Smt. Pinki Devi Agarwal Vs ITO (ITAT Jaipur)
For explaining the cash deposit in the bank account of Rs. 13,82,626/-, the assessee has filed the cash book showing the opening cash balance of Rs. 11,32,626/- and gift of Rs. 2,50,000/- received during the year, out of which Rs. 1,50,000/- received from mother Smt. Santosh Devi Agarwal and Rs. 1,00,000/-from father Shri Mali Ram Agarwal. The assessee produced the gift deeds whereby the mother and father of the assessee have confirmed the gifts given of Rs. 1,50,000/- and Rs. 1,00,000/- respectively to the assessee. It is pertinent to note that the assessee has been filing her return of income regularly and also produced the return of income as well as balance sheets for the assessment years 2009-10 and 2010-11, and these facts and records are not in dispute. Since none of the returns of income in the preceding year were subjected to scrutiny assessment, therefore, the availability of cash with the assessee would not be proved by mere filing of return of income. However, the assessee has shown the availability of cash of Rs. 11,32,626/- in the books of account being opening cash balance as on 01.04.2010. The said cash was also closing cash balance as on 31st March, 2010 in the balance sheet as on 31st March, 2010. The returns of income though were not subjected to scrutiny, however, once the cash was reflected in the books of account and part of the balance sheet of the assessee, then in the absence of said cash introduced in the books of account by the assessee during the year under consideration, the issue of making addition by disallowing the availability of cash in the hands of the assessee can be considered only in the preceding year in which the cash was introduced by the assessee in the books of account. The AO during the assessment proceedings was very well aware of the fact that Rs. 11,32,626/- was stated to have been introduced in the books during the earlier assessment year and, therefore, if the said claim of the assessee was not acceptable then the proper course of action was to make the addition of this cash introduced in the books of account under section 68 in the relevant assessment year in which the said cash was introduced in the books and not in the year under consideration when it is shown as opening cash balance. The AO instead of taking up the assessment of the preceding year has made the addition of the said amount by rejecting the source of the amount as shown as opening cash balance. Further, the AO has not rejected the books of accounts of the assessee and, therefore, once the assessee has established the availability of the cash in the books of account, then the proper course of action for rejecting the said claim and making the addition is to reopen the assessment of the earlier year. Hence, to the extent of availability of cash of Rs. 11,32,626/- being opening cash balance which was duly reflected in the books of account of the assessee for the year under consideration as well as in the earlier year, the same cannot be rejected and the consequential addition is not sustainable.
As assessee had duly proved source of cash deposit in her bank account to be opening cash balance and gift from her parents, no addition could be made under section 68.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is directed against the order dated 15th March, 2018 of ld. CIT (A)-2, Jaipur for the assessment year 2011-12. The assessee has raised the following grounds :-
“ 1. Under the facts and circumstances of the case the learned CIT (A) has erred in confirming the addition of Rs. 13,82,626/- on account of cash deposited in bank.
2. Under the facts and circumstances of the case the learned CIT (A) has erred in confirming the addition of Rs. 2,14,050/- on account of disallowance of plot registration expenses incurred out of opening cash balance.
3. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing.”
Ground No. 1 is regarding addition made on account of cash deposited in the bank account.
2. The assessee is an individual and earning income from business and other sources. The assessee filed her return of income on 12th January, 2012 declaring total income of Rs. 2,54,887/-. In the scrutiny assessment, the AO noted that there is a cash deposit of Rs. 16,81,000/- in the two bank accounts of the assessee, the details of which are as under :-
1. AXIS bank account no. 910010013887284.
