RAKESH KUMAR GOEL,GHAZIABAD V. ITO WARD-2(2)(2), GHAZIABAD

ITA 1549/DEL/2023

AI Insights

The case involves Rakesh Kumar Goel, the appellant, contesting an addition of Rs. 12,00,000 made by the Income Tax Officer (ITO) under section 69A of the Income Tax Act, which pertained to cash deposits in his bank account during the demonetization period. The addition was sustained by the CIT(Appeals), leading to the appeal before the Income Tax Appellate Tribunal. The appellant argued that the addition was unjustified as the cash was recorded in the books and the source was explained, supported by various documents including invoices and bank statements. The Tribunal, referencing several precedents, concluded that the addition under section 69A was inappropriate as the cash deposits were duly recorded and explained.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312244 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: CIT vs. Anoop Jain, Smt. Sadhana Jain Vs. CIT, PCIT Vs. M.C. Hospital, Durga Fire Work Vs. ITO, ITO Vs. M/s Zee Bangles Pvt. Ltd., Lalchand Bhagat Ambica Ram Vs. CIT, Lakshmi Rice Mills Vs. CIT, DCIT Vs. M/s Karthik Construction Co., Sobha Devi Dilipkumar Vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: AKHILESH KUMAR
• Keywords: Salary income; Deemed to accrue or arise in india
• Section: 69

Judgement Text

"I.T.A.No.1549/Del/2023 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER आ.अ.सं/.I.T.A No.1549/Del/2023 िनधा रणवष /Assessment Year: 2017-18 Rakesh Kumar Goel, CH. No.206-207, Ansal Satyam RDC, Rajnagar, Ghaziabad, Uttar Pradesh. बनाम Vs. ITO, Ward-2(2)(2), Ghazabad. PAN No.ACGPG5211P अपीलाथ\u0012 Appellant \u0014\u0015यथ\u0012/Respondent िनधा\u0007\bरतीक ओरसे /Assessee by Shri Akhilesh Kumar, Adv. राज\u0012वक ओरसे /Revenue by Shri Om Prakash, Sr. DR सुनवाईक तारीख/ Date of hearing: 25.04.2025 उ\u0018ोषणाक तारीख/Pronouncement on 28.04.2025 आदेश /O R D E R This appeal is filed by the Assessee against the order of the Ld. CIT(Appeals)-NFAC, Delhi dated 24/03/2023 for the AY 2017-18 in sustaining the addition u/s 69A of the Act. Assessee raised the following grounds: - 2. “Because, the Ld.CIT(A) grossly erred in sustaining the addition of Rs.12,00,000/- u/s 69A/115BBE of the Act, being the cash deposited in bank account during the demonetization period, as the same is beyond the scope of provision itself, whereby amount is duly recorded in books of accounts and source of such amount is fully I.T.A.No.1549/Del/2023 2 explained, hence addition is against the specific provision of Act. 3. Because, the Ld. CIT(A) further erred in not appreciating that the sale/purchases etc. are supported with invoices, bank account, Financials etc. mass documents on record proving the genuinity of transactions and cash deposit, whereby such cash deposit is also inline of subsequent years, beside addition is made without any iota of evidence/material against the assessee and in support of flimsy allegations made, therefore addition is against all the cannons of law. 4. Because, Ld. CIT(A) misdirected himself with all the objections of AO, which have been met by the assessee with evidences still sustained the addition by invoking the theory of probability against the concrete evidences on record which are not found defective or rejected, thus addition is sustained merely on the basis of surmises and conjectures. 5. Because, without prejudice to above, Ld. CIT(A) inherently wrong in sustaining the addition being the same amounts to double taxation is as much as all the sources of deposit like sales etc. have been declared and taxed thus to add the deposit again is against the basic tanets of law.” 2. Ld. Counsel for the assessee referring to ground no.2 of the grounds of appeal submits that Ld. CIT(A) grossly erred in sustaining the addition of Rs.12,00,000/- u/s 69A of the Act being the cash deposited in the bank account during the demonetization period since the same is beyond the scope of provision itself, whereby the said amount was duly recorded in the books of account and source of such amount was fully explained, hence, addition is against the I.T.A.No.1549/Del/2023 3 specific provision of the Act. Ld. Counsel placed reliance on the following decisions: - • CIT vs. Anoop Jain (112 taxmann.com 355) (Del.); • Smt. Sadhana Jain Vs. CIT (45 taxmann.com 432); • PCIT Vs. M.C. Hospital (142 taxmann.com 122) (Chennai – Trib.); 3. Ld. Counsel further submitted that assessee is enjoying salary income from an NGO and started part time business of trading of Chokar in AY 16-17 by purchasing Chokar of Rs.7,02,750/- vide invoice Nos. 3632/3637 dated 12.12.2015 & 15.12.2015 respectively from M/s Krishna Trading Co. 2150-B Shop No. 2 Mandi Extn., Bawana Road, Narela Delhi, TIN NO: 07780395221, payment of which is made through banking instrument duly credited on 30.03.2016 in the bank a/c of assessee long before demonetization (Paper Book Page-21 TO 25) and in the absence of any sale, reflected in Opening stock of current year which is sold in cash for 9,65,600/- during the current year in Oct, 16 on various dates(Paper Book Page-10 & 37). Sale is supported with invoices and entered in stock register (Paper Book Page-26 to 37). Qty of sales/purchases tallies (Paper Book Page-18). In the subsequent years also such cash sales of Chokar to the tune of Rs. 165663-7/- and 7856764/- is made as per the normal I.T.A.No.1549/Del/2023 4 business practice (Paper Book Page-11 to 14) which is accepted without any scrutiny. Details of cash deposited in bank in subsequent years and sources of cash deposited in current year are verifiable (Paper Book Page-2/15). Similarly current year purchases of choker of Rs. 11,00,800/- is made through banking transaction which is reflected in the year end stock. (Paper Book Page- 3 & 19/20). Agricultural income is supported with Mandi samiti Receipt -6R (PBP- 41) (Paper Book Page 41). Above facts are placed before Id. AO through various replies (Paper Book Page-15 to 18). Ld. AO recorded his objection on page 2/3 of order which, however transaction purchases/sales are accepted as no addition is made. Each objection from 2 to 8 are specifically met before ld. CIT(A) with specific reference to replies filed before ld. AO. (Paper Book Page-02-03/15 to 18). Ld. CIT(A) adjudicated issue in para 5 pages 7 to 9 by raising doubts on sales before demonetization and finally in para 5.3 pages 8/9 sustained the addition. Legal ground on section 69A and double taxation also rejected. Assessee version on merits, that: a) Additions u/s 69A cannot be made of an amount recorded in book of accounts for any source of income. I.T.A.No.1549/Del/2023 5 b) After accepting the sales by accepting declared income on same, same cannot be added again as no source. c) Objection of Ld. AO are either incorrect on record or are flimsy without any foundation. Beside so called behind the back enquiry never confronted and in any case is opened only at the time of arrival/removal of goods and there is no full time employee. d) Assessee had filed given source of Rs.14.40 lakh deposit beside agricultural income of Rs.160280/- out of which source of 2.40 lakh deposit accepted, thus same source accepted for part deposit and rejected for balance. e) Raising doubt on sales/rent after accepting the same is against the basic tenets of law and not permissible. f) Neither there is any material against the assessee or in support of addition, more so when none of the evidences and sources placed found false with some material. 4. Ld. DR strongly supported the orders of the authorities below. 5. Heard rival submissions, perused the orders of the authorities below. In the grounds of appeal no.2 the assessee has raised a legal ground i.e. whether the addition can be made u/s 69A of the Act in respect of cash deposits even though the same were recorded in the books of accounts. This identical issue has been decided by the coordinate bench of the Tribunal in the case of Durga Fire Work Vs. ITO in ITA No.383/Del/2024 dated 03/07/2024, wherein the Tribunal held as under: - “9. Heard rival submissions, perused the orders of the authorities below and the material placed before us. The legal issue raised by the assessee is whether the addition I.T.A.No.1549/Del/2023 6 can be made u/s 69A of the Act in respect of cash deposits even though the same were recorded in the books of account. It is the contention of the Ld. Counsel for the assessee that assessee recorded the cash deposits made into bank account in its books of account and the same were audited and tax audit report was also furnished. On this legal issue, we find that the Mumbai Tribunal in the case of ITO Vs. M/s Zee Bangles Pvt. Ltd. (supra) held as under: “9. We also find that Id. CIT(A) has rightly held that Sec. 69 provides that in case the assessee is found to be owner of any money, bullion, jewellery or any other valuable article and same is not recorded in the books of account, it may be considered to be deemed income of the assessee in case he is not able to provide explanation or his explanation is not satisfactory in the opinion of the assessing officer. The same cannot be applied to the case of the assessee since the assesse has himself declared the amount of cash deposited in the return of income after duly entering the same in the books of account. Regarding applicability of the provision of section 69A of the Act we have perused the provisions of Section 69A of the Act which is reproduced as under: “[69A Power to issue directions for blocking for public access of any information through any computer resource. - (1) Where the Central Government or any of its officer specially authorised by it in this behalf is satisfied that it is necessary or expedient so to do, in the interest of sovereignty and integrity of India, defense of India, security of the State, friendly relations with foreign States or public order or for preventing incitement to the commission of any cognizable offence relating to above, it may subject to the provisions of sub-section (2) for reasons to be recorded in writing, by order, direct any I.T.A.No.1549/Del/2023 7 agency of the Government or intermediary to block for access by the public or cause to be blocked for access by the public any information generated, transmitted, received, stored or hosted in any computer resource. (2) The procedure and safeguards subject to which such blocking for access by the public may be carried out, shall be such as may be prescribed. (3) The intermediary who fails to comply with the direction issued under sub-section (1) shall be punished with an imprisonment for a term which may extend to seven years and shall also be liable to fine.]” It is clear that Sec. 69A of the Act is applied when the assessee is found to be owner of any money which is not recorded in the books of account. However, in the case of the assessee, it has maintained hooks of accounts duly audited in accordance with section 44AB of the Income Tax Act which was also furnished with the return of income filed by the assessee. The assessee has demonstrated from the purchase books, sale books cash book supported with relevant invoices that source of cash deposited was out of the cash sales made during the A.Y. relevant to the assessment year under consideration. The Id. Counsel has also placed reliance on a number of judicial pronouncements on the proposition that addition u/s 69A of the Act cannot be made i.e. Lalchand Bhagat Ambica Ram Vs. CIT (1959) 37 ITR 288 (SC); Lakshmi Rice Mills Vs. CIT (1974) 97 ITR 258 (PAT); DCIT Vs. M/s Karthik Construction Co. ITA No. 2292/Mum/2016. 10. After considering the facts as discussed above, we find the AO has failed to justify in applying section 69A to the case of the assessee when the assessee itself declared the cash sales in its return of income duly recorded in the audited I.T.A.No.1549/Del/2023 8 books of accounts maintained by the assesse. Therefore, the CIT(A) has correctly held that provision of Sec. 69A of the Act cannot be applied in respect of cash deposited which have been duly recorded in the books of account and had already been declared income in the return of income filed by the assessee. Therefore, the grounds of appeal of the revenue are dismissed.” 10. Similarly, in the case of Sobha Devi Dilipkumar Vs. ITO (supra) the Vishakhapatnam Bench of the Tribunal held as under: “4. At the outset, the Ld. Authorized Representative submitted that the assessee being involved in money lending business, on the monies lent, the assessee has received an amount of Rs.3,63,609/- as interest income and the principal amount was given as loan during the previous year relevant to the assessment year 2017-18 to various persons and the same fact was recorded in the books of account which has been furnished before the Ld. Revenue Authorities. However, the assessee made cash deposits during the demonetization period and therefore the Ld. AO treated the amount of cash deposits as unexplained money u/s 69A of the Act. The Ld. AR further submitted that the assessee has disclosed the investments in the books of accounts and the computation of income which was offered for taxation and therefore the question of invoking the provisions of section 69A does not arise. The Ld. AR relied on the decision of this Bench of the Tribunal in the case of ITO v. Sri Tatiparti Satyanarayana in [IT Appeal No. 76 (Viz.) of 2021, dated 16-3-2022] to state that when the investments are disclosed by the assessee in the books of accounts, there is no application of the provisions of section 69A of the Act. The Ld. AR further submitted that the Ld. CIT(A)-NFAC, on similar set of facts, considered the assessee's son's case (Ankit Dilip Jain) but the Ld. CIT(A)-NFAC has not considered the assessee's case. Therefore, the Ld. AR pleaded that the addition I.T.A.No.1549/Del/2023 9 made by the Ld. AO and confirmed by the Ld. CIT(A)-NFAC may be deleted. 5. On the other hand, the Ld. Departmental Representative submitted that the assessee has not filed any details before the Ld. AO and even before the Ld. CIT(A)-NFAC and therefore there is no infirmity in the orders of the Ld. Revenue Authorities and the same may be sustained. 6. I have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. It is an undisputed facts that the assessee has disclosed the investment in his books of account and also shown the same in the computation of income which was offered for taxation. Therefore, the Ld. AR's contention that the provisions of section 69A are not applicable in the present case of the assessee as the cash deposits during the demonetization period are duly recorded in the assessee's books of accounts holds good. I have also considered the decision of the Division Bench of this Tribunal in the case of Sri Tatiparti Satyanarayana (supra) wherein the Tribunal held that the provisions of section 69 cannot be invoked when the assessee has disclosed investment in the books of account and in the computation of income which was offered for taxation. Considering the above facts and circumstances of the case, I find force in the arguments of the Ld. AR and accordingly I direct the Ld. AO to delete the addition made on account of unexplained money amounting to Rs.27,50,000/- since the provisions of section 69A are not applicable in the case of the assessee. It is ordered accordingly.” 11. We observe that even on a plain reading of the provisions of Section 69A of the Act it is very much clear that this provision can be invoked only “wherein any financial year the assessee is found to be the owner of the money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not I.T.A.No.1549/Del/2023 10 recorded in the books of account, if any, maintained by him for any source of income and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article or the explanation offered by the assessee is not in the opinion of the AO satisfactory, the money and the value of the bullion jewellery or other valuable article may be deemed to be the income of the assessee for such financial year”. Therefore, it is very much clear from the provision of Section 69A of the Act if the assessee is found to be the owner of any money which is not recorded in the books of account the same may be added as deemed income u/s 69A of the Act if the assessee offers no explanation or the explanation offered by the assessee in the opinion of the AO is not satisfactory. 12. In the case on hand, the assessee made cash deposits into the bank account which is reflected in its balance sheet, the books were audited, the assessee has furnished the tax audit report and it was also the explanation of the assessee that out of cash deposit of Rs.69,25,000/-, Rs.13 lakhs was from out of the sales made to Zergar Gas and the other cash receipts were out of the cash sales during Diwali which happened to be on 30.10.2016 just a week before the demonetization which happened on 09.11.2016. Therefore, in our opinion this addition is liable to be deleted on this legal ground alone.” 6. We further find that the Hon’ble Delhi High Court in the case of CIT Vs. Anoop Jain (supra) held that one of the essential conditions in section 69A of the Act is that the assessee should be the “owner of the money” and it should not be recorded in his books of account. This was a pre-condition to the next step of the assessee offering no explanation about the nature and source of the acquisition of such money. I.T.A.No.1549/Del/2023 11 7. We further observed that the Allahabad High Court in the case of Smt. Sadhana Jain Vs. CIT(supra) held as under: - “The provisions of section 69A are explicit and come into play when in a particular assessment year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money bullion, jewellery and other article is not recorded in the books of account and the assessee is unable to give any explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuation articles.” 8. It is also observed that the Chennai Bench of the Tribunal in the case of PCIT Vs. M.C. Hospital (supra) held that it is a settled principle of law that entries recorded in the books of account cannot be brought to tax u/s 69A of the Act. 9. The ratios of the above decision applies to the facts of the assessee’s case. Thus, respectfully following the above decisions since the assessee has recorded the transactions of cash deposits, sales, purchases, stock, etc. in the books of account the addition cannot be made u/s 69A of the Act. Ground no.2 of grounds of appeal of the assessee is allowed. 10. Since the addition has been deleted on the legal ground all other grounds on merits are left open as adjudication of these grounds at this stage would be of academic in nature only. I.T.A.No.1549/Del/2023 12 11. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 28/04/2025 Sd/- (C.N. PRASAD) JUDICIAL MEMBER Dated: 28.04.2025 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi "