KALU RAM SAINI,JAIPUR V. ITO WARD 1(5), JAIPUR

ITA 222/JPR/2024

AI Insights

The case involves Sh. Kalu Ram Saini, a small trader from Jaipur, who appealed against the order of the Learned CIT(A), National Faceless Appeal Centre, Delhi, which dismissed his appeal against the assessment order passed by the Assessing Officer. The assessment order included a significant addition to the assessee's income under section 69A of the Income Tax Act, due to unexplained cash deposits amounting to Rs. 71,59,000 during the demonetization period. The Tribunal found that the assessee had failed to substantiate the source of these deposits, despite various explanations involving loans, sales of jewelry, and personal savings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314124 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H
• Keywords: Opportunity of being heard; Corroborative evidences; Unexplained cash credit; Principle of natural justice
• Section: 143(3); 142(1); 44AD

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A-Bench” JAIPUR Jh xxu xks;y] ys[kk lnL; ,o aJh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 222/JPR/2024 fu/kZkj.ko\"kZ@Assessment Year : 2017-18 Sh. Kalu Ram Saini 350 Purana Bagrana, Agra Road, Jaipur-303012. cuke Vs. The ITO, Ward-1(5), Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: DMBPS1644N vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : None jktLo dh vksjls@Revenue by: Mrs. Anita Rinesh, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 06/05/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 07/05/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER . The assessee is feeling aggrieved by order dated 06.02.2024, passed by Learned CIT(A), National Faceless Appeal Centre, Delhi ( hereinafter referred to as “the NFAC”), relating to the assessment year 2017-18. 2 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur Vide impugned order, Learned CIT(A) has dismissed the appeal preferred by the assessee while challenging assessment order dated 17.12.2019, passed by the Assessing Officer. 2. Vide above said assessment order, total income of the assessee came to be assessed at Rs. 76,55,190/-, on account of making of addition u/s 69A of the Income Tax Act (hereinafter referred to as “the Act”) on the ground that the assessee had failed to explain source of cash deposits to the tune of Rs. 71,59,000/- deposited by him with Bank of Baroda during demonetization period. 3. Since, the appeal filed by the assessee against the above said addition stands dismissed, the assessee is before this Appellate Tribunal. 4. Arguments heard. File perused. 5. The only argument advanced by ld. AR for the appellant before us on 19.02.2025 is that the assessee is a small trader, and as such no books of accounts were maintained by the assessee. As regards cash deposits, Ld. AR submitted that the said amounts deposited by the assessee were actually the amounts withdrawn by him from his bank accounts, and that the assessee had established nature and source of cash deposits, but the authorities below rejected the claim of the assessee without appreciating the said withdrawals and that the assessee was a small trader. 3 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur 6. On the other hand, Ld. DR for the department has submitted that in response to the notice issued, the assessee claimed about availing of loan of Rs. 71,35,000/- from M/s N.J. Bullion and Ornaments, as he wanted to do business at a large scale, on different dates ; that he and his family members had sold jewellery worth Rs. 18 lacs and said proceeds were also deposited by him in his bank account. The contention raised by learned DR is that the authorities below rightly appreciated that when the assessee claimed to have availed of interest-free loan on 18.7.2016 and withdrew the entire loan amount from time to time, he failed to explain any purpose for said withdrawls and as to why he kept the said cash with him without utilizing the same, which belied the plea put forth by the assessee. Learned DR has pointed out that the plea of the assessee that he required cash for treatment of his father who was suffering from cancer, was rightly not accepted as the prescription slip relating to his father did not reveal that he was a cancer patient. As regards another plea put forth by the assessee that he being busy in Diwali and season of marriages, deposited the entire cash when demonetization was announced, Learned DR has submitted that Diwali 4 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur festival fell in the month of November, which belied said plea of the assessee. Learned DR has also submitted that the assessee nowhere disputed that no expenditure was made by him from the cash withdrawn from time to time, and that this fact also made his plea doubtful being beyond human probabilities. As regards sale of jewellery, Learned DR has pointed out that in respect of sale of jewellery payments were made in cash in the amounts which were below Rs.20,000/-, for which no explanation has been put forth by the assessee. Another submission is that the copies of the bills available at page 21 and 22, submitted by the assessee in the paper book reveal that only these are in the name of the assessee, whereas rest of the bills are in the names of other family members, whereas the ledger is in the name of the assessee. The contention is that in the given situation the assets belonging to other family members could not be referred to by the assessee to explain the cash deposits during demonetization period, without credible evidence that other family members had or had not contributed to said transactions of sale. So far as plea of the assessee about payments made to labour from the cash withdrawn, Learned DR has submitted that the assessee has 5 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur failed to substantiate the same by producing copies of contracts or other documents. It has also been contended that the assesee failed to produce before the authorities below properly maintained cash stock ledger depicting balance of cash in hand, which also belied the claim put forth by the assessee. In this situation, as further contended by Learned DR, there was no question of rejection of books of the assessee. Ultimately, learned DR has urged that the assessment order has been rightly upheld by CIT(A) in view of the provisions of section 69A having regard to the unexplained cash deposits, and as such the appeal deserves to be dismissed. 7. It may be mentioned here that in the course of arguments, the assessee was required by us to file copies of return of income for the preceding 2 years; bank statements for the preceding 2 years; return of income and balance sheet for the succeeding year; and cash flow statement for all the 3 years. In the meanwhile, a paper book consisting of 208 pages has been submitted, but without any certificate if any of said document was or was not submitted before the authorities below at any point of time. No 6 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur application has been filed on behalf of the assessee seeking permission to place on record said documents. Discussion Passing of assessment order 8. As per case of the parties, the assessee initially filed return of income on 25.07.2017, declaring total income of Rs. 4,96,190/-. Vide impugned assessment, addition of Rs. 71,59,000/- came to be made after the case was selected for scrutiny through CASS and issuance of notices dated 13.08.2018 u/s 143(2) of the Act, and notice dated 28.08.2019 u/s 142(1) of the Act. The assessee did not comply with the notice u/s 143(2) of the Act. In response to notice u/s 142(1) of the Act, the assessee put forth his submissions, wherein he claimed that he was doing job work by making/repairing of Gold and Silver ornaments jewellery of in the individual customers on their demand. By so submitting, he denied to have made any purchase or sale. The issue before the Assessing Officer related to cash deposit (SBN) to the tune of Rs. 61,45,000/- during demonetization period, in his bank account No. 01150100014279 and Rs. 10,14,000/- in his account No. 46080100000602, when the assessee claimed to have availed of loan from 7 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur M/s N.J. Bullion & Ornaments, withdrawal of the said amount and deposit thereof in bank after demonetization, and also that he and his family members sold jewellery of Rs. 18,00,000/-, which amount was also deposited in the bank, but the Assessing Officer found that the assessee had not furnished any documentary evidence in support of said claims. That is how, the Assessing Officer issued another notice dated 20.11.2019 u/s 142(1) of the Act. The notice was accompanied by a questionnaire calling upon the assessee to furnish confirmation of the aforesaid loan amount and produce copies of ITR, bank account statement, purpose for which the loan was taken from time to time, but not utilized. Vide same notice, the assessee was also required to furnish supporting documentary evidence of jewellery said to have been sold by him and his family members. On 21.11.2011, the assessee furnished reply to the above said notice. Subsequently, he furnished additional reply to the said notice by pleading as under:- “1. Further, stated that he preparing for a business on large level, for this purpose he took a loan of Rs. 71,35,000/- from M/s N.J. Bullion & Ornaments. 2. Further stated that he adopt a policy to take the 50% labour charges in advance and remaining 50% on delivery of jewellery, so that there was on requirement of my own working capital and my cash was not utilized for the payment of labour. 8 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur 3. Further stated that he busy in Diwali Festival & Marriage season and suddenly the demonetization was declared and after that he deposited the whole cash in bank account. 4. Further stated that he sold the jewellelry of family members for the Medical treatment of his father & other family requirements. He stated that his father is suffering from Cancer and was needed some major medical treatment, so he and his family members sold their personal jewellery. 5. Further stated that he was residing at Agra Road that time and they got the notice of Land acquisition by the Rajasthan Government of their residence for the Ring Road Plan at Jaipur. He and his family was searching for a purchase of a New residence during the year.” 9. As is available from the assessment order, the assessee submitted following source of cash deposited in bank during the aforesaid period:- I Cash withdrawal from bank of Baroda Rs. 41,95,0000/- II Cash withdrawal from ICICI bank Rs. 10,00,000/- III Earlier saving Rs. 1,50,000/- IV Sale of jewellery Rs. 18,00,000/- V Loan taken from Kedarnath Rs. 14,000/- VI Total Rs. 71,59,000/- 10. It may be mentioned here that, while going through previous record available with the department, the Assessing Officer found that no return of income was filed by the assessee prior to the assessment year 2017-18. During the year under consideration, the assessee reflected total income of Rs. 5,74,680/- u/s 44AD of the Act, due to the total receipts of Rs. 71,83,250/-, but, when he was directed to produce evidence regarding said income, he failed to furnish any explanation/reply in this regard. As regards 9 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur said income of Rs. 5,74,680/-, the Assessing Officer expressed that the assessee had failed to substantiate the income offered for taxation. 11. As regards, the claim of the assessee that he was doing job work i.e. repairing of gold and silver jewellery, the Assessing Officer observed that no receipt in this regard was found to have been credited in the bank account and rather all the credit entries pertained to the amount said to have been borrowed by the assessee, withdrawn on the same day(s) or next day(s). The Assessing Officer further observed that as regards the purpose of said withdrawal, the assessee himself was not sure. 12. In the assessment order, the Assessing Officer has reflected the amount of withdrawals of cash by the assessee in the form of a table, which is reproduced hereunder:- 10 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur 11 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur 13. The Assessing Officer observed that the assessee claimed to have borrowed the aforesaid loan amount with interest w.e.f. 18.07.2016 even though he had withdrawn cash and kept with him, without any reason. In this regard, the Assessing Officer observed that the assessee did not produce any bills of making expenditure for treating of his father , even though the prescription submitted by the assessee did not reveal that his father was a cancer patient. As further observed by the Assessing Officer, the assessee admitted that no expenditure was made for the aforesaid reasons and claimed that the cash deposits in his accounts were actually the amounts withdrawn by him. The Assessing Officer disbelieved said plea of the assessee. 14. As regards plea of the assessee regarding sale of jewellery of Rs. 18,00,000/-, the assessee submitted confirmation of accounts obtained from purchasing parties. On verification it was found that the assessee had accepted the said amount in piece meal manner, every time below Rs. 20,000/-, but the assessee did not furnish any reason for acceptance of the said amount under Rs. 20,000/- every time, especially when he was having two bank accounts, and also because no supporting evidence in the form of bills, payment of VAT of any purchase was furnished. 12 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur 15. Ultimately, the Assessing Officer arrived at the conclusion that the assessee had failed to substantiate his claim regarding cash in hand i.e. Rs. 71,59,000/- as on 11.11.2016. Appeal is decided by Learned CIT(A), NFAC 16. It may be mentioned here that in the appeal filed before Learned CIT(A), the assessee claimed that the impugned assessment order was passed against the principles of natural justice. In this regard, before Ld. CIT(A), the assessee claimed as under:- “1. On the facts and circumstances of the case the Id. AO has erred in law by making assessment without giving show cause notice to the humble appellant. 2. On the facts and circumstances of the case the order passed by Id. AO U/s 143(3) of the Act is bad in law. 3. On the facts and circumstances of the case the Id. AO has erred both on facts and in law in assessing the income of the appellant at Rs.76.55,190/- as against the returned Income of Rs. 4,96,190/-. 4 On the facts and circumstances of the case the order passed by the Id. AO is against the principles of natural justice. (i) On the facts and circumstances of the case the Id. AO has erred in treating cash deposited in the bank account by the assessee to the extent of Rs.71.59,000/- as unexplained credits under section 69A of the IT Act and taxing the same u/s 115BBE of the Act. (ii) That the said addition has been made ignoring the details and specific explanations filed by the appellant. (iii) That the said addition has been made by comparing the results of the year under dispute with the previous year ignoring the fact that every year is a separate year and financial results may vary. 13 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur (iv) That the AO has erred in appreciating that the cash was deposited in regular course of business activity and the same pertained to sales of previous month i.e. much before the date of demonetization of currency. 5. On the facts and circumstances of the case the Id. AO has erred in levying interest under section 234A/2348/234C of the Act. 6. That the Id. AO not rejected the books but made additions u/s 69A of IT Act.” There, the assessee also raised another ground that the impugned assessment order was illegal and bad in law for want of issuance of any proper notice, and also that the Assessing Officer had not rejected his books of accounts. Learned CIT(A) dismissed the appeal by observing in the manner as under:- “5. Decision: I have carefully gone through the contentions made by the appellant as well as the A.O. As observed, the appellant had deposited cash of Rs. 61, 45,000/- in old notes in his bank account No. 01150100014279 and Rs 10,14,000/- in his bank account No. 46080100000602 maintained at Bank of Baroda, Johari Bazar, Jaipur total cash deposited during the demonetization period was Rs. 71,59,000/- during the demonetization period i.e. between 09.11.2016 to 30.12.2016. The assessee filed his reply online explaining the source of the cash so deposited. On verification of the reply, it is seen that the assessee has claimed that total deposits were made as loans taken, sold gold jewelery, and previous savings. And the assessee has failed to substantiate his claim for cash in hand as on 11.11.2016 at Rs. 71,59,000/-. 6. During the proceedings, the appellant has not been able to file any concrete reasons or explanation for the nature and source of cash deposited total amount 14 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur at Rs. 71,59,000/- in his bank account with Bank of Baroda during the demonetization period and therefore the same is hereby added in return of income of the assessee and charged to income tax as unexplained money u/s 69A r.w.s. 115BBE trading undisclosed income under the head of other sources of the previous year relevant to the AY 2017-18. 7. In view of the same, the total addition made by the A.O. of Rs. 76,55,190/- is upheld. All the grounds of the appellant are quashed, and the appellant's appeal is dismissed. 8. For statistical purposes, the appeal is Dismissed.” 17. On going through the grounds of appeal raised by the appellant before Learned CIT(A) and the above discussion while upholding the assessment order, it is found that Learned CIT(A) has not effectively dealt with the issues involved and rather, while giving brief reasons, dismissed the appeal. Each issue deserved effective adjudication. In absence thereof, it is difficult to say as to what weighed with Learned CIT(A) while upholding the assessment and for rejecting each ground of appeal raised by the assessee. Conclusion 18. In the given situation, we are of the view that the matter deserves to be remitted to Learned CIT(A) for decision afresh, after providing reasonable opportunity of being heard to the appellant. 15 ITA No. 222/JPR/2024 Sh. Kalu Ram Saini, Jaipur Result 19. As a result, this appeal is disposed of, for statistical purposes, and the appeal before Learned CIT(A) is restored to his files for decision afresh, after providing reasonable opportunity of being heard to the appellant. File be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 07/05/2025. Sd/- Sd/- ¼xxu xks;y½ ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 07/05/2025 *Santosh vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Sh. Kalu Ram Saini, Jaipur. 2. izR;FkhZ@ The Respondent- ITO, Ward-1(5), Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File ITA No. 222/JPR/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar "