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TMI BlogCHECK THE DATE OF CASH WITHDRAWAL IN BANK STATEMENT OR PASSBOOK WITH CASH BOOK BECAUSE MISTAKE OF ANY CASHIER MAY BE COSTLY TO ASSESSEE.X X X X Extracts X X X X X X X X Extracts X X X X ..... CHECK THE DATE OF CASH WITHDRAWAL IN BANK STATEMENT OR PASSBOOK WITH CASH BOOK BECAUSE MISTAKE OF ANY CASHIER MAY BE COSTLY TO ASSESSEE. - By: - C.A. DEV KUMAR KOTHARI - Income Tax - Dated:- 8-9-2008 - - Cash withdrawal from bank: Cash can be withdrawn from bank through cheque, withdrawal slip or ATM card. Generally there is no mistake in recording of transactions in bank records. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, in some exceptional circumstances, he bank may record date as on the next working day. For example if cash is withdrawn from bank, after normal working hours which can be with prior permission and special discretion of manager. In such case the bank may record the transaction as on the next working day. In case of withdrawal through ATM card also in some cases it was noticed that the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive date is placed as next working day. For example, if cash is withdrawn on Sunday ( or other holiday), the effective date may be given by bank as of the next day. What to record in such cases: In such situations, record should be kept that the cash was withdrawn on a particular day, though effective date is recorded by the bank on the next working day. In case of ATM transactions if these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information are reflected in the bank statement, then there is no problem. However, if the bank statement shows the date of next working day, then a certificate may be obtained from the bank to the effect that cash was withdrawn on a particular day after normal banking hours. In any case the withdrawal slip should be preserved. In case cash is withdrawn from branch of bank after normal working ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hours, then an enquiry should be made as to the effective date which the bank will record. In case the bank records the transaction on the next working day, then immediately a certificate from bank can be obtained to the effect that cash was allowed to be withdrawn on a particular day after normal working hours of the bank and by that time books of the day were closed, therefore the cash withdrawa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l will be reflected on the next working day. A case before the Punjab and Haryana high Court: In SUNAM RICE AND DAL MILLS Versus CIT 2008 -TMI - 30593 , a question arose about a similar problem when an addition was made for alleged unexplained money shown as receipt from the bank on 9.11.73. The assessee withdrew money after normal banking hours with special permission of the Bank mang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. The bank debited the said amount on 12.11.73 that is the next working day of bank. The transaction was recorded by the bank on 12.11.73 as the first transaction of cash withdrawals. The bank manager in his letter dated 19.07.1978. has explained that he had made the payment after banking hours on 9.11.73, and had put the date of next working day that is 121.11.1973 on the cheque in his own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handwriting. The CIT(A) considering these facts deleted addition, however, the Tribunal considering that the transaction was recorded by bank on 12.11.1973 as per normal boo-keeping at bank, and that there were some contradictions in statements of bank officials confirmed the addition. Thus the assessee had to appeal before the high Court. The high Court gave weightage to the aspects considered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the CIT(A) and held that these aspects have not been dealt with by the Tribunal - hence tribunal is not justified in sustaining the additions. Therefore, the Tribunal's order was reversed and the addition was deleted. Weakness on the case: In this case we find that the letter of the bank manager certifying the date of actual cash withdrawal is of 19.07.1978, that is more than 56 month, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, one can have doubt of collusion or misrepresentation. After such a long time, it is likely that there will be changes amongst officers and staff of the bank and it may not be possible to obtain letter from the bank. To avoid such situations, it is advisable that such certificate should be obtained immediately by the account holder. The banks can also make these aspects clear, by giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of actual withdrawal and effective date in the statement. A practical solution: Just like the bank record the transaction of withdrawal on the next working day the assessee can also record the transactions of cash payment on the next working day, considering the fact that the payment was made after normal working hours. This will not cause short balance in cash book of the assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the day of payment. Special check on dates: During audit and checking special care should be taken to tally the dates of cash deposits and cash withdrawals. They must be reconciled with bank statement or pass book. In case there is no clarity and completeness in the bank statement or pass book (particularly when they are hand written), timely clarification or correction should be obtained. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mistake in recording of the cash transaction can prove costly as it may attract addition u/s 68 , 69 or 69A . - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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