आयकर अपील य अ धकरण, अहमदाबाद यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’SMC’’ BENCH, AHMEDABAD BEFORE SHRIWASEEM AHMED, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.1069/AHD/2019 नधा रणवष /Asstt. Year: 2010-11 Smt. BhartibenRajeshkumar Patel 1, Shivdhara Society, Nr. Akshardham Society, Visnagar Road, Unjha - 384170 PAN: ASSPP7562J Vs. ITO Ward-4, Patan (Applicant) (Respondent) Assessee by : Shri Dhrunal Bhatt, A.R. & Shri Biren Shah, A.R. Revenue by : Shri Purushottam Kumar, Sr. D.R स ु नवाईक तार ख/Date of Hearing : 29/12/2022 घोषणाक तार ख/Date of Pronouncement: 18/01/2023 आदेश/O R D E R The captioned appeal hasbeen filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals), Gandhinagar, Ahmedabad dated 26/04/2019 arising in the matter of assessment order passed under s.144 r.w.s. 147of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2010-11. 2. The assessee has raised following grounds of appeal: “1. In law and in the facts and circumstances of the appellant's case, learned CIT(A) has grossly erred in dismissing Appellant's grounds of appeal challenging validity of reopening carried out u/s 143(3) r.w.s 147. Ld CIT(A) ought to have appreciated that reopening carried out merely on the basis of information regarding cash deposited in bank account cannot be basis for reopening the case of the Appellant and reliance is placed by Appellant on the decision of Hon'ble Ahmedabad Tribunal in case of SmtMariyam Ismail Rajwani in ITA No: 676/Ahd/2016 dated 09/08/2016 in support of such contention. 2. In the law and in the facts and circumstances of the appellant's case, learned CIT(A) has grossly erred in confirming addition made towards cash deposited in HDFC bank account at Rs.12,79,000/-. ITA No.1069/AHD/2019 A.Y. 2010-11 2 3. In law and in the facts and circumstances of the appellant's case, learned CIT(A) has grossly erred in not appreciating the fact that the Appellant has not maintained regular books of accounts and accordingly the amount credited in the bank statement cannot be considered as unexplained cash credit as the bank statement arenot part of books of accounts. The case of the Appellant is squarely covered by the decision of Hon'ble Ahmedabad Tribunal in case of Smt. Ramilaben B. Patel, Vs. Income Tax Officer vide ITA No: 3393/AHD/2014dated 11/12/2018. 4. In law and in the facts and circumstances of the appellant's case, learned CIT(A) has failed to appreciate the fact that cash deposited in the bank account of the Appellant was duly explained by summary sheet submitted before him which also explains source of cash balance and supported by necessary evidences and considering such facts no addition towards unexplained cash credit is called for. 5. In law and in the facts and circumstances of the appellant's case, learned CIT(A) has grossly erred in not appreciating the contention of Appellant that cash received from various persons for making application for IPO were deposited in bank and cheques were issued against such cash deposits for application of IPO in name of such persons and such facts were supported by copy of affidavit and demate statement of the parties who has given cash to the Appellant. 6. In law and in the facts and circumstances of the appellant's case, in any case Ld CIT(A) ought to have restricted addition towards cash deposited in bank account applying the theory of peak credit and deducting opening cash balance from the peak cash deposit which comes to Rs. 10,01,300/-. 7. The appellant craves leave to add, amend and/or alter the ground or grounds of appeal either before or at the time of hearing of the appeal.” 3. The first issue raised by the assessee in ground no. 1 of her appeal is that the learned CIT(A) erred in confirming the validity of re-opening the assessment under section 147 of the Act. 3.1 At the outset, the learned AR for the assessee before us submitted that he has been instructed by the assessee not to press ground No. 1 raised in the memo of appeal, challenging the reopening of the assessment under section 147 of the Act. Accordingly, I dismiss the same as not pressed. 4. The next interconnected issues raised by the assessee in ground Nos. 2 to 7 are that the learned CIT(A) erred in confirming the addition of Rs. 12,79,000/- on account of cash deposits in bank by treating the same as unexplained cash credit u/s 68 of the Act. ITA No.1069/AHD/2019 A.Y. 2010-11 3 5. The facts in brief are that the assessee is an individual and for the year under consideration has not filed return of income under the provision of section 139 of the Act. The AO from the AIR/CIB information available on ITD portal found that the assessee deposited cash amounting to Rs. 23,29,100/- in saving bank account during the period of April 2009 to March 2010. Thus, the AO initiated income escapement proceeding by issuing notice under section 148 of the Act dated 29-03-2017. The assessee failed to furnish return of income under section 148 of the Act and also failed to comply with several notices issued under the provision of section 142(1) of the Act. Thus, the AO in absence of any reply from the assessee treated the cash deposit of Rs. 23,29,100/- as unexplained cash credit under section 68 of the Act and assessed the income of the assessee at Rs. 23,29,100/- in the assessment order under section 144r.w.s. 147 of the Act. 6. The aggrieved assessee preferred an appeal before the learned CIT(A). 7. The assessee before the learned CIT (A) filed additional evidences and submitted that the alleged cash deposit of Rs. 23,29,100/- made with two different bank detailed as below: 1. HDFC bank Rs. 12,97,000/- 2. Karurvasya Bank Rs. 10,50,100/- 7.1 With regard to Karur Vasya Bank, it was submitted that the same is joint account with Smt. Upasna N Patel and the entire cash deposit of Rs. 10,51,100/- was added to the total income of Smt. Upasna N Patel in her assessment. Therefore,the same should not be added in the hand of present assessee. 7.2 With regard to the sources of cash deposit, the assessee submitted that such cash represent receipt from the sale of agricultural produce and withdrawal made from the bank on earlier occasion and also from personal saving. ITA No.1069/AHD/2019 A.Y. 2010-11 4 7.3 The assessee alternatively submitted that if any addition is sustained on account of cash deposits in HDFC bank, then such addition should not be in excess of peak credit which comes at Rs. 12,10,200/- only. 8. The submission of the assessee along with the evidence was forwarded by the learned CIT(A) to the AO for remand report. The AO in the remand report found that agricultural land of 5.5 vigha from which the assessee claimed to have earned agricultural income is held by her father in law along with six other co- owners including Shri Rajendra V Patel, Shri Daval R Patel and husband of Smt. Upasna N Patel. There were additions on account of cash deposits for Rs. 10,50,850/-, Rs. 22,09,900/- and 10,50,000/- in the hands of Shri Rajendra V Patel, Shri Daval R Patel and Upasna N Patel respectively and all these assessee claimed to have received cash from sale of agricultural produce which was cultivated from impugned agricultural land. Such a huge income from such small piece of agricultural land of 5.5 vigha is not possible. It was also noticed by the AO that the assessee has not furnished the details of income generated from such agricultural land and her percentage of share in such land. Therefore, the AO submitted that the assessee’s claim that cash was deposited out of agricultural receipt is not acceptable. 9. The AO in the remand report also found that no withdrawal was made from the HDFC bank account. Therefore, the benefit of peak credit also cannot be extended. 10. The assessee in rejoinder submitted that that she is not maintaining regular books of account therefore explaining in precise the source of cash deposit is not possible. However, she believes that the cash was deposited out of earlier withdrawal and agricultural income from ancestral land. Further, the observation of the AO that no cash was withdrawnfrom HDFC bank is wrong. The narration in bank statement being “Chq Paid Unjha Stattion” represent cash withdrawal and not the cheque transfer. Therefore, the benefit of peak credit should be extended. The assessee also contended that she analyzed detail of earlier year and on the ITA No.1069/AHD/2019 A.Y. 2010-11 5 basis of transactions in her bank account, sheworked out the opening cash balance at Rs. 2,08,900/- only. Therefore,the same needs to be considered while working out the balance of peak credit. 11. The learned CIT(A) after considering facts in totality partially confirmed the addition made by the AO by observing as under: “6.3 During the course of appellate hearing and in connection with rejoinder to the remand report, the appellant along with her joint owner in KarurVyasya bank being Smt. Upsanaben Patel has filed submission wherein it was mainly argued that cash deposits are out of available opening cash balance. It was claimed that in case of Smt. Upsanaben, there was opening cash balance of Rs. 5,67,400/- and Rs. 2,08,900/- in case of the appellant and such cash balance has been used for making cash deposits in the current year. However, this contention of the appellant cannot be accepted because she has not filed any return of income prior to current year, hence she as well as other co-owner was having opening cash balance cannot be accepted. The theory of having opening cash balance and savings with the appellant is without any evidence hence the same cannot be accepted. The Hon’ble Ahmedabad ITAT in the case of Somabhai Ambalal Prajapati V/s ACIT 88 taxman.com 369 [2017] has held that when assessee could not explain how amount withdrawn in previous year remained with the assessee when the assessee has withdrawn further sum, the AO has rightly refused to give credit of such amount for the purpose of investment in land. On this basis, contention of the appellant that cash deposits are out of opening cash balance is not accepted. 6.4 Further, the appellant along with other co-owners has also contended that they were used to receive cash from various persons for making application of IPO and against receipt of cash, they were giving cheque to such persons for IPO application. The appellant has-submitted copy of affidavits of such persons and claimed that shares are directly allotted in their name and profit/loss arising from share transaction belongs to person to whom cheque is given. The appellant has also submitted a chart showing sources of cash deposits and, its subsequent deposits in bank account in support of such claim. These details, were not submitted by the appellant along with first submission and the same are submitted in response to remand report obtained from the AO, hence theory explained by the appellant is nothing but an afterthought for explaining cash deposits. The appellant has not given any explanation regarding fact as to why she and her co- owners have made such transactions when other parties have their independent bank accounts and even no income pertaining to such transactions is offered to tax, hence explanation provided by the appellant without having any tangible material is rejected. 6.5 It is observed thatSmt.Upsanaben Patel is having first name in KarurVysya Bank and the appellant is having the second name, hence such bank account is exclusively required to be considered in the hands of SmtUpsanaben as the appellant has failed to submit any evidences that such account is jointly operated ITA No.1069/AHD/2019 A.Y. 2010-11 6 by both the persons and the appellant was already having her independent bank account. The AO at para 4 of the remand report has also stated that bank account with KarurVysya Bank is jointly held with Smt. Upsanaben and if she accepts the ownership of cash deposit in such bank account, consequential relief may be granted in the case of appellant. For the reasons stated herein above and discussion made while passing appellate order of SmtUpsanaben Patel, entire cash deposit in bank account with KarurVysya is considered in her case and addition made by the AO to the extent of Rs.10,50,100/- is directed to be deleted. 6.6 Sofar as alternate, claim of the appellant that as there are cash withdrawals and cash deposits in bank account, hence only peak need to be taxed, it is observed that the AO has objected to it by contending that as there are no withdrawals from HDFC account, no benefit of peak can be given to the appellant The AO in the remand report has observed that peak credit can only be adopted if there is rotation of cash and its subsequent deposit. From perusalof the records, it is noticed that the appellant has not provided any copy of this bank account for verification of the peak worked out, this claim of the appellant is rejected. Thus, addition made by the AO for cash deposits in HDFC bank for Rs.12,79,000/- is confirmed. In nutshell, addition madeby AO for Rs.23,29,100/- is restricted to this much amount and the appellant gets, relief of Rs. 10,50,100/-. This ground of appeal is partly allowed.” 12. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before me. 13. The learned AR before me filed a paper book running from pages 1 to 65 and contended that the cash was deposited out of the agricultural income. It was also contended by the learned AR that the assessee has received cash for acquiring the shares in the IPO on behalf of the parties. To this effect, the learned AR has also filed affidavits of the parties which are available on record. The learned AR also submitted to consider the amount of opening cash balance available with the assessee. Similarly, the learned AR also prayed to apply the peak credit theory while calculating the income of the assessee. 14. On the contrary, learned DR before me vehemently supported the order of the authorities below. 15. I have heard the rival contentions of both the parties and perused the materials available on record. In the present case there was the cash deposits in the bank account of the assessee with HDFC Bank and KarurVasya Bank, the ITA No.1069/AHD/2019 A.Y. 2010-11 7 source of which was not explained by the assessee, therefore, the AO has made the addition to the tune of H23,29,100/- as unexplained cash credit under section 68 of the Actwhich was subsequently reduced by the learned CIT(A) to the extent of Rs. 12.97 Lacs being cash deposited with HDFC bank. 16. The learned AR before me has tried to justify the source of cash deposits from different sources. First of the contention of the learned AR was that the impugned cash deposit was made out of the agriculture income. However, I note that the assessee before the authorities below has not furnished any documentary evidence suggesting that the assessee has earned from the source of agricultural operation. It was also observed by the authorities below that the assessee was not even in the possession of agricultural land. The agricultural land as evident from form 8-A, it was noticed that such piece of land admeasuring 5.5 vigha was owned by her father-in-law along with 6 other co-owners. Three co-owners of the impugned land have already claimed to have deposited cash in their bank accounts out of the income from the agricultural operations from such piece of land. In such facts and circumstances, it is hard to believe the version of the learned counsel for the assessee. The onus lies upon the assessee to justify her contention based on the materials/documents on record about the agricultural operations carried out by her. Accordingly, I do not find any reason to interfere in the order of the learned CIT-A as far as this contention of the learned AR is concerned. 17. The 2 nd contention of the learned AR of the assessee was that she has received cashfrom two parties for making the investment in the IPO which was deposited in the bank account of the assessee. This contention was raised by the assessee 1 st time before the learnedCIT(A) in the rejoinder filed by her against the remand report furnished by the AO. As such this contention was not raised by the assessee during the assessment and remand proceedings. Thus the question arises whether such contention can be raised during the appellate proceedings and that too in the rejoinder of the remand report. Generally, such contentions ITA No.1069/AHD/2019 A.Y. 2010-11 8 should be discouraged to be raised at the higher forum without confronting before the AO during the assessment/ remand proceedings. However, such contentions can be allowed to be raised provided they are based on the documentary evidence and after giving the opportunity to the AO. Nevertheless, such contentions raised by the assessee were rejected by the learnedCIT(A) on the reasoning that: i. The contentions that the assessee has received money from the parties for their participation in the IPO was not raised during the original assessment and remand proceedings. ii. The persons who have paid cash to the assessee were also maintaining their respective bank accounts and therefore there was no justification for them to provide the cash to the assessee. iii. Mainly the so-called cash received from the parties for participation in the IPO was deposited in the bank account namelyKarurVasyaBank in respect of which no addition was made in the hands of the assessee on account of cash deposits as such bank account was belonging to the joint holder namelySmt.Upasana N Patel. 18. However, I note that the learned AR in support of his contention that the assessee has received money from the parties for the participation in the IPO have drawn our attention on the affidavits of the parties which are placed on pages 45 to 47 and 48 to 50 of the paper book and the copy of the ledger of one-party namely Shri Pankajkumar Sitarambhai Patel placed on pages 51 of the paper book. All these documents filed by the learned AR were considered by the learnedCIT-A as the documents prepared afterthought to justify the deposit of cash in the bank account and therefore the same were rejected. However, in the interest of justice and fair play, I am inclined to give one more opportunity to the assessee by setting aside this issue to the file of the AO for fresh adjudication as per the provisions of law. Even at the time of hearing, the learned DR did not oppose if the matter is set aside to the file of the AO for fresh adjudication as per the provisions of law. Thus, the contention raised by the learned AR is set aside to the file of the AO for fresh adjudication as per the provisions of law. ITA No.1069/AHD/2019 A.Y. 2010-11 9 19. It was also contended by the learned AR that there was opening cash balance as on 1 st April 2009 of Rs. 2,08,900/- which was utilized for depositing the bank account in the year under consideration. Admittedly, there was no documentary evidence furnished by the assessee in support of the opening cash balance therefore it is hard to believe that there was cash balance available with the assessee. But, considering the amount involved as the opening balance, the possibility of having the same out of the past savings cannot be ruled out. Accordingly, we direct the AO to give the benefit of opening balance of Rs. 2,08,900/- if any addition is sustained in the hands of the assessee on account of cash deposits in the year under consideration. 20. As regards the alternate contention of the learned AR to take the peak balance of cash deposit as the income of the assessee, in this regard we find that the learned ARhas filed the working which is placed on pages 4 to 5 of the paper book. According to the learned AR there was cash withdrawal of H 68,800/-only in the year under consideration which was available with her for re-deposit in the bank account and therefore to this extent the relief was sought by the assessee before the authorities below. However, the authorities below denied the benefit to the assessee on the reasoning that there was no cash withdrawal. It is the factual matter which can be established based on the documentary evidence. As such the assessee is directed to justify the withdrawal of cash from the bank account based on the documentary evidence. It is for the reason that once the cash has been withdrawn by the assessee then a presumption can be drawn that such cash was available with the assessee for depositing the same in the bank account until and unless it was held by the revenue based on the documentary evidence that such cash has been utilized for incurring the personal expenses or for making the investment. But no such finding was provided by the revenue about the utilization of such cash withdrawal from the bank. Thus, we hold that such cash withdrawal of Rs.68,800/- was available with the assessee for depositing the same in the bank account provided that the assessee furnishes the documentary evidence during the set-aside proceedings before the AO. Hence this contention of the ITA No.1069/AHD/2019 A.Y. 2010-11 10 learned AR is also set aside to the AO for fresh adjudication in the light of the above stated direction and as per the provisions of law. Hence, the ground of appeal of the assessee is partly allowed for the statistical purposes. 21. In the result the appeal filed by the assessee is partly allowed for the statistical purposes. Order pronounced in the Court on 18/01/2023 at Ahmedabad. Sd/- (WASEEM AHMED) ACCOUNTANT MEMBER Ahmedabad; Dated 18/01/2023 Tanmay, Sr. PS TRUE COPY आदेशक त ल प!े षत/Copy of the Order forwarded to : आदेशान ु सार /BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपील यअ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation :16/01/2023(Dictatedin his own laptop) 2. Date on which the typed draft is placed before the Dictating Member 16/01/2023 3. Date on which the approved draft comes to the Sr.P.S./P.S. - 18/01/2023 4. Date on which the fair order is placed before the Dictating Member for Pronouncement .................... 5. Date on which the file goes to the Bench Clerk.. : 18/01/2023 6. Date on which the file goes to the Head Clerk.................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order.......................... Date of Despatch of the Order.................. 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धतआयकरआय ु त/ Concerned CIT 4. आयकरआय ु त(अपील) / The CIT(A) 5. !वभागीय $त$न ध, आयकरअपील यअ धकरण/ DR, ITAT, 6. गाड&फाईल / Guard file.