SHRI ADARSH KUMAR NAGPAL, ABOHAR V. INCOME TAX OFFICER WARD-2 (3), ABOHAR

ITA 147/ASR/2022

AI Insights

The case involves Sh. Adarsh Kumar Nagpal, who appealed against the order of the CIT(A) National Faceless Appeal Centre, which confirmed additions made to his income for the Assessment Year 2017-18. The additions were primarily based on alleged unexplained cash deposits totaling Rs. 34,85,100, which were linked to credit card payments and other sources. The appellant contested that these payments were made from legitimate sources, including agricultural income and payments made on behalf of his business concerns for motor vehicle tax. The Tribunal examined the evidence and arguments presented, including bank statements, affidavits, and the appellant's income tax returns, and found merit in the appellant's explanations, leading to the setting aside of the CIT(A)'s order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114545 (ITAT-AMRITSAR)
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-05-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 29-06-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief
• Section: 69; 143(3); 195; 250; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 147/Asr/2022 Assessment Year: 2017-18 Sh. Adarsh Kumar Nagpal S/o Sh. Manohar Lal, Manohar Palace, Street No. 10, Abohar 152116, Punjab [PAN: AAJPN 1847P] (Appellant) V. Income Tax Officer, Ward-2(3), Abohar (Respondent) Appellant by Sh. Sudhir Sehgal Respondent by Sh. S. M. Surendranath, Sr. DR Date of Hearing : 16.05.2023 Date of Pronouncement : 24.05.2023 ORDER Per Dr. M. L. Meena, AM: This appeal has been filed by the assessee against the order of the Ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 06.05.2022 in respect of Assessment Year 2017-18. I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 2 2. The assessee has raised the following grounds of appeal: “1. That the Ld. CIT(A) erred in passing an order u/s 250 of the Income Tax Act, 1961 without appreciating facts of the case on record. 2. That the Ld. CIT(A) erred in making the addition under section 69 of the Act against the payment of Motor Vehicle Tax on behalf of the business concern. 3. That the Ld. CIT(A) has erred in making the addition relating to the rent received in cash. 4. That the Ld. CIT(A) has erred in making addition of Rs. 2,00,000/- on account of personal savings. 5. That the Ld. CIT(A) has erred in confirming the addition relating to payment of credit card bills amounting to Rs. 5,18,150/- 6. That the Appellant craves leave to add, amend, or alter the grounds of appeal before the appeal is finally disposed of.” 3. Ground Nos. 1 to 4 are interlinked pertaining to addition of Rs.34,85,100/- made u/s 69A r.w.s. 115BBE of the Act. 4. Briefly the facts as per record are that the AO observed that appellant had made payments of Rs.34,85,100/- for credit cards in cash, although the appellant stated vide reply dated 27.12.2019 that he has paid only Rs.5,18,150/- in cash for Credit Cards out of cash available with him from personal savings, agricultural income and cash withdrawals. However, the AO being not satisfied, has stated that no documentary evidence in support of this claim was filed and I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 3 accordingly, treated this amount of Rs.34,85,100/- as assessee’s income from undisclosed sources and added u/s 69A r.w.s 115BBE beside some other additions to Total Income of Appellant. 5. Aggrieved by the Order u/s 143(3) passed by the AO, appeal has been filed by the Appellant before the CIT(A) who has granted part relief by observing vide para 7.3 & 7.4 of the impugned order as under: “7.3 After examining the assessment order and written submissions filed by Appellant, the Grounds of Appeal No. 2 is discussed and decided as under:- a) As discussed in para 7.2(a), the Total cash deposits in Appellant’s bank account is Rs.51,21,000/- and not Rs.45,59,700/- as held by AO. b) The Appellant has contended that he deposited Motor Vehicle Tax on behalf of his company namely M/s Fazllka Dabwaii Transport Company to tune of Rs.22,27,587/- and on behalf of his firm namely M/s Nagpal Transport Co to tune of Rs.8,26,893/- totaling Rs.30,54,480/-. It was contended that these parties did not have online banking facility and Appellant used his personal internet banking to make these payments. Copies of challans evidencing deposit of Motor Vehicle Tax and summary was furnished. Confirmation from these two parties were also filed that Motor Vehicle Tax for these parties was deposited by the Appellant from his net banking during FY. 2016-17. However, the crucial issue remains unresolved i.e. what was the source of these cash deposits. No documentary evidence in this regard was filed. These two parties have given a general statement that “we have given him this sum in cash on periodic basis during the year to deposit Motor Vehicle Tax on our behalf”. They have neither given copies of their cash books or bank books or bank statements supporting the above statements. No evidence was filed to show that these parties had adequate cash in hand on these dates and said cash in hand was I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 4 transferred to the Appellant who deposited it in his bank account and made the online payment. It is further noted that these are 12 such payments made of each party during the year starting from 30.04.2016 to 19.03.2017. The issue of starting online/internet banking is a small Issue. This service can be activated by the bank on a request by the Account Holder. The banks on the other hand are encouraging the online/internet banking. Thus, the said two parties could have easily activated their online/internet banking by making a request to their bank branch and paid Motor Vehicle Tax through their own account instead of routing it through the Appellant’s account. In view of the above facts and in absence of any documentary evidence in support of “source of cash deposit” the contention of Appellant is not accepted and the addition made by AO of Rs.30,73,100/- is confirmed. c) Appellant has contended that source of cash deposits is from the cash withdrawals made from the below mentioned bank accounts on earlier dates. UCO Bank - Rs.1,96,000/- HDFC Bank - Rs.15,800/- Canara Bank - Rs.1,41,200/- Total Rs.3,53,000/- The Appellant filed copies of bank accounts of the above accounts. This contention of Appellant is acceptable and relief of Rs.3,53,000/- is allowed to the Appellant, d) Appellant has contended that he receives rental income in a Joint bank account held with his brothers. It was contended that his share of rental income of Rs.8,94,550/- is received by him in cash and this cash was deposited in his bank account. This contention of the Appellant does not emanate from the assessment order. There is no mention of rental income being received in cash and the cash being deposited in Appellant’s bank account in the assessment order. There is not even on I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 5 iota of documentary evidence in support of this contention except the above mentioned reply. The Appellant has not identified the specific cash deposits in his bank account which related to such rental income. Appellant has given confirmations in writing from his brother Sudhir Nagpal that cash deposits of Rs.1,95,000/- dated 10.11.2016 and 23.11.2016 in their Joint bank account with UCO Bank belongs to Sudhir Nagpal and not to Appellant. However, no such confirmation was filed by his brothers that the Appellant’s share in rental income was given to him in cash on monthly/quarterly basis, in absence of any satisfactory/valid documentary evidence this contention of the Appellant does not hold any ground and is not acceptable. e) Appellant has contended that he owns 8 acre of Agricultural land in Abohar with gross agricultural income of Rs.8,00,000/- which is deposited in cash in his bank account. Appellant has shown net agricultural income of Rs.5,00,000/- in his ITR. The difference in gross and net agricultural income of Rs.3,00,000/- must relate to the Agricultural expenses incurred by the Appellant in cash like seed money, pesticide, labour cost, diesel cost etc. This contention of Appellant is partly acceptable e Appellant is given credit of net agricultural income of Rs.5,00,000/- as being deposited in cash in his bank account. Accordingly, relief of Rs.5,00,000/- is allowed to the Appellant. f) Appellant has contended that UCO Bank account No. xxxx3661 is Joint bank account in names of Appellant and his three brothers. It was contended that cash deposits of Rs.1,50,000/- dated 10.11.2016 and Rs.45,000/- dated 23.11.2016 during demonetization period relates to his brother namely Sudhir Nagpal and should not be considered as cash deposits made by Appellant. In support the Appellant has filed confirmation from his brother namely Sudhir Nagpal (PAN: ABIPN8138R) stating that cash deposit of Rs.1,95.000/- was made by him out of his own funds and these deposits do not relate to Appellant. This contention of Appellant is acceptable in view of the confirmation filed by Sudhir Nagpal owing up the cash deposit of Rs.1,95,000/-. Accordingly, the Appellant is allowed relief of Rs.1,95,000/-. g) Appellant has contended that a sum of Rs.2,00,000/- each was deposited out of old savings held in cash by the Appellant and his wife. However, no documentary evidence in this regard was filed. The Appellant operates: 7 bank accounts then what was the need of keeping I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 6 such cash in hand. However, it is a fact that people in general keep cash in hand out of old savings at home in order to meet any uncalled for emergency situations. There is a concept of “Stree Dhan” is also followed in our customs. In view of these facts the contention of Appellant is partly acceptable and Appellant is allowed relief of Rs.2,00,000/- on account of cash deposits being made from old personal savings held in cash by the Appellant and his wife. 7.4. In view/ of the facts outlined in para 7.3 above the Appellant is allowed relief of Rs 12,48,000/- (Rs.3,53,000/- + Rs.5,00,000/- + Rs. 1,95,000/- + Rs 2,00,000/-) out of the total addition made on account of unexplained cash deposits made in the Appellants bank and the balance addition s confirmed. Ground of Appeal No. 2 is partly allowed.” 6. The Ld. Counsel for the assessee submitted that Ld. CIT(A) erred in confirming the addition without appreciating facts of the case on record that the payment of Motor Vehicle Tax was made on behalf of the business concern and that part of cash was received as rent receipt and pertains to personal savings and payment of credit card bills amounting to Rs. 5,18,150/- as well. He has files a brief synopsis in tabular form as under: Nature of Addition made by the AO Amount of Addition made by the Ld. AO (in Rs.) Remarks Source of cash deposits of Rs. 51,21,000/- Relief given by the CIT(A) (in Rs.) Addition challenged before the Hon'ble ITAT (in Rs.) Our Submissions before Hon’ble ITAT Cash Deposits made in the various bank accounts of the 45,59,700 1. The summary of cash deposits questione d by the AO contains 1. Rs. 22,27,587/- is related to M/s Fazilka Dabwali transport Co. P Ltd. + Rs. 1. Rs. 3,53,000/- on account of cash withdrawa ls from own bank (Rs. (ii) Minus 12,48,000) 1. The Ld. CIT(A) has not doubted the land holding of 8 acres and further, the agriculture income of Rs. 5 lacs was disclosed and accepted by the CIT(A) while passing the order and CIT(A) has given a set-off of Rs. 5 lacs of net agriculture income while I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 7 assessee totalling error. The total of the summary of cash deposits of Rs. 49,59,700/ - as against Rs. 45,59,700/ - questione d by the Ld. AO. 8,26,893/- is related to M/s Nagpal Transport Co. + Rs. 3,53,000/- is out of bank withdrawals form own bank accounts + Rs. 8,94,550/- is out of share of rental accounts + Rs. 1. 0 00/- o n account of agricultur e Income + Rs. 1,95,000/- cash deposited by the brother of the assessee in the joint account with the assessee + Rs. (i) 0 00/- o n account of past savings of assessee and his wife. adjudicating the issue of availability of cash with the assessee. However, the CIT(A) has failed to consider that beside Rs. 5 lacs, the assessee had Rs. 3 lacs of savings of agriculture income for the earlier years and which benefit ought to have been given and, for which, it is requested that the same benefit may please be given. 3. Other than that, in actual total cash deposits in various bank accounts of the assessee are Rs. 51,21,000/ - which have been explained by the assessee. Income in cash + Rs. 8,00,000/- from Agriculture income + Rs. 1,95,000/- is related to brother of the assessee + Rs. 2,00,00 0/- out of past savings of assessee+R s. Rs. 2. In nut shell, total relief given to the assessee by the CIT(A) is Rs.12,48, 000/- 2. Against the claim of Rs. 2 lacs each by the husband & wife, the CIT(A) has given a benefit of Rs. 1 lac each which is purely on surmises & conjectures and there is always a ‘Istridhan’ with the ladies and savings of the ladies and which benefit is ought to be given. 3. Regarding cash deposit of Rs. 22,27,587/- and Rs. 8,26,893/- as received from Company namely M/s. Fazilka, Dabwali Transport Company Pvt. Ltd. and M/s. Nagpal Transport Company (Regd.) respectively, it is submitted that the assessee is a Director and partner in these two concerns respectively and cash has been deposited on I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 8 2,00,000/- out of past savings of wife of the assessee. 2. Against cash deposits of Rs. 51,21,000/-, sources available with the assessee are 56,97,030/- account of Motor Vehicle Tax paid by the assessee on behalf of these two concerns. 4. These two concerns were not having net banking facility connected with their bank account and therefore, payment has been made by the assessee on their behalf. To prove the same, affidavits of the authorized persons of these two concerns were filed before the AO as well as CIT(A) confirming the fact that Motor Vehicle Tax deposited by the assessee on behalf of these two concerns out of his personal internet banking which has not been considered by them and the same are forming part of paper book II (Pg 294-295). 5. Further, we have already filed compilation sheet of Motor Vehicle Tax paid on behalf of these two concerns vide paper book Part I before the AO/CIT(A) and in case there was doubt, the same could have been asked by them (Page 1 to 2) 6. The copy of cash book, bank statement, audited balance sheet of Fazilka Dabwali Transport Company Pvt. Ltd. (pg. 3 to 137 of paper book part 1) and along with copy of cash book, bank statement, balance sheet of Fazilka Dabwali Transport Company Pvt. Ltd. (page 138 to 195 of Paper book Part 1) to prove the availability of cash in the hands of these two concerns. 7. These documents were always available with the assessee and the returns of both the concerns were with the same AO at the time of assessment proceedings, however, these were never asked for by the Ld. AO and assessee was under bonafide belief that affidavit filed by the authorized persons of above mentioned two concerns is sufficient to prove his contention. Therefore, the benefit of the same may, please, I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 9 be allowed to the assessee. The plea with evidence and certificate were given to the lower authorities and they had not accepted without assigning any valid reason. The balance sheets of the concerns stood filed and as such, same is not new evidence. 8. The rental income of Rs.8.94,550/- as claimed by the assessee is duly declared in his Income Tax Return under the head Income from house Property (Rs.1,38,375+3,75,194) and income from other sources (Rs.3,80,981) which is evident from the computation of income forming part of paper book –II at Pg. 296-298. Addition on account of cash payment of credit bills 34,85,100 Rs. 14,12,500/ - is related to AY 2018-19 and Rs.15,54, 450/- have been mentioned repeatedly by the reporting bank and in actual, only balance amount of Rs.5,18,1 50- has been made against credit payment. Rs.5,18,150 has been deposited out of cash sources mentioned above. 29,66,950/ - 5,18,150/- The said cash deposit of Rs.5,18,150/- is out of sources explained above which benefit is ought to be given. The finding of CIT(A) that no evidence was given for such claim is not correct. The computation of income stood filed. I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 10 Conclusion: In the light of above facts and documentary evidences, the assessee prayed for the following relief from your goodself: 1. The benefit of cash deposit of Rs. 32,43,280/- as proved being received from M/s. Fazilka, Dabwali Transport Company Pvt. Ltd. and M/s. Nagpal Transport Company (Regd.) on account of payment of Motor Vehicle Tax on their behalf may please be allowed to the assessee as above. 2. The benefit of agricultural income of Rs. 3,00,000/- being deposited out of past agricultural income savings may please be allowed to the assessee. 3. The rental income of Rs. 8,94,550/- is duly declared in the Return of Income filed by the assessee and therefore, the benefit of the same may please be allowed to the assessee. 4. The past savings of Rs. 2,00,000/- each persons, who are of appx. 45 years of age, is a very nominal amount that every person keeps with him/her to in the shape of ‘Istri Dhan’ to meet emergency situations as done by the assessee and his wife and therefore, the benefit of cash deposit of Rs. 2,00,000/- may please be allowed to the assessee, both i.e. self & wife. 5. Lastly, cash payment of Rs.5,18,150/- as made on account of Credit Card payment is out of the sources of cash proved above and therefore, the benefit of the same may please be allowed to the assessee. Thus, the balance sheets of both concerns were already with the same AO and confirmation along with the chart stood filed and, as such, the issue may be decided on merits.” 7. The Ld. DR stands by the impugned order. 8. Heard rival contentions, perused the material on record, impugned order, written submission filed before us. Admittedly, the total of the I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 11 summary of cash deposits of Rs. 49,59,700/- as against Rs. 45,59,700/- questioned by the Ld. AO; although alleged to be at Rs.51,21,000/-. It is seen that the appellant has filed details of the bank a/c’s and corroborative documentary evidence on source of cash deposit but neither of the lower authorities has rebutted the contention of the Ld. AR that total cash deposit was Rs. 49,59,700/- in appellant’s bank account. 9. The Ld. AR submitted that cash amount of Rs. 22,27,587/- is related to M/s Fazilka Dabwali transport Co. P Ltd.; Rs. 8,26,893/- is related to M/s Nagpal Transport Co.; Rs. 3,53,000/- is out of bank withdrawals from own bank accounts; Rs. 8,94,550/- is out of his share of rental Income in cash; Rs. 8,00,000/- from Agriculture income; Rs. 1,95,000/- is related to brother of the assessee; Rs.2,00,000/-out of past savings of assessee and Rs. 2,00,000/-out of past savings of wife of the assessee. Thus, the appellant assessee has explained the sources of available cash with him to the extent of Rs. 56,97,030/- as against alleged unexplained disputed cash by the AO of Rs. 51,21,000/-. 10. It is seen that the Ld. CIT(A) has not doubted the size of land holding of 8 acres and that the agriculture income of Rs. 5 lacs disclosed by the appellant has been accepted while giving a set-off of Rs. 5 lacs of net I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 12 agriculture income while adjudicating the issue of availability of cash with the assessee during the year under appeal. However, the CIT(A) has failed to consider the fact that beside Rs. 5 lacs agricultural income for the year relevant, the assessee had Rs. 3 lacs out of agriculture income for the earlier years and benefit for the same, ought to have been given based on agricultural income shown in the return of income of those earlier years. Accordingly, this request of the appellant is justified and the same benefit ought to be given. Similarly, 2 lacs claimed in hands of each husband and wife, the Ld. CIT(A) has reduced to 1 Lac in each hands based on surmises & conjectures ignoring the concept of ‘Istridhan’ to extent of Rs 2,50,000/- with the ladies and savings of the ladies and which benefit is ought to be given. 11. It is noted that cash deposit of Rs. 22,27,587/- and Rs. 8,26,893/- are explained as received from the Company namely M/s. Fazilka, Dabwali Transport Company Pvt. Ltd. and M/s. Nagpal Transport Company (Regd.) respectively, where the assessee is a Director and partner and cash has been deposited on account of Motor Vehicle Tax paid by the assessee through net banking on behalf of these two concerns because these two concerns were not having net banking facility with their bank account and I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 13 therefore, Tax payments had been made by the assessee on their behalf. In order to prove the same, affidavits of the authorized persons of these two concerns were filed before the AO as well as CIT(A) confirming the fact that Motor Vehicle Tax deposited by the assessee on behalf of these two concerns out of his personal internet banking which has not been considered by them (APB-II, Pgs. 294-295). The Ld. AR has further filed a compilation sheet of Motor Vehicle Tax paid on behalf of these two concerns (APB-I) before the AO/CIT(A) and if, there was any doubt, the same could have been verified from the concerned banks or further details ought to have been called for (APB-I, Pgs 1 to 2). The copy of cash book, bank statement, audited balance sheet of Fazilka Dabwali Transport Company Pvt. Ltd. (APB-I, Pgs. 3 to 137) along with copy of cash book, of Fazilka Dabwali Transport Company Pvt. Ltd. (APB, Pgs.138 to 195) are filed on record, before authorities below to prove the availability of cash in the hands of these two concerns. Without prejudice to above, both these concerns were filing return with the same AO, however, AO never asked for these details or verified from its office records and thus, assessee was under bonafide belief that affidavit filed by the authorized persons of above mentioned two concerns is sufficient to prove his contention. Therefore, the benefit of the same ought to be allowed to the assessee. In our view, the I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 14 evidence and certificate were being given to the lower authorities had not been accepted without assigning any valid reason is not justified and accordingly the disputed amount of aforesaid cash deposit stands explained. 12. The rental income of Rs.8.94,550/- as claimed by the assessee is duly declared in his Income Tax Return under the head Income from house Property (Rs.1,38,375+3,75,194) and income from other sources (Rs.3,80,981) which is evident from the computation of income forming part of paper book –II at Pg. 296-298 which is self explanatory. 13. The Next issue is regarding the said cash payment of Rs.5,18,150/- from credit card stand explained out of sources explained above which benefit is ought to be given to the appellant. The finding of CIT(A) that no evidence was given for such claim is factually incorrect. The amount of Rs. 14,12,500/- is related to AY 2018-19 and Rs.15,54,450/- have been mentioned repeatedly by the reporting bank and in fact, the actual, balance amount was of Rs.5,18,150- has been made against credit card payment. The computation of income stood filed by the appellant. The Ld DR failed to rebut the contentions of the ld. AR before us. I.T.A. No.147/Asr/2022 Adarsh Kumar Nagpal v. ITO 15 14. In view of the above discussion, we hold that the findings of the Ld. CIT (A) are perverse to the facts on record. We, therefore set aside the impugned order and delete the addition confirmed by the CIT(A) in arbitrary manner. 15. In the backdrop of the aforesaid discussion, the appeal of the assessee is disposed of in the terms indicated as above. Order pronounced in the open court on 24.05.2023 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr./P.S.* Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order