Garry Lakhanpal vs Income Tax Officer

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 2694/Del/2026 for Assessment Year: 2016-17 has arisen from the appellate order passed by ld. CIT(A) u/s 250 of the Income-tax Act, 1961(in Short “Act”), dated 27.01.2026 in DIN & Order No: ITBA/APL/S/250/2025-26/1085192426(1), which appeal in turn has arisen from the assessment order dated 16.12.2018 passed by the AO u/s 143 of the 1961 Act (Order No. ITBA/AST/S/143(3)/2018-19/1014329923(1)).

The brief facts of the case are that the assessee filed return of income declaring income of Rs. Nil , on 17^th October, 2016. The case of the assessee was selected by Revenue for framing limited scrutiny under CASS as to whether the cash deposit has been made from disclosed sources , and whether sales turnover/receipts has been correctly offered for tax. Statutory notices u/s 143(2) and 142(1) were issued by the AO to the assessee during the course of assessment proceedings. The assessee participated in the assessment proceedings. The AO observed that the assessee is involved in the business of sale, purchase and construction of immovable property , and shown income under the head income from business and profession as well income from other sources. The AO observed that the assessee has deposited cash in his Axis Bank account on various dates. The assessee was asked to explain the sources of cash deposit in the bank account. The assessee submitted that the assessee has received Rs.35,00,000/- as advance for repair and renovation at G-97, Saket, New Delhi, and the job was assigned to M/s GLP Construction, who have earlier constructed the building. It was submitted that the sum were received in cash from the owner Sh. Harpreet Singh Bindra of G-97, Saket, New Delhi , and the same was passed to GLP Construction. The assessee filed cash flow statements and ledger of GLP construction. The assessee submitted that the assessee being engaged in the business of construction, which requires higher investment and constant flow of funds, for which bank loans are required, and hence to avail loan the assessee has shown large transactions in his bank account. The AO asked the assessee to produce documentary evidences of any agreement made with Sh. Harpreet Singh Bindra from whom the assessee has claimed to have received Rs. 35,00,000/- . The assessee was also asked to submit confirmation. The assesse was also asked by the AO to furnish the agreement made with the firm M/s GLP Constructions for onward transmission of the work. The assessee was also asked by the AO to produce completion proof along with documentary proof of the renovation work done by the assessee. The assessee could not produce the documentary evidences in support of the assessee claim of the renovation work. The assessee also could not produce confirmation from the party for payment of renovation work by the assessee. The AO also rejected the contention of the assessee that the frequent deposit and withdrawal of cash in bank account were made to get bank loan as the same was found to be incorrect by the AO , as no bank loan was sanctioned by the Bank during the year under consideration . The AO issued show cause notice to the assessee as to why the amount of Rs.35,00,000/- stated to be shown as cash in hand as on 01.04.2015 may not be treated as unexplained money u/s 69A as no valid explanation about the nature of acquisition of money is offered by the assessee. The AR of the assessee agreed for the said addition. The AO made the addition to the tune of Rs.35,00,000/- to the income of the assessee as an unexplained money u/s 69A of the Act.

Aggrieved , the assessee filed first appeal before the Ld. CIT(A). The main bone of contention of the assessee before the Ld. CIT(A) is that the assessee has received cash of Rs.35,00,000/- from one Sh. Harpreet Singh Bindra for repair/renovation of immovable property being G-97, Saket , New Delhi. It was submitted that the assessee has assigned the job to the firm M/s GLP Construction where the assessee is a partner , and the money received was transferred/paid to the firm M/s GLP Construction. It was submitted that the money was received for specific purposes and has been applied for the said purposes. The assessee submitted that the said money is duly recorded in the books of account of the assessee stating source and purpose and end use . The assessee submitted before ld. CIT(A) that the AO has not doubted the explanation offered in relation to source and purpose and end use . It was submitted that the AO made additions based on surmises and conjectures. It was submitted that to ask for written contract with GLP construction is malice in law as the assessee has not sub-contracted the work , but got the job done through allied concern M/s GPL Construction , a partnership concern where the assessee is partner. It was submitted that the sum of Rs. 35,00,000/- is duly incorporated by M/s GLP Construction under the head receipts and documentary evidences in the form of Balance Sheet with annexures were placed on record. The assessee submitted that ultimate use is duly explained and verifiable and the need to transfer funds to partnership firm wherein assessee is partner , and that the assessee was the best judge as there was need to get desired service , which prompted assessee to assign the work and money to GLP Construction. In the alternative , the assessee submitted that if the said amount is added to the income of the assessee, then source of funds are identifiable, purpose of the receipt is known i.e. to use in the normal activity of the appellate and it has been accounted for as expenditure and receipt by the assessee and the firm GLP Construction where the assessee is partner. The Ld. CIT(A) observed that the assessee has completely failed to substantiate the nature and source of cash deposits of Rs.35,00,000/-. The Ld. CIT(A) observed that the contention of the assessee that the said amount of Rs.35,00,000/- in cash was received from Shri Harpreet Singh Bindra for repair/renovation work at G-97, Saket, New Delhi ( as per ld. CIT(A)-earlier sold to Shri Harpreet Singh Bindra), and since the work was of a specific nature , the assessee prudently assigned the job to M/s GLP Construction, where the assessee is partner, and purportedly transferred the same cash amount to the firm for execution of the repair work. The ld. CIT(A) observed that this explanation, as extracted from the assessee’s reply in the appeal file, is wholly unsubstantiated, self-serving, implausible, and contrary to statutory mandates. It was observed by Ld. CIT(A) that the assessee has not produced any written agreement, work order, confirmation from the payer, or third-party evidence to demonstrate that such repair work was ever contracted, assigned, commenced, or completed. The ld. CIT(A) observed that AO has specifically noted in the assessment order that no documentary evidence was furnished despite repeated opportunities. The Ld. CIT(A) further observed even if it is assumed that the transaction actually existed, consequentially then the receipts in cash are in violation of Section 269SS and 269ST. The ld. CIT(A) observed that the whole narrative pleaded by the assessee remains unverifiable with no corroboratory ledger entries , no bank trail , no acknowledgment from the firm , and no evidences demonstrating utilization of funds for stated purpose. The ld. CIT(A) observed that the whole narrative is after thought which stood rejected by Ld. CIT(A). Thus, the appeal of the assessee stood dismissed by ld. CIT(A).

Still aggrieved, assessee has now filed second appeal with Tribunal. Ld. Counsel for the assessee submitted that the additions has been made u/s 69A of the Act. It was submitted that the assessee is partner of the partnership firm namely M/s GLP Construction. It was submitted that the said firm sold 3^rd Floor of G-97, Saket (with exclusive terrace rights) to Smt. Rubinder Kaur Bindra wife of Shri Harpreet Singh Bindra , vide sale deed dated 02.01.2015 (registered on 05.01.2015). It was submitted that Sh. Harpreet Singh Bindra gave Rs.35,00,000/- in cash to the assessee for repair / renovation of G-97, 3^rd Floor, Saket ,New Delhi. The said amount was deposited by assessee in its bank account . It was submitted that the assessee is partner in partnership firm GLP Construction. The assessee transferred this amount of Rs.35,00,000/- to M/s GLP Constructions for repair and renovation of G-97, 3^rd Floor, Saket, New Delhi, as the said firm is having the capacity to do the desired work. It was submitted that the amount was properly recorded in the books of account. The assessee has produced ITR along with balance sheet and profit and loss account of GLP Construction. The assessee has also produced the sale deed dated 2^nd January, 2015 with respect to G-97, 3^rd Floor , Saket, New Delhi. It was submitted that amount were duly recorded in the books of account , and provisions of Section 69A cannot be invoked. It was also submitted that the amount was transferred to M/s GLP Construction for carrying out repair and renovation work. It was also submitted that the AO has invoked the provision of Section 269SS and Section 269ST against the assessee for receiving cash money.

I have considered rival contentions and perused the materials available on record. I have observed that the assessee has claimed that he is engaged in the business of construction , and sale and purchase of immovable property. I have observed that the assessee has claimed himself to be partner in the firm M/s GLP Constructions. I have also observed from the sale deed produced before the Bench by the assessee dated 2nd January, 2015 (registered on 05^th January, 2015) that GLP Constructions have sold G-97, 3^rd Floor, Saket, New Delhi(with exclusive terrace rights) to Smt. Rubinder Kaur Bindra wife of Shri Harpreet Singh Bindra , for a total consideration of Rs.2 Cr.. The assessee has produced the Balance Sheet and P& L Account of GLP Construction. The assessee has produced Ledger Account of Shri Harpreet Singh Bindra in its books of accounts. The same is reproduced hereunder:

It is the contention of the assessee that assessee has received Rs.35 lacs in cash from Shri Harpreet Singh Bindra for repair and renovation of G-97, 3^rd Floor, Saket, New Delhi. I have observed that assessee has stated that the said amount was transferred to M/s GLP Constructions for repair/renovation of G-97, Saket, New Delhi. I have observed from the aforesaid ledger account of Shri Harpreet Singh Bindra in the books of the assessee( copy reproduced hereinabove ) that there was opening balance payable to Shri Harpreet Singh Bindra as at 01.04.2015 , to the tune of Rs. 85,50,000/-. The assessee received Rs. 35,00,000/- in cash from Mr. Harpreet Singh Bindra on 01.04.2015 . Thereafter there are several other receipts aggregating to Rs. 27,00,000/- from Mr. Harpreet Singh Bindra during the year under consideration from time to time which were all received through banking channel. I have also observed from the ledger account that the assessee has repaid Rs. 7,00,000/- to Shri Harpreet Singh Bindra through banking channel on 09.12.2015. Then at year end the assessee by passing a ledger entry has transferred Rs. 45,00,000/- from the account of Mr. Harpreet Singh Bindra to GLP Constructions. Still, there is closing balance payable to Shri Harpreet Singh Bindra to the tune of Rs. 95,50,000/- payable as at year end i.e. 31.03.2016. There is no explanation as to why the transaction of Rs. 35 lacs of receipt is in ‘cash’ ,while other transaction with Mr. Harpreet Singh Bindra were through banking channel. It is stated by ld. Counsel for the assessee that the said amount of Rs. 35,00,000/- in cash was received from Mr. Harpreet Singh Bindra for repair and renovation of G-97, 3^rd Floor, Saket, New Delhi. It is stated that GLP Construction was assigned the work by the assessee to carry out the repair and renovation of G-97, 3^rd Floor, Saket, New Delhi , because the said firm M/s GLP Construction had capacity and expertise to do the desired work. I have observed that the assessee has not produced any written agreement with Harpreet Singh Bindra nor produced any written agreement with GLP Constructions for carrying out the said work. Even, the assessee has not produced any quotation, details of work , drawings, scope of work to be carried out, invoices for doing the work, invoices for procuring material for executing repair and renovation work, engineers certificate, architect drawings , filing of details with GST department , account statement of repair and renovation work executed etc. Thus, there is not even iota of evidence brought on record in context thereto. Once the transaction of repair and renovation is being carried out through assessee even if actual execution was claimed to be done by GLP Construction , it was the obligation of the assessee to produce complete details. The evidences which could be produced but are not produced, the presumption shall be the person who withheld such evidences. Further, the account of Mr. Harpreet Singh Bindra in assessee’s books of accounts is a running account as detailed above , but there is no explanation given by the assessee as to why there were other entries aggregating to Rs. 1,12,50,000/- appearing on the credit side of the said account including opening balance of Rs. 85,50,000/- Further, there is no explanation as to why Rs. 45,00,000/- has been transferred to GLP Constructions as at year end although it is claimed that Rs. 35,00,000/- was claimed to be advanced for repair and renovation of G-97, 3^rd Floor, Saket, New Delhi. There are no details as to mode and manner of transfer of funds to GLP Construction for carrying out the alleged repair and renovation work. No account statement or rendition of account by GLP construction to that effect is brought on record, nor rendition of account to Shri Harpreet Singh Bindra is brought on record. Further, I have observed that during the course of assessment proceedings, the assessee has surrendered this amount of Rs. 35,00,000/- and agreed for the addition , before the AO, which is duly recorded in the assessment order. I have also observed that the assessee has not retracted from the said agreed additions.No documents of retraction is brought on record. Even before me there was no retraction from the said agreed additions. No grounds of appeal has been taken before both the appellate authorities challenging/retracting surrender made by the assessee during assessment proceedings to the tune of Rs. 35,00,000/- by way of agreed addition. There is no whisper by the assessee to rebut to the agreed additions before the AO. The onus is very heavy on the assessee to riggle out of the surrender made by him , and the assessee has to bring on record conclusive evidences to justify that the amount was duly spent for the purpose for which it was intended. No confirmation /affidavit from Mr. Harpreet Singh Bindra as to execution of the work of repair and renovation of G-97, 3^rd Floor, Saket, New Delhi to his satisfaction or rendition of account, is brought on record. Similarly no confirmation from GLP Construction is brought on record. I have also observed that neither Shri Harpreet Singh Bindra was produced by the assessee to support its contentions nor any affidavit was filed. Thus, the whole transactions aggregating to Rs. 1,47,50,000/- claimed to be with Mr. Harpreet Singh Bindra is an unexplained transaction, out of which the assessee is claiming that Shri Harpreet Singh Bindra allegedly gave Rs. 35,00,000/- in cash on 01.04.2015 for repairs and renovation of G-97, 3^rd Floor, Saket, New Delhi. The AO has not made any additions for the year under consideration with respect to the other receipts , except alleged receipt of Rs. 35,00,000/-in cash from Shri H S Bindra. Thus, I am of the considered view that the assessee has failed to produce any evidences to substantiate the contentions raised by the assessee that the assessee received an amount of Rs. 35,00,000/- in cash from Mr. Harpreet Singh Bindra for repair and renovation of G-97, 3^rd Floor, Saket, New Delhi. I am of the considered view that the assessee failed to discharge the onus cast on him, and the authority below have rightly made/sustained additions by invoking the provisions of Section 69A, as the assessee has not offered satisfactory explanation about the nature and source of acquisition of Rs. 35,00,000/- , and the said amount is income of the assessee from undisclosed sources . Thus, the source of income from where this money was acquired by the assessee has not been satisfactorily disclosed by the assessee , and hence Section 69A was rightly applied by the AO. I uphold the additions as were made by the AO and as sustained by ld. CIT(A). The appeal of the assessee lacks merit and is dismissed. I order accordingly.

In the result,the appeal filed by the assessee is dismissed.