SHYAM SUNDAR INANI,JODHPUR V. ITO, WARD, PHALODI

ITA 675/JODH/2024

AI Insights

The case involves Shyam Sundar Inani, the appellant, contesting several additions and disallowances made by the Income Tax Officer, Ward-Phalodi, for the Assessment Year 2017-18. The primary issues included the addition of Rs.1,11,25,000 as unexplained cash deposits during the demonetisation period, an addition of Rs.30,25,000 related to a bank account not owned by the assessee, disallowance of deductions under Chapter VI-A, estimation of income without rejection of books of account, and denial of cost of construction in the computation of long-term capital gain. The Tribunal found that the matter required fresh factual verification, particularly concerning the source of cash deposits and the ownership of the bank account in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398011 (ITAT-JODHPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: KARNI DAN
• Assessee Lawyers: RAJENDRA JAIN
• Keywords: Set aside; Business income; Opportunity of being heard; Additional evidence; Capital Gains
• Section: 143(3); 80C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DIVISION BENCH, JODHPUR HEARING THROUGH: VIRTUAL MODE BEFORE: SHRI. LALIET KUMAR, JM & DR. MITHA LAL MEENA, AM ITA No. 675 /Jodh/ 2024 Assessment Year : 2017-18 Shyam Sundar Inani C/o Rajendra Jain Advocate, 106, Akshay Deep Complex, 5th B Road, Sardarpura, Jodhpur Vs. The ITO Ward, Phalodi Rajasthan PAN NO: AAGPI4093K Appellant Respondent Assessee by : Shri Rajendra Jain, Advocate Revenue by : Shri Karni Dan, Addl. CIT(Sr. D.R) Date of Hearing : 19/05/2025 Date of Pronouncement : 02/06/2025 आदेश/Order PER LALIET KUMAR, J.M: This appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi dated 04.07.2024, pertaining to the Assessment Year 2017–18, arising out of the assessment order passed under section 143(3) of the Income-tax Act, 1961 by the Income Tax Officer, Ward-Phalodi. 2. Though multiple grounds have been raised in the appeal, the core issues pertain to: 1. Addition of Rs.1,11,25,000/- under section 69A on account of cash deposits during the demonetisation period; 2. Addition of Rs.30,25,000/- in respect of a bank account allegedly not belonging to the assessee; 3. Disallowance of deduction under Chapter VI-A; 2 4. Estimation of income without rejection of books of account; and 5. Denial of cost of construction in computation of long-term capital gain. 3. The brief facts of the case are that the assessee is engaged in the trading of agricultural commodities like jeera and other seeds. During the assessment proceedings, the AO observed cash deposits in the assessee’s bank account aggregating Rs.1,11,25,000/- during the demonetisation period. The assessee explained that the cash was part of regular business receipts arising out of cash sales, particularly during the festive season (notably Diwali). 3.1. The assessee contended that proper books of account were maintained and duly audited. Supporting records such as the cash book, sales registers, VAT returns, and financial statements were submitted to the AO. It was submitted that the AO neither pointed out any defect in the books of account nor rejected them under section 145(3), and yet proceeded to make an addition under section 69A, which amounted to double taxation of recorded sales. 3.2. With regard to the addition of Rs.30,25,000/-, the assessee submitted that the relevant bank account was not owned by him and belonged to a third party. KYC documents and account particulars demonstrated that the account holder was someone else. It was contended that the AO mechanically attributed the account to the assessee without proper verification. 3.3. On other issues, the AR submitted that: a) Deduction under section 80C for LIC premium of Rs.38,320/- was disallowed despite submission of relevant documents; b) The AO erred in computing long-term capital gains without granting credit for cost of construction incurred from business income in earlier years; 3 c) The trading results having been accepted, no separate addition under section 69A was sustainable. Reliance was placed on judicial precedents to support the submissions. 3.4 In response, the Ld. Departmental Representative (DR) supported the orders of the lower authorities and submitted that the assessee failed to submit complete and satisfactory details despite multiple opportunities. The AO issued several query letters and show-cause notices, but the assessee did not provide corroborative evidence to explain the source of the cash deposits. It was further submitted that the CIT(A) rightly declined to admit additional evidence in view of non-compliance with Rule 46A. 4. We have heard the rival submissions and carefully perused the records. From the assessment and appellate records, it emerges that the assessee had submitted a letter dated 05.12.2019 enclosing the cash book and basic financial statements. However, the AO noted a lack of supporting documents and therefore treated the cash deposits as unexplained under section 69A. 5. The CIT(A) declined to admit additional evidence, such as sale bills, stock registers, and related documents, on the ground that no application was made under Rule 46A. However, considering the nature of the dispute and the evidence now being relied upon, we are of the view that the matter warrants a fresh factual verification. 5.1. In our considered opinion, in the interest of justice, the following issues require reconsideration by the AO: I. Addition of Rs.1,11,25,000/- under section 69A in respect of cash deposits; II. Addition of Rs.30,25,000/- related to the bank account allegedly not belonging to the assessee; III. Consideration of cost of construction while computing long- term capital gain; IV. Allowability of deduction under section 80C amounting to Rs.38,320/-. 4 5.2. Accordingly, we set aside the impugned appellate order to the extent mentioned above and restore the matter to the file of the Assessing Officer for fresh adjudication after affording a reasonable opportunity of being heard to the assessee. The assessee is directed to fully cooperate and furnish all necessary documentary evidence in support of his claim. The AO shall decide the matter in accordance with law, without being influenced by any earlier findings. 6. In the result, the appeal is allowed for statistical purposes. (Order pronounced in the open Court on 02/06/2025 ) Sd/- Sd/- (DR. MITHA LAL MEENA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER AG Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, JODHPUR 6. Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "