013-14, date of order 04/12/2023. The impugned order wasoriginated 2 ITA No.32/JODH/2024 Dashrath Kanwar from the order of the Learned Income-tax Officer, Ward-2, Jalore [in short, the “Ld. AO”+, passed under section 147/143(3)of the Act, date of order 30/11/2017. 2. We heard the rival submissions and considered the documents available on record. The assessment was completed under section 147 read with section 143(3) of the Act in relation to the cash deposited in bank account amount to Rs.30 lakhs and also the interest earned from the bank of Rs.30,309/-. The assessee filed the income-tax return in compliance of notice U/s 148 of the Act on 08/11/2017 declaring total income amount to Rs. 20,964/-. So, in the impugned assessment the Ld. AO observed that the assessee deposited of cash of Rs.30 lakh in Jalore Central Co-operative Bank, Raniwada on 31/10/2012. The Ld.AO asked for source for depositing cash in bank account of the assessee and the assessee replied that he had agricultural income and the amount accumulated was deposited in the bank account. In this respect the assessee submitted an affidavit and the documents related to “Khasra Girdawari Report” as evidence for holding the land and cultivation of the crops. The assessee is holding the property with other family members, and it is an ancestral property where the said income was generated. Finally, in impugned assessment year, the entire amount was deposited. The documents related to property is duly annexed in APB pages 7 to 17, is reproduced as below:- 1) Agri. Crops statement 2) Jamabandi 3) Jamabandhi (Pratilipi) 4) Jamabandhi (Khatauvni) Gram 3 ITA No.32/JODH/2024 Dashrath Kanwar 3. In argument, the Ld.AR placed that the documents of the assessee has never been challenged and veracity was never rejected. The Ld.AO fully relied on the order of the co-ordinate bench of ITAT, Jodhpur in case of Shabnam vs. ITO in ITA No.235/Jodh/2023 date of order 03/06/2024. The relevant paragraph No.7 is reproduced as below:- “7. We have heard both the parties and perused the materials available on record and gone through the judicial precedence cited by both the parties to drive home to the contentions so raised. The bench noted that in the year under consideration the assessee had made investment for purchase of immovable property of Rs. 6,50,877/-. Since the assessee has invested the money and has not filed the return of income the case was reopened as per provision of section 148 of the Act. As the assessee has not filed any return even in response to notice u/s. 148 of the Act and has not filed any information about the source of the investment the ld. AO made the addition of Rs. 6,50,877/- u/s. 69 of the Act. The matter was carried to the ld. CIT(A) wherein the assessee contended that her income from all the sources are below the maximum amount not chargeable to tax. The assessee also submitted before the ld. CIT(A) that the assessee lady is aged 45 years and has also having the married life of 25 years. She has also received the gift on various social occasion. She is also engaged in the business of embroidery and stitching work on cloth. The investment made by the assessee is out income and saving so made over the period the same was made in the cash. The assessee also contended that investment made by the assessee was out of the entire life savings money including stridhan and the amount received from the husband for the household expenses. The assessee submitted that this aspect of the matter has not been appreciated keeping in view the explanation furnished by the assessee. The ld. AO did not brought on record any other source of income of the assessee and therefore, there is no contrary finding recorded in the order of the ld. CIT(A) so far as to the explanation furnished by the assessee. The ld. AR of the assessee relying on the provision of section 69 of the Act and on the decision of the apex court in the case of CIT Vs. Smt. P. K. Noorjahan 103 Taxman 382 (SC) wherein it has been held that; “2. The appeals relate to the assessment years 1968-69 and 1969-70. The assessee is a Muslim lady who was aged about 20 years during the previous year relevant for the assessment year 1968-69. On 15-11-1967 she had purchased 16 cents of land in Ernakulam and the amount spent by her, inclusive of stamp and registration charges, for this purchase was Rs. 34,628. On 27-11- 1968, she purchased another 12 cents of land at Ernakulam and the total investment for this purchase was Rs. 25,902, the explanation of the 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 except to the extent of Rs. 2,000 by the ITO who made an 4 ITA No.32/JODH/2024 Dashrath Kanwar addition of Rs. 32,628 as income from other sources in the assessment year 1968-69 and an addition of Rs. 25,902 in the assessment year 1969-70. The said orders were affirmed in appeal by the AAC. 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 the 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. Section 69 of the Income-tax Act, 1961 ('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 income as income of the assessee as soon as the latter's explanation happened to be rejected. On that view the Tribunal allowed the appeals of the assessee and cancelled the assessment made by the ITO. Thereafter the Tribunal at the instance of the revenue referred the question abovementioned to the High Court for its opinion. The High Court has agreed with the said view of the Tribunal and has held that in the instant case, it could not be said that the Tribunal was wrong in having differed from the ITO and the AAC in the matter of exercising judicial discretion as to whether even after rejecting the explanation of the assessee the value of the investments were to be treated as the income of the assessee. 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. 3. Shri Ranbir Chandra, the learned counsel appearing for the revenue, has urged that the Tribunal as well as the High Court were in error in their interpretation of section 69. The submission is that once the explanation offered by the assessee for the sources of the investments found to be non acceptable the only course open to the ITO was to treat the value of the investments to be the income of the assessee. The submission is that the word 'may' in section 69 should be read as 'shall'. We are unable to agree. As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in the 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 the Parliament in enacting section 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 section 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 section 69 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 5 ITA No.32/JODH/2024 Dashrath Kanwar 4. 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. No order as to costs.” The bench noted that the facts of the case law cited by the ld. AR of the assessee identical with the case of the assessee and here in the case of the assessee the assessee has given the explanation of about the nature of the source of investment and considering the provision of section 69 of the Act read with the judgment cited herein above, we are of the considered view that the ld. CIT(A) ought to have exercised a discretion conferred under section 69 to treat the source of investment as found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case but as it is evident that in the instant case, the same has not been properly exercised and thus considering these aspect of the matter and the circumstances in which the assessee explained all these aspect which the assessee in support also declared on oath which we considered that the same is explained by the assessee and therefore, the addition made by the lower authority is directed to be deleted. Since we have considered the appeal of the assessee on merits in ground no. 3 the other ground either legal or general in nature they become educative in nature and the same are not required to be adjudicated.” 4. The Ld.DR argued and stated that the assessee is a co-owner of the said property, so the generation of income from the agricultural land is not sufficient for depositing cash in the bank account, so the addition should be upheld. But he was unable to file any contrary evidence against the submission of the Ld. AR. 5. In our considered opinion, the assessee has duly submitted all relevant documents, including an affidavit evidencing ownership and possession of agricultural land. Furthermore, the revenue has failed to establish the existence of any alternative source of income from which the assessee could have made the impugned cash deposits, which were allegedly undisclosed. 6 ITA No.32/JODH/2024 Dashrath Kanwar The Ld. AR placed reliance on the judgment of the Hon’ble Supreme Court in CIT, Ernakulam v. P.K. Noorjahan (1999) 103 Taxman 382 (SC), which has been duly followed by the Co-ordinate Bench of the ITAT, Jodhpur in the case of Shabnam (supra).Accordingly, the addition of Rs.30,00,000 confirmed by the Ld. CIT(A) is hereby deleted. The appeal of the assessee, bearing ITA No. 32/JODH/2024, stands allowed. 6. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 29th day of May, 2025. Sd/- sd/- (DR. MITHA LAL MEENA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Jodhpur,दिन ांक/Dated: 29/05/2025 Pavanan Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकरआयुक्त CIT 4. दवभ गीयप्रदिदनदि, आय.अपी.अदि., जोधपुर/DR, ITAT, JODHPUR 5. ग र्डफ इल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, JODHPUR "