Case Law Details
Rajeshkumar Lakhubhai Dangar Madhav Darshan Finance Vs ITO (ITAT Rajkot)
Summary: The Income Tax Appellate Tribunal (ITAT), Rajkot Bench, partly allowed the appeal filed for Assessment Year 2012-13 against the addition of Rs. 31.90 lakh made under Section 69A of the Income Tax Act on account of unexplained cash deposits. The assessee, engaged in finance business and labour work relating to speaker boxes, had declared income of Rs. 1,64,400/-. During scrutiny assessment, the Assessing Officer noted cash deposits of Rs. 7 lakh and Rs. 24.90 lakh in the bank account and treated the total amount as unexplained money. The assessee explained that the deposits were sourced from cash withdrawals, family agricultural income, and loan amounts received from Vrundavan Construction. The CIT(A) upheld the addition, observing that no agricultural income or unsecured loan was reflected in the returns or balance sheets, and that the assessee failed to justify why withdrawn cash from FY 2009-10 was redeposited in FY 2011-12 after two years. Before the Tribunal, the assessee relied on bank statements, agricultural sale bills, revenue records in Forms 7/12 and 8A, capital accounts, balance sheets, details of loans, and other supporting documents. The Tribunal noted that the assessee had submitted detailed records explaining the source of cash deposits and that the agricultural records produced were not specifically disbelieved by the Assessing Officer. Considering the nature of the assessee’s business, the documents placed on record, the explanation regarding family agricultural income, and the facts and circumstances of the case, the Tribunal held that the entire addition could not be sustained. However, it considered it appropriate to sustain an ad hoc addition of 10% of the disputed amount. Accordingly, the Tribunal sustained addition of Rs. 3,19,000 and directed deletion of the balance addition. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
Captioned appeal filed by assessee pertaining to Assessment Year 201213, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by the Learned Commissioner of Income-tax (Appeal), (in short ‘Ld.CIT(A)’), dated 30.08.2024, which in turn arises out of assessment order passed by Assessing Officer u/s. 143(3) of the Act on 23.03.2015.
2. The grounds of appeal raised by the assessee are as under:
“1. The Learned Commissioner (Appeals), NFAC, Delhi erred in confirming action of ITO, ward – 3(1)(1), Rajkot in making addition of Rs. 31,90,000/- by way of unexplained money u/s. 69A of the Act, being cash deposited in bank account of Appellant.
2. The appellant craves leave to add, amend, alter, and withdraw any ground of appeal anytime up to the hearing of this appeal.”
3. The brief facts of the case are that the appellant, being an individual, filed his ITR for the impugned AY 2012-13 declaring income of Rs. 1,64,400/- and the same was processed u/s 143(1) of the Act. The case was selected for scrutiny. The appellant is engaged in the business of finance and also provided labour work on speaker box during the year under consideration. The appellant during the year had purchased and sold lands and made huge cash deposits. The appellant submitted that cash deposit is mainly out of cash received from family agriculture income and loan from Vrundavan Constructions. The AO had found that the appellant’s contention is not acceptable and completed the assessment by adding the cash deposits amounting to Rs.31,90,000/- u/s 69A of the IT Act.
4. Aggrieved by the order of the AO, the assessee came in appeal before the Ld. CIT(A) who partly allowed the assessee’s appeal by observing as under:
“5.4. The appellant submitted that he proposed to start construction, road construction, work contract and hence wanted to explore the commercial opportunities with Vrundavan Construction and thus borrowed loan amounting to Rs.50,00,000/- from them during the FY 2009-10. The appellant stated that since they could not execute/enter in to deal with Vrundvan Construction, the said amount was returned to them. The appellant has withdrawn a total of Rs.47,00,000/- during the FY 2009-10 and deposited Rs.31,90,000/- out of Rs.47,00,000/- during the FY 2011-12.
5.5. The appellant did not furnish any explanation/ documentary evidence in relation to why the assessee had never shown any agricultural income in the returns of income filed of the current year as well as in previous years and or even in the computation of income. Further, the appellant did not furnish any explanation as to why unsecured loan was not shown in the current year as well as in the previous year’s return of income and also in the Balance Sheet.
5.6. In view of the above facts of the case, I am of the considered view that there is no merit in the contention of the appellant. The appellant has not furnished any reasons as to why the cash withdrawn during the FY 2009-10 was deposited during the FY 2011-12 that is after a lapse of two years. Therefore, in view of the facts of the case, I am of the considered view that the appellant has not properly established the sources of cash deposits amounting to Rs.31,90,000/-. Hence, the addition made by the AO in the assessment order is sustained. Accordingly, the grounds no.1,3 and 6 are dismissed.
5.7. The appellant contended that the AO has not accepted his contention of being family agricultural income. The AO in the assessment order mentioned that sale bills produced are found to be non genuine as the same are of a single party i.e. M/s Yogi Enterprise. The appellant has furnished the same documentary evidence even during the appellant proceedings also. Hence, the appellant has not substantiated the agricultural income with documentary evidence beyond doubt and hence contention raised by the appellant is not accepted and accordingly grounds raised by the appellant are dismissed.”
5. Aggrieved by the impugned order of the Ld. CIT(A), the assessee came in appeal before us.
a. During the course of herring, the Learned AR submitted that the cash deposited were out of agricultural income that entire detail of cash deposit were submitted before the assessing officer.
b. On the other hand, the Learned DR for the revenue relied on the findings of the Ld.CIT(A).
6. We have heard both the parties and perused the material available on record. We note that the assessee has submitted details of source income with details about deduction/exemption, The details about Proprietary Concern & Capital Account, details about Immovable & Movable Properties acquired during the year, certified copy of sale deed of properties sold during the year with computation of capital gain, copy of Bank Statements/Passbook, details about Address of Premises & Nature of Business, details about 5 parties with whom business has been transacted, details about Unsecured Loan were placed on record. The assessee has also submitted detail of cash source and copy of balance sheet and capital account for FY 2011-12. The assessee is providing labour work on speaker box and also proprietor of firm named M/s. Madhav Darshan Finance. During the A.Y. 2012-13 the assessee has declared income of Rs. 1,64,400/-. Later the case was selected for scrutiny and the AO in scrutiny assessment made an addition on cash deposit in bank account of Rs. 7,00,000 on 06.08.2011 and Rs. 24,90,000/- on 08.08.2011. So Rs. 31,90,000/- added into the total income of assessee as unexplained cash deposit u/s. 69A of the Act. The assesse has already explained that source of cash deposit in Bank of India, Sultanpur Branch on 06.08.2011 & 08.08.2011 of Rs. 7,00,000 & Rs. 24,90,000 respectively The cash was deposited out of cash withdrawal from the bank, and family agricultural income and out of loan received from Vrundavan Construction. However, the A.O. and the CIT(A) held that since no agriculture income was declared by the Appellant in the returns of income filed for the year and for previous years and that unsecured loan obtained from Vrundavan Construction was not shown in the return of income as outstanding, the explanation of the Appellant was not acceptable. The assessee explained that agriculture income was not shown in the returns of income of Appellant as it was of family income. Further, the Appellant had duly submitted agriculture sale bills and revenue records in Form 7/12, 8A in support of agriculture income, which was not disbelieved by the A.O. Detail working of source of cash deposits for the year along-with bank account statements of the Assessee duly explain the source of impugned cash deposits made during the year. After considering the smallness of amount of cash deposit and the document submitted by the assesse has cannot be brushed aside, after considering the facts and circumstances of the case, in the interest of justice, we are of the view that addition @10% on ad-hoc were sustained and allow the appeal of the assessee, therefore we deem it fit to necessary and considering the addition to the tune of Rs. 3,19,000/- should be sustained in the hands of the assessee, therefore the addition of (Rs. 31,90,000/- – Rs.3,19,000/- = Rs.2,87,100/-) is directed to be deleted. we further make it clear that the above addition was made in the hands of the assessee after considering the smallness amount and after consider the peculiar facts and circumstances and nature of the assessee business, therefore, it should not be treated as allowed in above terms.
7. In the result, the appeal of the assessee is allowed, for statistical purposes.
Order is pronounced in the open court on 02/04/2026.
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