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TMI Blog2024 (5) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... he bank account. The AO and CIT(A) have proceeded purely on assumption and surmises that cash withdrawn was not available to the Assessee on completely extraneous factors - Assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. Decided in favour of assessee. - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER For the Appellant : Shri Prathik P., A.R. For the Respondent : Shri Ganesh R Ghale ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by assessee is directed against order of NFAC for the assessment year 2017-18 dated 21.9.2023 passed u/s 250 of the Income Tax Act, 1961 (in short The Act ). The assessee has raised following grounds of appeal: 1. The order passed by the learned Commissioner of Income Tax (Appeals) in the case of the appellant, in the facts and under the circumstances, is grossly opposed to law and facts of the case 2. The learned Commissioner of Income Tax (Appeals) has grossly erred in law and in fact in confirming the addition of a sum of Rs.16 lakhs being the cash deposited by the Appellant in his bank account during the FY 2016-17 as unexplained money under Sec. 69A. 3. The learned Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, namely that the appellant must be found to be the owner of money that is not recorded in the books of accounts maintained by him, and that the explanation offered by him in the opinion of the Assessing Officer is not satisfactory, which were not satisfied in the present case. 10. The appellant craves for leave to add to, to delete from or to amend the grounds of appeal. 2. The ld. A.R. submitted that the assessee, an individual earlier engaged in the business of executing civil contracts, had filed his return of income electronically for the AY 2017-18 on 24-06-2017, returning rental income and interest income. Scrutiny assessment proceedings in respect of the said return were initiated by the issuance of notice u/s. 143(2) of the Act dated 09-08-2018, which was followed by the notices u/s. 142(1) of the Act in response to which the assessee filed details, documents and information as requisitioned from time to time. 2.1 Acting on information said to be available with the office of the Learned Assessing Officer, to the effect that the assessee had made cash deposits aggregating to Rs. 11 lakhs in the savings bank accounts maintained by him with the Karnataka Bank Ltd., Nehru Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n thereto, the ld. A.R. also filed copies of the cash book prepared by him for the FY 2016-17, particulars regarding the immovable property on which the assessee had proposed to construct a residential house in connection with which the cash withdrawals were originally made etc., The Learned Commissioner of Income Tax (Appeals) has however declined to accept the submissions of the assessee on the grounds that the cash held on hand was too distinct in time from the date of deposit and that there was no reason for the assessee to hold substantial cash on hand, that the assessee's income was not commensurate with the cash deposits made, that the cash book submitted was a self serving dumb document and that merely indicating the cash balance in the income tax returns was not sufficient and has proceeded to hold that from out of the aggregate sum of Rs. 19 Lakhs being the cash deposited into the bank account of the assessee, only a sum of Rs. 3 lakhs was reasonable and has accordingly reduced the addition made u/s. 69A from Rs. 19 Lakh to Rs. 16 Lakhs, vide the appellate order dated 21-09- 2023. Aggrieved by this order, the assessee was in appeal before this Bench. 2.5. The ld. A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idential house on the property purchased by the assessee. He further submitted that the amounts withdrawn for the purpose of construction were indeed utilized in the construction of the residential house referred above. 2.7. He submitted that it is the contention of the learned Commissioner of Income Tax (Appeals) that the cash held on the assessee's hand was too distinct in time, meaning to say that according to him there was no reason for the assessee who had an opening cash balance of Rs. 19.71.244/- to have held it till the month of November 2016 when the demonetization of specified bank notes was announced by the Reserve Bank of India. The learned Commissioner in doing so has disregarded the bona-fide submissions of the assessee that it was customary for people engaged in the business of executing civil contract to hold a certain amount of cash to meet initial working capital requirements such as labour, material etc., as well as the submissions regarding the residential house that was proposed to be constructed by the assessee on the land at K. Narayanpura, Bengaluru acquired by him and in respect of which, bills relevant to the subsequent construction expenses incurred w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in CIT Vs. Shaileshkumar Rasiklal Mehta (Tax Appeal Nos. 977 to 980 of 2013) and CIT Vs. Manoj Indravadan Choshi ([2014] 50 Taxmann.com 419), held that in the absence of any finding that the amount which was previously withdrawn by the assessee was utilised for any other purpose merely on the basis of conjecture that the amount might have been utilised for any other purpose and was not available with the assessee for making the deposits, addition u/s. 69A could not be upheld. 2.9. He further referred to the more recent decision of the Delhi Bench of the ITAT Om Prakash Nahar Vs. ITO (100 ITR Trib. 345) wherein the Bench relied upon cash withdrawals made over a period of four to five years leading to the cash on * hand as per books that was deposited upon demonetisation of the specified bank notes to hold that the deposits were well explained and that without any adverse material brought on record it could not be presumed that the cash deposited by the assessee was out of undisclosed source of income and accordingly deleted the addition sustained by the CIT(A) u/s. 69A of the Act. The same bench of the ITAT in ACIT, Central Circle-1, Gurugram Vs. Omaxe Forest Spa and Hills Develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficant enough to justify the extent of cash deposits made by the assessee. In doing so, the learned Commissioner has ignored the income generated year on year by the assessee from various sources all of which were duly declared in the returns filed by him and so assessed. He referred to the statement enclosed with the written submissions, containing the summary of incomes earned by the assessee over the preceding six previous years, a perusal of which will indicate that the cash deposits made by the assessee, especially in a case were proper books of accounts were maintained and the income tax returns were filed, were not only commensurate but sufficiently explained. 2.11. He further submitted that the Learned Commissioner of Income Tax (Appeals) has also stated that the cash book submitted during the appellate proceedings was a dumb document and that going by the turnover of the business activities of the assessee, he was not required to maintain any cash book and that therefore the cash book filed in support of his transaction was merely a self serving document which could not be given much credence. He submitted that this finding of the learned Commissioner is perverse in so far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t demonetization of the specified bank notes by the RBI. 2.12. The ld. A.R. submitted that t he learned Commissioner, with a view to justify his upholding the disallowance under Sec.69A has also stated that merely indicating a figure of cash balance in the Income Tax Returns was not sufficient but has failed to indicate as to what else could be held to be sacrosanct, if not for the financial statements prepared in the usual course of business and which were duly declared in the income tax returns filed for the proper assessment years. He submitted that the assessee has duly discharged the onus cast upon him to substantiate the sources of the cash that was deposited into the bank account during the year by producing copies of the cash book as well as the bank statements and the income tax returns filed for prior assessment years. Having so discharged the onus, there was no occasion for the learned Assessing Officer to estimate the gross contract receipts that ought to have arisen if the opening cash balance were reckoned at 8% of such sum. In doing so, the learned Commissioner has proceeded on the erroneous assumption in fact and in law, that the net surplus generated from the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn in the accounts of the assessee, there was no occasion to tax the deposit of high denomination notes as undisclosed income in the hands of the assessee. He submitted that the same decision applies with equal force in the present case. 2.15. For the reasons stated herein above, in view of the fact that the assessee has duly discharged the onus cast upon him by explaining the source of cash deposits, and in view of the settled position in law on the subject, the ld. A.R. prayed that the disallowance u/s. 69A of the Act in a sum of Rs.16 lakhs as upheld by the Learned Commissioner of Income Tax (Appeals) be deleted at the ends of justice. 3. The ld. D.R. submitted that assessee has deposited an amount of Rs.11 lakhs to Karnataka Bank and Rs.8 lakhs to Kaveri Grameena Bank for which assessee has not furnished proper explanation, so that the addition was made and the same to be sustained. He relied on the order of this Tribunal in the case of Afrozkhan in ITA No.830/Bang/2023 dated 5.12.2023 wherein held as under: 3. We have heard the rival submissions and perused the materials available on record. Similar issue came for consideration before this Tribunal in the case of Bhoopalam Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non- availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not. 3.1 In view of the above order of the Tribunal, we inclined to remit the issue in dispute to the file of ld. AO for fresh consideration to examine in the light of above order of the Tribunal. 4. I heard the rival submissions and perused the materials available on record. In this case, main contention of ld. A.R. is that the assessee is having opening balance as on 31.3.2016 at Rs.19,71,244/-. This has been disclosed to the department in ITR-4 filed for the assessment year 2016-17. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to the Assessee on completely extraneous factors. In our view, the Assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. I therefore delete the addition made in this regard. Consequently, the appeal of the Assessee is allowed. 6. In the result, appeal of the assessee is allowed. 4.1 Similar view was taken by this Tribunal in the case of Shri Girigowda Dasegowda Vs. ITO Ward 2(2)(8) in ITA No.360/Bang/2022 dated 10.8.2022 wherein held as under: 9. I have carefully considered the rival submission. The Hon'ble Karnataka High Court in the case of Smt. P. Padmavathy (supra) clearly laid down that earlier withdrawals of cash from Bank account have to be accepted as available to 4an assessee to explain a later deposit as source. The Hon'ble Court held that it was not open to the Revenue to contend that the assessee has to explain as to how the cash withdrawn earlier was utilized by an assessee and was still available with the assessee. The decisions cited by the learned DR are contrary to the law laid down by the Hon'ble Karnataka High Court and therefore not binding. I, therefore, hold the past withdrawa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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