KANWALIJIT SINGH RANDHAWA, PATHANKOT V. ITO WARD 2, PATHANKOT

ITA 79/ASR/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5934 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-05-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 20-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 69; 144; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 Kanwalijit Singh Randhawa S/o Pritam Singh Randhawa, H. No. 5, Gill Avenue, Friends Colony Dhangu Road, Pathankot. [PAN:ACJPR8113N] (Appellant) Vs. ITO, Ward (2), Pathankot. (Respondent) Appellant by Sh. R. K. Magow, CA Respondent by Sh. Radhey Shyam Jaiswal, Sr. DR Date of Hearing 14.05.2024 Date of Pronouncement 08.07.2024 ORDER Per: Udayan Das Gupta, JM This appeal is filed by the assessee against the order u/s 250 of the Act 61, passed by the Ld. CIT (A) NFAC, dated 26 th December, 2023, which has arisen out of the order passed u/s 144 of the Act 61, by the AO, ward -2, Pathankot, dated 30.12.2019. 2. The grounds of appeal 1 to 7, taken by the assessee are as follows: I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 2 “1. That the order of the CIT (A) upholding the order of ITO passed under section 144 is illegal, violative of natural justice, without fair application of the mind to the extent of Rs. 1836500/- out of cash deposited in the bank during demonetization period. 2. a.That the learned CIT (A) has erred in not taking cognizance of the cash withdrawals from the bank before demonetization. b.That the learned CIT (A) appeal has erred in not giving the benefit of cash withdrawals before demonetization by applying the test of human probabilities and rejected the genuineness of cash deposit of Rs.1836500/- out of cash withdrawals before demonetization period and agricultural income from 01.04.2016 to 14.09.2016. 3. That the learned CIT (A) has erred in not taking cognizance of the facts that the appellant and his family member are agriculturist owning 175 Acres of agriculture land and the captioned cash was deposited out of past savings and agricultural income. 4. That the assessment by AO was wrongly made U/s 144 and that too when the assessee submitted relevant information on the dates fixed for hearing. 5. That the addition of Rs. 1836500/- u/s 69 has been wrongly made as the assesses being agriculturist, not required to maintain books of accounts. I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 3 6. That the assessment order was wrongly framed by the Assessing Officer u/s 144 whereas in fact the assesses submitted, response from time to time, as required by the Assessing Officer. 7. That the assesse craves leave to add or amend any other grounds of appeal either at the time of hearing or before the hearing.” 3. Though the appellant has taken seven grounds in appeal in Form 36, all the grounds relates to one single issue of addition of Rs. 18,36,500/-, being cash deposited in bank account by the assessee during demonetization period, the source of which has not been satisfactorily explained before the AO, resulting in an addition of the said amount u/s 69 of the Act 61, and consequential applicability of tax rates u/s 115 BBE of the Act 61. 4. The brief facts of the case are that the assessee is an agriculturist, fully engaged in agricultural activity and is the owner of one hundred seventy five acres of agricultural land (which according to the AO is one hundred acres) belonging to the assessee, his wife, his mother and other close relatives, but the fact that the assessee has agricultural income is not in dispute , and agricultural income being exempted, no return of income has been filed by the assessee, for the year under appeal. 4.1 The contention of the AO is that the assessee has deposited a total amount of Rs. 38,88,000/- in his bank account at Punjab Gramin Bank A/c No I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 4 84650100310295, during demonetization period in one lump sum on a single date on 13 th November, 2016, the source of which needs to be explained. 4.2 The assessee has filed written submissions before the AO, during assessment, explaining the source of the cash deposit, which is summarized as follows: Particulars : Amount Remarks Agricultural Sale Proceeds 20,51,386.00 Accepted by received in Cash supported AO after verification by Form - J , received during the period 15th Sept 2016 to 03rd November, 2016 Out of CASH withdrawals This part not accepted from Punjab Gramin Bank and added back by AO during April 2016 till 08/11/2016 u/s 69 of the Act 61 and which according to the assessee taxed at rates 115BBE statement filed is Rs. 37,80,000/- which covers the balance deposit 18,36,614.00 38,88,000.00 4.3 The AO has accepted the amount of Rs.20,51,386/- being supported by Form J, received in cash and deposited in bank in cash, as explained. I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 5 5. Regarding the benefit of cash withdrawal from the same bank, during the period 01/04/2016 till 08/011/2016, has not been allowed by the AO, on the ground, that the assessee was involved in frequent property transaction and moreover the assessee must have consumed the withdrawals for his agricultural activities. Hence the remaining cash deposit during demonetization period amounting to Rs. 18,36,500/- is treated as unexplained cash and added back in income of the assessee u/s 69 of the Act 61. 6. The matter was carried in appeal, before the first appellate authority, where the assessee has furnished submissions along with copies of bank statements and other evidences. The Ld. CIT (A), due to reasons contained in his appellate order, dismissed the appeal by observing as follows: “6. I have perused assessment order and considered the submissions of appellant. The only issue to be adjudicated is whether the source of cash of Rs. 18,36,500/-, deposited on 13.11.2016. could be the cash withdrawn on 19.7.2016 (4 months ago), 16.9. 2016 (2 months ago) and 6.10.2016 (1 month 7 days ago)? 6.1. Appellant has claimed that source of cash deposits were cash withdrawals made from banks on 19.7.2016 (Rs. 9,00,000/- ), 16.9.2016 (Rs. 2,00,000/-) and 6.10.2016 (Rs. 11,50,000/-). Assessee was a person who not only had access to banking facilities but also regularly did banking transactions. So, there was no reason why he would withdraw and accumulate cash I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 6 currency notes of lakhs of rupees in his home at a grave risk instead of keeping it in bank and withdraw as and when required. Human nature is that if a large sum is withdrawn with specific, pre-decided intention to deposit in bank, it will be deposited on the same day or 1-2 days and not keep at home for 40-50 days or even more as was done in this case. The appellant has not stated any specific reason why he chose to keep such huge deposit at home. If his claim were true, then question naturally arises, why he withdrew Rs. 2 lakh on 16.9.2016 when (as per his own claim) he had cash of Rs. 9 lakh, withdrawn on 19.7.2016, intact at his home? Similarly, question arises, why would he withdraw cash of Rs. 11,50,000/- on 6.10.2016 when he already had cash of Rs. 11,00,000/-, withdrawn earlier on 19.7.2016 and 16.9.2016, intact at his home? Natural explanation is that he definitely exhausted the cash withdrawn earlier. That is why he felt it necessary to withdraw more cash. Normal human behavior and logic defy and disprove appellant’s claim. In this context, there is no direct evidence to show that same currency notes were deposited. It is true that what is written above is probability. But it is fact that, the yardstick of evaluation of evidence under Income Tax Act is ‘preponderance of probability’ and not ‘beyond reasonable doubt’. This stockpiling of cash at home in spite of having access to banking facilities is against human nature and defies normal human probability. So, the matter has to be decided on circumstantial evidence including human probability I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 7 with the guidance of case laws of Supreme Court and jurisdictional High Court.” 7. Now the assessee is before the Tribunal against the said addition of Rs. 18,36,500/-, which is the remaining balance of cash deposited in bank, which the assessee has explained, to have come out of cash withdrawn from the same bank during the period April 2016 to 8 th November 2016. 8. The Ld. AR of the assessee has filed a paper book containing bank statements, written submissions, and supporting case laws relied upon for support, and argued that the addition has been made on surmise, conjectures and human probabilities. He further argued that the assessee is only engaged in agricultural activity having his own lands measuring 175 acres, and deriving income from agriculture, and the same being exempt, is not liable to file any mandatory income tax returns, because he has no taxable income and the assessee has not maintained any cash book. Moreover, the AO and the first appellate authority, has not taken into cognizance the amount of cash drawn from bank by the assessee amounting to Rs.37.80 lakhs during the period 1 st April 2016 till 08 th November, 2016 from Punjab Gramin Bank, and has also totally overlooked the amount of cash withdrawn in the immediately preceding FY 2015-16, from the same bank, amounting to Rs. 62.50 lakhs, (the calculation of which he has placed in paper book page -16). I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 8 9. The AR further argues, that the AO has not brought any evidence on record to prove that the assessee has made any investments, or expenditures, where the said cash might have been utilized or spent otherwise, and he has only disbelieved the availability of cash, because there has been a time gap, in between withdrawals and deposits, and on the basis of human preponderance of probabilities. 9.1 He relied upon the following judicial decisions in support of his contention and prayed for deleting the addition. a) Gurpreet Singh : ITAT Chandigarh “A” Bench ITA No.221/Chd/2014 (Trib.) b) Deepali Sehgal, ITAT Delhi “B” Bench ITA No.5660/Del/2012 (Trib.) c) Baljit Singh, ITAT, “SMC” Bench Chandigarh, ITA No.986/Chd/2018 (Trib.) d) Sudhirbhai Pravinkant Thacker, ITAT Ahmedabad Bench in ITA No.788/Ahd/2012 (Trib.) 10. The Ld. DR, relied upon the order of the Ld. CIT(A), and argued that in this case there is a time gap between withdrawal and deposit and the AO is also correct in observing that agricultural expenses must have been expended for agricultural income, and submits that the addition is justified and may be sustained. 11. We have heard the submissions of both the counsels and examined the materials on record including the paper book filed, including bank statements of I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 9 Punjab Gramin Bank and Syndicate Bank (both placed in paper book pages 10 to 15). Though the assessee has filed details of cash withdrawal from bank during the FY 2015-16, amounting to Rs.62,50,000/-, (as per PB page 16) we are not taking the same into consideration. 11.1 We only restrict our findings to the year under appeal, and at this stage we only look into the probability as to whether the assessee could have had sufficient cash available with him for making the deposit of Rs. 18,36,614/- in bank on 13 th November, 2016 11.2 For ready reference we reproduce the date wise Cash withdrawal (and cash deposit) of the assessee with Punjab Gramin Bank, during the period 1 st . April 2016 to 8 th November 2016 as under: Punjab Gramin Bank A/c 84650100310295 Dates : Cash Withdrawal Cash Deposit 08/04/2016 50,000.00 03/05/2016 2,00,000.00 18/05/2016 8,50,000.00 23/05/2016 1,20,000.00 23/06/2016 4,00,000.00 27/06/2016 80,000.00 19/07/2016 9,00,000.00 25/07/2016 6,50,000.00 16/08/2016 30,000.00 20/08/2016 35,000.00 22/08/2016 35,000.00 I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 10 29/08/2016 60,000.00 91/09/2016 55,000.00 16/09/2016 2,00,000.00 21/09/2016 5,000.00 01/10/2016 70,000.00 05/10/2016 5,000.00 06/10/2016 11,50,000.00 12/10/2016 32,000.00 13/10/2016 35,000.00 Total 43,12,000.00 6,50,000.00 Net Amount 36,62,000.00 In Syndicate bank A/c 81002010031950, it is seen that total cash withdrawals in the month of April was Rs. 3,10,000/- and cash deposit was NIL and no further transactions except a cash withdrawal of Rs. 20,000/- on 5 th Sept, 2016. 11.3 As such from the above particulars the total net cash with drawn by the assessee, considering both the banks was Rs. 39,92,000/-, during the period April 2016 to 8 th November, 2016. 11.4 We also find that, the department has not brought any material on record to the contrary to prove that the cash withdrawn by the assessee from bank throughout the above period, has already been utilised or expended elsewhere or for any other investment or for any other purpose. 12. As such , considering the factual aspect of the matter and to take a practical view considering the above particulars and to arrive at a logical conclusion , even if we consider that fifty percentage of the above bank withdrawals are expended by the assessee for meeting his family expenses and to meet the expenditure relating I.T.A. No.79/Asr/2024 Assessment Year: 2017-18 11 to agricultural activities ( as observed by the AO in the assessment order ) , the balance remaining amount of say twenty lakhs approx ( 50% of Rs.39.92 lakhs ), is good enough to cover the cash deposit of Rs. 18.36 lakhs in bank account on 13 th November, 2016. 13. As such we have no hesitation in holding that the assessee had sufficient cash at his disposal to make the deposit of Rs. 18.36 lakhs in bank as on the date 13 th November, 2016, and the addition made by the AO and sustained by the Ld. CIT (A), on this ground is deleted. 14. In the result, the appeal of the assessee bearing ITA No. 79/Asr/2024 is allowed. Order pronounced in the open court on 08.07.2024 Sd/- Sd/- (Dr. M. L. Meena) (UDAYAN DAS GUPTA) Accountant Member Judicial Member AKV 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