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TMI Blog2024 (9) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had explained that the cash was deposited out of cash in hand accumulated over a period of time for which cash flow statement for the period 01-10-2015 to 31-12- 2016 demonstrating the history and status of the cash in hands was submitted which was rejected by the lower authorities. From the perusal of the cash flow statement, it is noted that the assessee was having balance of Rs. 25,09,620/- as on 8-11-2-016 which shows that the cash was lying with the assessee and it is also noted that cash balance was never disputed by the lower authorities during the proceedings. Thus assessee had deposited in cash in bank accounts during the demonetization whose details were put forth before the lower authorities by the assessee as mentioned in the cash flow statement and supporting bank statement. We found that the assessee has submitted full details of amount through his written submission and there remains no ambiguity in the submission giving the details deposited during the demonetization period - Asssessee appeal allowed. - SHRI SANDEEP GOSAIN, JM SHRI RATHOD KAMLESH JAYANTBHAI, AM For the Appellant : Shri Deepak Sharma, CA Shri Vinod Kumar Gupta, CA For the Respondent : Shri Anup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned by the AO at page 2 of the assessment order is mentioned as under:- SN. Name of Bank Account Amount in Rs. Date of cash deposit. 1. Punjab National Bank 5294009900000282 4,00,000/- 28-11-2016 2. Punjab National Bank 5294009900000103 15,96,000/- 12-11-2016 (Rs.8.00 lacs), 28-11- 2018 (Rs. 46,000) 3. Punjab National Bank 529400NC00003705 3,00,000/- 28-11-2016 4. State Bank of India 51101653945 2,08,000/- 29-11-2016 Total 25,04,000/- 3.2 Being aggrieved by the order of the AO, the assessee carried the matter before the ld. CIT(A) who confirmed the action of the AO by observing as under:- 6. I have carefully considered the details involved in the case and case law referred to by the AO and the appellant. It clearly appears to be a fact-based case. Main contention of the appellant is his cash withdrawals in earlier year to justify cash deposits in the current year. It was noticed that there was a gap of approximately one year between such withdrawals and subsequent deposits. Quite logically, the AO concluded that no one is expected to hold back such volumes of cash for a period of about one year. Especially, through salary and rent the appellant was having regular sources of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, inference has been drawn without considering the facts and submission of the record. In this regard our submission is as follows: - a. Appellant was having income from salary, rent from house property (received in cash) and interest from saving bank. Appellant was not required to maintain books of accounts. Under the facts, the appellant had submitted cash flow statement (PBP No.: 1 To 3) along with supporting bank statements (PBP No.: 4 to 48) during the assessment proceeding as well as during the first appellate proceeding However, addition has been made and sustained without finding any fault in submitted cash flow statement. It is pertinent to note that under the circumstances of the case, cash flow statement is the only method from which availability of cash for deposition can be examined. Lower authorities preferred to draw inference based upon presumption or surmises rather than documentary evidenced filed before them. b. Moreover, appellant was admittedly having rental income, which is evident from the ITR (PBP 50-51) and same was also received in cash which is also not disputed. However lower authorities, without considering the nature, source of income and cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee, a sum of Rs. 10,000 was being spent for household expenses every month and the assessee has withdrawn from bank a sum of Rs. 2 lacs on 4th Dec., 2000 and there was no material with the Department that this money was not available with the assessee. It has been held by the Tribunal that in the instant case the withdrawals shown by the assessee are far in excess of the cash found during the course of search proceedings. No material has been relied upon by the AO or CIT(A) to support their view that the entire cash withdrawals must have been spent by the assessee and accordingly, the Tribunal rightly held that the assessment of Rs. 2.5 lacs is legally not sustainable under s. 158BC of the Act and the same was rightly ordered to be deleted. Hon ble ITAT, Jaipur in case of Shri Sunil Mathur Vs. The ITO, Ward-2(4), Kota [ ITA No. 660/JP/2019] vide order dated 01.11.2021 held as under: (Case Law#1) It has been explained by the assessee that the source of cash deposits during the year is out of earlier two years withdrawals and cash in hand at the beginning of the year. In support of his contention, the assessee has submitted cash book and cash flow statement for previous t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neness of the source of deposits in the bank account on the ground that the cash was allegedly kept in hand for a long period of two years, in my considered view is not tenable. Once a that such amount was spent elsewhere. The Hon ble Kerala High Court in CIT Vs. K. Sreedharan (1993) 201 ITR 1010 (Kerala) has held that: The period of four years between 1976-77 and 1980 81 is not so long a period as to rebut the presumption regarding the continued availability of the amount. 5. Adverting to the facts of the instant case, it is seen that the assessee was regularly filing returns and balance sheets on year to year basis. The availability of cash in hand from maturity of FDRs in past and re- depositing of proceeds in the bank account in the instant year, cannot be doubted as the factum of maturity of FDRs has not been disputed by the AO. When the Hon ble Kerala High Court in the aforementioned case has accepted the availability of unutilized cash for four years as reasonable, there is no reason to doubt such availability for two years in the instant case. In view of the foregoing discussion, I am satisfied that the addition was wrongly sustained. I, therefore, order to delete the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hasmukh Kanjibhai Tadhani Vs ITO, Surat [ITA No. 19/SRT/2023] has deleted the addition made u/s 69A of the Act and held as under: 12. I have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. Before me, Ld. DR for the Revenue reiterated the stand taken by the Assessing Officer. However, on the other hand, Ld. Counsel for the assessee submitted, the return of income and computation of income for assessment year (AY.) 2017-18 (vide paper book page nos.3 to 5), wherein I have noticed that assessee has income from house property and also has income from business and profession to the tune of Rs. 10,70,000/-, as a remuneration received from Shivam Polishing LLP. The assessee also received profit from Shivam Polishing LLP to the tune of Rs. 12,73,620/-. The assessee also submitted the detail of cash deposited during the year under consideration of Rs. 5,07,000/-, vide paper book page no.6, wherein it is stated that cash was deposited out of cash withdrawal from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh balance at the beginning of 01.04.2016. Apart from this, the assessee is a partner in M/s Shivam Polishing LLP and from the partnership firm, the assessee has received remuneration to the tune of Rs. 10,70,000/- and profit to the tune of Rs. 12,73,620/-. The assessee has submitted the cash deposited during the demonetization and the summary thereof which is placed at paper book page nos.18 to 19 and hence it is quite clear from the cash book, cash flow statement and cash withdrawal from the bank, that assessee has explained the source of cash deposit in bank account in a satisfactorily manner. Hence, I am not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence this ground of the assessee is allowed . The Hon ble ITAT, Mumbai Bench in the case of Shri vinay Deshrath Guptaibhai Tadhani has deleted the addition made and held as under: 8. I have considered rival submission and perused material on record. Undisputedly, in the relevant previous year the assessee has made cash deposits into his savings bank account. While explaining the source of such cash deposits, the assessee had submitted that such deposits were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the currencies which he holds/possesses are banned by the prescribed authorities from circulation and that too, he will deposit all the currencies in on a single day as one time deposit and not inpiece-meal at different dates. If it is not done within a reasonable time, it is for the assessee to prove the reasons for not doing so. (d) Applying the ratio in the Theory of Human Probability , no prudent person will hold such Specified Bank Notes (SBNs) in hand in large number in his possession and deposit the same into the bank account on various dates spread over for 15 to 20 days. It has been held by the Hon ble Supreme Court in the Case of Sumati Dayal Vs CIT (Citedsupra)that the time period between cash in hand and deposit of such cash in bank account should not be too long and therefore, must not be against human probabilities. In the case of the assessee, it is seen that the deposits of SBN notes are made from 12.11.2016 to 29.11.2016, spread over for 18 days, which the assessee could not substantiate with reasonable explanation. Thus, by the human test of probabilities as laid down and tested by the Highest Court of the land as well as the circumstances of the case, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in the case of Durga Prasad More and Sumati Dayal. e. It is humbly submitted that while these decisions provide guidance on when to use the Theory of Human Probability in tax assessments but do not provide a blanket authorization for the Ld. AO or the Ld. CIT(A) to ignore documentary evidence and rely solely on Human Probability. Each case must be evaluated on its own merits and the AO/ CIT(A) must provide clear and cogent reasons for rejecting the evidence presented by the appellant. f. Furthermore, it is also an established principle that the judgement of any court/ tribunal etc. must be read in its context and should be applied after considering the facts and circumstances of the case and not in pick and choose manner. In the assessment order, the Ld. AO cared to pick Theory of Human Probability but shuts his eyes to the Principle of ApparentReality discussed in the judgements of the Hon ble Supreme Court which states that apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real .In the context of this principal the Ld. AO and the Ld. CIT(A) should have relied on the apparent state of affairs of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove . The Hon ble ITAT, Bench B , Hyderabad in the case of ITO(IT-1) vs Shri M. Prabhakar, Hyderabad [ITA No. 1727/Hyd/2014] dismissed the appeal of the revenue and held as under: Considered the rival submissions and perused the material facts on record. The assessee has deposited Rs. 34.70 lakhs during this AY and there is sufficient cash available in his possession as per the cash book and Wealth Tax return submitted by the assessee. The mute question before us is whether the cash deposited was coming out of the cash available with the assessee, which was kept by him for last two years. It was not brought on record why he has withdrawn so much of money and what made the assessee to keep such huge money in hand. But, on record, submitted by the assessee, we find that he had sufficient money. Even the AO could not bring any proof that the assessee has in fact utilized or applied the cash withdrawn two years back, except making a remark that there is no possibility of keeping such amount by the assessee being a NRI. He has not brought on record, why he cannot keep so much of cash in hand and no contrary findings were given by him against the submissions of assessee. AO has made the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The AO also noted that the assessee failed to give satisfactory explanation about the nature and source of cash deposits for which the AO treated the amount of Rs. 25.04 lacs as unexplained money u/s 69A of the Act and added the same to the total income of the assessee. Hence, the total income of the assessee is taxed u/s 115BBE of the Act @ 60% by the AO. In first appeal, the ld. CIT(A) has confirmed the action of the AO. It is noted from the submissions of the assessee that the assessee was having income from salary, rent from house property which was received in cash and the assessee also earned interest from saving bank. Thus assessee was not required to maintain book of accounts. The ld. AR of the assessee submitted cash flow statement (APB 1 to 3) alongwith supporting bank statement (APB 4 to 58) during the assessment proceedings as well as first appellate proceedings. It is noteworthy to mention that cash flow statement is the only method from which availability of cash for deposition can be examined. It is also noted that the assessee had received rental income in cash which has also been shown in the ITR (APB 50-51) and the same was also not disputed. It is also noted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has given his finding in Para 6.1 and 6.2 of his order at page 8. Perusal of the findings shows that the Ld. CIT(A) reiterated, more or less, the same basis as of the A.O. The Bench has taken into consideration the submissions of both the parties and found that the assessee had deposited Rs. 25.04 lacs in cash in bank accounts during the demonetization whose details were put forth before the lower authorities by the assessee as mentioned in the cash flow statement and supporting bank statement. We found that the assessee has submitted full details of amount of Rs. 25.04 lacs through his written submission and there remains no ambiguity in the submission giving the details of amount of Rs. 25.04 lacs deposited during the demonetization period. We also take into consideration the following case laws which finds favour in the case of the assessee. 1. CIT vs Kulwant Rai, 291 ITR 36 (Delhi) 2. Sunil Mathur vs ITO, Ward 2(4), Kota (ITA NO. 66/JP/2019 order dated 01-11-2021). 3. CIT vs K Sreedharan [1993] 201 ITR 1010 (Kerala). 4. Lalchand Bhagat Ambical vs CIT [1995 AIR 1295) 5. ITO vs Shri M Prabhakar (ITA No.1727/Hyd/2014 ITAT Hyderabad B Bench) 6. Abhilasha Jain vs DCIT, Circle (Int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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