JAYSHRI GANATRA, RAIPUR,RAIPUR V. INCOME TAX OFFICER-3(1), RAIPUR, RAIPUR

ITA 455/RPR/2024

AI Insights

The case involves an appeal by Jayshri Ganatra against the order of the Income Tax Officer-3(1), Raipur, which added Rs.8.76 lakhs to her income as unexplained money under Section 69A of the Income Tax Act, 1961, for the assessment year 2017-18. The addition was based on unexplained cash deposits of Rs.11.26 lakhs in her bank account during the demonetization period. The Tribunal's decision to reduce the addition to Rs.7.26 lakhs was based on the assessee's partial substantiation of the source of these deposits, considering her past savings and the absence of any active bank accounts before December 2016.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469759 (ITAT-RAIPUR)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Next Hearing Date: 18-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 18-10-2024
• Other Referred Cases: Smt. Sarabjit Kaur vs. ITO, Mir Basheeruddin Ali Khan, Sumati Dayal vs. CIT, Durgaprasad More vs. CIT, Aayodhya Jaira vs. CIT(A)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHAL AGRAWAL
• Assessee Lawyers: DEEPAK MEGHANI
• Keywords: Business income; Opportunity of being heard; Additional evidence; Unexplained investment; Earning of tax free income
• Section: 143(2); 69A; 20

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 455/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Jayshri Ganatra H. No.8/332, Raman Mandir, Ward-Fafadih, Raipur (C.G.) PAN: BWSPG7172C .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-3(1), Raipur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Deepak Meghani, CA Revenue by : Shri Mohal Agrawal, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 18.11.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 25.11.2024 2 Jayshri Ganatra Vs. ITO-3(1), Raipur ITA No. 455/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the ADDL/JCIT(A)-8, Mumbai dated 20.08.2024, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 27.11.2019 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal: “1. The learned A.O had erred in making addition to total income under section 69A amounting to Rs.8,76,000 and consequently raised demand amounting to Rs.6,81,858. 2. The learned A.O has erred in not giving reasonable opportunity of being heard to the appellant and passed the assessment order in haste. 3. The appellant reserves the right to amend, modify or add any of the grounds of appeal.” 2. Succinctly stated, the assessee who derives income from sewing and tuition activities a/w. interest income had e-filed her return of income for A.Y.2017-18 on 05.08.2017, declaring an income of Rs.3,98,710/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the course of the assessment proceedings, the A.O observed that the assessee had made cash deposits of Rs.11,26,000/- in her bank account with HDFC bank, Branch: Devendra Nagar, Raipur. The assessee 3 Jayshri Ganatra Vs. ITO-3(1), Raipur ITA No. 455/RPR/2024 on being queried about the source of the cash deposits, submitted that the same was sourced out of the cash in hand of Rs.11,63,150/- that was available with her as on 01.04.2016. As the assessee failed to substantiate the aforesaid claim of availability of substantial amount of cash in hand to source the cash deposits in her bank account, therefore, the A.O though partially allowed her claim as regards the availability of amount to the tune of Rs.2.50 lacs but held the balance amount of Rs.8.76 lacs as her unexplained money u/s.69A of the Act. Accordingly, the A.O vide his order passed u/s.143(3) of the Act, dated 27.11.2019 determined the income of the assessee at Rs.12,74,710/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: “4.1 Ground No. 1: This ground relate to the addition u/s 69A of Rs.8,76,000/- made by the AO on account of unexplained cash deposit in bank account during demonetization period. The appellant has derived income from sewing and tuition. During the course of assessment proceedings, the appellant explained that the cash deposits were made out of cash deposits available from earlier years. The appellant had submitted cash book for the financial year which shows opening balance of Rs.11,63,150/- as on 01.04.2016. The AO noticed that on perusal of the Income Tax Return for A.Y.2016-17 there was no closing cash in hand which indicated that there was no cash in hand on 01.04.2016. He therefore rejected the cash book and allowed Rs.2,50,000/- as business receipts and made an addition of Rs.8,76,000/- to the total income of the appellant as unexplained money u/s 69A of the Act. 4.1.2 The submission of the appellant has been perused, which has been reiterated in all the three written submissions. The 4 Jayshri Ganatra Vs. ITO-3(1), Raipur ITA No. 455/RPR/2024 appellant has submitted a cash flow statement since the year 2001. The appellant has submitted that the cash flow prior to the year 2014 could not be submitted to AO due to lack of opportunity and has requested to admit the cash flow since year 2001 as additional evidence u/s 46A. In view of the submissions of the appellant and keeping in view the principles of natural justice, the evidence is admitted u/s 46A of the Act. The appellant has claimed that the appellant has filed the ITR-1 for AY2016-17, wherein there was no column for cash in hand. The appellant has claimed that she had cash in hand of Rs. 11,63,150/- as on 31.03.2016. The cash book since the year 2001 submitted by the appellant has been perused. The opening cash balance as on 1.4.2001 is taken at Rs.6,03,500/-. The income in the year 2001 was only Rs.34 500/- It is improbable that a person having a meagre income of Rs.34, 00/- will hold a cash in hand of Rs.6,03,500/-. The appellant was holder of a bank account. In spite, of that the appellant has not justified the reasons for keeping so much cash at home. No satisfactory justification has been given for the huge cash in hand Further, on perusal of cash book it is seen that not a single rupee of cash has been claimed to have been deposited in the bank account for 16 years till the deposit during the demonetization period. 4.1.3 The appellant has relied on the decision of the Hon'ble Chandigarh Tribunal in the case of Smt. Sarabjit Kaur vs. ITO [2022] 142,Taxmann.co. 454 (Chandigarh-Trib). However in that case the appellant was maintaining books of accounts and had submitted the balance sheet with the return of income. The fact of the case relied upon are thus different from the appellants case. 4.1.4 The Hon. ITAT, Hyderabad in Mir Basheeruddin Ali Khan, [2014] 42 taxmann.com 69 has held that the assessee has to demonstrate sufficient reasons to explain as to why such huge cash was kept when the assessee was in possession of bank accounts. The relevant portion of the said decision is reproduced herein as under: \"Section 69 of the Income Tax Act, 1961-Unexplained Investments [Cash Deposit) Assessment Year 2005-06- Assessee had made cash deposit of Rs. 6.50 lakhs in his saving bank account on 0810912004- He submitted that cash deposit was out of amount withdrawn earlier from bank over a period from February, 2002 to September, 2003 and kept with him-Assessing Office rejected explanation and treated cash deposit of Rs. 6.50 lakhs as unexplained investments under section 69-Assessee had not shown any valid reason as to why he kept so much with him for over a period of one year when he was holding a bank 5 Jayshri Ganatra Vs. ITO-3(1), Raipur ITA No. 455/RPR/2024 account- Whether Assessing Officer was justified in treating amount of Rs. 6.50 lakhs as unexplained investments under section 69- Held, yes.\" 4.1.5 It will not out of place to refer her the decision of Hon'ble Apex court in the case of Sumati Dayal 2141TR 801 and Durgaprasad More (1971) 82 ITR 540. As laid down in Commissioner of Income Tax v. Durga Prasad More, (1971) 82 ITR 540, at pp. 545, 547), apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. It is a well settled principle of law as declared by the Hon'ble Supreme court in the case of Sumati Dayal Vs.CIT (214 ITR 801) SC that the true nature of transaction has to be ascertained in the light of surrounding circumstances . It needs to be emphasized that the standard of proof beyond reasonable doubt has no applicability in determination of matters under taxing statutes. In the present case it is clear that apparent is not the real as evidenced from the surrounding circumstances. When the impossible is projected as possible through a plethora of well arranged documents it would be reasonable to reject the documents as make be eve or self serving. 4.1.6 After considering the surrounding circumstances and test of human probabilities as brought out by apex court in above referred cases, I find no infirmity in the order of the AO. The decision of the AO is, consequently, upheld. The appeal of the appellant is, therefore, dismissed.” 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the tribunal. 6. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 6 Jayshri Ganatra Vs. ITO-3(1), Raipur ITA No. 455/RPR/2024 7. Shri Deepak Meghani, Ld. Authorized Representative (for short ‘AR’) for the assessee at the threshold submitted that the cash deposits of Rs.11,26,000/- in the assessee’s bank account with HDFC bank, Branch : Devendra Nagar, Raipur were sourced out of the cash in hand of Rs.11,63,150/- that was available with her as on 01.04.2016. The Ld. AR in order to fortify his claim that the cash deposits in the assessee’s bank account were sourced out of her past savings/accumulated funds, had drawn support from the fact that the said money was ultimately parked as the fixed deposit (FDR) with the said bank. Also, the Ld. AR had filed an “affidavit” dated 12.11.2024 of the assessee wherein it is deposed by her that she was not holding any active or inactive bank accounts or any other financial accounts either in India or abroad before 02.12.2016. It is further stated by the assessee that she had opened a bank account with HDFC bank, Branch: Devendra Nagar on 02.12.2016. The Ld. AR to support of his claim that now when the assessee had duly explained the source of the cash deposits by producing her cash book, therefore, no addition could have been made in her case, relied on the following judicial pronouncements: (i) Aayodhya Jaira Vs. CIT(A), ITA No.43/Jodh/2022, dated 08.04.2014 (ii) Mrs. Usha Narayan Chawre Vs. ITO, Ward-4(5), Pune, ITA No.377/PUN/2022, dated 24.02.2023. 7 Jayshri Ganatra Vs. ITO-3(1), Raipur ITA No. 455/RPR/2024 8. Per contra, Shri Mohal Agrawal, Ld. Sr. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 9. Ostensibly, I find that both the lower authorities had held/sustained the cash deposits to the tune of Rs.8.76 lacs (supra) as the assessee’s unexplained money u/s. 69A of the Act for the reason that she could not place any material on record to substantiate her claim that the same was sourced from the cash in hand available with her as on 01.04.2016. 10. As observed by me hereinabove, it is the unsubstantiated claim of the assessee that the cash deposits of Rs.11.26 lacs (supra) made in her bank account during the year under consideration was sourced from the past savings and accumulated funds of the past years that were lying available with her. At the threshold, I may hereinabove observe that the CBDT Instruction No.03/2017 dated 21.02.2017, which is binding on the revenue, had, inter alia, stated that in case of an individual taxpayer not having any business income, no further verification is required to be made if the total cash deposits during the demonetization period is up to Rs.2.50 lacs. It is further stated in the Instruction that the source of such amount can be either household savings/savings from past income or amounts claimed to have been received from any of the sources therein mentioned, i.e. exempt income, cash withdrawals from bank, cash received from identifiable persons (with PAN/without PAN), and amounts received from 8 Jayshri Ganatra Vs. ITO-3(1), Raipur ITA No. 455/RPR/2024 un-identifiable persons. Instruction No.03/2017 (supra) further states that the cash deposits above the aforesaid cut-off amount, i.e. Rs.2.50 lacs may require verification to ascertain whether the same is explained or not. Also, it is stated in the Instruction No.03/2017 (supra) that the basis for the verification of cash deposits above the prescribed threshold amount i.e. 2.50 lacs can be the income earned during past years and its source, filing of return of income and income therein shown, cash withdrawals from accounts, etc. For the sake of clarity, the CBDT Instruction No.03/2017 dated 21.02.2017 is culled out as under (relevant extract) \"1.1 In case of an individual (other than minors) not having any business income, no further verification required to be made if total cash deposit is up to Rs.2.5 lakh. In case of taxpayers above 70 years age, the limit is Rs.5 lakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during past years and its source, filing of ROI and income shown therein, cash withdrawals made from accounts etc.\" 11. As per the CBDT Instruction No. 03/2017, dated 21.02.2017, in case of an individual (other than minors) not having any business income, no further verification is required to be made if total cash deposits in the assessee’s bank account is up to Rs.2.5 lakh. At the same time, it is provided that in case of cash deposits in excess of the said threshold verification to ascertain the source of such excess amount of deposit is to be carried out. As regards the deposits in excess of the threshold limit, the 9 Jayshri Ganatra Vs. ITO-3(1), Raipur ITA No. 455/RPR/2024 CBDT has stated that the same can be done by looking into various aspects, viz. (i) income earned during the past years along with source; (ii) return of income filed by the assessee; and (iii) cash withdrawals made by the assessee from the bank accounts etc. The assessee before me is regularly being assessed to tax since A.Y.2015-16. I am of the view that in the backdrop of the facts involved in the case before me, viz. (i) that the assessee, aged 62 years; (ii) she had regularly been filing her returns of income since A.Y.2015-16, and (iii) that as deposed by her in the “affidavit” filed before me, she was prior to 01.12.2016 not holding any bank account, therefore, in the totality of the aforesaid facts, it can safely be concluded that she was in possession of cash in hand of Rs.4 lacs to partially source the cash deposits in her bank account during the year under consideration. Accordingly, I scale down the addition made by the A.O to Rs.7.26 lacs [Rs.11.26 lacs (-) Rs.4 lacs]. The order of the CIT(Appeals) is modified in terms of my aforesaid observations. 12. Apropos the Ld. AR’s claim that the assessee in the course of proceedings before the lower authorities had substantiated the source of cash deposits of Rs.11.26 lacs (supra) by producing her cash book, I am unable to persuade myself to subscribe to the same. As the assessee was not regularly maintaining any books of accounts and had prepared the so called cash book only for the purpose of explaining the source of the subject cash deposits in her bank account, therefore, the veracity of the 10 Jayshri Ganatra Vs. ITO-3(1), Raipur ITA No. 455/RPR/2024 same cannot be summarily accepted on the very face of it. Apart from that, a perusal of the cash book/cash flow statement filed by the assessee also does not inspire any confidence. I, say so, for the reason that the assessee had claimed of being in possession of cash in hand as on 01.04.2016 of Rs.6,03,500/-. As there is no material to support her aforesaid claim of being in possession of a substantial amount of cash in hand of Rs.6.03 lacs 20 years back, therefore, the veracity of the cash flow statement filed before me is not free from doubt. 13. Apropos the order of the ITAT, Jodhpur in the case of Aayodhya Jaira Vs. CIT(A), ITA No.43/Jodh/2022, dated 08.04.2014 as had been pressed into service by the Ld. AR, the same being distinguishable on facts would not carry his case any further. As in the aforesaid case, the assessee had duly substantiated the claim of availability of cash in hand based by producing the “cash book” that was maintained by her, therefore, the Tribunal had observed that there was no reason to doubt her claim of being in possession of cash in hand as on the date of making the cash deposits. 11 Jayshri Ganatra Vs. ITO-3(1), Raipur ITA No. 455/RPR/2024 14. In the result, appeal of the assessee is partly allowed in terms of the aforesaid observations. Order pronounced in open court on 25th day of November, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 25th November, 2024. ***SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "