9911796707
TMI Blog2024 (10) TMI 1271X X X X Extracts X X X X X X X X Extracts X X X X ..... human probabilities that he would be in possession of substantial amount of cash-in-hand (in his personal account) carries substance. If the assessee during the pre-demonetization period was in possession of substantial amount of cash in hand (personal account), then neither there would have been any need for him to have made heavy cash withdrawals from the bank accounts of his proprietary concern nor made cash withdrawals from his bank accounts for incurring business expenses. Accordingly, the assessee s claim of having introduced cash in form of capital in his proprietary concern, viz. M/s. CP Coal Company in absence of any supporting material, and being beyond human probabilities cannot be accepted. Based on my aforesaid observations, the cash in hand available with the assessee in the books of account of his proprietary concern, i.e. on the date on which he had made a cash deposit of Rs. 33 lacs in Allahabad Bank stand reduced by an amount of Rs. 21.70 lacs, i.e. the capital (in cash) allegedly claimed to have been introduced by him during the period 13.10.2016 to 02.11.2016 out of cash in hand (from personal account). As the cash book of the assessee reveals availability of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... honourable CIT(A) has erred for confirming the order of learned assessing officer without properly appreciating the fact of the case. 5. That, assessee reserves the right to add, amend, alter or withdraw any ground/grounds of appeal at the time of hearing. 2. Succinctly stated, the assessee had filed his return of income for A.Y.2017-18 on 17.10.2018, declaring an income of Rs. 7,35,960/-. Thereafter, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the course of assessment proceedings, the A.O observed that the assessee had on two occasions during the demonetization period made cash deposits in Specified Bank Notes (SBNs), viz. (i) on 10.11.2016 Rs. 13,01,000/-; and (ii) on 22.11.2016: Rs. 33,00,000/-. Although the A.O was of the view that the cash deposit of Rs. 13,01,000/- (supra) made by the assessee in his bank account on the 1st day of banking after the demonetization was sourced out of the funds that were genuinely available with him on the date of deposit, but called upon him to put forth an explanation as regards the source of the cash deposits of Rs. 33 lac made on 22.11.2016. As the reply filed by the assessee did not find f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined unfamiliar with the banking system and would have taken the risk to keep substantial amount of cash with him knowing well that the same would be vulnerable to the risk of theft, fire etc. Further, the A.O was of the view that no prudent person would choose to keep his cash idle instead of depositing the same in various investment avenues or government securities and earn income therefrom. 4. The A.O queried the assessee about the source of the cash expenses that were incurred by him during the subject year. In reply, the assessee stated that the said expenses were sourced out of the withdrawals made from his bank account. The A.O observed that on the one hand the assessee claimed to be in possession of substantial amount as cash in hand, but on the other hand, had stated that the cash expenditure incurred by him was sourced out of cash withdrawals made from his bank account. Accordingly, the A.O held a firm conviction that the claim of the assessee of being in possession of substantial amount of cash in hand as on 08.11.2016 which, thereafter, was utilized for making cash deposits in his bank account was found to be incorrect. The assessee on being confronted with his incompre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gyanchand Tatiya from personal account on 13.10.2016 Rs.4,50,000.00 8 Capital introduction by Mr. Gyanchand Tatiya from personal account on 21.10.2016 Rs.5,00,000.00 9. Capital introduction by Mr. Gyanchand Tatiya from personal account on 31.10.2016 Rs.6,00,000.00 10. Capital introduction by Mr. Gyanchand Tatiya from personal account on 05.11.2016 Rs.2,00,000.00 11. Capital introduction by Mr. Gyanchand Tatiya from personal account on 02.11.2016 Rs.4,20,000.00 Total Rs.54,80,572.58 6.2 As can be seen from the above, the appellant explained the source for a part of cash deposits as the cash withdrawn from banks between 16/05/2016 and 21/09/2016, which was claimed to have been deposited during the demonetization period. During assessment proceedings, the appellant was specifically asked to explain the purpose of withdrawal of cash and the reason for keeping cash idle for such a long period of time, for which the appellant stated that he does not have faith in the banking system and he has insecurity to keep cash in the bank account'. Further, rest of the cash deposit to the tune of Rs. 21,70,000 was explained as capital introduction from the personal account of Mr. Gyanchand Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reality and the matter has to be considered by applying the test of human probabilities - CIT v. Durga Prasad More [1971] 82 ITR 540, at pp. 545, 547 (SC). 6.6 The appellant made a vague statement that cash-in-hand and cash previously withdrawn were used to make cash deposits in the banks, without giving any corroborative evidence. 6.7 In the present case, applying the test of human probabilities, one can safely conclude that no prudent businessman will withdraw cash, when large cash is already on hand. Further, appellant being a mechanical engineer, if he submits that he has no belief in bank, it appears rather strange and is unacceptable. Further, as held by the Apex Court in Sumati Dayal (supra), the AO is entitled to look into the surrounding circumstances to find out the reality by applying the test of human probabilities. Based on such analysis, the AO had a reason to believe that it is highly improbable that the cash-in-hand must have been deposited, especially in a scenario when the appellant was withdrawing cash in spite of having large sum of cash in hand. The appellant's explanation that cash was withdrawn despite sufficient cash-in-hand and the subsequent accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el referred to in clause (a) of sub-section (15) of section 144C shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath; (c) compelling the production of books of account and other documents; and (d) issuing commissions. 7.4 Thus, section 131(1) confers on the Income Tax Authorities mentioned therein, the same powers as those vested in a court under the CPC, when trying a suit. Section 131(1) of the I.T. Act, by conferment of the powers as envisaged therein, equates the powers of the Income Tax Authorities with those of a Court. Therefore, it follows that it is only during the pendency of some proceeding before it, that an Income Tax Authority can exercise the power vested on them under section 131(1), and not otherwise. 7.5 In the case at hand, scrutiny proceedings u/s. 143(3) was pending before the AO. Therefore, the action of the AO of issuing summons u/s. 131 of the IT Act, enforcing the attendan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in his bank account on 22.11.2016 is an unexplained cash credit u/s. 68 of the Act. 9. Shri Sakshi Gopal Agrawal, Ld. Authorized Representative (for short AR ) for the assessee at the threshold submitted that the A.O had grossly erred in law and facts of the case in treating the cash deposit of Rs. 33 lac (supra) that was sourced from the duly audited books of account of the proprietary concern of the assessee, viz. M/s. CP Coal Company as an unexplained cash credit u/s. 68 of the Act. Elaborating on his contention, the Ld. AR had taken me through the copy of the cash book of the aforementioned proprietary concern, viz. M/s. CP Coal Company for the year under consideration, Page 79-93 of APB. The Ld. AR had specifically drawn my attention to the transactions in the cash book on 22.11.2016, which revealed that cash deposit of Rs. 33 lac was made by the assessee in his bank account, viz. CC A/c. No.20246189407 with Allahabad Bank. The Ld. AR submitted that as the subject cash deposit of Rs. 33 lac was made by the assessee from the regular books of account of his proprietary concern, viz. M/s. CP Coal Company, therefore, there was no justification for the A.O to have held the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensibly, the cash deposit of Rs. 33 lac (supra) as had been culled out by the A.O in the body of the assessment order based on the assessee s statement recorded u/s. 131 of the Act, dated 16.12.2019 is primarily sourced from, viz. (A) opening cash-in- hand on 01.04.2016: Rs. 5.10 lacs (approx.); (B) cash withdrawn from bank account, viz. (i) CC A/C. No20246189707 with Allahabad Bank, Branch: Amrit Sandesh Complex, Raipur; AND (ii) OD A/c. No.915030057859194 with Axis Bank Ltd. Branch: Pandri: Rs. 29 lacs; and (C) cash introduced by the assessee as capital contribution (out of his personal funds) in his proprietary concern : Rs. 21.70 lacs. 13. In so far the opening cash in hand on 01.04.2016 of Rs. 5.10 lacs (supra) is concerned, I find that the availability of the same with the assessee on 31.03.2016 can safely be gathered from the balance sheet of his sole proprietary concern i.e. M/s. CP Coal Company as on 31.03.2016, i.e. for A.Y.2016-17, Page 78 of APB. Also, the cash withdrawals made by the assessee from his bank account during the year under consideration, i.e. over the period 16.05.2016 to 21.09.2016 of Rs. 29 lacs (aggregate) is proved on a perusal of the bank accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concern, viz. M/s. CP Coal Company aggregating to Rs. 21.70 lacs (supra) in absence of any supporting material, and being beyond human probabilities cannot be accepted. 15. Based on my aforesaid observations, the cash in hand available with the assessee in the books of account of his proprietary concern, viz. M/s. CP Coal Company, i.e. on the date on which he had made a cash deposit of Rs. 33 lacs in his CC A/c. No.20246189707 with Allahabad Bank, Branch: Amrit Sandesh Complex, Raipur would stand reduced by an amount of Rs. 21.70 lacs, i.e. the capital (in cash) allegedly claimed to have been introduced by him during the period 13.10.2016 to 02.11.2016 out of cash in hand (from personal account). As the cash book of the assessee reveals availability of the CIH as on 22.11.2016 of Rs. 33,14,870.58, therefore, after reducing the same by an amount of Rs. 21.70 lacs (supra) the balance remains at Rs. 11,44,870.58. Accordingly, I am of the view that the cash in hand available with the assessee to source the cash deposit of Rs. 33 lacs on 22.11.2016 is explained only to the extent of Rs. 11,44,870.58. I, thus, in terms of my aforesaid observations restrict the addition in the hands of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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