SARIKA JAIN,JODHPUR V. .ITO, WARD-3(2), JODHPUR

ITA 102/JODH/2022

AI Insights

The case revolves around the appeal by Sarika Jain against the order of the Income Tax Officer, which was upheld by the CIT(A), National Faceless Appeal Centre, Delhi. The primary issue was the addition of Rs. 14,75,000 to the assessee's income as unexplained money under section 69A of the Income Tax Act, due to cash deposits made during the demonetization period. The assessee contended that the deposits were from legitimate sources, including cash balances and funds from her husband. However, both the lower authorities and the Tribunal found the explanations and evidence provided by the assessee insufficient to substantiate the claims, leading to the dismissal of the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31836 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 04-08-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARNI DAN
• Assessee Lawyers: RAKSHA BIRLA
• Keywords: Condonation of delay; Reasonable cause; Corroborative evidences; Unexplained investment; Salary income; Income from undisclosed sources; Period of limitation; Principle of natural justice; Time period of passing order
• Section: 148; 143(3); 142(1); 143(2); 250; 143(1); 263; 69; 133(6); 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 102/Jodh/2022 Assessment year 2017-18 Sarika Jain Mohan Niwas, 1st B Road Gole Building Sardarpura, Jodhpur. [PAN: AHOPJ1029R] (Appellant) Vs. Income Tax Officer Ward-3(2), Jodhpur. (Respondent) Appellant by Ms. Raksha Birla Respondent by Sh. Karni Dan, Addl. CIT- DR Date of Hearing 21.10.2024 Date of Pronouncement 09.12.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by assessee is arising out of the order of the ld. CIT(A), National Faceless Appeal Centre, Delhi dated 30.05.2022 [ for short “CIT(A)/(NFAC)”] for assessment year 2017-18, which in turn arise from the order dated 18.11.2019 passed under section 143(3) of the Income Tax Act ( for short “Act”) by the ITO, Ward-3(2), Jodhpur [ for short AO]. 2. In this appeal, the assessee has raised following grounds: - “1. That on the facts and in the circumstances of the case, the CIT(A) NFAAC has grossly erred in violating the principal of faceless appeal as announced for I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 2 justice of honest taxpayers and the functioning of faceless processing’s in honesty and judicially manner and to avoid litigation as created unnecessary by AO. 2. That on the facts and in the circumstances of the case, the CIT(A) NFAAC has grossly erred in upholding the validity of order passed by the Ld. AO. 3. That on the facts and in the circumstances of the case, the CIT(A) NFAAC has grossly erred in sustaining addition of Rs. 14,75,000/- in respect of unexplained money u/s 69A of the Act. 4. That on the facts and in the circumstances of the case, the CIT(A) NFAAC has grossly erred in upholding the finding recorded by Ld. AO without considering the documentary evidences any material facts as explained by assessee in right prospective and judicious manner. 5. That on the facts and in the circumstances of the case, the CIT(A) NFAAC has grossly erred in holding the cash deposit in bank account during the demonetization period is undisclosed income of the assessee without analyzing the nature of transactions recorded in cash book in judicious manner and thereby sustained the addition in a hypothetical way which is against principle of natural justice. 6. That on the facts and in the circumstances of the case, the CIT(A) NFAAC has grossly erred in upholding validity of the provision of section 69A of the Act as applied by ld. AO particularly when the ld. AO failed to discharge mandatory and legal requirement for invoking provision of section 69A of the Act. 7. That on the facts and in the circumstances of the case, the CIT(A) NFAAC has grossly erred in representing erroneous and irrelevant finding in the order and thereby sustaining arbitrary addition in a hypothetical way by putting the assessee to erroneous harassment and inconvenience. 8. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 9. The petitioner prays for justice & relief.” 3.1 At the outset of the hearing of the appeal it is noted that the appeal filed by the assessee is delayed by 06 days. The ld. AR of the assessee relied upon the contention stating the reasonable cause in the petition for condonation of delay which reads as:- I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 3 “1] That on 30/05/2022, the Id CIT(A) NFAC had passed the order u/s 250 of the Act and sustained the addition of Rs. 14,75,000/- made by the Ld AO in the assessment order. 2] Since the appeal filed before the Hon'ble ITAT Bench is delayed by 6 days. It is submitted that due to the ill health of my Mother-in-law, I was busy in taking care of her and most of the limitation period allowed for filing of appeal has been expired. Subsequently, I have provided all the documents & orders to my legal counsel for preparation of appeal to be filed before the Hon'ble Bench. Meanwhile the close family member of my legal counsel was expired and all such circumstances I am unable to file within the prescribed time limit. the appeal 3] Further, by filing appeal belatedly, no benefit has accrued to the assessee as such the delay in filing the appeal is beyond the control of the assessee, not deliberate or intentional. In view of this, delay in filing of the appeal was due to reasonable cause as explained above and delay in filing of the appeal may be condoned. 4] The Supreme Court in Vedabai alias Vaijayanatabai Baburao Patil v. Shantaram Baburao Patil & Ors., (2001) 9 SCC 106 observed that where the delay is of a few days, the court should adopt a liberal approach. The Courts while exercising discretion under section 5 of the Limitation Act should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of few days. Where the delay is inordinate, the consideration of prejudice to the opposite party will be a relevant factor calling for a more cautious approach, but in the latter case where the delay is of few days, no such consideration may arise, and such a case deserves a liberal approach. The Supreme Court observed that the exercise of discretion on the facts of each case, keeping mind that in construing the expression \"sufficient cause\", the principle of advancing substantial justice is the prime importance. In light of above, the delay was bonafide and also in the interest of substantial justice as held by the Hon'ble Supreme Court that \"when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred\". Therefore I humbly request kindly decide the appeal on merit and delay may kindly be condoned and oblige.” 3.2 The ld. AR of the assessee appearing in these appeals submitted that the assessee is serious on the duties and the delay due to the ill health of her mother-in-law and she being lady has to take care of her, I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 4 and therefore, there is a delay in bringing the present appeal by 6 days. Considering, the reasons advance in the matter the assessee has sufficient reasons for filling these appeals belatedly. To drive home to his contention, she relied upon the decision of the apex court in the case of Vedabai Alias Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil & Ords. (2001) 9 SCC 106. 3.3 On the other hand ld. DR representing the revenue submitted that the assessee has engaged the counsel and the reasons advanced are not sufficient to condone the delay and therefore, objected to the petition for condonation of delay. 3.4 We have heard the rival contentions and gone through the petition advanced for condonation of delay. Since, the reasons advanced are beyond the control of the assessee when the assessee was busy attending the ill health of her Mother-in-law and that reasons are sufficient to condone the delay. We support of our view from the finding of the Hon’ble Apex Court’s wherein the apex court directed the other courts to consider the liberal approach in deciding the petition for condonation of delay as the assessee is not going to achieve any benefit for the delay in fact the assessee is at risk. Based on these observations the delay in bringing the present appeal is condoned. I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 5 4. Now coming to the merits of the case, the brief facts of the case are that the assessee has filed her return of income on 27.03.2018 declaring income of Rs. 3,07,530/-. The assessee has shown income from salary, short term capital gain and other source. The case of the assessee was selected for scrutiny for limited purpose due to reason “cash deposit during demonetization period”. During the demonetization period the assessee made cash deposition in his bank account for an amount of Rs. 9,75,000/- State Bank of India, Rs. 2,50,000/- Corporation Bank and Rs. 2,50,000/- State Bank of India. 4.1 Based on that information a notice u/s 143(2) was issued on 08.08.2018. Notices u/s 142(1) along with detailed questionnaire were issued and the assessee was asked to furnish the details of cash deposition made along with sources thereof. In response of the same the assessee furnished a reply along with copy of ITR and computation of income and tax. Regarding the source of cash deposit worth Rs. 14,75,000/- the assessee furnished that Rs. 7,75,000/- was out of cash balance of cash book on the date of demonetization period earlier withdrawn from bank and Rs. 7,00,000/- were received from her husband for deposit in her bank account. Later on the assessee also submitted copy of cash book in support of her submission and stated that the amount of cash balance in cash book out of withdrawals from bank. I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 6 Notice u/s 133(6) were issued to the banks and copy of bank statements were called for. On perusal of bank statement it was found that very meger cash withdrawals were made by the assessee and it does not support the contention of the assessee that cash balance in cash book is due to withdrawals from bank. Due to this reason, notice u/s 142(1) along with show cause was issued to the assessee on 30.09.2019. In response to the notice dated 30.09.2019 the assessee submitted her reply on 15.10.2019 and mostly repeated the earlier reply. 4.2 The ld. AO noted that the submission of the assessee is contradictory itself as earlier the source was only cash balance available with assessee and her husband due to cash withdrawals made from the bank accounts. Further, it was also added that it was from cash withdrawals along with year-to-year savings. Further, no supporting evidence were submitted by the assessee. The scrutiny in the case of the assessee's husband Shri Sanjay Jain for the A.Y. 2017-18 is pending with the AO of the assessee due to the reason of cash deposition during demonetization period worth Rs. 12,25,000/- and the source of the same has been declared as cash balance withdrawn from bank. During the year under consideration the annual income of Shri Sanjay Jain was Rs 2,97,810/-. All these financials do not support the myth that Shri Sanjay Jain made cash deposit of Rs. 12,25,000/- in his bank accounts and Rs. I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 7 7,00,000/- in his wife's bank account, while as per the cash book the cash balance never touched to Rs. 19,00,000/- from 01.11.2016 till 31.12.2019. The cash withdrawals from the bank accounts are so meagre that do not support the cash deposition amounts. The annual income of the assessee is very meagre in comparison to the huge cash deposition amount. 4.3 Considering this discussion, the assessee has made cash deposition worth Rs. 14,75,000/- during the demonetization period. The assessee found to be the owner of the money appearing in bank account as assessee failed to prove the source of the same. The assessee was found owner of the money but has not offered any acceptable and cogent explanation regarding the source of such money found in her bank accounts. The Income earned during the year has not been offered and taxes due there upon has not been paid as is observed by ld. AO. The deposit made by the assessee clearly attracts the provisions of section 69A. Since the assessee failed to justify and to produce documentary evidence of source of cash deposit, cash deposits worth Rs. 14,75,000/- appearing in the all the Bank Accounts is deemed as unexplained money u/s 69A of the Act and added to the total income of the assessee. The total income assessee is taxed u/s 115BBE of the Act at the rate of 60%. Out of Rs. 14,75,000/- the amount said to be received I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 8 from the husband of the assessee, i.e. 7,00,000/- is also added to the total income of the assessee’s husband Shri Sanajay Jain u/s 69A on protective basis. 5. Aggrieved from the above assessment order passed by the Assessing Officer the assessee preferred an appeal before the ld. CIT(A). After perusing the submissions of the assessee, the ld. CIT(A) has dismissed the grounds of appeal in relation to the amount of Rs. 14,75,000/- added in the hands of the assessee. The relevant finding of the ld. CIT(A) is as under:- “4. Decision: 4.1 The appellant, deposited cash of Rs. 14,75,000/- during the demonetization period i.e. from 09.11.2016 to 31.12.2016. In response to the queries of the AO, the appellant stated that Rs.7,75,000/- was out of cash balance of Cash book on the date of demonetization period and Rs.7,00,000/- was received from her husband that was deposited in her bank account. The appellant submitted Return of Income, copies of Financial statements from AY 2014-15 to 2017-18, copy of cash book and other details in the course of appellate proceedings. The appellant stated that she possessed large cash in hand from year to year derived from sale of property of Rs. 10,50,000/-in F.Y.2012-13 and savings from income year to year thereafter. The appellant further claimed to have had cash in hand of Rs. 18,52,802/- as per ‘cash book’ maintained by her. It is seen that the appellant had deposited cash of Rs.9,75,000/- in State Bank of India, Rs.2,50,000/- in Corporation Bank and Rs.2.50,000/- in another account of State Bank of India during Demonetization. The appellant reiterated that she had been regularly withdrawing cash on various dates and the cash flow statement reflected sufficient source of cash deposit in bank account which was duly declared and recorded in financial statement. 4.2. On the other hand, the AO observed that the appellant made cash deposits worth Rs. 14,75.000/- during Demonetization period and the appellant failed to prove the source of the same. The AO further observed that I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 9 the appellant did not offer any acceptable and cogent explanation to the source of such money found in her bank accounts. The AO also noticed that income earned during the said year had not been offered and taxes due had not been paid by the appellant. 5 Considered the observations of the AO and the submissions made by the appellant. It is seen from the particulars submitted by the appellant that the cash deposited in bank accounts is not recorded in the books of account of the appellant. The \"Cash Book of the appellant is a single sheet of paper with a few bank transactions recorded. In fact, what is claimed to be a single sheet of \"Cash Book\" is nothing but the Capital Account of the appellant with Drawings and bank transactions. The appellant has made a feeble attempt to explain the transactions from her various bank accounts disclosed to the department or otherwise as sources for the cash deposit made during the Demonetisation period. The bank account details of the appellant also show that very meagre cash withdrawals were made by the appellant and did not support her contention that the monies came from her earlier withdrawals. The AO rightly rejected the contention of the appellant since there were no substantial past savings for the appellant, there was a large time gap between the cash deposits and withdrawals and there was no evidence to believe the claim of the appellant that large amounts of cash were kept with her at home at a time when she was maintaining 3 bank accounts. The appellant's reliance on a few ITAT decisions are of no avail since the facts of the case on hand are completely at variance from those relied upon. 5.1 Further, the claim of the appellant that Rs.7,00,000/- was deposited by her husband. Shri Sanjay Jain does not hold water since the annual income of her husband was Rs.2.97:810/- which was so meagre in comparison to the alleged huge cash deposit. More importantly, there was an unexplained cash deposit of Rs.12,20,000/- in his bank account during the Demonetisation period which he has failed to explain before the Assessing Officer. In view of the above, I agree with the conclusions drawn by the AO that the appellant failed to offer any explanation with regard to the cash deposit of Rs.14,75,000/- In the absence of satisfactory explanation and evidence, the AO had rightly made the addition of Rs. 14,75,000/- u/s 69A of the Income Tax Act to the returned income of the appellant. Therefore, the addition of Rs. 14,75,000/- made by the AO is sustained. The appellant fails on this ground. 6. In view of the above, the AO has rightly taxed the total income of the appellant @ 60% u/s 115BBE, which is in accordance with law and the same is upheld. 7. As a result, the appeal is dismissed.” I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 10 6. Feeling dissatisfied from the above orders of the ld. CIT(E), the assessee has preferred the present appeal on the ground as stated hereinabove. In support of the grounds so raised the ld. AR appearing on behalf of the assessee has placed reliance on the written submission which is extracted herein below:- “FACTS OF THE CASE 1] That the assessee is a lady and regularly filling return of income since last so many years. That on 27/03/2018 the assessee had filed the return of income and declared the total income of Rs. 3,07,530/- in respect of salary income, short term capital gain and other source income. The return so filed was processed u/s 143(1) of the Act. 2] Subsequently, the case of the assessee was selected for limited scrutiny through CASS due to reason “cash deposit during the demonetization period”and accordingly notice u/s 143(2) and 142(1) along with query letter were issued by the Ld AO. 3] That during the demonetization period the assessee had deposited total cash of Rs. 14,75,000/- in her different bank account and also explained the source of such deposits out of cash balance available with her and also by her husband from the cash recorded in his books of accountsand produced the copy of cash book & Financial statements as placed on record. However without recorded any reason or any specific finding for disbelieving the explanation & documentary evidence furnished by the assessee, the Ld AO hadtreated the cash deposit in bank account as undisclosed income of assessee which is not only contrary to the provision of law but also against the principle of natural justice. 4] That on 18/11/2019 the Ld AO had passed the order u/s 143(3) of the Act and assessed the total income of Rs. 17,82,530/- thereby making addition of Rs. 14,75,000/- on account of unexplained cash deposit in bank account u/s 69A of the Act. Having discussed the facts of the case, I would like to submit on each ground of appeal raised in the memo of appeal: - I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 11 1] As regards ground of appeal No. 1relating to validity of order. That during the assessment proceedings the assessee had furnished explanation in respect of query raised by the ld AO. However without analyzing the explanation supported from documentary evidence submitted by the assessee the ld AO had made arbitraryobservations in the order which is not only contrary to material record& circumstances but also against the principle of natural justice. Therefore the order passed by the ld AO may kindly be quashed and oblige. 2] As regards ground of appeal No. 2 to 4 relating to addition of Rs. 1475000/- in respect of cash deposit in bank accounts as unexplained money u/s 69A of the Act. a] That during the assessment proceeding the assessee had submitted that total cash deposited during the demonetization period amounting to Rs. 1475000/- in her three bank account and the details of same are as follow:- Name of bank Bank A/c No. Cash deposition amount during demonetization period State Bank of India 33252070442 9,75,000/- Corporation Bank 049200101009657 2,50,000/- State Bank of India 10132003610 2,50,000/- b] The source of above cash deposit in bank account with supporting documentary evidence are submitted before the Ld AO which are as under:- i. Source of cash deposits of Rs. 7,75,000/- a. That during the assessment proceeding the assessee had explained that she had deposited cash of Rs. 7,75,000/- in bank account from cash balance available on 08/11/2016 amounting to Rs. 7,97,705/- and such cash accumulated out of earlier bank withdrawals and other receipts which are duly reflected in cash book and also recorded in Financial statement as placed on record before the Ld AO. b. The cash flow statement from 01/04/2015 to 01/08/2016 are as follow:- Cash balance as on 01/04/2015 102381.06 Cash withdrawals from 01/04/2015 to 31/03/2016 Corporation Bank 55000/- SBI A/c No. 10132003610 346000/- 401000/- Receipt of loans & advances given 300000/- I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 12 Other receipt 16800/- Drawings& other payments (79476) Cash Balance as on 31/03/2016 740705.06 Cash deposits from 01/04/2016 to 08/11/2016 SBI A/c No. 10132003610 (72000) Cash withdrawal from 01/04/2016 to 08/11/2016 Corporation Bank 15000/- SBI A/c No. 10132003610 114000/- 129000 Cash Balance as on 08/11/2016 7,97,705/- c. The copy of cash book and financial statement were produced before the Ld AO and these facts are duly verifiable from such legal & credible evidences. ii. Source of remaining cash deposits of Rs. 7,00000/- a. It was submitted that during the demonetization period the husband of assessee i.e. Shri Sanjay Jain had deposited cash of Rs. 700000/- in her bank account out of his accumulated cash balance as recorded in his books of accounts & financial statement which are placed on record and also examined & verified by the Ld AO during the assessment proceeding. b. Further it is relevant to mention that during the assessment proceeding u/s 143(3) in the case of Shri sanjay Jain (husband of assessee), he had explained that during the demonetization period he had deposited cash of Rs. 7,00,000/- in his wife bank account out of cash in hand amounting to Rs. 18,52,802/-as recorded & supported from Financial statement. Further he had also submitted that cash accumulated out of bank withdrawals from over the year for purchase of new property however the purchase transaction was not materialized and meanwhile the government announced demonetization of old currency therefore he had deposited the cash in hand on the date of demonetization in his bank account and also in the bank account of his wife (Smt.Sarika Jain). These facts were explained by the assessee along with legal & valid documentary evidence. c] It is apparently clear that the source of cash deposit in bank account were duly explained and supported from material evidence. Further the husband of assessee himself admitted and established that out of total cash deposits, cash of Rs. 700000/- was deposited by him and the source of such cash deposit is also verifiable from documentary evidence placed on record.The legal & valid documentary evidence proving the source of cash deposit in bank account were available with the Ld AO which were neither found to be false nor any adverse finding /observation recorded by the Ld I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 13 AO in the assessment order. The true & correct facts that the fund available with assessee& husband of assessee in form of accumulated cash from past year are recorded & supported form valid documentary evidences which were duly examined & considered as genuine by the Ld AO. d] The Ld AO had not analyzed the documents and explanation furnished by the assessee in right perspective and misinterpreted the true & correct facts as furnished by the assessee and recorded the arbitrary or contrary allegations against the assesseeand on the basis of which had made the addition of Rs. 14,75,000/- as undisclosed cash deposit in bank account. The observation of the Ld AO in the assessment order are as follow:- “4. In response to the notice dated 30.09.2019 the assesse submitted her reply on 15.10.2019 and mostly repeated the earlier reply. Earlier the source was mentioned as cash balance due to withdrawal from bank. Now, it was also added that cash deposited by the assesse was from earlier out of withdrawn from bank and cash in hand in saving from year to year. It was also submitted that regarding 3,00,000/- received from her husband is out of cash in hand and in the hand of husband and same was due to withdrawals for earlier from bank or income earned from year to year. In further paras it was submitted that a sum of Rs. 7,00,000/- has deposited out of cash balance of her husband in the assesse account as there was sufficient cash balance with the husband of the assessee. The submission of the assessee is contradictory itself as earlier the source was only cash balance available with assessee and her husband due to cash withdrawals made from the bank accounts. Further, it was also added that it was from cash withdrawals alongwith year to year savings. Further, no supporting evidences were submitted by the assessee. The scrutiny in the case of the assessee’s husband Sh. Sanjay Jain for the A.Y. 2017-18 is pending with the undersigned due to the reason of cash deposition during demonetization period worth Rs. 12,25,000/- and the source of the same has been declared as cash balance withdrawn from bank. During the year under consideration the annual income of Sh. Sanjay Jain was Rs. 2,97,810/-. All these financials does not support the myth that Sh. Sanjay Jain made cash deposit of Rs. 12,25,000/- in his bank accounts and Rs. 7,00,000/- in his wife’s bank account, while as per the cash book the cash balance never touched to Rs. 19,00,000/- from 01.11.2016 till 31.12.2019. The cash withdrawals from the bank accounts are so meager that do not support the cash deposition amounts. The annual income of the assessee is very meager in comparison to the huge cash deposition amount. I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 14 5. Considering theabove, it is clear that the assessee has made cash deposition worth Rs. 14,75,000/- during the demonetization period. The assessee found to be the owner of the money appearing in bank account as assesse failed to prove the source of the same. The assessee was found owner of the money but has not offered any acceptable and cogent explanation regarding the source of such money found in her bank accounts. The Income earned during the year has not been offered and taxes due there upon has not been paid. This clearly attracts the provisions of section 69A.” e] That the Finding recorded by the Ld AO for disbelieving the source of cash deposit in bank account are totally arbitrary and also contrary to the material facts brought on record as it is evident from the facts as brought out on record that assessee is earning income from salary & other source from last so many years Besides this, the assessee has no source of income or is involved in any business or profession. From the perusal of the history of cash withdrawals from last financial year, your Honour will find that assessee has been regularly withdrawing cash on various dates and the cash flow statement as incorporated above clearly showsthat the assessee has sufficiently source of cash deposit in bank account which has been duly declared & recorded in financial statement and therefore there was a huge amount available with the assessee in the form of cash. Under these facts and circumstances stated by the assessee, it cannot be held to be improbability that assessee did not have any availability of cash at the time of demonetization.Further the Ld AO neither doubted the transaction recorded in financial statement nor pointed out any deficiency or defects therein. f] The assumption of Ld AO that Shri Sanjay Jain (husband of assessee) had no source to deposit in the account of wife and as per the cash book the cash balance never touch the balance of Rs. 1900000/- as such observation are totally arbitrary and also contrary to the real & true facts as on persual of financial statement of Shri Sanjay kumar Jain it is apparently discernable that he is having opening cash balance of Rs. 1815357/- as on 01/04/2016 which is also recorded in balance sheet of A.Y 2016-17 and after net of cash deposit & cash withdrawal from bank account from 01/04/2016 to 08/11/2016, the closing balance of cash comes to Rs. 18,52,802/-. Further remaining difference of deposits was out of savings of household expenses. However the entire observation of the Ld AO based on assumption & presumption without verification of true & correct facts as established from credible documentary evidence as placed on record. I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 15 g] Further the sufficiency of fund recorded in form of accumulated cash is not doubted therefore the irrelevant observation of the Ld AO that “The annual income of the assessee is very meager in comparison to the huge cash deposition amount..” cannot be ground to doubt the genuineness of cash deposit in bank account and such finding is also contrary to the law explained by The Hon’ble ITAT Delhi Bench in the case of M/s. Mantram Commodities Pvt. Ltd. Vs ITOITA.No.105/Del./2021 dated 25/04/2022in which it was held that “Merely because the Investor Companies have shown meager income during the impugned assessment year, the same in my opinion, cannot be a ground to doubt the creditworthiness of the said company especially when the said company is having sufficient funds in its account in shape of share capital and free reserves.” h] It is not in doubt that the legal & valid documentary evidence in support of explanation were filed before the Assessing officer during the course of assessment proceedings which had not been disapproved by the Ld AO as appearing from assessment order. Apparently, the explanation given by the assessee has been rejected without assigning any reason nor doubted the genuineness of cash balance as recorded in financial statement. Therefore without any adverse material or cogent reasoning how the Ld AO can fasten the undue liability against the assessee & presumed that the cash deposited by the assessee is out of some his undisclosed source as such action of the Ld AP which is not only against the principle of natural justice but also contrary to the finding of the Hon’ble ITAT Chandigarh Bench in the case of Smt. Sarabjit Kaur Vs. ITOITA Nos. 1144 & 1145/C HD /2019 dated 30/03/2022 in which it was held that the assessee officer without any valid reason, cannot be denied the benefit of this closing cash balance in hand for the purpose of explaining the source of deposits in bank. i] The addition made by the Ld AO without brought on record any tangible or credible material evidence to justify the allegation that cash deposits represents income from any other source other than accumulated cash balance therefore in such circumstances it cannot be presumed that the cash deposited by the assessee is out of some his undisclosed source. Further it is relevant to mention that even if we ignore the explanation, for the sake of argument, then also it is for the assessing officer to bring on record some cogent evidence to prove that the amount deposited in the bank account was undisclosed income arising from the business or from any other activities. However in the present case the Ld AO had failed to do so. The arbitrary &factually incorrect allegations/observation made by the Ld AO is highly violation of the principles of natural justice as not I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 16 expected from the quasi judicial authority by treating the bonafide explanation as something unusual in casual manner which is against the provision of law. Hon'ble Supreme Court in the matter of CIT vs. Smt. P.K. Noorjahan (1999) 155 CTR (SC) 509: (1999) 103 Taxman 382 (SC) it was held as\"3. Shri Ranbir Chandra, the learned counsel appearing for the Revenue, has urged that the Tribunal as well as the High Court were in error in their interpretation of s. 69. The submission is that once the explanation offered by the assessee for the sources of the investments found to be non- acceptable the only course open to the ITO was to treat the value of the investments to be the income of the assessee. The submission is that the word 'may' in s. 69 should be read as 'shall'. We are unable to agree. As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in the parliament, the word 'shall' had been used but during the course of consideration of the bill and on the recommendation of the select committee, the said word was substituted by the word 'may'. This clearly indicates that the intention of the parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under s. 69 to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case.” j] It is further relevant to mention that the assessee has only source of income which has been disclosed in his return of income and explained with supporting documentary evidences therefore the observations & findings recorded by the Ld AO that assessee has deposited the cash out of undisclosed income is apparently not correct as discussed hereinabove and as such only on the basis of assumption and presumption without having any credible evidences in contrary to submission and evidences furnished by assessee as such over-looking of fact on record by ld AO on the basis of fallacious assumption that bank deposits constituted undisclosed income, is against the principal of natural justice. The Hon'ble Supreme Court in Dhakeshwari Cotton Mills Ltd. v/s CIT, (1954) 26 ITR I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 17 775 (SC), for the proposition that no assessment can be made based on pure guess work and without reference to the material on hand. k] Further recently The Hon’ble ITAT Delhi Bench in the case of Baldev Raj Chhabra Vs. ITO (ITAT Delhi) ITA No. 856/Del/2012 29/04/2022 held that “6.1 We have given thoughtful consideration to the facts and circumstances of the case and find that both the authorities below have acted upon, only on the presumption and without any substantive material for making and sustaining the addition under consideration. In our considered view the presumption cannot be real adjudication of an issue. The very purpose of income tax proceedings is to correctly assess the tax liability of an Assessee in accordance with law but not under presumption as held in this case. Article 265 of the Constitution of India prescribes that no tax shall be levied or collected except by the authority of law. The Hon’ble Allahabad high Court in the case of Pt. SheoNath Prasad Sharma vs. C.I.T., 66 ITR, p.647 (All.) reminded that the law empowers the Income-tax Officer to assess the income of an Assessee and determine the tax payable thereon in accordance with law.” l] It is submitted that the section 69A is a deeming provision and it cannot be initiated based on suspicion. However the source and nature of deposits had been explained, and as such the cash deposits in the bank account cannot be treated as income from undisclosed sources within the meaning of section 69A of the Act. Further also the ld AO had not made any specific or relevant finding that the cash deposits in the bank account are out of undisclosed sources or brought on record any corroborative evidence contrary to explanation and documentary evidences available on record. Further also it is appeared that the allegation and to invoking the provision of section 69A was prejudicially and erroneously interpreted by ld AO at his whims and fancies. It is cardinal principal of taxation that all receipts are not income and all incomes are not taxable incomes. m] The ld AO nowhere in his order has brought out any material on record to show that assessee is having any additional source of income other than that disclosed in the return nor could spell out in his order that cash deposits made by the assessee was from some undisclosed source. It is admitted facts, that cash deposited in the bank account partially by assessee & husband of assessee out of their cash in hand as explained above as these facts had not been disapproved or disputed by the Ld AO at any stage of proceeding and further cash deposit in bank cannot be constitute as undisclosed income of assessee. Therefore, the provision of 69A invoked by ld AO is not only erroneously but also against the I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 18 provision of law and accordingly the provisions of section 115BBE is not applicable in the case of assessee. In light of above material facts the addition made by the ld AO may kindly be deleted.” 6.1 To support the various contentions so raised by the ld. AR of the assessee in the written submission he has relied upon the following evidences in support of the contentions so raised:- S No. Particulars Page No. 1. Copy of Written submission before CIT(A) 1-11 2. Return of income and computation of income 12-13 3. Copy of reply furnished before the Ld. AO during the assessment proceedings. 14-19 4. Documentary evidences in respect of source of cash deposit in bank account. 20-26 6.2 The ld. AR of the assessee also filed a cash deposit and withdrawal chart to support the contentions raised as to source of cash deposit :- I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 19 I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 20 6.3 The ld. AR of the assessee in furtherance to the written submission also vehemently argued that lower authority has not considered the fact that the source of cash deposit has been explained from the bank account withdrawal of husband and wife. They have sold the property and that is why the source is not disputed. If the statement of Husband and wife is considered there is no unexplained cash deposit as such. The ld. AR of the assessee relying on the chart available at page 16 of the paper book submitted that her husband has available cash balance of Rs. 17,70,000/- and that source is not considered supported with the ITR filed by the assessee and if that income is considered there is no cash remained to be considered as unexplained. That chart relied on is extracted herein below: I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 21 7. Per contra, the ld. DR relied on the orders of the ld. CIT(E) and submitted that the assessee has no source to justify the cash of Rs. 14,75,000/- and therefore the addition is required to be sustained. The source of Husband withdrawal was argued to be considered but he has also deposited a sum of Rs. 12 lac and therefore, the benefit of the same is rightly rejected by the lower authority. The assessee sold the property in 12-13 is also considered by the lower authorities. So, the I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 22 looking to these aspects of the matter the addition is required to be sustained. 8. We have heard both the parties and perused the materials available on record. Though in this case the assessee has taken various grounds, but we see that ground no. 1 to 7 challenges the addition made by ld. AO and sustained by the ld. CIT(A). The bench noted that in this case the assessee has challenged the addition of Rs. 14,75,000/- considered the amount deposited into the bank account as unexplained money u/s. 69A of the Act. The brief fact to the issue are the assessee during the demonetization period made cash deposition in her bank account for an amount of Rs. 9,75,000/- State Bank of India, Rs. 2,50,000/- Corporation Bank and Rs. 2,50,000/- State Bank of India totalling to Rs. 14,75,000/-. Before the lower authorities the assessee contended that the assessee has furnished the explanation that Rs. 7,75,000/- was out of cash balance of cash book on the date of demonetization period earlier withdrawn from bank and Rs. 7,00,000/- were received from her husband for deposit in her bank account. The authority below did not considered this explanation of the assessee and added the cash deposit as unexplained money. The ld. AO noted that the submission of the assessee is contradictory itself as earlier the I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 23 source was only cash balance available with assessee and her husband due to cash withdrawals made from the bank accounts. The assessee also contended that it was from cash withdrawals along with year-to-year savings as the assessee could not support this contention her explanation was not considered. Ld. AO noted that the scrutiny in the case of the assessee's husband Shri Sanjay Jain for the A.Y. 2017-18 was also pending with the AO of the assessee due to the reason of cash deposition during demonetization period worth Rs. 12,25,000/- and the source of the same has been declared as cash balance withdrawn from bank account. During the year under consideration the annual income of Shri Sanjay Jain was Rs 2,97,810/-. All these financials do not support the myth that Shri Sanjay Jain made cash deposit of Rs. 12,25,000/- in his bank accounts and Rs. 7,00,000/- in his wife's bank account, while as per the cash book the cash balance never touched to Rs. 19,00,000/- from 01.11.2016 till 31.12.2019. The cash withdrawals from the bank accounts are so meagre that do not support the cash deposition amounts. The annual income of the assessee is very meagre in comparison to the huge cash deposition amount. Based on that cash deposit in the case of the assessee for an amount of Rs. 14,75,000/- during the demonetization period were not considered. The assessee found to be the owner of the money I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 24 appearing in bank account as assessee failed to prove the source of the same. Out of Rs. 14,75,000/- the amount said to be received from the husband of the assessee, i.e. 7,00,000/- is also added to the total income of the assessee’s husband Shri Sanajay Jain u/s 69A on protective basis. In support of the contentions the assessee before us filed the statement showing the cash available as on 08.11.2016 as computed as under: d. The cash flow statement from 01/04/2015 to 01/08/2016 are as follow:- Cash balance as on 01/04/2015 102381.06 Cash withdrawals from 01/04/2015 to 31/03/2016 Corporation Bank 55000/- SBI A/c No. 10132003610 346000/- 401000/- Receipt of loans & advances given 300000/- Other receipt 16800/- Drawings& other payments (79476) Cash Balance as on 31/03/2016 740705.06 Cash deposits from 01/04/2016 to 08/11/2016 SBI A/c No. 10132003610 (72000) Cash withdrawal from 01/04/2016 to 08/11/2016 Corporation Bank 15000/- SBI A/c No. 10132003610 114000/- 129000 Cash Balance as on 08/11/2016 7,97,705/- As is evident from the above statement the assessee is found be having the cash as on 31.03.2016 to the extent of Rs. 7,40,705 and withdrawal as recorded herein which shows that the assessee is having cash balance worth Rs. 7,97,705/-. Ld. AO through ld. DR did not brought anything contrary on record. Now coming to the money received from I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 25 the husband of the assessee we note that the ld. AO contended that the assumption of Ld AO that Shri Sanjay Jain (husband of assessee) had no source to deposit in the account of wife and as per the cash book the cash balance never touches the balance of Rs. 1900000/-. We note that the same is not considering the fact that in the financial statement of Shri Sanjay kumar Jain it is clear that he is having opening cash balance of Rs. 1815357/- as on 01/04/2016 which is also recorded in balance sheet of A.Y 2016-17 and after net of cash deposit & cash withdrawal from bank account from 01/04/2016 to 08/11/2016, the closing balance of cash comes to Rs. 18,52,802/- and thereby giving cash of Rs. 7,00,000/- to be deposited in the bank account of the assessee cannot be considered as unexplained money. We note that the while making the addition on protective basis the evidence produced were rejected merely based on the presumptions and assumptions basis. It is not a case of the assessee that no evidence were placed on record and therefore, the evidence placed on record vs. no evidence the evidence without contrary finding is required to be considered since the revenue has not placed on record any contrary finding to that effect. As we note that ld. AO nowhere in his order has brought out any material on record to show that assessee is having any additional source of income other than that disclosed in the return nor could spell out in his order that cash deposits I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 26 made by the assessee was from some undisclosed source. It is admitted facts, that cash deposited in the bank account partially by assessee has been submitted by submitting the cash flow statement & the cash sourced from her husband is also out of the balance of Rs. 18,52,802/- found to have been available with the assessee and in that cash source of Rs. 7,00,000/- received by the assessee also stands explained. Thus, we note that in both the cases we the assessee has substantiated that they were having the opening cash balance and the source of money so deposited was thus required to be considered as explained when the assessee do not set the cash for other use. We get support of our view from the decision of our own High court in the case of Commissioner of Income-tax v. Parmeshwar Bohra [ 131 Taxman 145 (Rajasthan) ] wherein the High court observed as under : 3. This Court by order dated 8-7-2002 found that the following substantial question of law arises for consideration in this appeal :— \"Whether on the facts and circumstances of the case, the ITAT was justified in quashing the order of the CIT (Appeals) dated 31-8-1999 under section 263 of the Act without appreciating the fact that in view of section 69 of the Income-tax Act even in a case where an amount is credited on the very first day of the account year and the explanation offered by the assessee is not accepted, such amount may be assessed as income of the assessee in the account year for which the books were maintained.\" 4. During the course of assessment proceedings for the accounting year 1992-93, it came to the notice of the assessing authority that opening capital in the case of Asian Marbles and Asbestos which is as said, a branch of P.G. Marbles was shown at Rs. 2,73,500 as on 1-4-1992. It was found by the Commissioner of the Income-tax that the assessing authority while completing the re-assessment for the year 1993-94 altogether omitted to consider this issue of capital shown as Rs. 2,73,500 on 1-4-1992 and passed the order of re-assessment on 24-9-1997. The Commissioner of the Income-tax, after hearing the representative of the assessee, by order dated 24-9-1997, held that the openingbalance of capital account in Asian Marbles and Asbestos as on I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 27 1-4-1992 shown by the assessee at Rs. 2,73,500 represents the assessee’s income from undisclosed sources and that is taxable for the assessment year 1993-94. 5. The Income Tax Appellate Tribunal, Jodhpur in appeal, ITA 486(JDPR)/ 99 for the assessment year 1993-94 filed by the respondent, held that it is a case of unexplained investment under section 69 of the Act and the appropriate previous year for inclusion is the relevant financial year, therefore, the opening capital cannot be added as an unexplained investment under section 69 of the Act for the assessment year 1993-94. The Tribunal also held that the genuineness of the capital introduction has already been adjudicated upon by the assessing authority for the financial year 1992-93 (sic), therefore, the order of the assessing authority dated 24-9-1997 does not suffer from any error and is not prejudicial to the interest of the revenue. The Tribunal also observed that the order passed by the assessing authority for the assessment year 1993-94 on the basis of the notice under section 148 dated 17-6-1997 has already been quashed by the order of the Tribunal dated 6-12-2001 in ITA No. 71 (JDP)/99 and, ultimately, held that since the assessment order has been quashed, therefore, the order passed by the Commissioner of the Income-tax under section 263 of the Act of 1961 is also quashed. 6. The learned counsel for the appellant submitted that the assessee has always submitted return without furnishing capital accounts and the income was always assessed on estimate and it is held by the Calcutta High Court in the case of CIT v. Ashok Timber Industries [1980] 125 ITR 336 that when an amount is credited in the books of the assessee on the very first day of the accounting year and the explanation offered by the assessee is not accepted, such amount is assessable as the income of the assessee of the accounting year for which the books are maintained. 7. It appears that the Tribunal has considered the issue regarding assessability of the capital while considering the assessee’s appeal ITA 71(JDP)/99 for the assessment year 1993-94 by order dated 6-12-2001 whereby the Tribunal held that it is not a case of introduction of cash credit but it is a case of unexplained investment under section 69 of the Act of 1961 and the appropriate previous year for inclusion is the relevant financial year and, therefore, the opening capital account cannot be added as an unexplained investment under section 69 of the Act of 1961 for the assessment year 1993-94. The Tribunal also held that the genuineness of the capital introduction has already been adjudicated upon by the assessing authority for the appropriate financial year relevant to assessment year 1992-93. The Tribunal also took note of the fact that the order passed by the assessing authority for the assessment year 1993-94 on the basis of notice under section 148 dated 17-6-1997 has already been quashed by the order dated 6-12-2001 in the same ITA No. 71 (JDP)/99. Therefore, on the basis of the above decision dated 6-12-2001, the appeal of the assessee was allowed by the Income Tax Appellate Tribunal. Nothing has come on record what happened to the order dated 6-12-2001 and whether the said order of the Tribunal was ever challenged by the revenue or not. When the revenue itself has accepted the order dated 6-12-2001 wherein it has been held by the Tribunal that it is a case of unexplained investment under section 69 of the Act of 1961 and the appropriate previous year for inclusion is the relevant financial year and its genuineness has already been adjudicated upon by the assessing authority for the appropriate financial year, i.e., 1992-93 (sic) then how the order of the assessing authority can be said to be erroneous or prejudicial to the interest of the revenue. Since the Income Tax Appellate Tribunal has decided the I.T.A. No. 102/Jodh/2022 Sarika Jain vs. ITO 28 appeal on the basis of the decision dated 6-12-2001, therefore, there appears to be no illegality in the order passed by the Income Tax Appellate Tribunal. 8. The judgment relied upon by the learned counsel for the appellant delivered in the case of Ashok Timber Industries (supra) has no application to the facts of this case because of the reason that the genuineness of the capital introduction in this case has already been adjudicated by the assessing authority for appropriate financial year i.e., 1992-93, therefore, it cannot be said to be unexplained investment after order passed by the assessing authority holding genuine capital introduction for the assess- ment year 1992-93. 9. In view of the reasons mentioned above, it is held that the Income Tax Appellate Tribunal was justified in quashing the order of the Commis-sioner of Income-tax, Udaipur dated 31-8-1999 passed under section 263 of the Act of 1961. The question is answered accordingly. 10. The appeal is, therefore, dismissed. Respectfully following the ratios as laid down and facts of the case ground no. 1 to 7 raised by the assessee are allowed. Ground no. 8 & 9 being general in nature does not require any specific adjudication. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Dated 09/12/2024 *Ganesh Kumar, Sr. PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order "