GURCHARAN SINGH,PANIPAT V. INCOME TAX OFFICER, PANIPAT

ITA 3412/DEL/2025

AI Insights

The case involves Gurcharan Singh, an agriculturist, who appealed against the order of the Joint Commissioner of Income Tax (Appeals) confirming the addition made by the Income Tax Officer (ITO) on account of unexplained cash deposits during the demonetization period. The ITO had treated a sum of \\u20b95,15,000 as unexplained money under section 69A read with section 115BBE of the Income-tax Act, 1961. The assessee argued that these deposits were from legitimate sources, including the sale of agricultural land and agricultural income, supported by documents and testimonies from Aarhtis (commission agents). The Tribunal, after considering the submissions and evidence, concluded that the entire cash deposits were adequately explained and deleted the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772498 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: SMILE Microfinance Limited vs ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Section: 144; 142(1); 131; 133(6)

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No. 3412/Del/2025 (Assessment Year: 2017-18) Gurcharan Singh, Village Urlana Khurd, Urlana Kalana, Matlodha, Distt Panipat-132103 Vs. Income Tax Officer, Ward No. 1, Panipat, PAN: DVBPS8866P Assessee by : None Revenue by: Shri Manoj Kumar, Sr. DR Date of Hearing 14/08/2025 Date of pronouncement 27/08/2025 O R D E R 1. The appeal in ITA No.3412/Del/2025 for AY 2017-18 arises out of the order of the ld. Joint ld. Commissioner of Income Tax (Appeals)-1, Vadodara [hereinafter referred to as ‘ld. JCIT(A)’, in short] in Appeal No. ITBA/APL/S/250/2024-25/1075032089(1) dated 26.03.2025 against the order of assessment passed u/s 144 of the Income-tax Act, 1961 dated 24.12.2019 (hereinafter referred to as ‘the Act’) by ITO, Ward-1, Panipat (hereinafter referred to as ‘ld. AO’). 2. The only effective issue to be decided in this appeal is as to whether ld JCIT(A) was justified in confirming the addition made on account of cash deposits in the facts and circumstances of the instant case. 3. None appeared on behalf of the assessee. I have heard the ld DR and perused the material available on record. The assessee filed its return of income for assessment year 2017–18, declaring agricultural income of ₹14,69,626/- on 07.10.2019 in response to notice issued u/s 142(1) of the Act. During the course of assessment proceedings, the assessee was asked to explain the source of Printed from counselvise.com ITA No. 3412/Del/2025 Gurcharan Singh Page | 2 cash deposits of ₹13 lacs made in KCC Bank Account No. 06825115001164, maintained with Oriental Bank of Commerce during the demonetization period. The assessee submitted that his wife Smt. Jaswinder Kaur along with other co- owner had sold agriculture land situated at village Urlana Khurd for a total consideration of ₹15,70,000/- in which the share of his wife of ₹7,85,000/- and this sale consideration was deposited in the bank account during the period under consideration. The assessee submitted that he is an agriculturist and the remaining amount was deposited out of agriculture income. The assessee submitted the copy of the sale deed, proof of holding of agricultural land and copy of J Forms amounting to ₹7,06,177/- pertaining to relevant period. The ld AO issued notice u/s 133(6) of the Act dated 18.11.2019 to Aarhtis, who had issued J Forms to the assessee. All the 4 Aarhtis sent their reply vide email dated 10.12.2019 giving the details of J Forms but did not mention anything about mode of payment. Summons were issued u/s 131 of the Act dated 11.12.2019 to all the 4 Aarhtis by the ld AO seeking for their presence along with ledger and daily cashbook on 16.12.2019 which stood un-complied. The ld AO concluded that authenticity of the J Forms could not be ascertained as Aarhtis could not provide complete information more particularly the mode of payment to the assessee. So, out of total deposit of ₹13 lakhs made in the bank account, a sum of ₹5,15,000/- was deposited during the demonetization period which alone was treated as unexplained money u/s 69A read with section 115BBE of the Act by the ld AO and the additions made in the assessment. 4. The assessee filed a detailed written submission before the ld JCIT(A). The assessee also furnished the letter issued by 3 Aarhtis M/s. Mangla Associates, M/s. Singroha Trading Co, M/s. Bali Ram Raj Kumar, clearly mentioning the mode of payment thereon. The assessee submitted that cash was received from Aarhtis in the following manner:- Printed from counselvise.com ITA No. 3412/Del/2025 Gurcharan Singh Page | 3 Name of Aarhti Particul ars Date of Form J Amount (Rs.) Copy of Form j Attached at Page No. M/s Mangla Associates Form- J 28/09/2016 1,62,557 4 M/s Singroha Trading Co. Form-J 14/10/016 96,227 5 M/s Bali Ram Raj Kumar Form-J 28/10/2016 72,441 6 M/s Singroha Trading Co. Form-J 01/11/2016 2,71,674 7 Total 6,02,899 5. The confirmation in the form of letter submitted from Aarhtis before ld JCIT(A) was forwarded to the jurisdictional AO for remand vide letter dated 15.05.2024, calling for a remand report. The remand letters were sent on 05.07.2024 and 20.09.2024, which stood uncomplied by the ld AO. Accordingly, ld JCIT(A) concluded not to wait for the remand report by the ld AO and proceeded to deal with the issue on merits. The ld JCIT(A) reproduced the sample confirmation issued by one of the Aarhitis and concluded that they fail to establish that whether they are Aarhtis and accordingly doubted their veracity and hence, ignored the same. The ld JCIT(A) ultimately upheld the action of the ld AO. 6. I find that assessee had given a basic explanation that a sum of ₹7,85,000/- was received on sale of agricultural land by his wife which was deposited in the bank account. This explanation has not been found to be false. Further, the assessee had shown agricultural income before the demonetization period of ₹7,06,177/-. To this effect, the assessee had furnished confirmation from the Aarhtis duly indicating the mode of payment thereon to be in cash. The assessee had finally declared agricultural income in the return of income in the sum of Rs. 14,69,626/-. This agriculture income has not been found to be false by the ld AO as ultimately the ld AO starts computation from the income returned by the assessee and accepted the same to be claimed as exempt. Only a sum of ₹5,15,000/- was added on account of cash deposit during demonetization period. It is not the case of the revenue that the cash deposits Printed from counselvise.com ITA No. 3412/Del/2025 Gurcharan Singh Page | 4 were made in excess of agricultural income and sale consideration of agricultural land received in cash. Rather, the assessee has sufficient cash balance in his kitty to make the cash deposits of ₹13 lacs during the year, including the cash deposits during demonetization period in the sum of ₹5,15,000/-. Hence, I am of the considered opinion that the entire cash deposits stood properly explained, including the cash deposits made during demonetization period. Hence, there is no scope for treating any part of the deposit as unexplained money u/s 69A r.w.s. 115BBE of the Act. The addition made u/s 69A is here by directed to be deleted. Further, I also find that Hon’ble Madras High Court in the case of SMILE Microfinance Limited vs ACIT in WP (MD) No. 2078 of 2020 and WMP (MD) No. 1742 of 2020 dated 19-11-2024 had held that the provisions of section 115BBE of the Act mentioning the enhanced rate of tax could be made applicable only from 01.04.2017, relevant to assessment year 2018-19 onwards and not earlier. Accordingly grounds raised by the assessee are allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 27/08/2025. -Sd/- (M. BALAGANESH) ACCOUNTANT MEMBER Dated: 27/08/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "