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2022 (4) TMI 1125 - AT - Income TaxUnexplained cash credit under section 68 - AO was not satisfied with the contention of the assessee on the reasoning that there was no evidence available on record suggesting that additional 3 bank accounts belongs to the assessee as Benamidar - AO also did not believe on the contention of the assessee that the part of the amount of cash deposit was out of the money available with the impugned society - HELD THAT - Assessee in the settlement commission has disclosed 19 bank accounts of which he was the Benamidar. These 3 additional bank accounts were also duly disclosed in the petition filed before the settlement commission which were also admitted as the bank accounts of the Benamidar. A report was also called upon under rule 9 wherein the learned ld. PCIT has also admitted the assessee as the Benamidar of these 3 bank accounts. The admission by the learned Ld. PCIT in his report leaves no scope of confusion for the AO to draw an inference against the assessee that it was afterthought. Accordingly, we hold that the assessee was the Benamidar of these 3 bank accounts. At this juncture, we are inclined to mention that there were total 19 bank accounts which were used as the Benamidar. But the issue that arising from the order of the AO is limited to the extent of 6 bank accounts only. Accordingly, we are not inclined to give any finding on the remaining bank accounts which have been accepted as the Benamidar. Whether the cash book prepared for the financial year 2004-05 and the cash balance (opening as on 1 April 2004), should be considered as the cash available with the assessee for the purpose of depositing the same in the bank account? - AO has not brought anything on record suggesting that the assessee has made investment or utilized the impugned cash withdrawal from the bank in the financial year 2004- 05 for some other purpose. In the absence of such finding, the presumption goes in favour of the assessee that such cash was available with him which has been utilized for making the deposit in the year under consideration. At this juncture, it is also important to note that it was submitted by the assessee before the learned CIT-A that he has prepared the cash book for the period beginning from 1st April 1999 till 31st March 2006 to justify the availability of cash in hand in his books of accounts. But the AO has never questioned to the assessee about the cash available in the earlier years with the assessee.Thus in the absence of any question raised by the AO to the assessee about the availability of cash in the earlier years, the same cannot be doubted. Whether the cash available with the society can be considered as deposits made in the bank account of the assessee? - The crucial issue arises if it is believed that there was no money received by the assessee from the society which was deposited in the bank accounts as discussed above, there would be negative balance of the cash and the same is liable to be taxed. If it is done so, then the closing cash in hand of the assessee shall automatically increase by the amount which was purported to have been received from the society. In that event, the application made before the settlement commission showing the opening balance as on 1 April 2006 of ₹50 lakhs should be enhanced by the amount claimed to be received from the society which ultimately would reduce the tax burden upon the assessee before the settlement commission. However, the order of the settlement commission has reached to the finality wherein the opening cash balance of ₹50 lakhs was shown by the assessee. Thus, if we deny the claim of the assessee for having received the money from the society, it would lead to the double addition of the same item of the cash receipt which is unwanted under the provisions of law. Firstly, the amount of cash receipt from the society will suffer from the tax in the year under consideration and secondly, the assessee failed to claim the benefit of the higher amount of available cash in hand as on 1st April 2006 before the settlement commission which eventually has already suffered the tax again. Thus, to avoid the double taxation, we are inclined to admit the contention of the assessee that he has received cash from the society which was utilized to deposit in the bank accounts. Thus we direct the AO to delete the addition made by him under the provisions of section 68 - Decided in favour of assessee.
Issues Involved:
1. Deletion of addition made by the AO on account of unexplained cash credit under section 68 of the Income Tax Act, 1961. Issue-Wise Detailed Analysis: 1. Deletion of Addition Made by the AO on Account of Unexplained Cash Credit under Section 68 of the Act: The Revenue raised the issue that the learned CIT (A) erred in deleting the addition made by the AO regarding unexplained cash credit under section 68 of the Income Tax Act, 1961. The facts of the case reveal that the assessee, an individual engaged in construction activity and part of the 'Dev Group', was found to be the Benamidar of three bank accounts during a search and seizure operation under section 132 of the Act. The AO issued a show cause notice under section 142(1) proposing to add the cash deposits in these accounts to the total income of the assessee. The assessee responded by providing details of additional Benami bank accounts and claimed that the cash deposits were sourced from withdrawals made in the financial year 2004-05 and from cash available with a group concern, Dev Pritam Nagar Cooperative Housing Society. The AO rejected the assessee's explanations on the grounds that there was no evidence supporting the claim of additional Benami accounts and the source of deposits in the financial year 2004-05 was not explained. The AO also dismissed the claim of cash received from the society due to lack of evidence and treated the cash deposits as unexplained cash credit, adding the entire amount of ?1,99,91,050 to the assessee's total income. Upon appeal, the learned CIT (A) considered the assessee's explanations and the modus operandi accepted by the settlement commission for the assessment years 2007-08 to 2013-14. The CIT (A) noted that the assessee had disclosed 19 Benami bank accounts in the settlement petition, which were accepted by the settlement commission. The CIT (A) found that the cash book prepared by the assessee for the relevant financial years was consistent with the cash flow statement accepted by the settlement commission, showing an opening cash balance of ?50,00,000 as on 1st April 2006. The CIT (A) also observed that the AO had not questioned the opening cash balance during the assessment proceedings and that the cash book showed a positive balance throughout the year. The CIT (A) accepted the assessee's explanation that the cash deposits were sourced from cash available with the group concern and from withdrawals made in earlier years. The CIT (A) also noted that the AO's rejection of the cash book was not tenable, as the cash book was consistent with the cash flow statement accepted by the settlement commission. However, the CIT (A) confirmed the addition of ?13,00,000 for unexplained cheque deposits and ?4,50,000 for cash deposits in the name of Shri Suresh Goswami. The Revenue appealed against the CIT (A)'s order, but the Tribunal upheld the CIT (A)'s decision, noting that the assessee had disclosed the additional Benami accounts before the settlement commission, which were accepted. The Tribunal also found that the AO had not brought any evidence to suggest that the cash withdrawals in the financial year 2004-05 were utilized for other purposes. The Tribunal accepted the assessee's explanation that the cash available with the society was used for deposits in the bank accounts, as denying this would lead to double taxation. The Tribunal directed the AO to delete the addition made under section 68 of the Act. Conclusion: The Tribunal upheld the CIT (A)'s order, directing the AO to delete the addition of ?1,99,91,050 made under section 68 of the Act, except for the confirmed additions of ?13,00,000 and ?4,50,000. The Revenue's appeal was dismissed.
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