ITO Vs Rajeev Sareen Indore (ITAT Indore)
1. The assessee had made huge cash deposits in different bank accounts.
2. During assessment-proceeding, the assessee claimed that the cash-deposits were made out of the opening cash-balance available with him.
3. Ld. AO perused the return of income of the immediately preceding year held by department on record and observed that the assessee had declared “Nil” cash balance as on 31st march of preceding year in the return.
4. When this fact was confronted to the assessee, it was submitted by him that the reporting of “Nil” cash balance was just a reporting- error, but the assessee was factually having cash-balance as claimed by him during the assessment.
5. Accordingly the AO held that when the assessee had ‘NIL’ cash balance on 31st march of one year as shown in return, the assessee cannot have huge cash balance on very next date i.e. 1st April of next year as claimed by him during the assessment and therefore the cash deposits were unexplained.
6. The CIT (A) accepted the submissions of the assessee and deleted the additions.
7. That against the order of CIT(A) revenue filed an appeal before ITAT
8. Before the ITAT it was again submitted on behalf of the assessee that the reporting of “Nil” cash balance was just a reporting- error, but the assessee was factually having cash-balance as claimed.
9. The Tribunal while setting aside the order of CIT(A) Held:
a) The ITR is a sacred document prescribed in law and reporting-error cannot be pleaded so lightly
b) The prescribed forms of ITR have suitable columns to furnish the details of cash-balance, This law procedure has been in statute for several years and nobody can dispute it.
FULL TEXT OF THE ORDER OF ITAT INDORE
Feeling aggrieved by appeal-order dated 21.06.2017 passed by learned Commissioner of Income-Tax (Appeals)-II, Indore [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 30.03.2015 passed by learned ITO, Ward-5(5), Indore [“Ld. AO”] u/s 143(3) of the Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2012-13, the revenue as well as assessee have filed these cross-appeals.
2. Briefly stated the facts are such that assessee-individual is engaged in property business. He filed return of income declaring total income at Rs. 7,90,290/- and agricultural income of Rs. 5,04,360/-. The case was selected under scrutiny and statutory notices u/s 143(2)/142(1) were issued from time to time, which were complied with by assessee. Finally, Ld. AO completed assessment whereby (i) an addition of Rs. 1,56,25,499/- was made on account of unexplained cash-deposits in Bank A/c; (ii) agricultural income of Rs. 5,04,360/- was not accepted; and (iii) Development expenses of Rs. 31,83,223/- claimed by assessee as business-deduction were disallowed. Being aggrieved, the assessee filed first-appeal to Ld. CIT(A) and got substantial relief. Now, the revenue as well as assessee both are aggrieved by the order of Ld. CIT(A) and have come before us.
3. We first take up revenue’s appeal and thereafter assessee’s appeal.
Revenue’s Appeal:
4. Revenue has raised following grounds:
“1. Whether in facts and circumstances of the case the Ld. CIT(A) erred in deleting the addition of Rs.1,56,245,499/- made by the AO on account of unexplained cash deposit in the bank account.
2. Whether in facts and circumstances of the case the Ld. CIT(A) erred in deleting the addition of Rs.1,56,245,499/- even when the income of earlier years does not support this kind of cash balance claimed and even the turnover of assessee for preceding year was blow auditable limits and or A.Y.2010-11, there was no business income of assessee.
3. Whether Ld. CIT(A) was justified in restricting the addition on account of bogus agricultural income of Rs. 5,04,360/- to Rs. 1,25,000/- without affording any opportunity to AO before accepting the sale bills of agriculture produce and estimating agricultural expenses.”
Ground No. 1 and 2:
5. In these grounds, the revenue has claimed that the Ld. CIT(A) has erred in deleting the addition of Rs. 1,56,25,499/- (Rs. 1,56,245,499/-) is wrongly mentioned in Ground) made by Ld. AO on account of explained cash-deposits in Bank.
6. During assessment-proceeding, Ld. AO observed that during the AY 2012-13 (previous year 2011-12), the assessee had made a total cash-deposit of Rs. 1,56,25,499/- in different bank accounts. When the Ld. AO confronted the assessee about the source of cash-deposit, the assessee submitted Cash-Book showing opening balance of Rs. 1,76,64,438/- as on 01.04.2011. The assessee claimed that the impugned cash-deposits of Rs. 1,56,25,499/- were made out of the aforesaid opening cash-balance available with him. Ld. AO perused the return of income of the immediately preceding AY 2011-12 held by department on record and observed that the asssessee had declared “Nil” cash balance as on 31.03.2011 in the return. Accordingly, Ld. AO was not satisfied with the opening cash-balance of Rs. 1,76,64,438/- as on 01.04.2011 claimed by assessee. Therefore, the Ld. AO treated the cash-deposited in bank as unexplained and made addition.
7. During first-appeal, Ld. CIT(A) was satisfied with the submissions of assessee and hence deleted addition by observing as under:
“2.2 After carefully examining the submission of the appellant, it is clear that the audited cash book so produced cannot be just brushed aside by the AO. Further, the assessments for A.Y.2010-11 & 2011-12 were completed u/s 143(1) of Income Tax Act, 1961 and thus there was no occasion to examine or produce cash book or other accounts for these year. The appellant had submitted the cash flow/cash book for these year. The appellant had submitted the cash flow /cash book for the A.Y.2011-12 for co-relating the opening cash balance of A.Y.2012-13. Thus, in view of these facts and evidence so produced the contention of the AO that the cash in hand for A.Y. 2011-12 was Nil cannot be accepted. In view of the above discussion, detailed submission of the appellant, the cash flow and cash book so produced both at the stage of assessment and appeal, this addition does not appear to be warranted. Further, the appellant has also produced the assessment order for A.Y.2009-10 in which despite specific query and AIR information on cash deposit, the addition was not made by the AO after detailed examination of cash book. Same was the case for the appellant’s wife for A.Y.2009-10 where no addition was made on account of deposit of cash in bank account after due examination of the Books of accounts. Also the Hon’ble I.T.A.T. Bench (E) New Delhi in the case of Deputy Commissioner of Income Tax vs. Shri Manish Kumar Agrawal ITA No. 3301/Del/2012 for A.Y.2008-09 and in ITA No. 3475/Del/2012 for A.Y.2008-09 held that “when in the Electronic filing of the return, there is no provision for filing of the balance sheet, then non furnishing of the balance sheet cannot lead to the presumption that there was no cash in hand with the appellant.” So the AO’s contention that there was NIL cash balance for F.Y.2010-11 does not hold good as the return was accepted u/s 143(1) of the Income Tax Act, 1961 and the appellant has given detailed cash flow for the A.Y.2011-12 for co-relating the cash balance with the opening cash balance of A.Y.2012-13. Thus, I am afraid that this addition cannot be sustained and is hereby deleted. This ground of the appeal is allowed.”
8. Before us, learned representatives of both sides made strong submissions contesting their rival claims. We have heard them peacefully at length. The controversy between parties is very simple and can be fit in a narrow compass of facts. It is so that the assessee made a cash-deposit of Rs. 1,56,25,499/- in bank accounts and claimed to have sourced from opening cash-balance of Rs. 1,76,64,438/- possessed by him as on 01.04.2011 but the claim of assessee is not acceptable to revenue. Hence we only need to examine whether the assessee had opening cash-balance or not?
9. Ld. AR submitted that the assessee was possessed of cash-balance from year to year as under:
