LALLANSINGH MANSARAM YADAV,AHMEDABAD V. THE ITO, WARD-7(2)(1), AHMEDABAD

ITA 2160/AHD/2024

AI Insights

The case revolves around the appeal by Lallansingh Mansaram Yadav against the order of the Commissioner of Income Tax (Appeals), which upheld the addition of Rs. 17,00,000 as unexplained cash deposits in the assessee's bank account during the demonetization period. The Assessing Officer had initially added this amount as unexplained under Section 69A of the Income Tax Act, citing lack of sufficient explanation for the source of the deposits. The assessee contended that these deposits were from cash withdrawals made earlier for a failed property transaction. The Tribunal, after examining the submissions and evidence, including bank statements, concluded that the assessee had sufficiently demonstrated that the deposits were from his own earlier withdrawals, and thus, the addition was unjustified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473692 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: Smriti Television Media and Films (P.) Ltd. vs. Principal Commissioner of Income-tax, Sarhaddar Brothers vs. Commissioner of Income -tax, Principal Commissioner of Income-tax vs. Rajesh Exports Ltd., Prem Castings (P.) Ltd. vs. Commissioner of Income-tax (Appeals), Sudhirbhai Pravinkant Thaker vs. ITO, Ajit Bapu Satam vs. ITO, Jaspal Singh Sehgal vs. ITO, Smt. Krishna Agarwal v. ITO, C. Vamsi Mohan v. ITO, Deepali Sehgal vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVINDRA
• Assessee Lawyers: SAMIR VORA
• Keywords: Business expenditure; Question of law; Income from undisclosed sources; Onus to prove; Principle of natural justice
• Section: 69; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.2160/Ahd/2024 (Assessment Year: 2017-18) Lallansingh Mansaram Yadav, 11, Ishan Bungalows, Sun N Step Club Road, Thaltej, Ahmedabad-380054 Vs. Income Tax Officer, Ward-7(2)(1), Ahmedabad [PAN No.ABBP8779L] (Appellant) .. (Respondent) Appellant by : Shri Samir Vora, A.R. Respondent by: Shri Ravindra, Sr. DR Date of Hearing 17.02.2025 Date of Pronouncement 20.02.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 11.12.2024 passed for A.Y. 2017-18. 2. The assessee has taken the following grounds of appeal:- “1.1 The order passed u/s.250 on 11.12.2024 for A.Y.2017-18 by NFAC CIT(A) Delhi [For short \"CIT(A)\"] upholding the addition of Rs.17 lakhs towards cash deposits in Bank account as unexplained sources u/s 69A of the Act is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned addition. 2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming addition Rs.17 lakhs towards cash deposits in Bank account as unexplained sources u/s 69A of the Act. ITA No. 2160/Ahd/2024 Lallansingh Mansaram Yadav vs. ITO Asst.Year –2017-18 - 2– 2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld the addition of Rs.17 lakhs towards cash deposits in Bank account as unexplained sources u/s 69A of the Act.” 3. The brief facts of the case are that the assessee is an individual and is deriving income from pension and other sources. During the course of assessment proceedings, the Assessing Officer observed that assessee had made cash deposit of Rs. 7,00,000/- on 11.11.2016 and another cash deposit of Rs. 10,00,000/- on 06.12.2016 in State Bank of India, Gulab Tower Branch, Ahmedabad during the demonetization period. The Assessing Officer asked the assessee to furnish source of such cash deposit. Vide reply dated 14.12.2019, the assessee submitted that he is a retired senior police inspector and is getting pension income and income from other sources. The assessee submitted that his son is a dentist and running a clinic near Mansi Circle, Vastrapur. The assessee wanted to buy the said property from the owner and the cost of this property was fixed at Rs. 40,00,000/-. The owner of the property wanted 50% of the amount in cash and was willing to execute a sale deed at a registered value of Rs. 20,00,000/-. With the intent for buying such property for son, the assessee withdrew a sum of Rs. 10,00,000/- on 25.02.2016 from his bank account, another sum of Rs. 5,00,000/- on 11.04.2016 from his bank account and a sum of Rs. 5,00,000/- on 18.07.2016 from his bank account. The explanation of the assessee was that the property purchase transaction did not materialize and the aforesaid cash amounting to Rs. 20,00,000/-, which had earlier been withdrawn by the assessee was redeposited by the assessee in to the same bank account on 11.11.2016 ( Rs. 7,00,000/-) and 06.12.2016 (Rs. 50,00,000/-). Accordingly, the assessee’s submission was that the source of the cash deposit was fully explained as having sourced out of withdrawals made by the assessee from the same bank ITA No. 2160/Ahd/2024 Lallansingh Mansaram Yadav vs. ITO Asst.Year –2017-18 - 3– account. However, the Assessing Officer did not accept contention of the assessee and added a sum of Rs. 17,00,000/- as unexplained money of the assessee under Section 69A of the Act. 4. In appeal, Ld. CIT(A) confirmed the addition by the Assessing Officer with the following observations: “6.1 During the assessment proceedings the AO found that assessee made two cash deposits in his SB account during demonetization period. The first cash deposit of Rs. 7 lakhs was made on 11.11.2016 and the second cash deposit of Rs. 10 lakhs was made on 06.12.2016. When asked to explain the sources the assessee replied that he was planning to purchase property worth Rs. 40 lakhs for the purpose of running dental clinic by his son and therefore he claimed to have accumulated cash however the purchase did not materialise and then he claimed to have deposited cash of Rs. 17 lakhs in bank account during demonetization period. Regarding sources the assessee submits that he withdrew amount of Rs. 10 lakhs in cash from his bank account on 25.02.2016 which he claims to have deposited again in bank account during demonetization, nearly after 10 months. When asked by the AO what he did with this money after withdrawing from bank in Feb 2016, the assessee claims to have entered into a purchase agreement with the owner of the property. However, the assessee failed to furnish sale agreement and confirmation from the other party. In view of this the Ld. AO treated the entire sum of Rs. 17 lakhs as unexplained money u/s. 69A. 6.2 During the appellate proceedings the assessee submitted written submissions alongwith certain case laws. However, the assessee failed to submit the crucial evidences such as sale agreement and confirmation letter from the proposed seller and therefore the addition of Rs. 10 lakhs out of the total unexplained sum of Rs. 17 lakhs is confirmed. Whereas with regard to the balance addition of Rs. 7 lakhs the assessee failed to trace this cash deposit of Rs. 7 lakhs to any accounted sources by way of bank statements. Accordingly, the balance addition of Rs.7 lakhs out of the total unexplained sum of Rs. 17 lakhs is confirmed. 6.3 In the absence of these crucial evidences as mentioned in Para 6.2 of this order the current appeal of the appellant is liable to be dismissed and accordingly dismissed. In support of the decision the undersigned relies on the following case laws, wherein it has been held that burden of proof in respect of cash credits lies on the assessee only. 1. [2023] 151 taxmann.com 323 (Madhya Pradesh)[03-04-2023]Smriti Television Media and Films (P.) Ltd. vs. Principal Commissioner of Income-tax 2. [2023] 148 taxpann.com 4B3 (Calcutta)|13-02-023] Sarhaddar Brothers vs. Commissioner of Income -tax ITA No. 2160/Ahd/2024 Lallansingh Mansaram Yadav vs. ITO Asst.Year –2017-18 - 4– 3. [2023] 150 taxmann.com 18 (Karnataka) [10-02-2023] Principal Commissioner of Income-tax vs. Rajesh Exports Ltd. 4. [2017] 88 taxmann.com 189 (Allahabad)[29-11-2017] Prem Castings (P.) Ltd. vs. Commissioner of Income-tax (Appeals) 7. As a result, appeal filed by the appellant against the order passed u/s. 143(3)of the I.T. Act for A.Y. 2017-18 is treated as DISMISSED.” 5. The assessee is in appeal before us against the aforesaid order confirming the addition of Rs. 17,00,000/- made by the Assessing Officer. 6. Before us, the Counsel for the assessee submitted before us a brief summary of cash withdrawals and deposits into savings bank account No. 34828342352 held by the assessee in State Bank of India. The summary of cash withdrawals and deposits are summarized for ready reference: Sr. No. Date Decs. Debit (Withdrawal) Credit (Deposit) 1 25.02.2016 Self (By Cheque no: 820703) 10,00,000/- 2 11.04.2016 Cash withdrawal by Cheque:820704 5,00,000/- 3 08.07.2016 Cash withdrawal by Cheque:820707 5,00,000/- 4 11.11.2016 Cash Deposit Self 7,00,000/- 5 06.12.2016 Cash Deposit Self 10,00,000/- 7. Further, the assessee also produced before us relevant pages of the bank statement to demonstrate that cash had been withdrawn from the same bank account and re-deposited by the assessee into the same bank account. The Counsel for the assessee also placed reliance on judicial precedents in support of contention that unless the Assessing Officer brings any cogent material to show that such cash withdrawn by the assessee had been utilized ITA No. 2160/Ahd/2024 Lallansingh Mansaram Yadav vs. ITO Asst.Year –2017-18 - 5– for some other purpose, then it has to be presumed that the subsequent deposit has been sourced out of earlier withdrawals made by the assessee. 8. We have heard the rival contentions and perused the material on record. 9. It is a well settled law that if the assessee is able to show that it had made cash withdrawals from which the deposits were made, then it would be reasonable to infer that the source of cash deposits was from the cash withdrawals made by the assessee, unless, the Revenue is able to establish that there was a specific expenditure incurred by the assessee as a consequence to which the assessee was not in a position to/did not have adequate cash in hand to make the cash deposits in his bank account. In the case of Pesto Chem India Ltd. 108 TAXMAN 310 (DELHI), the assessee- company had shown certain withdrawals by its directors from petty account to meet business expenses to which assessee explained that amounts so withdrawn were deposited in bank or in cash book when needed and for this purpose amounts were transferred from imprest account to bank account or in cash book. The Assessing Officer, however, treated amounts so deposited as income from undisclosed sources. The Tribunal found that existing debit balance in imprest account was adequate to cover credits on any one date in said imprest accounts, meaning thereby that directors redeposited amount either wholly or partly with company out of withdrawals. The High Court held that finding recorded by Tribunal being pure finding of fact which was not challenged by revenue as perverse or unreasonable, no question of law did arise from Tribunal’s order deleting addition. In the case of Sudhirbhai Pravinkant Thaker 88 taxmann.com 382 (Ahmedabad - Trib.), the ITAT ITA No. 2160/Ahd/2024 Lallansingh Mansaram Yadav vs. ITO Asst.Year –2017-18 - 6– held that when assessee had demonstrated that he had withdrawn cash from bank and there was no finding by authorities below that this cash available with assessee was invested or utilized for any other purpose, it was not open to authority to make addition on basis that assessee failed to explain source of deposits. In the case of Ajit Bapu Satam 147 taxmann.com 222 (Mumbai - Trib.), the ITAT held that where assessee contended that cash which was withdrawn by assessee from bank was deposited in very same bank account and he provided details of cash withdrawal from bank account and cash so withdrawn was lying with him and was not used anywhere else, since both cash withdrawal and deposit were duly substantiated from bank statement of very same branch of bank and there was no findings by lower authorities that cash available with assessee was invested or utilised for any other purpose, cash so deposited could not be treated as unexplained money under section 69A of the Act. In the case of Jaspal Singh Sehgal 83 taxmann.com 246 (Mumbai - Trib.), where the assessee submitted detailed cash summary showing inflow and outflow of cash for relevant year, in absence of any materials to show that cash withdrawn was utilised elsewhere by assessee, benefit of cash withdrawn by assessee from bank account against amount of cash deposit into bank should be given. In the case of Smt. Krishna Agarwal v. ITO in ITA. No. 53/JODH/2021, the ITAT held that mere time gap between withdrawals and deposits cannot be the reason for alleging undisclosed income. In the case of C. Vamsi Mohan v. ITO ITA No. 469/Hyd/2014 the ITAT held that said withdrawal having been made by the assessee just before a week, the same can reasonably be treated as available with the assessee for cash deposit especially when there is nothing to show that the said amount was utilized by the assessee for some ITA No. 2160/Ahd/2024 Lallansingh Mansaram Yadav vs. ITO Asst.Year –2017-18 - 7– other purpose. In the case of ITO v. Deepali Sehgal I.T.A. No. 5660/Del/2012 it was held that merely because there was a time gap between withdrawal of cash and its further deposit to the bank account, the amount cannot be treated as income from undisclosed sources under Section 69 of the Act in the hands of the assessee. 10. In view of the facts of assessee’s case as highlighted above and the judicial precedents on the subject, we are of the view that the assessee has been able to explain the source of cash deposits in his bank account as coming from earlier withdrawals made by the assessee from the same bank account. The Department has not brought any material to show that the earlier withdrawals from the same bank account was utilized by the assessee for any other purpose. 11. In the result, the appeal of the assessee is allowed. This Order is pronounced in the Open Court on 20/02/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 20/02/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "