SANJAYKUMAR PREMAJIBHAI PATEL,SABARKANTHA V. THE ITO, WARD-1, MODASA

ITA 1644/AHD/2024

AI Insights

The case involves Sanjaykumar Premjibhai Patel, who appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the addition of Rs. 21,30,233 as unexplained cash deposits under Section 69A read with Section 115BBE of the Income Tax Act for the assessment year 2017-18. The primary contention was the incorrect calculation of peak credit by the CIT(A), which the assessee argued should be Rs. 16,93,000 instead of Rs. 23,35,000 as calculated by the CIT(A). The Tribunal examined the evidence and submissions, including agricultural receipts and bank statements, and partly allowed the appeal by adjusting the unexplained cash deposits to Rs. 16,93,000.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473696 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KETAKI DESAI
• Assessee Lawyers: S.N. DIVATIA
• Keywords: Corroborative evidences; Unexplained cash credit; Peak credit; Principle of natural justice
• Section: 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.1644/Ahd/2024 (Assessment Year: 2017-18) Sanjaykumar Premjibhai Patel, At. Rozad, Tal. Talod, Sabarkantha, Gujarat-383307 Vs. Income Tax Officer, Ward-1, Modasa [PAN No.AMGPP5636B] (Appellant) .. (Respondent) Appellant by : Shri S. N. Divatia, A.R. Respondent by: Ms. Ketaki Desai, Sr. DR Date of Hearing 08.01.2025 Date of Pronouncement 19.02.2025 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 16.07.2024 passed for A.Y. 2017-18. 2. The assessee has taken the following grounds of appeal:- “1.1 The order passed by U/s.250 passed on 16.07.2024 for AY 2017-18 by NFAC, [CIT(A) Delhi (for short CIT(A)\" upholding the addition to the extent of Rs.21,30,233/- in respect of the peak credit of cash deposits in bank accounts as unexplained credit u/s 69A rws 115BBE is wholly illegal, unlawful and against the principles of natural justice. 2.1 The ld. CIT(A), has grievously erred in law and or on facts in not considering fully and properly the explanation given and evidence produced during the appellate proceedings. 3.1 The ld.CIT(A) has grievously erred in law and or on facts in upholding the addition to the extent of Rs.21,30,233/- in respect of the peak credit of cash deposits in bank accounts as unexplained credit u/s 69Arws 11.5BBE ITA No. 1644/Ahd/2024 Sanjaykumar Pramjibhai Patel vs. ITO Asst.Year –2017-18 - 2– 3.2 That the in the facts and circumstances of the ld. CIT(A), ought not to have upheld the addition to the extent of Rs.21,30,233/- in respect of the peak credit of cash deposits in bank accounts as unexplained credit u/s 69A rws 115BBE. 4.1 Without prejudice to above and in the alternative, the ld.CIT(A) has erred in working out the peak credit at Rs. 23,35,000/- as against Rs. 16,93,000/- and also erred in not allowing the benefit of opening cash on hand & past savings etc.” 3. The brief facts of the case are that assessee is an individual and he did not file return of income for A.Y. 2017-18. On the basis of information received by the Assessing Officer, it was found that assessee had deposited a sum of Rs. 38,28,500/- as cash into his bank account during the relevant assessment year. During the course of assessment, the assessee submitted that he received interest income from bank of Rs. 1,18,440/- and agricultural income of Rs. 18,10,000/-. Regarding agricultural income, the assessee was only able to submit loan documents, but failed to furnish bills and vouchers. Accordingly, the Assessing Officer held that since the assessee does not have any explanation to offer regarding nature of source of above amount credited in the bank account, the amount of Rs. 38,28,500/- was treated as unexplained money under Section 69A of the Act. 4. In appeal, the assessee submitted Form 7/12 extracts regarding proof of agricultural holding and sample copies of agricultural receipts. After verification of receipts, the Assessing Officer in the remand report stated that the bills which were submitted by the assessee were not in the name of the assessee and further, most of the bills, except the bills amounting to Rs. 2,04,767/- did not pertain to the relevant assessment year. 5. During the appellate proceedings, the assessee submitted that he is not carrying any business and therefore, the question of maintaining books of accounts does not arise. However, CIT(A) held that in order to earn cash ITA No. 1644/Ahd/2024 Sanjaykumar Pramjibhai Patel vs. ITO Asst.Year –2017-18 - 3– from agriculture of Rs. 38,28,500/-, the assessee’s total turnover from agriculture must be substantial. Even if the assessee does not maintain books of accounts, then atleast the assessee should be able to submit bills and vouchers of purchases, and sale but no such proof was provided by the assessee. Accordingly, Ld. CIT(A) held that Assessing Officer had rightly treated these cash credits as unexplained money of the assessee in terms of Section 69A of the Act, since no evidence had been adduced by the assessee in respect of performing agricultural operations. Regarding cash withdrawal and deposits, the assessee submitted bank statement of Bank of Baroda and Union Bank of India and argued that peak credit of Rs. 16,93,000/- only may be adopted as unexplained cash deposits. The assessee submitted that the assessee can show earlier cash withdrawals as source of subsequent cash deposits in the bank account, unless the Assessing Officer is able to establish that earlier cash withdrawals were utilized by the assessee for some other purpose. 6. In appeal, Ld. CIT(A) held that a portion of periodic cash withdrawals from the bank account was necessary to meet personal and agricultural expenses. But the assessee has not provided for any such expenses in the statement of expenses provided during the course of appellate proceedings. Ld. CIT(A) observed that assessee had deposited cash of Rs. 9,35,000/- till 31.05.2016 and in absence of corresponding withdrawals, the entire sum of Rs. 9,35,000/- should be considered as unexplained income in the hands of the assessee. From the month of June 2016 to March 2017 the Ld. CIT(A) held that peak credit of Rs. 8,00,000/- was liable to be added as unexplained income of the assessee (since there were corresponding withdrawals during ITA No. 1644/Ahd/2024 Sanjaykumar Pramjibhai Patel vs. ITO Asst.Year –2017-18 - 4– this period). Hence, the total unexplained cash credit in the bank account was Rs. 17,35,000/- (9,35,000 + 8,00,000). In addition, the Ld. CIT(A) held / assumed that at least Rs. 50,000/- per month should have been incurred as personal expenses by the assessee and accordingly, added a sum of Rs. 6,00,000/- as cash withdrawals utilized for annual personal expenses. Further, the Ld. CIT(A) also gave credit of Rs. 2,04,767/- as agricultural income earned by the assessee on the basis of certain supporting evidence produced during the course of appellate proceedings and accordingly, restricted the addition to Rs. 21,30,233/-, with the following observations: “4.5 As per this table, peak credit of Rs.8,00,000 shall be added to unexplained deposits of Rs.9,35,000 till 31.05.2016. Hence, total unexplained cash credits in bank account was Rs.17,35,000. In addition to this, appellant has incurred other expenses. In this case the appellant himself argued that (para H.1 of letter dated 14.06.2024) in villages majority of the transactions for agriculture operations take place in cash. For various types of operations, say, payment to farm labour, purchase of seeds, fertiliser etc. cash is the only mode of operations. As the appellant has not quantified these expenses, it is safe to assume that at least Rs.50,000 per month was incurred as personal expenses. So, Rs. 6,00,000 shall be added as cash withdrawals utilised for annual expenses. However, as discussed in para 4.1, Rs.2,04,767 was already available with the appellant as agricultural receipts. Hence, cumulative addition of Rs.21,30,233 (935000+800000+600000-204767) shall be sustained as unexplained cash deposits u/s 690A. As a result, ground no 2 is partly allowed.” 7. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A). 8. Before us, the Counsel for the assessee submitted that Ld. CIT(A) has incorrectly worked out the peak credit as against an amount of Rs. 16,93,000/- worked out by the assessee. Further, the Counsel for the assessee submitted that the assessee had furnished computation of income showing net agricultural receipts of Rs. 13.19 lakhs, out of which only a sum of Rs. 2.04 lakhs was allowed by the Ld. CIT(A). ITA No. 1644/Ahd/2024 Sanjaykumar Pramjibhai Patel vs. ITO Asst.Year –2017-18 - 5– 9. In response, Ld. D.R. placed reliance on the observations made by Ld. CIT(A) in the appellate order. 10. On going through the facts of the instant case, we observe that before Ld. CIT(A), the assessee had submitted Form No. 7/12 as proof of agricultural holding and agricultural receipts and after an in depth analysis of various documents / evidences submitted by the assessee and after calling for remand report from the Assessing Officer, the Ld. CIT(A) came to the considered conclusion that only receipts amounting to Rs. 2,04,767/- were relevant to the impugned assessment year. Accordingly, we find no infirmity in the observations made by the Ld. CIT(A) so as to call for any interference. Regarding the next contention of the Counsel for the assessee, (which was also taken before Ld. CIT(A)) that only peak credit of Rs. 16,93,000/- may be adopted as unexplained cash deposit, we are agreeable to the view sought to be taken by the Ld. Counsel for the assessee and accordingly, direct that addition may be directed to be restricted to a sum of Rs. 16,93,000/- as unexplained cash deposits in the hands of the assessee. 11. In the result, the appeal of the assessee is partly allowed. This Order is pronounced in the Open Court on 19/02/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 19/02/2025 TANMAY, Sr. PS TRUE COPY ITA No. 1644/Ahd/2024 Sanjaykumar Pramjibhai Patel vs. ITO Asst.Year –2017-18 - 6– 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 1. Date of dictation 14.02.2025 2. Date on which the typed draft is placed before the Dictating Member 17.02.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 18.02.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 20.02.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 20.02.2025 7. Date on which the file goes to the Bench Clerk 20.02.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… "