PRAKASH KUMAR KSHATRIYA,RAJNANDGAON V. INCOME TAX OFFICER, WARD-1, RAJNANDGAON, RAJNANDGOAN

ITA 436/RPR/2025

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The case involves Prakash Kumar Kshatriya, an employee with salary and commission income, who faced an addition of Rs.18,18,000 to his income under Section 69A of the Income Tax Act, 1961, due to unexplained cash deposits in his bank account. The assessee claimed that the deposits were from legitimate sources, including compensation and family contributions for purchasing immovable property. The lower authorities, including the CIT(Appeals)/NFAC, upheld the addition due to lack of documentary evidence. However, the Tribunal found that the addition was made under an incorrect legal provision and without proper verification of facts, leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714569 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: Vidya Shankar Jaiswal Vs. ITO, Ward-2, Ambikapur, Jagdish Prasad Singhania Vs. Additional Commissioner of Income Tax (TDS), Raipur, Inder Singh Vs. the State of Madhya Pradesh, Sanjeev Kumar, C/o M/s. Raj Kumar & Associates vs. ITO Ward 2(3)(2), Bulandshahr, Smt. Sarika Jain Vs. The Commissioner of Income Tax, Bareilly and Another, Raghvendra Singh Thakur Vs. The Income Tax Officer, Ward-4(1), Raipur
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: WAY OF SELF SPEAKING DOCUMENTARY; WAY OF SELF SPEAKING DOCUMENTARY EVIDENCE; EXPLANATION
• Keywords: Question of law; Corroborative evidences; Unexplained investment; Salary income; Gift; TDS
• Section: 68; 69

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी पाथ[ सारथी चौधरȣ, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं./ITA No.436/RPR/2025 Ǔनधा[रण वष[ /Assessment Year : 2016-17 Prakash Kumar Kshatriya House No.9, Ward No.44, Kaurin Bhata, Shiv Colony, Rajnandgaon-491 441 (C.G.) PAN: CDHPK3190B .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-1, Rajnandgaon (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : None (Adjournment Application) Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 05.08.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 05.08.2025 Printed from counselvise.com 2 Prakash Kumar Kshatriya Vs. ITO, Ward-1, Rajnandgaon ITA No.436/RPR/2025 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The captioned appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 07.03.2025 for the assessment year 2016-17 as per the grounds of appeal on record. 2. At the time of hearing, none appeared for the assessee. However, an adjournment application has been filed by the assessee which is rejected. The matter is heard after recording the submissions of the Ld. Sr. DR and on perusal of the documents available on record. 3. At the very outset, it is noted that there is delay of 42 days in filing of the appeal by the assessee. In this regard, the assessee had stated that in Form 35, in the option regarding service of notices/communications by the department through email, the assessee had opted as “No” and therefore, the order of the Ld. CIT(Appeals)/NFAC which was sent to the assessee on email absolutely had gone unnoticed and resultantly, such impugned delay has been caused. That when option has been provided itself by the department to the assessee in Form 35, in such case, once the assessee has opted as “No” regarding receiving of any notices/communications from the department through email, therefore, the assessee cannot be held at any fault for the delay caused. Accordingly, Printed from counselvise.com 3 Prakash Kumar Kshatriya Vs. ITO, Ward-1, Rajnandgaon ITA No.436/RPR/2025 the said delay of 42 days is condoned. I take guidance from the judicial pronouncements in the cases of viz. (i) Vidya Shankar Jaiswal Vs. ITO, Ward-2, Ambikapur, Civil Appeal Nos……………../2025 [Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31.01.2025; (ii) Jagdish Prasad Singhania Vs. Additional Commissioner of Income Tax (TDS), Raipur (C.G.), TAX Case No.17/2025, dated 24.02.2025, and (iii) Inder Singh Vs. the State of Madhya Pradesh, Civil Appeal No…………/2025, Special Leave Petition (Civil) No.6145 of 2024, dated 21st March, 2025. 4. Coming to the merits of the matter, the brief facts in this case are that the assessee is an employee of M/s. Shree Hari Transport Corporation having salary income and earning miscellaneous commission income. That as per the ITS details, the assessee had deposited an amount of Rs.18,60,000/- in his bank account and had purchased an immovable property of Rs.55 lacs. It is seen that the assessee had deposited cash in his bank account and transferred the same through banking channels to the persons from whom he had purchased the immovable property. Regarding source of cash deposits, the assessee has submitted that an amount of Rs.5,80,000/- has been received as compensation from insurance company and Rs.5,10,000/- received from M/s. Rajaram Maize Products after the death of his father totaling Printed from counselvise.com 4 Prakash Kumar Kshatriya Vs. ITO, Ward-1, Rajnandgaon ITA No.436/RPR/2025 Rs.10,90,000/- which was kept by his mother and she had given the said amount to him for purchase of the land. The assessee has furnished capital account of himself as well as his mother as on 2006 to 2016. In absence of any further documentary evidence regarding the source of cash deposits the said amount as appearing in the bank statement was added to the income of the assessee u/s. 69A of the Act r.w.s. 115BBE of the Income Tax Act, 1961 ( for short ‘the Act’). 5. The Ld. CIT(Appeals)/NFAC had confirmed the findings of the A.O observing as follows: “6.5 The appellant during the assessment proceedings had submitted that the capital account of himself and his mother, however the appellant had failed to submit any supporting documentary evidences. Similarly during the appellate proceedings, the appellant had not submitted any new supporting evidences. The claim made by the appellant that a sum of Rs.11,75,000 received from his mother Ansuyiaben in earlier years from the employer of her husband and compensation through a Court order is not supported by any evidences. In absence of any documentary evidences, these claims cannot be accepted. Hence the addition made by the Id AO of Rs.18,18,000/- is hereby upheld and grounds no. 1 and 2 raised by the appellant are hereby dismissed. 6. I have considered the submissions of the Ld. Sr. DR and perused the documents placed on record. In this case, the assessee has earned salary income as well as income from commission. The only dispute is with regard to the source of cash deposits of Rs.18,18,000/- deposited by the assessee in his bank account. Explaining the same, the assessee had Printed from counselvise.com 5 Prakash Kumar Kshatriya Vs. ITO, Ward-1, Rajnandgaon ITA No.436/RPR/2025 submitted that a sum of Rs.11,75,000/- has been received from his mother in earlier years and from employer and compensation through court order. In this regard, the assessee has also submitted capital account of himself and his mother. The Ld. CIT(Appeals)/NFAC had failed to conduct any enquiry as mandated in Section 250(4) & (6) of the Act and had summarily dismissed the appeal of the assesse. Further, the Ld. CIT(Appeals)/NFAC has not verified regarding the claim of the assessee as regards the nature and source of such cash deposits. The Ld. CIT(Appeals)/NFAC has not given any finding as to the capital account that has been submitted by the assessee regarding himself and his mother as on 2006-2016. That instead of making any verification on facts, the Ld. CIT(Appeals)/NFAC has chosen to summarily dismiss the appeal of the assessee without any findings on facts. The revenue has not brought on record suggesting any other source of income of the assessee other than the source of declared income in his return of income. This fact has not been disputed. That at the same time, the assessee is earning salary income and commission income. This source of income has also been accepted by the department. The assessee had submitted the capital account and had explained the source of such cash deposits. It was incumbent upon the department to come to a conclusion only after due verification of all material available on record which it had failed to do. This is a classic example of non-application of mind by the quasi-judicial Printed from counselvise.com 6 Prakash Kumar Kshatriya Vs. ITO, Ward-1, Rajnandgaon ITA No.436/RPR/2025 authority. In this regard, I refer to the following judicial pronouncements where for non-application of mind, the addition have been deleted from the hands of the assessee. 7. The Co-ordinate Bench of Delhi in the case of Sanjeev Kumar, C/o M/s. Raj Kumar & Associates vs. ITO Ward 2(3)(2), Bulandshahr, reported in 2023(10) TMI 1027-ITAT Delhi on the same issue of “non- application of mind” had observed and held as follows: “14. In view of foregoing discussion, I reach to a logical conclusion that the complete cash book statement clearly explains the source of cash deposit to the bank account of assessee, wherein the assessee has not only included cash receipts as salary and capital withdrawal from two partnership firms M/s Umang Beverages and M/s Mohan Oil & Cattle Feed and a cash salary from Bihar Milk Foods Pvt. Ltd. and has also reduced the amount of drawings for household expenses. The copy of return of income of wife of assessee Smt. Shalini and father of assessee Shri Kalu Mal co-jointly established that the other family members of assessee are also earning and contributing towards household expenses. Therefore, in my humble understanding the source of cash deposit during demonetization to the bank account of assesses is properly explained by the assessee by way of self speaking documentary evidence and explanation. Secondly, the AO has made addition u/s 69 of the Act which pertains to unexplained investments, whereas the assessee has not made any investment either in movable or any immovable property during the relevant period by way of using cash amount. The Ld.CIT(A) though has given credit of 25% of Impugned cash deposit confirming the remaining part of addition but there is no logic of this segregation. From the relevant operative part of first appellate order, I also note that the Ld.CIT(A) has upheld the part addition without mentioning any charging section and impliedly adopting section 69 of the Act in the line of assessment order. Therefore, respectfully following the proposition rendered by the Hon'ble Jurisdictional High Court of Printed from counselvise.com 7 Prakash Kumar Kshatriya Vs. ITO, Ward-1, Rajnandgaon ITA No.436/RPR/2025 Allahabad in the case of Sarika Jain (supra). I have no hesitation to hold that the addition made by the AO by mentioning incorrect and irrelevant charging section is not sustainable and valid being bad in law. Accordingly, grounds of assessee are allowed and AO is directed to delete the entire addition. 15. In the result, appeal of the assessee is allowed.” 8. Similarly, in the decision of Hon’ble High Court of Allahabad in the case of Smt. Sarika Jain Vs. The Commissioner of Income Tax, Bareilly and Another, reported in (2018) 407 ITR 254 (All) which decision was referred to and applied in the earlier decision of the Co- ordinate Bench of Delhi (supra), the Hon’ble High Court of Allahabad held as follows: “In the present case, it is apparent that the subject matter of the dispute all through before the Tribunal in appeal was only with regard to the addition of alleged amount of the gift received by the appellant-assessee as his personal income under Section 68 of the Act and not whether such an addition can be made under Section 69-A of the Act. In view of the above, it can safely be said that the Tribunal travelled beyond the scope of the appeal in making the addition of the said income under Section 69-A of the Act. It may be worth noting that the Tribunal has recorded a categorical finding that \"it is clear that under the provisions of Section 68, the addition made by the Assessing Officer and sustained by the CIT (Appeals) cannot be sustained, meaning thereby that the Tribunal was of the opinion that the Assessing Officer and the CIT (Appeals) committed an error in adding the aforesaid amount in the income of the appellant-assessee under Section 68 of the Act. In view of the above, when the said income cannot be added under Section 68 of the Act and the Tribunal was not competent to make the said addition under Section 69-A of the Act, the entire order of the Tribunal stand vitiated in law Printed from counselvise.com 8 Prakash Kumar Kshatriya Vs. ITO, Ward-1, Rajnandgaon ITA No.436/RPR/2025 Accordingly, we answer the question of law, as framed above, in favour of the appellant-assessee and against the Revenue and hold that the Tribunal was not competent to make any addition under Section 69-A of the Act and as the same was subject matter of the appeal before it.” 9. Further, ITAT, “SMC” Raipur Bench in the case of Raghvendra Singh Thakur Vs. The Income Tax Officer, Ward-4(1), Raipur ITA No.242/RPR/2025, dated 14.07.2025 on the similar facts and circumstances has held and observed as follows: “5. At the outset, on this issue, it is noted that the AO had made addition u/s.69 of the Act which refers to unexplained investment. However, in this case, the assessee had neither purchased nor sold any moveable or immoveable property, nor had invested in any such property. In fact, the verification of facts as emanating from the assessment order as well as the findings of the Ld. CIT(A)/NFAC all pertains to and revolves on un-explained cash deposits by the assessee which resulted in addition of 1/3 of the total deposit since the account was in the name of three persons, including the assessee, so as per his share 1/3 of the said deposit was added as the assesse was unable to prove the nature and source of such cash deposit. In this periphery of investigation and addition made by the department, the correct provision of law to have been applied is Section 69A of the Act, which deals with unexplained money, bullion, jewelry or other valuable article for which the assessee offers no explanation about the nature and source of acquisition of such money, bullion, jewelry or other valuable article etc. The wrong application of provision of law to the facts and circumstances of the case regarding a particular assessee tantamount to non-application of mind by the assessing officer. This itself vitiates and makes the addition void ab initio, since there is no application of mind, much less than any satisfaction arrived at by the AO. In a recent decision of the Co-ordinate Bench of Delhi in the case of Sanjeev Kumar c/o M/s Raj Kumar & Associates vs. ITO Ward 2(3)(2), Bulandshahr, reported in 2023(10) TMI 1027-ITAT Delhi on the same issue of applying wrong provision of the Act, it was observed and held as follows: Printed from counselvise.com 9 Prakash Kumar Kshatriya Vs. ITO, Ward-1, Rajnandgaon ITA No.436/RPR/2025 “14. In view of foregoing discussion, I reach to a logical conclusion that the complete cash book statement clearly explains the source of cash deposit to the bank account of assessee, wherein the assessee has not only included cash receipts as salary and capital withdrawal from two partnership firms M/s Umang Beverages and M/s Mohan Oil & Cattle Feed and a cash salary from Bihar Milk Foods Pvt. Ltd. and has also reduced the amount of drawings for household expenses. The copy of return of income of wife of assessee Smt. Shalini and father of assessee Shri Kalu Mal co-jointly established that the other family members of assessee are also earning and contributing towards household expenses. Therefore, in my humble understanding the source of cash deposit during demonetization to the bank account of assesses is properly explained by the assessee by way of self speaking documentary evidence and explanation. Secondly, the AO has made addition u/s 69 of the Act which pertains to unexplained investments, whereas the assessee has not made any investment either in movable or any immovable property during the relevant period by way of using cash amount. The Ld.CIT(A) though has given credit of 25% of Impugned cash deposit confirming the remaining part of addition but there is no logic of this segregation. From the relevant operative part of first appellate order, I also note that the Ld.CIT(A) has upheld the part addition without mentioning any charging section and impliedly adopting section 69 of the Act in the line of assessment order. Therefore, respectfully following the proposition rendered by the Hon'ble Jurisdictional High Court of Allahabad in the case of Sarika Jain (supra). I have no hesitation to hold that the addition made by the AO by mentioning incorrect and irrelevant charging section is not sustainable and valid being bad in law. Accordingly, grounds of assessee are allowed and AO is directed to delete the entire addition. 15. In the result, appeal of the assessee is allowed.” 6. Similarly, in the decision of Hon’ble High Court of Allahabad in the case of Smt. Sarika Jain Vs. The Commissioner of Income Tax, Bareilly and Another, reported in (2018) 407 ITR 254 (All) which decision was referred to and applied in the earlier decision of the Co- ordinate Bench of Delhi (supra), the Hon’ble High Court of Allahabad held as follows: Printed from counselvise.com 10 Prakash Kumar Kshatriya Vs. ITO, Ward-1, Rajnandgaon ITA No.436/RPR/2025 “In the present case, it is apparent that the subject matter of the dispute all through before the Tribunal in appeal was only with regard to the addition of alleged amount of the gift received by the appellant-assessee as his personal income under Section 68 of the Act and not whether such an addition can be made under Section 69-A of the Act. In view of the above, it can safely be said that the Tribunal travelled beyond the scope of the appeal in making the addition of the said income under Section 69-A of the Act. It may be worth noting that the Tribunal has recorded a categorical finding that \"it is clear that under the provisions of Section 68, the addition made by the Assessing Officer and sustained by the CIT (Appeals) cannot be sustained, meaning thereby that the Tribunal was of the opinion that the Assessing Officer and the CIT (Appeals) committed an error in adding the aforesaid amount in the income of the appellant-assessee under Section 68 of the Act. In view of the above, when the said income cannot be added under Section 68 of the Act and the Tribunal was not competent to make the said addition under Section 69-A of the Act, the entire order of the Tribunal stand vitiated in law Accordingly, we answer the question of law, as framed above, in favour of the appellant-assessee and against the Revenue and hold that the Tribunal was not competent to make any addition under Section 69-A of the Act and as the same was subject matter of the appeal before it.” 7. Considering the aforestated legal principles and on examination of the facts and circumstances, the addition made u/s 69 of the Act is uncalled for and void ab initio. The AO is directed to delete the said addition from the hands of the assessee……” 10. Respectfully following the aforesaid judicial pronouncements and on examination of the facts on record, the additions made in the case of the assessee u/s. 69A of the Act is misplaced and uncalled for, arbitrary and bad in law. Accordingly, the A.O is directed to delete the same from the hands of the assessee. Printed from counselvise.com 11 Prakash Kumar Kshatriya Vs. ITO, Ward-1, Rajnandgaon ITA No.436/RPR/2025 11. As per the above terms grounds of appeal raised by the assessee are allowed. 12. In the result, appeal of the assessee is allowed. Order pronounced in open court on 5th day of August, 2025. Sd/- (PARTHA SARATHI CHAUDHURY) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर / Raipur; Ǒदनांक / Dated : 5th August, 2025. SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. CIT-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, “एक-सदèय” बɅच, रायपुर / DR, ITAT, “SMC” Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur Printed from counselvise.com "