JAYNTIBHAI DAHYABHAI ANGHAN,SURAT V. INCOME TAX OFFICER -3(3)(2), SURAT

ITA 451/SRT/2024

AI Insights

The case involves Jayntibhai Dahyabhai Anghan, the appellant, who contested the addition of Rs. 20,00,000 to his income by the Income Tax Officer, Ward-3(3)(2), Surat, under section 69A of the Income Tax Act, 1961, for unexplained cash deposits during the demonetization period. The Assessing Officer had initially treated the entire amount as unexplained, which was upheld by the CIT(A). The appellant argued that the cash was from legitimate agricultural activities and savings from previous years, supported by certificates from cooperative sugar mills. The Tribunal, after considering the submissions and evidence, decided to partially allow the appeal, reducing the addition to 20% of the total cash deposits, citing the need to prevent revenue leakage while acknowledging the appellant's partial substantiation of the cash sources. The Tribunal also addressed the applicability of section 115BBE, confirming it was not relevant for the assessment year in question.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 106863 (ITAT-SURAT)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 16-04-2024
• Other Referred Cases: CIT vs. Scindia Steam Navigation Co. Ltd. (1961) 42 ITR 589 (SC), PCIT vs. Aacharan Enterprises (P.) Ltd. [2020] 117 taxmann.com 745 (Raj), Avani Exports vs. CIT 23 taxmann.com 62 (Guj), CIT vs. S.A. Wahab (1990) 48 Taxman 362 (Kerala), Karimtharuvi Tea Estate Ltd. vs. State of Kerala (1966) 60 ITR 262 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: ISHWAR JIVANI
• Keywords: Business income
• Section: 143(3); 48; 13; 69A; 101

Judgement Text

"आयकर अपीलीय अिधकरण, सुरत Ɋायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT “SMC” BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER आ.अ.सं./ITA No.451/SRT/2024 (AY 2017-18) (Hearing in Physical Court) Jayntibhai Dahyabhai Anghan 170, Gokuldham Society, Near Pratham Avenues, Mota Varachha, Abrama Road, Surat-394 101 [PAN No: ADDPA 2384 D] बनाम Vs Income Tax Officer, Ward-3(3)(2) Aaykar Bhavan, 4th Floor, Majura Gate, Opp New Civil Hospital, Surat- 395001 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri Ishwar Jivani, CA राजˢ की ओर से /Revenue by Shri Mukesh Jain, Sr-DR अपील पंजीकरण/Appeal instituted on 18.04.2024 सुनवाई की तारीख/Date of hearing 16.10.2024 उद ्घोषणा की तारीख/Date of pronouncement 04.11.2024 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [for short to as “NFAC/Ld. CIT(A)”] dated 29.12.2023 for assessment year 2017-18, which in turn arises out of assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 15.12.2019. The assessee has raised the following grounds of appeal:- “1. The Commissioner of Income Tax (Appeals), NFAC was not justified in confirming addition on the basis of facts and law. 2. On the facts and circumstances of the case and in law the CIT(A) has erred in questioning/doubting the status of the appellant as agriculturist, without appraising the fact that the appellant is basically an agriculturist since birth and his status as an agriculturist has never been matter of dispute before the Ld.AO. ITA No.451/SRT/2024 (A.Y 17-18) Jayntibhai D Anghan 2 3. The Ld CIT(A) erred on facts and in law in confirming the addition of Rs.20,00,000/- on account of cash deposits during demonetization period ignoring the submission made by the appellant during the course of scrutiny assessment treating the same as undisclosed money u/s 69A of the Act. 4. Without prejudice to the above, the CIT(A), NFAC dismissed the appeal without dealing with even basic facts of the matter. 5. On the facts and circumstances of the case and in law, the CIT(A) erred in not adjudicating the ground of appeal on merits. 6. Your appellant reserves his right to add, amend, alter, and/or withdraw any ground of appeal at the time of hearing of the appeal.” 2. Brief facts of the case are that the assessee is individual, filed his return of income for A.Y. 2017-18 on 27.02.2018 declaring income of Rs.3,10,460/-. In his computation of income, the assessee has shown net agricultural income of Rs.3,14,860/-. The case was selected for scrutiny for the reasons of cash deposit during demonetization period as compared to returned income. During the assessment, the assessee was asked to furnish source of cash deposit during demonetization period of Rs.20.00 lacs with Varachha Cooperative Bank Ltd. Surat. The Assessing Officer noted that the assessee furnished submission but failed to explain the source of cash deposit. The assessee in his reply submitted that all the cash deposits during the relevant financial year are from earlier years saving and from agriculture activities as well as withdrawal from deposit from agriculture activities. The assessee also furnished certificate from Shree Chalthan Vibhag Khand Udyog Sahakari Mandli Ltd. wherein the assessee has sold sugarcane from 2007 to 2017 of Rs.1.20 crore. The assessee submits that the agriculture income is sufficient ITA No.451/SRT/2024 (A.Y 17-18) Jayntibhai D Anghan 3 to justify the cash deposit. The Assessing Officer on further verification of details, noted that the assessee has accepted that he has received 50% cash and 50% in cheque from Shree Chalthan Vibhag Khand Udyog Sahakari Mandli Ltd. The Assessing Officer on verification of bank statement of assessee noted that assessee has made various withdrawals on 24.08.2016 and 29.08.2016, meaning thereby that the assessee has no cash-in-hand on those days. On the aforesaid observation, the Assessing Officer issued fresh show cause notice to the assessee. In the fresh show cause notice, the assessee was asked as to why the entire cash should not be treated as unexplained and assessee again asked to furnish source of cash deposits. In response to such show cause, the assessee furnished details of land holding, bills and vouchers from sugar mills and other local traders. The Assessing Officer on considering the aforesaid details held that the assessee has not furnished proper documents of source of cash deposits. The Assessing Officer treated the entire cash deposit as unexplained and added under section 69A of the Act, while passing the assessment order on 15.2.2019. Aggrieved by the addition made in the assessment order, assessee has filed appeal present appeal before Ld.CIT(A). 3. Before Ld. CIT(A) assessee reiterated his submission that he is an agriculturist and having sufficient land holding to substantiate the source of cash deposit. The assessee showing agricultural activities and receiving payments of sugarcane from Shree Chalthan Vibhag Udyog Sahakari Mandli Ltd. who are issued necessary certificate in the name of assessee. The assessee has shown agricultural income in his return of income. The Ld.CIT(A) on considering the ITA No.451/SRT/2024 (A.Y 17-18) Jayntibhai D Anghan 4 submission of assessee held that assessee owned agricultural land holding in the name of five other persons and some of the land are owned by 12 other persons. The assessee has shown business income from M/s Jay Khodiyar Rayons which shows that assessee is in business of textile which is not disclosed by assessee. In assessment years 2013-14, 2015-16, 2016-17 and 2017-18 the assessee has income from partnership firm as well as agricultural income total business income of assessee is Rs.11,57,582/- and net agricultural income is Rs.11,71,965/-. Thus, assessee failed to prove source of cash deposits satisfactorily. Further aggrieved, assessee has present appeal before the Tribunal. 4. I have heard the submissions of Ld. Authorized Representative (Ld. AR) for the assessee and Ld. Senior-Departmental Representative (Ld. Sr-DR) for the Revenue. The Ld.AR for the assessee submits that assessee is a partner in a firm and also doing agricultural activities. The assesse along with his family members owned more than 13 hectare of land. The assessee is showing agricultural income since assessment year 2012-13. The assessee while filing his return of income from more than decades. The assessee is also showing business income as well as agricultural holding. Area of land is not disputed by lower authorities. The assessee has shown cash in the cash book from 01.04.2008 till 17.11.2018. The assessee was having more than Rs.40,00,000/- cash-in-hand out of which, assessee has deposited Rs.20,00,000/- in the form of Specified Bank Notes (in short ‘SBN’). The lower authorities disregard the submissions of without giving any findings on various documents. The lower authorities wrongly held that assessee has not ITA No.451/SRT/2024 (A.Y 17-18) Jayntibhai D Anghan 5 substantiated cash deposits. The cash was deposited out of cash balance during demonetization period. On the observation of Assessing Officer about withdrawal of cash in August, 2016. The Ld. AR for the assessee submits that assessee has withdrawn of cash only on two occasions in the whole of the year prior to demonetization period that does not tantamount to doubt of withdrawal for not availability of cash in hand. The Ld.AR of the assessee also furnished cash flow statement along with short note of submission and would submit that assessee was having sufficient cash balance available with him. To support his submission, Ld. AR for the assessee relied upon the following decisions:  CIT vs. Scindia Steam Nagivation Co. Ltd. (1961) 42 ITR 589 (SC)  PCIT vs. Aacharan Enterprises (P.) Ltd. [2020] 117 taxmann.com 745 (Raj)  Avani Exports vs. CIT 23 taxmann.com 62 (Guj)  CIT vs. S.A. Wahab (1990) 48 Taxman 362 (Kerala)  Karimtharuvi Tea Estate Ltd. vs. State of Kerala (1966) 60 ITR 262 (SC) 5. The Ld. AR for the assessee submits that he has substantiate the cash deposits, yet to avoid the long drawn process of litigation, some token disallowance may be sustained. The Ld. AR for th9e assessee further submits that Assessing Officer has not specified in assessment order for taxing the addition under section 115BBE of the Act so the assessee has not raised such grounds of appeal before Ld. CIT(A), however, as per computation sheet, the Assessing Officer has taxed the addition under section 115BBE of the Act. The provisions of section 15BBE of the Act is not applicable for the year under consideration. The provisions of Taxation of Law second amendment in 2016 received assent of Hon’ble President of India only on 15.12.2016 and was made effective from 01.04.2017. Even otherwise, Division Bench of this ITA No.451/SRT/2024 (A.Y 17-18) Jayntibhai D Anghan 6 Tribunal, Surat and other various Tribunals held that amended of Section 115BBE of the Act is not applicable for assessment year 2017-18. 6. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities. The Ld. Sr-DR for the Revenue submits that assessee failed to substantiate the cash deposits with cogent evidence. Mere land holding in the name of assessee if so facto does not prove that assessee was engaged in agricultural activities. All the submissions of assessee including alleged large land holding is considered by Ld.CIT(A) while confirming the order of Assessing Officer. So far as taxing the addition under section 115BBE, the ld Sr DR for the revenue submits that the assessee has not raised any such ground of appeal. 7. In the short rejoinder submissions, the ld AR of the assessee submits that he has raised legal plea that amended rate of higher rate of tax is not applicable, which is purely a legal plea which can always be considered by the Bench. 8. I have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. Ground No. 1 &2 are general and needs no adjudication. Ground No.3 relates to addition of cash deposits of Rs. 20.00 lacs. I find that there is no dispute that assessee is a partner in a firm, namely, M/s Jay Khodiyar Rayons. Further, I find that assessee has shown regular agricultural income while filing his return of income, which has been accepted by Ld. CIT(A) in his impugned order. Considering the fact that neither Assessing Officer investigated the facts nor gave any specific finding on various submission and evidence furnished by assessee. Similarly, the assessee has also failed to fully discharge the onus in proving the source of ITA No.451/SRT/2024 (A.Y 17-18) Jayntibhai D Anghan 7 entire cash in hand as claimed by the assessee. Thus, in such circumstance, in order to avoid the possibility of revenue leakage an ad hock disallowance would meet the end of justice. Therefore, in order to avoid the possibility of revenue leakage, in my view that a reasonable disallowance of 20% of cash deposit would be sufficient to avoid the possibility of revenue leakage. Thus, Assessing Officer is directed to restrict the addition @ 20% of total cash deposits. In the result, Ground No. 3 of the appeal raised by the assessee is partly allowed. 9. So far as taxing the addition at the enhanced rate of tax under section 115BBE is concerned, I find that Divisions Bench as well as SMC Bench of this Tribunal in a series of case has held that enhance rate prescribed under section 115BBE is not applicable for AY 2017-18, reference is made in case of Samir Shantilal Mehta Vs ACIT ITA No. 42/Srt/2022 (Surat Trib), Arjunsinh Harisinh Thakor Vs ITO in ITA No. 245/Srt/2021 and in Jitendra Nemichand Gupta Vs ITO ITA No. 211/Srt/2021 and Indore Bench in DCIT Vs Punjab Retail Pvt. Ltd 677/Ind/2019 (Indore Trib) and Jabalpur Bench in ACIT Vs Sandesh Kumar Jain in ITA No. 41/Jab/2020. No specific submissions are made in support of remaining grounds of appeal, thus, all other grounds of appeal are dismissed. 10. In the result, the appeal of the assessee is partly allowed. Order pronounced in open court on 4th November, 2024. Sd/- (PAWAN SINGH) [Ɋाियक सद˟ JUDICIAL MEMBER] सूरत /Surat, Dated: 04 /11/2024 Dkp Outsourcing Sr.P.S* ITA No.451/SRT/2024 (A.Y 17-18) Jayntibhai D Anghan 8 आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to :  अपीलाथŎ/ The Appellant  ŮȑथŎ/ The Respondent  आयकर आयुƅ/ CIT  आयकर आयुƅ (अपील)/ The CIT(A)  िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT  गाडŊ फाईल/ Guard File // True Copy // By order/आदेश से, सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत "