9911796707
TMI Blog2024 (7) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... d as unexplained money in the hands of the assessee. As assessee demonstrated that the income has not abnormal trend with that of with the last year month to month. The income is slightly higher, and it cannot be said sudden or irregular hike. Based on that finding so recorded herein above we hold that the cash deposited into the bank account of the assessee cannot be considered as unexplained considering the month wise receipt and income slightly more than last year cannot warrant the cash deposited into the bank account as unexplained cash which is proved as such and even taxed without rejecting the books of account. In the light of the discussion so recorded here in above we note that the cash so deposited by the assessee is explained to be emerges out of the her professional income and revenue has not proved that the assessee has any other source for the income which is already reflected in her books of account - addition so made by the ld. AO and sustained by the ld. CIT(A) is directed to be deleted. Decided in favour of assessee. - DR. S. SEETHALAKSHMI, JM SHRI RATHOD KAMLESH JAYANTBHAI, For the Assessee : Shri G. M. Mehta, CA For the Revenue : Shri Anoop Singh, Addl. CIT O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited cash aggregating to Rs. 99,96,000/- during the demonetization between 09.11.2016 to 30.12.2016 in the form of specified bank notes (SBNs). The ld. AO asked the assessee to submit various details and comparison of cash deposits of preceding two years. The assessee has furnished comparative chart of cash deposited in preceding two years. In support of the SBNs deposited in the bank account the assessee also filed the cash book. On perusal of cash book ld. AO noted that the assessee has not mentioned any narration regarding the patients from whom consultation fees has been furnished. The assessee has also not explained the sudden spike in the cash deposits post demonetization. Therefore, for these reasons a show cause notice dated 18.12.2019 was issued to the assessee. The assessee vide letter dated 20.12.2019 filed the detailed reply contending that each and every deposit of cash in bank is out of disclosed sources, appearing in regular books of account which are also audited u/s. 44AB of the Act. The assessee also explained that there was an opening cash balance available with the assessee for Rs. 18,45,420/-. There is an increase in the returned income for an amount of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the monthly cash deposit the following picture emerges:- The appellant has shown regular increase in the monthly closing balance of cash in hand and as shown in closing balance of rupees 94,87,418 at the end of October 2016. However the cash deposited in bank and the practice income shown on month-to-month basis is without any co-relation as the cash deposited in bank has not increased and has not matched the closing cash in hand shown by the appellant. The Hon'ble Supreme Court in the case of Sreelekha Banerjee v. CIT [1963] 49 ITR 112 has observed as under : If there is an entry in the account books of the assessee which shows the receipt of a sum on conversion of high denomination notes tendered for conversion by the assessee himself, it is necessary for the assessee to establish, if asked, what the source of that money is and to prove that it does not bear the nature of income. The department is not at this stage required to prove anything. It can ask the assessee to produce any books of account or other documents or evidence pertinent to the explanation if one is furnished, and examine the evidence and the explanation. If the explanation shows that the receipt was not of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awn ten days later to finance the business. It appears that the money on hand (Rs. 45,000) was not touched at all, but on January 30, 1946, a further sum of Rs. 6,005 was withdrawn and not utilised, which made up the sum of Rs. 51,000 for which the high denomination notes were encashed. On these facts, the Tribunal came to the conclusion that the high denomination notes represented not the cash balance but some other money which remained unexplained, and the Tribunal treated it as income from some undisclosed source. The High Court held on the above facts and circumstances that there were materials to show that Rs. 51,000 did not form part of the cash balance, and the source of money not having been satisfactorily proved, the department was justified in holding it to be the assessable income of the assessee from some undisclosed course. In this conclusion, the High Court was justified, regard being had to the principles we have explained above. Some of the important factual-legal relevant questions emerging from the above judgement are as under:- Question of justification of keeping large sums on hand whereas the facility of withdrawing cash was available at the time and place it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tandard, the burden of proof is met when the party with the burden convinces the fact finder that there is a greater than 50% chance that the claim is true. This preponderance is based on the more convincing evidence and its probable truth or accuracy. Considering the facts of the case, the cash deposit pattern of the appellant in the past and the availability of cash on hand in the past is considered to be the best available basis to judge the availability of cash on hand and the date of announcement of the demonetisation. The cash in hand with the appellant as on 1 April 2016 and as on 31 March 2018 are almost same even though the cash on hand as on 31 March 2017 is lesser. Further considering the above discussion in the facts, in the absence of any explanation and the justification, cash deposited in the bank in a particular month is found to be the best available basis to arrive at the approximate amount of the practice income earned during the month immediately before the deposit of cash. In view of this decision, the amount of monthly practice income shown by the appellant is not reliable and the same is hereby rejected. In view of the discussion in the above paragraphs, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash in hand of roundly 19 lakhs with her. In view of the totality of the facts of the case of the appellant, the reasonable conclusion to be drawn is that on the date of the announcement of the demonetisation also the appellant was actually maintaining this cash balance and the cash over and above this 19 lakhs, as deposited in the bank during the period of demonetisation remains unexplained and is upheld as the income of the appellant and the action of the learned assessing officer in this regard is upheld to this extent. Accordingly addition of 80,96,000 is hereby upheld. Accordingly, these grounds of appeal are partly allowed. 5. In the result, the appeal of the appellant is partly allowed. 5. Feeling dissatisfied and aggrieved from the order of the the ld. CIT(A), the assessee has preferred the present appeal before on the grounds as reproduced hereinabove. To support the grounds so raised by the ld. AR of the assessee, he has filed the written submissions in respect of the various grounds raised by the assessee and the same is reproduced herein below: BRIEF FACTS OF THE CASE: Assessee, a Gynecologist, is in practice for last more than 45 years in Jaipur. Books of account for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or bank deposits 42,49,752 TABLE D (Extra deposits in bank account compared to AY 2016- 17)) S. No. Deposit in bank account Amount Paper book page 1. Asstt. Year 2016-17 1,37,20,500 39 2. Asstt. Year 2017-18 1,75,77.700 40 Extra bank deposits as against extra sources of Rs. 42,49,752/- as per table C 38,57,200 The above tables have also been repeated by ld. CIT(A) in order u/s. 250 of Act. From the order u/s. 250 of I.T. Act by ld. CIT(A), it is very much proved that relief of Rs. 19,00,000/- was not based on any legal or factual ground but on the imagination and guess work of ld. CIT(A). It gets further support from the fact that by both the lower authorities, while accepting the sources appearing in cashbook as genuinely explained, without application of provisions of sect. 145(3) of Act, treated the deposits out of same sources only in period of demonetization as unexplained under sec. 68 of Act. Considering totality of the facts and circumstance of the case, ld. CIT(A) acted in very arbitrary way in sustaining major amount of disallowance of Rs. 80,96,000/-. Ground No (2): Ld. CIT(A) was not justified in allowing only partial relief of Rs. 19,00,000/- out of total addition of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 2. May 18,40,400 23,72,800 3. June 20,16,400 24,17,900 4. July 19,28,000 24,30,500 5. August 16,26,400 18,72,000 6. September 15,12,800 17,64,500 7. October 17,06,000 19,06,000 8. November 10,22,400 10,72,000 9. December 6,46,000 4,45,000 10. January 5,60,600 4,60,500 11. February 5,80,400 3,85,000 12. March 4,96,800 4,83,500 Total practice Income of assessee 1,54,49,400* 1,73,27,300** (*Paper book page 43, ** Paper books page 44) The fact admitted by the ld. AO at top of page (3) of order dated 31.12.2019 u/s. 143(3) is repeated hereunder: the assessee has justified the source of cash deposited from cash generated from consultancy fee . Income from practice is more or less same before declaration of demonetization on 08.11.2016, if compared to same period of preceding year but was wrongly treated by the ld. AO as higher practice income in that period. 3) Cash deposit in bank account being higher than previous year and there was no justification for such spike of c(ash deposit : The value of demonetized currency notes of Rs. 1,000/- and of Rs. 500/- on declaration of demonetization was nil, therefore the only course open with the assessee was to deposit the demonetized currency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. Act for the debit side of cash book (deposits in bank a/c) whereas credit side i.e. receipts from practice income was accepted as genuine Ground No. (3) as per Form 35 was repeated by the ld. CIT(A) in his order dated 23.02.2024 u/s. 250 of Act remained indisposed of for which reason appears that as against acceptance of source of cash entered in cash book, ld. AO had treated the deposit of same cash in bank on declaration of demonetization, as unexplained under sec. 68 of I.T. Act which is against the provisions of Income tax Act and also against accounting principles. On the facts, the explained currency notes, duly appearing in audited statements of account which were deposited in bank in form of demonetized currency notes after 9th November 2016 to 31st December 2016 cannot be treated as unexplained under sec. 68 of Act when cash deposited in remaining period during the same year was fund to be out of explained sources. Reliance is further placed on the following judicial pronouncements : (1) Anil Verma Vs. Dy. CIT (2019) 201 TTJ (Chand. A ) 608 (P.B. page No. 44 0 57) (2) Pr. CIT Vs. Agson Global (P) Ltd. (2022) 325 CTR (Del)1 (P.B.page No. 58 to 75) (3) Asstt. CIT Vs. Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which is already forming part of regular books of accounts cannot be added u/s 68 of the Act if at all is to be done that income is required to be reduced which has not been done by the ld. AO and the ld. CIT(A). The reasons given by the ld. AO while making the addition are nothing but mere prejudicial based on the surmises or conjectures. The assessee has submitted around 600 pages including patient register and the ld. AO did not brought anything on record that the income declared by the assessee which is duly reflected in the cash book are not arising out of professional income of the assessee. The ld. AR of the assessee based on the table has reflected in the order of assessment explained that there is also increase in income and receipt shown by the assessee. The cash book so produced before the lower authorities has not been rejected upon finding of any fault. The ld. AR of the assessee also submitted that he has submitted a chart controverting the finding of the lower authorities comparing professional income with that of the amount deposited in to the bank account. During the year under consideration, the professional income is duly recorded for an amount of Rs. 1,75,77,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that this is a classic Case of human probability. He not disputed the fact but submitted that the assessee failed to justify by placing on record direct evidence in support of the claim of professional receipt. Thus, the finding of Hon ble Apex Court in the case of Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124 squarely applied in this case. As the evidence placed on record are not correct and not reliable the professional receipt shown on the assessee in the same set of cash book is on reducing after demonetarization period. Therefore, the cash balance recorded in the cash book is not reliable and there is no substance in the entries recorded in that cash book. The records produced are thus, self- serving document rightly rejected and not considered by the lower authorities. The ld. DR referring to page No. 40 of the paper book filed by the assessee wherein the assessee was having cash balance of Rs. 46,00,000/-. He has deposited at Rs. 5,00,000/- into the bank account only and so holding of high cash balance from May, 2016 onwards suggest the reliability of cash so as to justify the deposit of cash in the period of demonetization. The assessee is not a farmer or not an il ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulam 18 [2008] 113ITD377 (Delhi) IN THE ITAT DELHI BENCH 'A' (SPECIAL BENCH) Manoj Aggarwal v. Deputy Commissioner of Income-tax, Central Circle 3, New Delhi 8.2 The ld. DR also argued that the assessee considering the merits in the arguments of the assessee the ld. CIT(A) has also granted relief of Rs. 19,00,000/-. As regards the action of making the separate addition in addition to the professional income already offered the ld. DR submitted that since the income added is in addition to the regular income the assessee rightly denied the benefit of deduction of the income to that extent. 9. In the rejoinder to the submission of the ld. DR, the ld. AR of the assessee referring to page no. 41 [ the show cause notice dated 18.12.2019 ] submitted that the notice was issued on 18.12.2019 and leaving one day only the reply was expected on 20.12.2019. Given that time the assessee submitted the patient register and cash book. The ld. AR of the assessee also submitted that in the previous year, the assessee has shown of Rs. 100,54,450/- out of that receipt, she deposited at Rs. 1,37,20,500/- and based on the chart placed on record. He demonstrated that in the previous year assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. AO noted that there is no narration regarding the fees received from the patients and there is no reasonable justification for the sudden spike in the cash deposited in the demonetization period. The assessee explained that there was an opening cash balance available in her books for Rs. 18,45,420/-. There is an increase in the returned income for an amount of 25,52,460/- compared with last year. If both that aspect of the matter is considered and keeping in mind that the fact that the assessee is a doctor the deposit of cash for the amount of Rs. 99,96,000/- is nothing but out of the professional income and cash balance is duly supported by a cash book maintained. The assessee also filed a patient register vide letter dated 20.12.2019. The assessee submitted through mail two registers which were made part of the submission and marked as annexure A. In that annexure assessee submitted the details of the total fees charged, receipt per patient along with other details of patients like, date of consultation, name of the patient, registration number, age of patient and gender are given. The ld. AO has not pointed out any defect in the details so submitted. In the show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income chart given at page 42 43 submitted before the lower authority. The said chart of Monthly Practice Income compared to immediately preceding year is reproduced herein below; S.No. Month A.Y. 2016-17 A.Y. 2017-18 1. April 15,13,200 17,17,600 2. May 18,40,400 23,72,800 3. June 20,16,400 24,17,900 4. July 19,28,000 24,30,500 5. August 16,26,400 18,72,000 6. September 15,12,800 17,64,500 7. October 17,06,000 19,06,000 8. November 10,22,400 10,72,000 9. December 6,46,000 4,45,000 10. January 5,60,600 4,60,500 11. February 5,80,400 3,85,000 12. March 4,96,800 4,83,500 Total practice Income of assessee 1,54,49,400* 1,73,27,300** 11. As it is evident from the above monthly receipt chart that the receipt from December to March has reduced trend previous year also. Thus, it is usual practice and not only on the reasons of the demonetization. Based on these set of facts we see no force on the contention so raised while confirming the addition by the ld. CIT(A). Therefore, the contention that the income which has not sudden hike and irregular pattern as alleged has no basis. The observation of the ld. CIT(A) that the assessee has shown regular increase in the monthly closing balance of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. AO. The bench noted that while making the addition the ld. AO has not rejected the books of account of the assessee. The ld. CIT(A) while confirming the addition invoked the provision of section 145(3) of the Act, but while doing so, he has not pointed out any defects and the same was not confronted to the assessee, as required by that provision. There is no show cause notice issued by the ld. CIT(A) while invoking the provision of section 145(3) of the Act and that too without showing any defects in the books of account of the assessee therefore, that action is against the provision of section 145(3) of the Act. The ld. AO through the ld. DR, did not show any defect in the records so placed by the assessee. Thus, ld. CIT(A) erred in law as well as on fact while rejecting the books of account of the assessee. While arguing the case ld. DR heavily relied upon the fact of the case of Sumati Dayal, which are not applicable in the facts of the case, as the assessee is regularly filling the return, she being doctor having regular practice income and that source is not doubted. Thus, the fact of the case of the assessee and that of the Sumati Dayal is on different aspect cannot a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration. Therefore, even otherwise based on this analysis of the income offered by the assessee is not jump or spike in the receipt of the assessee or that of the cash on hand. Based on that analysis of facts the lower authority without appreciating the facts when the demonetization announced the assessee has no option to carry the cash on hand but must deposit into the bank account. The source of that cash is duly explained and supported by the clear and cogent evidence placed on record. It has been held in a number of cases that it is trite law that suspicion howsoever strong cannot take place of a legal proof. The ld. CIT(A) has relied on the decision of Sreelekha Banerjee Vs. CIT [ 49 ITR 112 (SC) ] quoting the finding that the department does not then proceed on no evidence, because the fact that there was receipt of money is itself evidence against the assessee. In that same judgment the apex court also held that The department cannot by merely rejecting unreasonably a good explanation, convert the good proof into no proof. Further the bench also noted that ld. AO made the addition of cash deposited without considering the fact that income is already included to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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