KISHAN SINGH, JAIPUR V. ACIT CENTRAL CIRCLE-4, JAIPUR

ITA 83/JPR/2023

AI Insights

The case involves an appeal by Kishan Singh against the order of the Commissioner of Income Tax (Appeals)-4, Jaipur, which confirmed the addition of Rs. 4,51,000 to the assessee's income as unexplained cash deposits. The addition was initially made by the Assessing Officer following a search and seizure operation under sections 132 and 133A of the Income Tax Act, 1961. The Tribunal's decision to allow the appeal was based on the failure of the lower authorities to adequately address the evidences and explanations provided by the assessee, which linked the cash deposits to legitimate sources including cash withdrawals and receipts from a business associate, Chandra Mohan Bhati.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132218 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 23-02-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Principle of natural justice; Corroborative evidences; Tax effect; Documents seized
• Section: 132; 143(3); 133A; 153A; 207; 43

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ ITA. No. 83/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2013-14 Sh. Kishan Singh 13, Jai Kisan Colony, Tonk Phatak, Jaipur cuke Vs. ACIT Central Circle-02, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGWPS 6004 N vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Ashish Khandelwal jktLo dh vksj ls@ Revenue by : Shri Ajay Malik (CIT) a lquokbZ dh rkjh[k@ Date of Hearing : 12/07/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 28/07/2023 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assessee aggrieved from the order of the Commissioner of Income Tax (Appeals)-4, Jaipur [ Here in after referred as Ld. CIT(A) ] for the assessment year 2013-14 dated 05.01.2023, which in turn arises from the order passed by the ACIT, Central Circle-04, Jaipur passed under Section 143(3) r.w.s 153A of the Income tax Act, 1961 (in short 'the Act') dated 31.12.2019. ITA No. 83/JP/2023 Kishan Singh vs ACIT 2 2. The assessee has marched this appeal on the following grounds:- “1. That both the lower authorities have erred in law as well in facts of the case in making/ confirming addition of Rs.451000/- by considering genuine & explained cash deposit to be unexplained. 2. That both the lower authorities have without appreciating that source of cash funds emanated out of opening cash in hand which was accepted by AO in assessment of proceeding year and from receipts reflected in seized document. 3. That ld. CIT(A) has erred in law as well in facts of the case in not appreciating that AO rejected the claim of appellant & evidence put on without assigning any speaking reason.” 3. The fact as culled out from the records is that a search and seizure action u/s 132 of the Income Tax Act, 1961 (“the Act”) and/or survey action u/s 133A of the Act was carried out by the Income Tax Department on the members of Chandra Mohan Bhati and Kishan Singh Group, Jaipur on 23.08.2017 of which the assessee is one of the members. During the above referred action(s), cash, jewellery, valuables, stock-in-trade, documents, books of account and/or loose papers were found and/or seized from the premises of the members of the Chandra Mohan Bhati and Kishan Singh Group, Jaipur of which one such member happens to be the assessee. The Jurisdiction over the case was assigned to Central Circle-04, Jaipur vide order u/s 127 of the ITA No. 83/JP/2023 Kishan Singh vs ACIT 3 Income-tax Act, 1961 by the PCIT(C)/DCIT(Hq)/C-243/Misc./2019- 20/1183 dated 06.08.2019. The assessee is employed in Jaipur Municipal Corporation and has shown income from salary along with income from house property and other sources. In this case, original return of income was filed on 29/07/2013 for the A.Y 2013- 14 declaring total income at Rs.3,92,270/-. In the assessment proceeding the ld. AO noted that the assessee has deposited Rs. 3,08,000 in his SBI A/C No. 64055151633, SBI SMS Highway and Rs. 1,43,000/- in his BOB A/C No. 31470100000300, therefore, it is seen that the assessee has deposited total amount of Rs. 4,51,000/- in his bank accounts. It is proposed to make an addition of the said deposits, as these deposits remain unexplained. Therefore, an addition of Rs. 4,51,000/- is being made to the income of the assessee as undisclosed income. 4. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. A propose to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: “5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the ITA No. 83/JP/2023 Kishan Singh vs ACIT 4 assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- (i) The submissions of the appellant are very vague and do not explain with evidence as to how the inferences drawn by the AO is incorrect. Merely submitting the cash book does not explain the source of cash deposits into the Bank Account. As regards the appellants contention that the seized document is itself evidence that Rs.35 lakh was realized in tranches from Shri Chandra Mohan Bhatti during the FY 2012-13, the order of the AO does not record any such finding. The appellant has failed to substantiate his submissions with supporting evidences In view thereof, I do not find any reason to differ with the addition made by the AO and addition made by the AO amounting to Rs. 4,51.000/ on account of unexplained cash deposit in the two Bank Accounts is upheld. 6. The last Ground of Appeal is that the appellant craves right to add, alter or 6.1 The appellant has not added or altered any of the above mentioned grounds of appeal. Accordingly such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication and is accordingly treated as disposed off. 7. In the result, the appeal of the appellant is partly allowed.” 5. The ld. AR appearing on behalf of the assessee has placed their written submission to support the grounds so raised and the same is extracted here in below; “ The appellant is salaried employee and regularly filing his returns of Income. During the relevant year, original return of Income was filed on 29.07.2013 declaring total Income of Rs. 392270/-. Subsequently, search & seizure action u/s 132 of the Income Tax Act was carried out by the Income tax Department on 23.07.2017 on the appellant and his friend Shri Chandra Mohan Bhati (herein after referred to as Mr. Bhati for sake of brevity). During the course of search, various documents were found and/or seized by the Income Tax Department from the residential house of the appellant. ITA No. 83/JP/2023 Kishan Singh vs ACIT 5 Further , the notice u/s 153A of the Income Tax Act was issued by the department requiring the appellant to furnish return of Income and in compliance of Same , the return of Income was furnished by the assessee declaring Income to the tune of Rs.452550/- 04.11.2019 .(Kindly refer Pg 8-12) During the course of assessment proceedings , the appellant elaborately explained each & every entry contained in documents seized by the department . However ,the AO was not satisfied with regards to the source of Rs. 43 Lakhs paid to Mr. Bhati and therefore on this count , the ld AO made addition of Rs. 24.49 /- lakhs by considering same to be unexplained Investment . Besides that ,AO added cash deposit made into bank account totaling Rs. 451000/- to be unexplained Income .Thus , in total addition of Rs. 29,00,000/- was made, aggrieved by the same ,the appellant filed appeal before Appellate Commissioner . Subsequently , the ld CIT(A)-4 , Jaipur vide appellate order dated 05.01.2023, deleted addition of Rs. 24.49 Lakhs but sustained the addition on account of cash deposit made into bank account . Aggrieved by the same ,the appellant filed appeal before your honour. With this background, the individual grounds of appeal & brief submission of appellant is as under:- Grounds of Appeal 1. That both the lower authorities have erred in law as well in facts of the case in making/ confirming addition of Rs.451000/- by considering genuine & explained cash deposit to be unexplained. 2. That both the lower authorities have without appreciating that source of cash funds emanated out of opening cash in hand which was accepted by AO in assessment of proceeding year and from receipts reflected in seized document. 3. That id CIT (A) has erred in law as well in facts of the case in not appreciating that AO rejected the claim of appellant & evidence putt on without assigning any speaking reason. (Submission to all of above three ground have been made in consolidated manner as issue involved is same ). Brief facts:- ITA No. 83/JP/2023 Kishan Singh vs ACIT 6 The appellant made cash deposit of Rs. 4,51,000/- (tranches) in various bank accounts and source of same was also explained in length to the AO vide letter dated 12.12.2019 & 18.12.2019 . The appellant contended that source of cash deposit emanated partly out of opening cash as on 31.03.2012, redeposit of cash through preceding cash withdrawals & also from Mr. Bhati which was evident from the seized material. Further to fortify the contention, the appellant filed copy of Cash Book, Personal Statement of Affairs & also filed submission linking the cash deposit to the seized material. However, the ld AO without assigning any speaking reason, rejected the contention of the appellant and made addition of Rs. 451000/- by considering the cash deposit into bank account to be unexplained without assigning any reason (what to say of cogent & speaking ) , for his non acceptance. Even on Ist appeal, the worthy CIT (A) also turned blind eye to the evidence furnished by the appellant & confirmed the addition made by the AO. As per AO (Pg No.4 of Impugned Order) During the year, the assessee has deposited Rs. 3,08,000 in his SBI A/C No. 64055151633, SBI SMS Highway and Rs. 1,43,000/- in his BOB A/C No. 31470100000300, therefore, it is seen that the assessee has deposited total amount of Rs. 4,51,000/- in his bank accounts. It is proposed to make an addition of the said deposits, as these deposits remain unexplained. Therefore, an addition of Rs. 4,51,000/- is being made to the income of the assessee as undisclosed income. As per CIT (A) (Pg No. 12 of Impugned Order) The submissions of the appellant are very vague and do not explain with evidence as to how the inferences drawn by the AO is incorrect. Merely submitting the cash book does not explain the source of cash deposits into the Bank Account. As regards the appellants contention that the seized document is itself evidence that Rs.35 lakh was realized in tranches from Shri Chandra Mohan Bhatti during the FY 2012-13, the order of the AO does not record any such finding. The appellant has failed to substantiate his submissions with supporting evidences. In view thereof, I do not find any reason to differ with the addition made by the AO and addition made by the AO amounting to Rs. 4,51,000/- on account of unexplained cash deposit in the two Bank Accounts is upheld. SUBMISSION:- ITA No. 83/JP/2023 Kishan Singh vs ACIT 7 The action of the lower authorities in making /confirming addition of cash Deposit into bank account to the tune of Rs. 451000/- , by considering the same to be unexplained & originated from undisclosed sources , is bereft of any merit & inconsiderate to the detailed submission & information filed by the appellant & even contrary to information /recitals contained in seized material and for want of other , detailed point wise as under :- 1. That the addition of Rs. 451000/- made by the AO is purely based upon surmises & conjectures and inconsiderate of the detailed information & explanation filed by the appellant during course of assessment proceedings . Your honour will appreciate on mere perusal of assessment as well as appellate order that no reason have been assigned for considering cash deposit to be unexplained . There is no whisper in the order of both the lower authorities about opening cash in hand , which was accepted in assessment for preceding year , was consumed elsewhere or not available with the appellant . 2. That both the lower authorities failed to appreciate that appellant left no stone unturned in explaining the source of cash deposit . The appellant furnished cash book , statement of affairs & other details to substantiate the source of cash deposit into bank account but both the lower authorities without controverting the detailed evidences or pinpointing any iota of non –reliability , made/confirmed addition by considering the same as Income from undisclosed sources . Your honour will evident on perusal of e-filed submissions made to the AO that detailed & in depth reply was made to substantiate the cash deposit but the that the AO on his whims & fancies and without assigning any cogent reason made the addition . (kindly refer Pg 22-28 of PB) There is no whisper in the observation of the AO as to the effect that “why impugned cash deposit are unexplained & as to why cash book is not reliable ”? 3. That the ld AO failed to appreciate that the opening cash in the hands of the appellant stood at Rs. 6,87,718/- as per statement of affairs as on 31.03.2012 , which formed part of cash deposit into bank account . It is worthy to mention that FY 2011-12 formed part of block period . Therefore , there was no justification on the part of AO to disbelieve , even the factum of availability of opening cash. It is worth submitting that the assessment of search case is based upon incriminating material & there was no incriminating material with the department that opening cash was consumed elsewhere. Even there is no whisper in the AO ITA No. 83/JP/2023 Kishan Singh vs ACIT 8 order that opening cash was consumed & not available with the appellant . [Emphasis supplied] 4. That ld AO failed to even appreciate that the total cash withdrawal made from the bank accounts stood at Rs. 3,10,000/- during relevant year , which formed part of cash deposit into bank account. Therefore, there was no justification on the part of AO to disregard the factum of preceding cash withdrawal forming source of redeposit of cash into bank account. Moreover, there was no incriminating material with the department that cash withdrawal on prior occasions was not available for making redeposit. [emphasis supplied] 5. That the ld AO failed to appreciate that, the appellant realized Rs. 35,00,000/- from Mr. Bhati during the relevant year which was itself evident from seized material. (Right side of Annexure AS pg 21). The ld AO without assigning any reason disbelieved that contention of the appellant and turned off his eyes to the seized material which echoes that the appellant realized Rs. 35,00,000/- from Mr Bhati in tranches. The action of AO is classic example of double standards, in as much, on one side, the AO sought & verified the source of deposit with Mr. Bhati appearing on left side of the document but on the contrary , disbelieving the right side of the document which contains details of cash realization from Mr. Bhati. The copy of relevant seized document (Annexure AS Pg 13) is reproduced, which will clear the entire issue :- ITA No. 83/JP/2023 Kishan Singh vs ACIT 9 From the bare perusal of seized document (Kindly refer Pg 16 ), it is self evident that the appellant realized Rs. 35 Lakhs in tranches from Mr. Bhati during FY 2012-13 and therefore , in absence of any incriminating material to the effect that same was consumed elsewhere , the availability of same in hands of appellant for making deposit into bank account cannot be ruled out in any stretch of imagination. 6. That your good self will appreciate that the appellant duly discharged the primary onus casted upon his shoulder u/s 68/69 of the Act, by furnishing cash book, personal statements of affairs & detailed explanation on the source of deposits. But the AO without even controverting the evidences or assigning reasons for non reliability of evidences, disallowed/disbelieved the claim of the appellant, which is contrary to settled law & breach of principle of natural justice. There is no whisper in entire assessment order as to why cash book, seized material, personal statements of affairs furnished by the appellant were not reliable. ITA No. 83/JP/2023 Kishan Singh vs ACIT 10 7. That your good self will appreciate on mere glimpse of cash book (Kindly refer Pg 17-21 ) as well as seized material(Kindly refer Pg 16) that the appellant had whopping cash in hand generated from opening cash, preceding cash withdrawal and realisation of Rs. 35,00,000/- from Mr Bhati. There was no occasion for the AO to treat the cash deposit into bank to be unexplained, when source of same was itself verifiable from seized material . 8. That your honour will appreciate that worthy CIT(A) sustained the addition by making unreasoned observation that “ merely submitting the cash book does not explain the source of cash deposits into the Bank Account”. The observation of CIT(A) is bereft of any merit& contrary to settled position , in as much ,the AO was required to pin point as to why cash book was not acceptable or reliable and also where opening cash was consumed is not available for redeposit . The opening balance of cash book was already accepted in preceding assessment & all withdrawals and deposits from/into bank deposits were considered in cash book .The worthy CIT(A) failed to appreciate that neither AO pointed any defect in cash book nor in statement of affairs then how come source of cash deposit was discarded by AO without assigning any single reason for his arbitrary action . Thus , in concluding part of our submission, it is reiterated that the action of both the lower authorities in rejecting the explanation of the appellant ,without assigning any reason (what to say of cogent & clinching reason) is unjust , uncalled for & illegal and thus entire addition deserves to be deleted . PRAYER:-In light of detailed submission , it is requested before your honour to delete all addition made to the returned Income and Oblige.” 6. The ld. AR of the assessee in addition to the above written submissions filed vehemently argued that the lower authorities has erred in confirming the addition of Rs. 4,51,000/- without appreciating facts placed on record. The assessee has explained the source of these cash deposit vide letter dated 12.12.2019 & ITA No. 83/JP/2023 Kishan Singh vs ACIT 11 18.12.2019. The source this cash is supported from the cash book filed and the same is also sourced from the amount already withdrawn from the bank account and also from Mr. Bhati which is evident from the seized material. The ld. AR of the assessee also submitted personal statement of affairs & also filed submission linking the cash deposit to the seized material. The lower authority without dealing with the same in speaking order simply passed an order confirming the addition. The ld. AR of the assessee also stated even the ld. CIT(A) who ought have considered the submission but has not passed the order after considering the merits of the case. 7. On the other hand, the ld. DR relied upon the order of the lower authorities to the extent as it is favourable to the revenue. As regards the relief granted by the ld. CIT(A) to the assessee revenue has not challenged that order as the tax effect was low. To that effect the ld. DR submitted the report of the AO wherein AO has contended as under:- “Sub:- Appeal before Hon’ble ITAT in ITA No. 83/JP/2023 (A.Y 2013-14) in the case of Kishan Singh, Jaipur (PAN: AGWPS6004N)- regarding- Reference: Your letter No. 207 dated 12/07/2023. ITA No. 83/JP/2023 Kishan Singh vs ACIT 12 Sir, Kindly refer to the above mentioned subject and reference thereto. In this connection, it is submitted that considering the tax effect as below the prescribed limit for filing further appeal as per CBDT’s circular No. 17/2019 dated 08.08.2019, no further appeal has been made on the issue of addition of Rs. 24,49,000/- made on account of unexplained deposits of funds.” 8. Heard the parties and persuaded the material placed on record. We note that the lower authorities have confirmed these additions but has not appreciated the set of facts placed on record by the assessee vide his letter dated 12.12.2019 and 18.12.2019. The ld. CIT(A) has based on the submissions placed on record has allowed, the claim of the assessee for receipt of Rs. 24,49,000/- and the assessee has deposited the money source from that money has been confirmed even though the assessee has submitted cash book, personal statement of affairs and submission linking the cash deposit to the seized material and thus we see not reasoned finding of the lower authorities for these much submission filed for the addition of Rs. 4,51,000/-. The ld. CIT(A) has not allowed the claim of the assessee stating that merely submitting the cash book does not explain the source of cash deposits into the Bank Account. As regards the appellants ITA No. 83/JP/2023 Kishan Singh vs ACIT 13 contention that the seized document is itself is evidence that Rs. 35 lakh was realized in tranches from Shri Chandra Mohan Bhatti during the FY 2012-13, the order of the AO does not record any such finding but simply stated ; “the appellant has failed to substantiate his submission with supporting evidences. In view thereof, I do not find any reason to differ with the addition made by the AO and addition made by the AO amounting to Rs. 4,51,000/- on account of unexplained cash deposit in the two Bank Accounts is upheld.” 9. We have gone through the material placed on record and the submission of the assessee, the action of the lower authority in confirming the addition of Rs. 4,51,000/- by not considering the same as explained for which the ld. AR of the assessee drawn our attention to the submission made during the assessment proceeding and same is reiterated herein below. “15) Details & source of cash deposit into bank account The assessee has made cash deposit of Rs. 8,50,000/- into bank accounts during the relevant year on piecemeal basis. In this regard, it is submitted that same were deposited out of realization of Rs. 35,00,000/- from Mr. Bhati (as per exhibit AS-1, Pg 6), cash withdrawal of Rs. 2,10,000/- from Bank account and opening cash balance. Thus, no adverse inference should be drawn on account of piecemeal cash deposition as each & every cash deposit is backed by explained source & even evident from seized material. The copy of cash book is enclosed to substantiate the contention. Moreover, your good self will appreciate on perusal of page 6 of exhibit I that assessee realized whopping sum of Rs. 35,00,000/- in cash from Mr. Chandra Mohan Bahti.” ITA No. 83/JP/2023 Kishan Singh vs ACIT 14 10. Thus, we find from the submission so made by the assessee and the finding of the recorded in the order of the assessment. There is no whisper in the assessment order as to why the submission made by the assessee is not considered. So far as deposit of cash into bank account for an amount of Rs. 4,51,000/- is concerned. We have also gone through the finding of ld. CIT(A) wherein ld. CIT(A) has not granted the benefit of the submission contending that there is no evidence as to the fact that the assessee released Rs. 35,00,000/- in trenching Sh. Chandra Mohan Bhatti and therefore, the explanation of the assessee has not considered. We find from the submission and facts in the form of evidence such as bank statement cash book and statement of other details to substantiate the source of cash deposit. However, this evidence so filed by the assessee never dealt with while passing the order nor the same is found to be incorrect. We also note that even the Assessing Officer has not recorded the explanation provided by the assessee in the assessment proceedings, the assessee has already justified the deposit of cash by submitting document and withdrawal of cash from the bank account of the assessee these primarily evidences placed on record from the assessment proceedings is not properly dealt by ITA No. 83/JP/2023 Kishan Singh vs ACIT 15 the lower authorities. Based on these finding we see no reason to disbelieve the explanation so furnished for the source of cash deposits of Rs. 4,50,000/- made by the assessee. In terms of these observations, the ground No. 1 raised by the assessee is allowed. 11. Ground No. 2 & 3 is on account of not appreciating the claim of the assessee and evidences by the lower authorities. Since, we have considered that while dealing with the Ground Nos.1 therefore, ground no 2 & 3 raised by the assessee become educative in nature. In terms of these observations, appeal of the assessee is allowed. Order pronounced in the open Court on 28/07/2023 Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judcial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 28/07/2023 *Ganesh Kumar, PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Kishan Singh, Jaipur 2. izR;FkhZ@ The Respondent- ACIT, Central Circle-04, Jaipur 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) ITA No. 83/JP/2023 Kishan Singh vs ACIT 16 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File { ITA No. 83/JP/2023} vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar