INCOME TAX OFFICER, WARD-5(2), JAIPUR, JAIPUR V. JAI GOVIND DHAMANI HUF, JAIPUR

ITA 1347/JPR/2024

AI Insights

The case involves the Income Tax Department appealing against the order of the CIT(A) which had allowed the appeal of Shri Jai Govind Dhamani, HUF, deleting an addition of Rs.98,00,000 made by the AO. The addition was initially made on the grounds that the cash deposits during the demonetization period were unexplained and treated as undisclosed income under Section 69A of the Income Tax Act, 1961. The CIT(A) had accepted the assessee's explanation that the deposits were from cash sales and withdrawals, which the Tribunal found unsubstantiated due to lack of documentary evidence such as cash books and invoices.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472808 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Keywords: Set aside; Additional evidence
• Section: 143(3); 142(1); 133(6); 69A

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, ‘’A” JAIPUR Jh xxu Xkks;y] ys[kk lnL; ,o aJh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 1347 /JP/2024 fu/kZkj.k o\"kZ@Assessment Year : 2017-18 The ITO Ward 5 (2) Jaipur cuke Vs. Shri Jai Govind Dhamani, HUF B-270, Janta Colony Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAFHJ 5335 J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Aayush Akar, employee from the office of the A.R. jktLo dh vksj ls@ Revenue by: Shri Manoj Kumar,JCIT-DR. lquokbZ dh rkjh[k@ Date of Hearing : 10 /03/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 11 /03/2025 PER: NARINDER KUMAR, JUDICIAL MEMBER Present appeal has been filed by the Department challenging order dated 18- 09-2024 passed by ld. CIT(A),NFAC, Delhi. The matter pertains to the assessment year 2017-18. 2. Vide impugned order, ld. CIT(A) allowed the appeal filed by the assessee – respondent herein, and thereby granted relief by way of deletion of addition of Rs.98,00,000/- which was made by the AO vide order dated 18-12-2019. 2 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR 3. Vide assessment order dated 18-12-2019 passed u/s 143(3) of the Income Tax Act, 1961 (in short ‘’the Act’’), total income of the assessee was computed at Rs.1,02,43,730/- by making above said addition of Rs.98.00 lacs, treating the unexplained cash deposit, as undisclosed income, applying the provisions of Section 69A of the Act. It may be mentioned here that the appeal was presented before ITAT on 12-11-2024. On behalf of the respondent–assessee, on 25-02-2025, adjournment was prayed on the ground that the written arguments/submission to be presented before ITAT, was under preparation. Accordingly, appeal was adjourned to 6-03-2025. However, on 6-03-2025, once again adjournment was sought on behalf of the respondent – assessee on the same ground. The matter was adjourned for today. Surprisingly, once again adjournment was sought today on the same ground i.e. non- preparation of written arguments. Vide separate order of even date, request for adjournment has been declined. Ld.DR for the Department has advanced arguments. 4. The contention raised on behalf of the appellant-department is that the assessee never produced cash book or invoices of sale before the Assessing Officer, and as such, the assessee- respondent failed to establish its claim that the amount deposited in the bank during demonetization period was from withdrawal and cash 3 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR sales. Therefore, ld DR has urged that ld. CIT(A), erred in allowing appeal filed by the assessee and in deleting the addition. 5. The assessee is a manufacturer and involved in trading of agriculture equipments and other items. 6. Case of the assessee was selected for scrutiny through CASS due to the reason that abnormality in cash deposit was noticed during demonetization period, as compared to pre-demonetization period. 7. In the assessment order, the AO observed that as per Col. 13, Part B – TTI of E-filing of ITR 3 filed on 26-10-2017, the assessee had deposited cash in following banks on the following dates. S.N. Name of Bank A/c No. Date Amount 1. The Karur Vyas Bank Ltd. 4501250000000032 10-11- 2016 50,00,000/- 2. The Karur Vyas Bank Ltd. 4501135000003833 11-11- 2016 32,00,000/- 3. The Karur Vyas Bank Ltd. 4501135000003833 11-11- 2016 9,50,000/- 4. The Karnataka Ltd. 3642500101032401 - 6,50,000/- Total 98,00,000/- 8. During assessment proceedings, the AO is recorded to have requisitioned bank statement of the assessee by issuing notices u/s 133(6) of the Act. These pertained to F.Y. 2015-16 and 2016-17. 4 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR 9. As per said statements, following cash deposits were found to have been made by the assessee in above two banks during the following periods of the two Financial Years: 1. The Karur Vyas Bank Ltd. (A/c No.4501250000000032) S.N. Cash deposited in F.Y. 2015-16 Cash deposited in F.Y. 2016-17 01-04-2015 to 31-03- 2016 9-11-2015 to 31-12-2015 01-04-2016 to 31-03-2017 9-11-2016 to 31-12-2016 1 Rs.3,09,51,500/- Rs.44,03,000/- Rs.58,00,000/- Rs.50,00,000/- Regarding the above cash deposits, the Assessing Officer observed: “Perusal from the above tabulation, it was gathered that there was increase in cash deposit during the demonetization period as compared to period of 09- 11-2015 to 31-12-2015 (before last year relevant period). Also the total overall year, the cash was deposited at Rs.58,00,000/- only.” 1. The Karur Vysya Bank Ltd. (4501135000003833) S.N. Cash deposited in F.Y. 2015-16 Cash deposited in F.Y. 2016-17 01-04-2015 to 31-03- 2016 9-11-2015 to 31-12-2015 01-04-2016 to 31-03-2017 9-11-2016 to 31-12-2016 1 Rs.2,37,15,500/- Rs.Nil Rs.48,50,000/- Rs.41,50,000/- From the above tabulation, the Assessing Officer gathered that there was zero cash deposit during the period of 09-11-2015 to 31-12-2015 (before last year relevant period) whereas during the demonetization period, the assessee deposited 5 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR cash of Rs.41,50,000/- which was much more than unbelievable increase. During the whole of year i.e. 2016-17, only Rs.48,50,000/- was found to have been deposited and out of this a sum of Rs.41,50,000/- was deposited during demonetization period. 2. The Karnataka Ltd. (A/c No. 3642500101032401) S.N. Cash deposited in F.Y. 2015-16 Cash deposited in F.Y. 2016-17 01-04-2015 to 31-03- 2016 9-11-2015 to 31-12-2015 01-04-2016 to 31-03-2017 9-11-2016 to 31-12-2016 1 Nil Nil Rs.6,50,000/- Rs.6,50,000/- 10. Assessing Officer issued notice u/s 142(1) dated 29-08-2019 and show cause notice dated 4-12-2019 to the assessee calling upon its representative to file source of above said cash deposits. 11. The assessee submitted the reply dated 10-12-2019 and 13-12-2019 pleading therein that the assessee was engaged in manufacturing and trading of agriculture equipments, and further that as on 8-11-2016, the assessee had cash deposits of Rs.91,90,854/-. 12. After considering the reply submitted by the assessee, the AO observed in para 6 of the assessment order that the assessee had not furnished any cash book for the year under consideration i.e. F.Y. 2016-17. He further observed that no 6 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR invoices/ sale bills etc. or the basis of the said cash balance as on 8-11-2016 were furnished. In para 6 of the assessment order, the AO went on to observe that the assessee claimed to be involved in manufacturing of agriculture equipments and that the above said deposits were made in the above said banks out of cash. The Assessing Officer then highlighted that the gross receipts in the F.Y. 2014-15, 2015-16 and 2016-17 were found to be as under:- A.Y. 2014-15 2015-16 2016-17 Returned income 7,34,020/- 10,36,470/- 8,58,940/- Turnover 8,74,50,143/- 16,94,50,151/- 13,35,46,270/- Cash in hand - 3,09,895/- 60,540/- The AO further observed that as per bank statement pertaining to bank account i.e. Karur Vyas Bank Ltd.(A/c No. 4501250000000032), during the period from 9-11-2015 to 31-12-2015, there was cash deposit of Rs.44,03,000/- only. He further observed that there was no cash deposits during the said period i.e. 9-11-2015 to 31-12-2015 in other two bank accounts named above. While dealing with the claim put forth by the assessee that as on 8-11-2016, there was cash balance of Rs.91,90,854/-, the AO observed that neither any cash book nor any invoice/ sale bills were furnished by the assessee in response to the notice issued u/s 142(1) dated 29-08-2019. 7 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR He further observed that the assessee failed to submit any supporting evidence regarding availability of cash balance, and as such, there was no sufficient and cogent reasons for deposits of the above said amounts in cash in the above said bank accounts. Ultimately, the AO came to the conclusion that it was a case of unexplained money within the ambit of Section 69A of the Act, as it was evident that the assessee had actually received said amount from unexplained/undisclosed sources and then deposited the same in the above said bank accounts. 13. As noticed above, the assessee felt aggrieved by the assessment order and accordingly presented the appeal. Ld. CIT(A) allowed the appeal and deleted the addition. What weighed with ld CIT(A) to do so is reflected in para nos. 3.2 to 3.5 of the impugned order. For ready reference, same are reproduced: ‘’3.2 During the appellate stage, the assessee explained that the sum deposited in Specified Bank Notes was out of the cash balance available in the cash book of the assessee. The assessee also claimed that such available cash in the cash book was partly out of withdrawals made from the month of April, 2016 to 08.11.2016 for a sum of Rs.93,28,000/- and the balance was out of the cash sales made during the year. The assessee claimed that during the Immediately preceding year, the assessee made cash sales to the tune of Rs.5,97,91,089/-, out of which total deposits made in the bank account were for Rs.6,44,08,500/-. There had been withdrawal from bank account during Financial Year 2015-16 for a sum of Rs.87,50,000/-. All such transactions were recorded in the cash book of the assessee and the books of 8 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR accounts were duly audited in their case. Similarly. for Financial Year 2016-17, the assessee made total cash sales of Rs.1,34,81,038/-However, the related cash expenditure was Rs.83,14,335/-, The total cash deposit made in the bank account for Financial Year 2016-17 was for Rs.1,56,88,000/- and withdrawal from bank was for Rs. 1,08,28,000/-. Out of the deposit of Rs.1,56,88,000/-, it is true that the deposit made in the bank account for a sum of Rs.98,00,000/- during the demonetization period was relatively high. However, from perusal of the cash book of the assessee for the entire year and the bank statements submitted during the appellate stage, it is seen that all transactions of deposit as well as withdrawal from bank account were dully disclosed in the said cash book. From the cash book, it is apparent that there had been balance available in the cash book for the deposit made in the bank account by the assessee. 3.3 Although it is very uncommon to that the assessee from April, 2016 itself at time to time has withdrawn huge amount of cash from the bank account and kept it in the form of liquid cash as reflected in the cash book. The apparent reason for such cash withdrawals is not explained. During the appeal stage, the assessee cursorily mentioned that the assessee had a plan for investment in some property for which the cash was withdrawn However, due to the demonetization announced by the Government, the assessee had no other alternative but to redeposit such withdrawn cash in the bank account once again. 3.4 The logic of the assessee is found to be weird. However, I find that there is irrefutable evidentiary proof that there had been cash available in the cash book which ultimately got deposited during the demonetization time. It is also seen that in the month of January to March, the assessee made deposit in bank account for a sum of Rs.42,77,000/-addition to the cash deposit during the demonetization period. Apparently, the entire source of cash deposit is found to be partly withdrawal of cash since April and partly the cash sales accounted for by the assessee during the year. 9 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR 3.5 The Assessing Officer did not accept logic of the assessee. However, it is seen that he has not rejected the books of account of the assessee, which is duly audited by the Chartered Accountant on 06.10.2017, Since no addition can be made purely on the basis of surmise and conjecture and since no evidence contrary to the assessee's stated position could be detected by the Assessing Officer, I have no other alternative but to accept the assessee's books of accounts and therefore the addition made by the Assessing Officer is directed to be deleted.’’ 14. In Para 3.2 of the impugned order, the ld. CIT(A) referred to the claim of the assessee about the cash sales made during the immediately preceding year, to the tune of Rs.5,97,91,089/-. He also referred to claim of the assessee that cash deposited was available with the assessee being part of the withdrawal made by the assessee to the tune of Rs. 93,28,000/- during the period from April 2016 to 8-11-2016. In the same para, ld CIT(A) observed that all transactions regarding withdrawal of Rs.87,50,000/-, were recorded in the cash book of the assessee and further said that the books of accounts were duly audited , as regards the F.Y. 2015- 16. However, admittedly, during assessment proceedings, no cash book was produced by the assessee . As regards F.Y. 2016-17, the claim of the assessee was that it had made cash sales to the tune of Rs.1,34,81,038/- and relative cash expenditure was to the tune of 10 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR Rs.83,14,335/-, but nowhere in the impugned order it has been recorded that any invoices/ sale bills were produced by the assessee in appeal proceedings. As regards cash expenditure of Rs.83,14,335/-, there is no mention in the impugned order as to what evidence was produced by the assessee before Ld.CIT(A). 15. ld CIT(A) himself observed in para 3.3 that the withdrawal of huge amount of cash from bank account by the assesee, from April 2016 and keeping of said huge amount in form of liquid cash, is very uncommon. Ld. CIT(A) further observed that the assessee had failed to explain and furnish solid reasons for withdrawal of said huge amount. But, it remains unexplained as to why he did not draw any adverse inference against the assessee even after having made said observations. Surprisingly, ld CIT(A) mentions in the impugned order about a plea cursorily put forth by the assessee during appeal stage and the plea was that the assessee had a plan for investment in some property and as such, the assessee had withdrawn the said cash. However, no material was placed on record by the assessee before the ld CIT(A) in support of said plea for withdrawal of huge amount of cash. In absence of any material, this plea also deserved to be rejected out- rightly. 11 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR 16. Another reason recorded by ld. CIT(A) was non-rejection of books of account of the assessee by the AO, especially when the said books of account were duly audited by the CA on 6-10-2017. At this stage, significant to mention that admittedly the assessee did not produce any cash book before the AO. The assesse also failed to produce any sale bills in support of the claim of cash balance position as on 8-11-2016. There is nothing in the impugned order passed by the ld. CIT(A) that the assessee submitted any application before the ld. CIT(A) for production of additional evidence. There is no mention in the impugned order that any such request for additional evidence was considered by the ld. CIT(A) and allowed for such and such reason. In suchlike situation, the assessee is required to satisfy the appellate authority as to why he failed to produce the requisite documents before the Assessing Officer. But, in the impugned order Learned CIT(A) has not recorded his satisfaction about failure of the assessee in production of requisite documents before the Assessing Officer. 17. It is also worth mentioning that even before this Appellate Tribunal, the assessee has failed to produce any of the document, which is stated to have been produced before Ld.CIT(A). No reason has been furnished for non production of any such document or evidence for perusal and consideration of the Appellate Tribunal. 12 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR 18. In absence of any evidence in the form of invoice/ sale bills, it remains unexplained as to how the ld. CIT(A) felt satisfied that a part of the cash deposited in the above mentioned banks and during the above said period, was by way of income from cash sales. 19. As and when additional evidence is produced before CIT(A), remand report is generally called for so that the requisite material produced in appeal is got verified and then taken into consideration, but, significant to note that CIT(A) did not call for any remand report from the Assessing Officer about verification of additional evidence stated to have been produced there. There is no explanation in this regard in the impugned order. 20. As regards observations made by Ld. CIT(A) about non rejection of the books of accounts, how could AO reject any books of accounts when cash book was not at all produced by the assessee before Assessing Officer, and when the AO clearly observed that the assessee had not furnished any cash book or sale bills etc. Conclusion 21. In view of the above discussions, we are of the considered opinion that ld. CIT(A) deleted the addition of Rs.98.00 lacs without cogent and convincing evidence in proof of claim of the assessee about withdrawal and sales. 13 ITA NO. 1347/JP/2024 ITO, WARD 5(2), JAIPUR VS SHRI JAI GOVIND DHAMANI,HUF, JAIPUR Result 22. Consequently, this appeal is hereby allowed and the impugned assessment order passed by the AO is sustained, whereas the impugned order passed by Learned CIT(A) is hereby set aside. 23. Appeal file be consigned to record room after the needful is done by the office. Order pronounced in open Court on 11/ 03/2025 Sd/- Sd/- (xxu Xkks;y) ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@ Dated 11 /03/2025 *Mishra, Sr. PS vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- ITO, Ward 5(2), Jaipur 2. izR;FkhZ@ The Respondent- Shri Jai Govind Dhamani, HUF 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 ITA No. 1347/JP/2024) vkns'kkuqlkj@ By order, lgk;diathdkj@Asstt. Registrar "