Case Law Details
Narayana Shibaroor Shibaraya Vs ITO (ITAT Bangalore)
If deposit of money in bank a/c is preceded by withdrawal of money from the very same bank a/c then the source of funds is prima facie demonstrated or explained by Assessee.
Assessee, a retired bank employee earning pension, deposited Rs.15 lakhs cash in his bank account on 13.11.2016 which he explained as withdrawal on 13.10.2015 or a perceived need and kept the cash with him and the very same cash was deposited.
AO rejected the explanation for the reason that the assessee failed to explain the perceived need for which cash was withdrawn holding that no prudent person would keep cash and lose interest if he deposits the money in FD. AO treated the cash deposit u/s 69A. CIT(A) confirmed the addition.
On further appeal, the assessee contended before the hon’ble Bangalore ITAT that if there is no evidence to show that the cash was utilized by the assessee elsewhere, the availability of cash as a source for deposit into the bank account cannot be rejected relying on decision in the case of Col.Rajan in ITA No.101/Bang/2022.
Tribunal was observed that the withdrawal of cash from the bank a/c prior to deposit of cash is not disputed by the revenue. The fact that the Assessee did not explain the reasons for withdrawal of cash from his bank cannot be the basis to hold that the source of deposit of cash was not explained by the Assessee. The legal position in this regard is that if the deposit of money in the bank account is preceded by withdrawal of money from the very same bank account, then the source of funds is prima facie demonstrated or explained by the Assessee.
The Tribunal noted that the Honourable Karnataka High Court in the case of S.R. Venkata Ratnam Vs CIT, Karnataka-I & Others 127 ITR 807 has held that once the Assessee discloses the source as having come from the withdrawals made on a given date from a given bank, it was not open to the revenue to examine as to what the Assessee did with that money and cannot chose to disbelieve the plea of the Assessee merely on the surmise that it would not be probable for the Assessee to keep the money unutilized.
Tribunal further held that if the revenue wants to disbelieve the plea of the Assessee then it must show that the previous withdrawal of cash would not have been available with the Assessee on the date of deposit of cash in the bank a/ct. It held that AO & CIT(A) have proceeded purely on assumption and surmises that cash withdrawn was not available to the Assessee on completely extraneous factors.
The Tribunal held that the explanation offered by the Assessee with regard to the source of deposit of is satisfactory & deleted the addition.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal by the assessee against the order dated 24.06.2022 of NFAC, Delhi, relating to Assessment Year 2017-18.
2. The assessee in this case, is an individual and is a retired bank employee and earns income in the form of pension. He deposited cash of a sum of Rs.15 lakhs in his bank account with Vijaya Bank on 13.11.2016. The AO called upon the assessee to prove the source of cash deposited in the bank account. The assessee explained that on 13.10.2015 he withdrew a sum of Rs.15 lakhs for a perceived need and kept the cash with him and the very same cash was deposited in SB Account on 13.11.2016.
3. The above explanation of the assessee was rejected by the AO for the reason that the assessee failed to explain the perceived need for which cash was withdrawn from the bank account. According to the AO, no prudent person would keep cash and lose interest if he deposits the money in Fixed Deposit. The AO, therefore, treated the cash deposit of Rs.15 lakhs under section 69A of the Income Tax Act, 1961 (hereinafter called ‘the Act’) as unexplained money. On appeal by the assessee, the CIT(A) confirmed the order of the AO for the very same reason that were assigned by the AO for the rejection.
4. Aggrieved by the order of the CIT(A), the assessee has preferred the present appeal before the Tribunal. Learned Counsel for the assessee placed reliance on the decision of the SMC of ITAT, Bengaluru Bench, in the case of Col.Rajan in ITA No.101/Bnag/2022, order dated 01.06.2022 wherein this Tribunal on a similar plea taken by the assessee accepted the plea of the assessee and observed that if there is no evidence to show that the cash was utilized by the assessee elsewhere, the availability of cash as a source for deposit into the bank account cannot be rejected. Learned DR relied on the order of the CIT(A).
5. I have considered the rival submission. I am of the view that the explanation offered by the Assessee with regard to the source of deposit of Rs.15.00 lakhs in his bank account is satisfactory and therefore, no addition can be made on account of unexplained cash. As rightly contended by the ld.counsel for the Assessee, the withdrawal of cash from the bank account prior to deposit of cash is not disputed by the revenue. The fact that the Assessee did not explain the reasons for withdrawal of cash from his bank account cannot be the basis to hold that the source of deposit of cash was not explained by the Assessee. The legal position in this regard is that if the deposit of money in the bank account is preceded by withdrawal of money from the very same bank account, then the source of funds is prima facie demonstrated or explained by the Assessee. The Honourable Karnataka High Court in the case of S. R. Ventakaratnam Vs CIT, Karnataka-I & Others 127 ITR 807 has held that once the Assessee discloses the source as having come from the withdrawals made on a given date from a given bank, it was not open to the revenue to examine as to what the Assessee did with that money and cannot chose to disbelieve the plea of the Assessee merely on the surmise that it would not be probable for the Assessee to keep the money unutilized. The decision of the Hon’ble Karnataka High Court supports the plea of the assessee. It is seen that the cash deposits in the bank account are preceded by withdrawal from the very same bank account. I am of the view that the ratio laid down in the aforesaid judgment will apply to the facts of the present case. If the revenue wants to disbelieve the plea of the Assessee then it must show that the previous withdrawal of cash would not have been available with the Assessee on the date of deposit of cash in the bank account. The AO and CIT(A) have proceeded purely on assumption and surmises that cash withdrawn was not available to the Assessee on completely extraneous factors. In our view, the Assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. I therefore delete the addition made in this regard. Consequently, the appeal of the Assessee is allowed.
6. In the result, appeal of the assessee is allowed.
Pronounced in the open court on the date mentioned on the caption page.
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