Case Law Details

Case Name : Rakesh Sharma Vs ITO (ITAT Jaipur)
Appeal Number : ITA No. 371/JP/2022
Date of Judgement/Order : 29/09/2023
Related Assessment Year : 2008-09

Rakesh Sharma Vs ITO (ITAT Jaipur)

In a recent case before the Income Tax Appellate Tribunal (ITAT) Jaipur, the authorities carefully examined the findings of lower authorities, submissions, and evidence provided by the parties. The crux of the matter revolved around the assessee’s day-to-day cash flow statement, particularly regarding credits from bank transfers and subsequent cash withdrawals.

Background and Assertions: The assessee, in its defense, presented a comprehensive cash flow statement based on the ICICI S/B bank statement. The statement, available in the Assessee’s paper book, indicated sufficient cash availability on the respective days of cash deposits. However, lower authorities denied the credits of bank transfers and cash withdrawals, raising questions about the genuineness of these transactions.

ITAT’s Analysis: The ITAT meticulously examined both the cash flow statement and the bank statement related to the ICICI account. The bank statement revealed numerous transactions, including deposits, bank transfers, RTGS, and cash withdrawals. The Assessing Officer (AO) acknowledged these transactions but denied their credibility, citing a lack of substantial supporting evidence.

However, the ITAT disagreed with the AO, emphasizing that if evidence is relied upon, it should be considered in its entirety. The tribunal asserted that credits through bank transfers and RTGS from third parties demonstrated the genuineness of the source in the hands of the appellant.

Key Observations:

1. Misinterpretation of Certificate: The ITAT scrutinized a certificate from Ratnawali Jewelers (RJ), confirming the transactions related to the ICICI account. The AO, without making direct inquiries from the transferring parties, suspected the transactions. The ITAT rejected this suspicion, stating that the certificate’s confirmation by RJ proved the bona fides and genuineness of the source.

2. Cash Withdrawals and Recycling: The ITAT dismissed the AO’s contention that cash withdrawals should be excluded from the cash flow statement. The tribunal emphasized that unless the AO could prove the cash withdrawals were spent or utilized elsewhere, they should be considered available for recycling and rotation.

3. Opening Cash Balance: The ITAT disagreed with the estimation of the opening cash balance by the Commissioner of Income Tax (Appeals) [CIT(A)]. The tribunal stated that the meager saving of Rs. 2,50,000 was plausible, considering the assessee’s salary from RJ and age at that time.

4. Discretion of the AO: The ITAT reminded that provisions under sections 68 and 69 of the Income Tax Act grant discretionary power to the AO. In the absence of contrary evidence, the tribunal found no justification for making the addition of Rs. 22,54,250 under section 69, directing its deletion.

Conclusion: The ITAT’s decision underscores the importance of considering all available evidence in its entirety. The tribunal emphasized the need for the AO to judiciously exercise discretion and provide concrete evidence before denying the genuineness of transactions. This case sets a precedent for similar situations, reinforcing the principle that evidence should be read comprehensively, and doubts must be substantiated.

FULL TEXT OF THE ORDER OF ITAT JAIPUR

The assessee has filed an appeal against the order of the Id. CIT(A)-I, Jaipur dated 22-07-2017 for the assessment year 2008-09 wherein the assessee has raised the following grounds of appeal.

“1. The very action taken u/s 147 r.w.s. 148 is bad in law jurisdiction and being void ab initio, the same kindly be quashed. Consequently, the impugned assessment framed u/s 144/148 dated 29-02-2015 also kindly be quashed.

2. The AO erred in law as well as on the facts of the case in making addition of a huge amount of Rs.22,54,250/- being the cash deposit / credits appearing in a joint bank account with ICICI Bank u/s 68 as unexplained cash credits. The addition so made being totally contrary to the provisions of law and facts on the record and hence the same kindly be deleted in full.”

2.1 In Ground-I, the assessee has challenged the action taken u/s 147/148 being without jurisdiction and prayed to quash the notice u/s 148 as also the impugned assessments order dated 29.02.2015 mainly on the plea that there was no valid service of the notice u/s 148 and that the AO had reason to suspicion than reason to believe. The submissions so made by the Id. AR of the assessee are detailed below:-

“Submission:

3.1 It is submitted that the law contemplates a valid service of a notice u/s 148, which is a condition precedent for a valid assumption of jurisdiction by the concerned AO. If it is established that there was no valid service/service of such a notice, the AO cannot assume jurisdiction and consequently the assessment made by him pursuant thereto has to be quashed.

3.2 In the impugned order, the Id. AO has stated that the impugned notice u/s 148 dated 25.03.2015 was served upon the assessee through postal authority vide Receipt No. ER267470372 dated 27.03.2015 at the address given in the PAN data. However, as a matter of facts the impugned notice was never served upon the assessee Shri Rakesh Sharma nor on anyone authorized in this regard. No details have been provided in the assessment order as to the name of the person on whom the alleged service, if any, was effected and whether that person is the assessee himself or somebody else. It was only a mere assertion without evidence. Although there appears no reference thereof in the impugned assessment order yet however, the said letter has been sent through registered post and cannot be ignored. This way the assessee had also even Med his objection as regards non receipt of notice of any type / nature or under any provisions of the Act.

3.3 Another aspect- to be considered is that once the impugned notice u/s 148 was issued only on 25.03.2015, it is not known as to how it could have reached and served upon anyone prior to 31.03.2015 looking to the small period of time available with the department. Such service, if not impossible, was also not free from all reasonable doubts to have been served before 31.03.2015.

3.4 The Authorities below has repeatedly contended that the notice was served within the period of limitation provided u/s 149 of the Act. However, they completely ignored the mandatory provisions of 8. 148(2) which provides that a valid service of a notice n/a 148 is a condition precedent for completion of the assessment validly, pursuant to proceedings initiated u/s 147 of the Act. The AO has also admitted this settled law at Pg. 10 of CIT (A) Order through his Remand Report.

3.4.1 Kindly refer :

In the case of Y. Narayana Chetty 8a Anr. vs. ITO (1959) 35 ITR 388 (SC) it was held that :

“The service of the requisite notice on the essence W a condition precedent to the validity of any reassessment made under s. 34; and if a valid notice is not issued as required, proceedings taken by the ITO in pursuance of an invalid notice and consequent orders of reassessment passed by him would be void and inoperative. The notice prescribed by s. 34 cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assesses as required that the ITO would be Justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid then the validity of the proceedings taken by the ITO without a notice or in pursuance of an invalid notice would be illegal and void.”

3.4.2 The above decision was followed in the case of Mrs. Shubhashri Panickeer vs. CIT (2018) 166 DTR (Raj) 403 ITR 434 (HC)(DPB 1.11).There are several other decisions taking this view.

3.5 The fact that the impugned notice u/s 148 was sent through registered post even does not provide any support of the provisions of S. 27 of the General Clauses Act, 1897, (otherwise also not so claimed )in as much as the same merely provides a rebuttable presumption and the moment such presumption is rebutted ,onus again shifts upon the revenue. The scope of this provision has been explained in Harcharan Singh vs. Shiv Rani, AIR 1981 SC 1284, as under:

Sec. 27 of the General Clauses Ad, 1897 deals with the topic- ‘Meaning of – service by post’ and says that where any Central Act or regulation authorizes or requires any document to be served by post, then unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting it by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. The section thus raises a presumption of due service or proper service if the document sought to be served is sent by properly addressing, prepaying and posting by registered post to the acidresiee and Such presumption is raised irrespective of whether any acknowledgement due is received from the addressee or not. It is obvious that when the section raises the presumption that the service shall be deemed to have been effected it means the addressee to whom the communication is sent must be token to have known the contents of the document sought to be served upon him without anything more. Similar presumption W raised under Illustration (I) to s. 119 of the Indian Evidence Act where under it is stated that the Court may presume that the, common course of business has been followed in a particular case, that is to say, when a letter is sent by post by prepaying and properly addressing it the same has been received by the addressee. Undoubtedly the presumptions both under s. 27 of the General Clauses Act as well as under section 114 of the Evidence Act are rebuttable but in the absence of proof to the contrary the presumption of proper service or effective service on the addressee would arise.”

The reliance by ld.CIT(A) on Atulbhai Hiralal (supra) is also misplaced Firstly, if it is a mere dismissal of SLP and not a declaration of law under Article 142 of the Constitution of India. Secondly, pertinently the notice was received back unserved as admitted by the CIT himself in para 3.1.2 (I) pg.12. Thus, when the post sent itself has come back there can’t be any presumption of service. It is not claimed that the envelope had comeback with the remark left. The assessee never claimed to have changed the address nor that he was not available at the given address. Therefore, the impugned assessment order passed without complying with the mandatory requirement of 8.148(2), is a nullity being without jurisdiction and deserves to be quashed.”

2.2 On the other hand, the Id. DR supported the order of the Id. CIT(A)

2.3 After a careful consideration, we find that the Id CIT(A) was justified in rejecting the claims so made by of the assessee by way of a detailed discussion in the light of the judicial pronouncements cited therein. Finding no merit in this ground of appeal, therefore, this Ground No. 1 taken by the assesses is rejected.

3.1 Apropos ground No. 2 of the assessee, the A.O. during the course of assessment proceedings and on the basis of information noticed that the assessee has deposited cash of Rs.29,98,450/- in his saving bank accounts with !CIO Bank Ltd but alleging that the assessee failed to explain the source of the cash credit found in the bank account which remained unexplained u/s 68 and added the entire deposit made on different dates totaling to Rs.29,98,450/- as the income from undisclosed sources. The relevant findings of the AO at pare 7 of his order are as under:-

“7. Under the facts and circumstances of the case and relying upon the above judgement, it is deduced that the assessee has failed to explain the source of cash deposit/credit to his bank account and he has offered no proper, reasonable and acceptable explanation to the source of cash credit of Rs.29,98,450/- in the bank account. Therefore, in view of the above, it is fairly construed that the assessee has absolutely failed to explain the source of cash credit which remains unexplained u/s 68 of the Income Tax Act, 1961. Accordingly, the credit of Rs.29,98,450/- is treated as unexplained income of the assessee out of undisclosed sources of income and the same is added to the total income of the assessee..”

3.2 Aggrieved by the order of the AO, the assessee carried the matter before the ld. CIT(A) who has restricted the addition to the extent of Rs.22,54,250/- by observing as under:-

(vi) In the instant case under consideration, no specific finding was given by the AO regarding the utilization of cash withdrawal by the assessee from its bank accounts in some investment or expenditure. Therefore, in view of the above referred decision of jurisdictional High Court in the case of Sind Medical Store vs CIT(Supra), the benefit of peak credit theory could be allowed to the assessee. On a perusal of the above cash flow statement as prepared during the appellate proceedings and marked as Annexure-A, it appears that there was peak credit negative balance of Rs.23,04,250/-on 31-03-2008. In its written submission, it has been claimed by the appellant that it was having opening cash in hand of Rs.2.50 lees as on 01-04-2007,:however, no evidence was filed by the appellant to Substantiate such claim Therefore, looking to the totality of facts and circumstances of the case, it would be appropriate to take the opening cash in hand as on 01-04-2007 at Rs.50,000/- especially in view of the fact that the appellant was not filing its return of income being below taxable limits in earlier years. Therefore, the amount of Rs.22,54,2504 (23,04,250 – 50,000) found to be remained unexplained. Hence, the addition of Rs.29,98,450/- made by the AO on account of unexplained cash deposits in the bank account of the appellant is restricted to Rs.22,54,250/- and is hereby sustained. However, the AO is hereby directed to go through the cash flow statement annexed as Annexure-A to this order very carefully alongwith the relevant bank statement and if there is any mistake, the AO is to recompute the peak credit and revise the addition accordingly. Hence, this ground of appeal is hereby allowed. Therefore this ground of appeal is partly allowed.”

(vii) It may be mentioned that the AO has made addition on account of unexplained deposits in the saving bank account of the appellant without stating the Section of the Act. Since 1 am having the powers co-terminus with the AO, it is, therefore, held that the addition on account of unexplained deposits in the saving bank account is being made u/s 69 of the Act.

3.3 During the course of hearing, the Id. AR of the assessee prayed for deletion of addition and to this effect he filed a detailed written submission as under:-

“Submission:

1. No addition Legally Sustainable u/s 68 w.r.t bank deposits. The facts are not denied that this assesse is an employee as admitted by lower authorities and in particular by the Id. CIT (A) who categorically recorded this fact in the operative pan at page 2 pant 2.1 that and the appellant did not file its ROI(Page 11 pant 3.1.2). In any case the authorities have never said that the appellant has maintained the regular books of accounts and therefore, the law is well settled that for invoking of S.68, the subjected amount must be found credited in the accounts regularly maired. In thins it is admitted that no accounts were maintained herein, there was naquestion of invoking of S.68.

1.1.1 Supporting Case laws: In CIT vs. P. Mohan Rale (2007) 291 ITR 278 (8C) held “The question is what is the nature and scope of S. 68 of the Act? When and in what circumstances Sec. 68 of the Act would come into play? That a bare reading of S. 68 suggests that there has to be credit of amounts in the books maintained by assessee; sonic credit has to be of during the previous year…”

1.1.2 In ANAND RAM RAITANI vs. CIT (1997) 139 CTR 0235 (Gaul Held: The AO before invoking the power under s. 68 must be satisfied that there are books of account maintained by the assessee and the cash credit is recorded in the said books of account and if the assessee fails to satisfy the AO, the said sum so credited has to be charged to income-tax as the income of the assessee of that previous year. The existence of books of account is a condition precedent for invoking of the power. Discharging of burden is a subsequent condition. If the first point is not fulfilled the question of burden of proof does not arise. The books of account of the firm are not the books of account as contemplated under s. 68. A partnership firm is a separate entity and may be the assessee was a partner of the said firm, but that does not mean that these books of account were maintained by the assessee in his individual capacity. Such books have to be the books of the assessee himself and not of any other assessee. A partnership firm is an assessable entity distinct from the individual partner. The books of account of a partnership cannot be treated as those of the individual partner. In the facts and in the circumstances, s. 68 had no application at all to this case-Smt. Shanta Devi vs. CIT (1988) 171 ITR 532 (P&H) : TC 42R.1125 concurred with.

1.2 In this case the credits are admittedly found in the bank passbook however, the bank passbook is not books of accounts u/s 68 as held in the case of Snit. Shanta Devi vs. CIT (1988) 171 ITR 532 (P&H) wherein , it was hold as under (DPB 12-14):

‘Perusal of section 68 would show that in relation to the expression ‘books’ the emphasis is on the word ‘assesses. In other words, such books have to be the books of the assesses himsetf and not of any other assesses. In the present case, the assessee maintained no books of account. The cash credit entry of which the impugned amount formed pan, was found in the books of account of the partnership firm, which in its own note, was an assessee. In view of this, the books of account. of 11w partnership firm herein could not be considered that of the individual assesses herein and, therefore section 68 was not attracted to the present case Accordingly, the addition made on account of the impugned amount was not justified’

1.3 The Id.-CIT(A) at page 32 pars (vii) has held as under:

‘it may Be mentioned that the AO has made addition on account of unexplained deposits in the saving bank account of the appellant without stating the section of the Act. Since, I am hating the powers co terminus with the AO, it is, therefore held that the addition on account of unexplained deposits in the saving bank account is being made u/s 69 of the Act.’

Firstly, it is wrong to say that the AO did not state any Section in much as the AO very clearly made the addition u/s 68 only as a cash credit addition as evident from his findings recorded at page 6.1 pare 6 followed by various case laws which also refers to S.68 only and thereafter he concluded in pare 7 page 8 where he finally made the addition of Rs. 29,98,450/- as unexplained cash credit u/s 68 of the Act. Thus, to say that the AO did not mention the section is factually wrong and is a fact twisted by Id. CIT (A) to suit his own convenience.

Secondly, the use by the first appellate authority of co-terminus power is not open in a case where the appellate authority tries to find out a new source of income. In this case, the AO made addition u/s 68 which is meant for unexplained cash credit only however the Id. CIT (A) wants to make some other addition au/s 69 as unexplained deposit in bank account. The CIT (A) thus, could not have introduced new provision and new sources of income as held in the cases as under:

1. CIT vs. Rai Bahadur Hardutroy Motilal Chamaria (1967) 66 ITR 443 (SC)

2.CIT vs. Shapoorji Pallonji Mistry (1962) 44 ITR 891 (SC)

3. CIT vs. Associated Garments Makers (1992) 197 ITR 350 RAJ RC), It was held under:

“6. We have given our thoughtful consideration to the rival contentions and have looked into the provisions of law.

7. X    X     X      X      X      X A perusal of ss. 246 to 257 makes it dear that any questions wising out of the assessment orders in an appeal by the assessee can be possible and wide powers are given to the appellate authority, but these powers are circumscribed to the assessment order in the matters wising thereof or a matter arising out of the proceedings, evert the appellate authority can suo mots consider the questions arising thereof but there is no provision to go beyond the matter arising out of the proceedings before the assessing authority, more particularly for which separate provisions are made in the Act. The Tribunal had elaborately discussed the provisions of the Ad and the case law on the subject and has rightly come to the conclusion that new sources not mentioned in the return or considered by the ITO are beyond the scope of powers of the AAC. The case relied on by the Learned Counsel for the petitioner that power of sating aside the assessment order remanding the case for reconsideration of the whole matter including the evasion by the assessee, is not applicable in the facts of the present case because the matter wising in that case was one which arose out of the proceedings before the ITO. The question was not about new and fresh material for the purposes of enhancement. On the contrary, the case is clearly covered by the decisions of the Supreme Court, CIT vs. Shapoorji Pallonji Mistry (supra) wherein it has been held that, “In an appeal filed by the assessee the AAC has no power to enhance the assessment by discovering new sources of income not mentioned in the return of the assess.. or considered by the ITO uh the order appealed against”, and the case reported in CIT vs. Rai Bahadur Hardutroy Mall& Chamaria (supra) wherein if has been held that, ‘It is not, therefore, open to the AAC to travel outside the record, i.e., the return made by the assessee or the assessment order of the ITO, with a view to finding out new sources of income and the power of enhancement under s. 31(3) is restricted to the sources of income which have been the subject-matter of consideration by the ITO from the point of view of taxability’. Thar Lordships considered the meaning of the word ‘consideration’ and held that, “Consideration’ does not mean, ‘incidental’ or ‘collateral’ examination of any matter by the ITO in the process of assessment, therefore, there must be something in the assessment order to show that ITO applied his mind to the particular subject-matter or the particular source of income with a view to its taxability or to its non-taxability and not to any incidental connection. In the instant case, the AAC has, after issuing notice, himself considered the new material and has gone into new sources of income the consideration of which he had no jurisdiction.

8. In fact, we fail to understand as to why when the order was brought to the notice of the Commissioner himself proceeded into direction when he had ample powers under other provisions of this Act. There are various other provisions under the IT Act which can be evolved in erases of escaped income or such situation where the new sources had been left to be considered, but that would not give powers to the MC to transgress his jurisdiction. We, therefore, find no case for reference and the Reference Application is rejected.’

In the above case the AO made the disallowance of the claim of interest paid u/s 36 (1) (iii) of the Act. However, the Id. CIT(A) have made enhancement of income of Rs. 3.24 Lac u/s 2 (22) (e) and of Rs. 97,303 u/s 2(24) (iv) and also of cash credit of Ra. 1.32 Lac u/s 68. In this context, the above decision was rendered. This Hon’ble ITAT accepted this contention and following the above decisions held so in the case of Geetanjali Hotels & Promoters Pvt.Ltd vs. ACIT/DCIT,Circle-2,Jaipur ITA. No. 298 & 299/JP/2017 Order dated 26/09/2022 as under:

8. During the course of hearing, the Id. AR of the assessee has lucidly submitted the details of the investment made in AOP by the assessee company x xxx . It is also noted from the record that the assessee was having total interest funds to the tune of Rs.15.13 crones whereas total loan given to subsidiaries were to the tune of Rs.12.92 awes (PR 41) only and if the amount of interest charged is further reduced from this amount then it comes to Rs.6.35 Crores (Rs.12.92 Cr. Minus Rs 6.57 Cr.) which is more than the disallowance confirmed by the ld CIT(A) amounting to Rs. 1,74,18,626/-. The decisions relied upon by the id. AR of the assessee finds favour in this case. Since, the assessee has not challenged the finding of the id. AO. The addition made by the Id. AO is confirmed and that of the id CIT(A) is reversed. In this view of the matter, we feel that the CIT (A) has exceeded his jurisdiction and the enhancement made by the la CIT(A) deserves to be deleted. Thus Ground No. 1 of the assessee is allowed’

Hence the ratio of the above case laws fully applies.

In any case the CIT (A) has never given any opportunity to the appellant before taking the decisions which otherwise amounts to the sense that without deleting addition made by AO u/s 68 he made addition u/s 69 though did not gave any mathematical effect thereto. Therefore, without giving statutory notice u/s 251(2) , this part of the impugned order deserves to be quashed without taking any cognizance thereof. Thus, the legal contention of the assessee as made above deserves full consideration and adjudication.

Alternatively, and without prejudice

2. On Merits:

2.1 Detailed submissions (PB 6-1 1) and Additional submissions(PB16-17)were made explaining the source of cash deposits w.r.t the summary of the cash withdrawals vis-a-vis the cash deposits (PB-5), which are fully reproduced in the order of the CIT(A) and are strongly relied upon. The appraisal of the summary reveal that there is no negative cash balance on any date of deposit. Further in absence of establishing utilization of the available cash elsewhere, the onus of which was upon the AO, no addition was legally possible as was held in various cases already cited in our submissions (PB 6-17) before the CIT (A). Pertinently, even the Id. CIT(A) has recorded a categorical finding on this aspect at pg.31 para(VI) stating that in the instant case under consideration, no finding was given by the AO regarding the utilization of cash withdrawals by the assessee from its bank accounts in some investment or expenditure and department not being in appeal, such finding has attained finality. Importantly, the Id.CIT (A) appeal acting upon and following this finding thereafter also applied the peak theory in his cash flow statement. Notably, he did not whisper a single word otherwise on the merits of the claim so made except w.r.t M/s Ratnawali Jewelers. Therefore, the dispute now rest only on this limited aspect.

2.2.1 The Id. CIT (A) at pg.28 onward reproduced this certificate dt. 05.10.2016 given by M/S Ratnawali Jeweler and thereafter while preparing a fund flow statement in his own way (Annexure A to CH(A) order) denied the benefit of the cash withdrawls made by the assessee in its cash flow statement (PB 5) stating that these cash withdrawls pertained to M/S Ratnawali Jewellers and not to the appellant and thus, the appellant cannot be allowed to take benefit of cash withdrawals from its saving bank account under consideration.

The Id. CIT(A) however proceeded on a purported misreading and misconception of law and facts in as much as what all Ratnawali Jewelers said was that be owned the transaction as an owner. Shri Sunil Sharma merely stated that all the transaction of giving cheque and cash withdrawal pertained/belonged to him which means that he claimed his ownership over the amounts deposited in the bank account and thereafter on the withdrawal therefrom. He never said that the cash shown withdrawn was utilized or taken away by him in any manner and that the same was not available with the appellant. He doesn’t dispute the fact of redeposits of cash out of such cash withdrawals by the appellant in its bank account nor it is the case of the revenue that Shri. Sunil Sharma denied the appellant the access of such cash withdrawals. The certificate was given only in the capacity of the owner but the further fact was read by the Id. CIT (A)to suit his own purpose. Therefore, his conclusion that such cash withdrawals were not available is his own imagination without any supporting material.

2.2.2 Pertinently, even after excluding such withdrawals of Rs. 22.92 lakhs, the shortfall of Rs. 7.06 lakhs only against which appellant was having undisputed cash withdrawals of Rs. 6.99 lakhs further leaving a meager Rs. 7,250/- which could be met by the opening cash in hand of Ra. 50,000/- accepted by the CIT(A). This working was submitted to him on 20.10.2016 (end. here with) but perhaps ignored.

2.3. His further objection that in absence of Shri Sunil Sharma the additional evidence could not be proved at pg.30, is again a purported misconception of law. While filing the certificate, we have already stated in para 1.2 page 25 of CIT(A) order during the course of the appellate proceeding the CIT(A) himself required the certificate. His findings are contradictory as on one hand he alleges the same to be additional evidence but at the same time he has also considered and adjudicated the evidence so filed which implies that he has admitted certificate and on merit he did not give full benefit of the same to the appellant.

2.4. As regard the claimed opening cash in hand of Rs.2.501akh as on 01.04.2007 the Id. CIT (A) partly accepted the plea at pg.31 pr. VI alleging lack of evidence and because appellant was not filing ROI hence he estimated the same at Rs. 50,000/-. Thus, evidently the Id. CIT(A) accepted the contention of availability of opening cash in hand, in principle and what remained was only estimation. He failed to consider the contention of that human probability pre-pondered in favour of the assessee because the fact that the appellant was getting salary from Ratnawali Jewelers was not denied. He was aged 34 years thus, saving of 2.50lakh was not something abnormal. Therefore, the balance of Rs.2.50 lakhs also deserves acceptance.

Hence, the impugned addition kindly be deleted in full even on merit.”

3.4 On the other hand, the ld.DR supported the order of the Id. CIT(A).

3.5 We have carefully considered the findings recorded by the lower authorities in their orders, submissions, replies and rejoinders thereto of the parties very carefully. The assessee prepared a day-to-day cash flow statement based on the ICICI S/B bank statement which is placed at Assesse’s paper book (APB 5) showing that there was sufficient cash availability on or prior to all the respective days when cash was deposited. The lower authorities however, denied the credits of bank transfers therein and the cash withdrawal therefrom. We have carefully perused the cash flow statement and also the bank statement relating to a/c 001201579315 with ICICI bank, copy of which is placed at APB pages 1 to 3 filed by the Assessee. It is revealed that (apart from cash deposits) there appear many transactions of deposits or credit through banking channels/ bank transfers/ RTGS and cash withdrawals which fact has been noted by the AO also in pare 3 page 3 of assessment order which was further detailed by the AO in the remand report in para 4.3 at page 23 of CIT(A) order that there were credits through bank transfers/RTGS from Ratnawali Jewelers (“RJ”), Sajit, Katoda Jewelers, etc. on different dates. But benefit of such credits was denied by the AO alleging that no substantial supporting evidence was filed to prove the genuineness of the transaction. However, we are not in agreement with the AO for the reason that if an evidence is relied upon then it has to be read/relied upon in toto. Panics cannot be permitted to read only a part thereof ‘cause it suits him best and ignore or doubt the other part which does not suit to their wishes. When the AO relied upon the saving bank account and made addition of cash deposits made therein, of Rs. 29,98,450/- and when in the same very bank account, also there were bank transfers/RTGS, then such credits could not be ignored/denied. The very fact that the credits were on account of bank transfers/RTGS from third parties itself prima fade proved the bona fides & genuineness of the source in the hands of the appellant. The claim of withdrawals in cash and utilization towards deposits can’t be denied. No other material has been referred to or relied upon by the AO to justify a different conclusion. It is not alleged that the bank transfers were a made up affair and in reality it was the Assesse’s undisclosed income introduced. It is also not the case of the revenue that they made inquiries from those panics. Thus. we find no justification behind denial to consider availability of the various bank transfers to the credit of the bank account of’ the assessee which were rightly used as a source for subsequent cash deposits made by the assessee. It is noticed that major credits/transfers were from one RJ which is the proprietary concern of Shri Sunil Sharma, of Rs. 22.92 lakhs. Since the AO did not provide any opportunity or confronted of his doubt with regard to those transferring parties, the assessee filed a certificate dated 05.10.2016 from RJ before the CIT(A) placed at (APB 18) wherein Shri Sharma has confirmed that the transactions (narrated in the certificate) of depositing cheque and withdrawing cash in/from the subjected ICICI Account though in the name of the appellant, pertained/belonged to him and that Shri Sharma had nothing to do with these transactions. The Id CIT(A) however, rejected the claim on the plea that cash withdrawals were related to/made out of credits received from RJ, pertained to RI and not to the assessee therefore the assessee cannot be allowed to take benefit of such cash withdrawals. Ile accordingly prepared his own cash flow statement made a part of appellate order as Annexure-A wherein such cash withdrawals were excluded and peak of Rs. 23,04,250/- was worked out. We are, however, unable to agree with such a contention of the Id CIT(A) which is based upon a misinterpretation of the certificate. The mere statement that those transactions pertained/ belonged to RJ could not be taken to be a statement that the cash withdrawal subsequent to the bank transfers by RJ were not available for subsequent cash deposits or that such cash withdrawals were utilized either by RJ/the assessee elsewhere. We agree with the Id AR that Shri Sharma merely confirmed the transactions of deposits and withdrawals as pertaining or belonging to him (and not to the assessee ) in the sense that the assessee cannot/should not claim as an owner thereof and the money transferred belonged to him only. He also confirmed the fact of withdrawal but there is nothing in the certificate to show that cash withdrawal was taken back by him and/or utilized by him elsewhere and in any cast it was not available with the assessee. There apart, the lower authorities did not find any fault or defect in the cash flow statement. The Id CIT(A) observed that the assessee failed to comply with the notices issued by the AO and therefore, the certificate issued by RJ filed as an additional evidence could not be proved. We have already held that even without any supporting evidence the undisputed fact of credits through bank transfers has proved the genuineness of the source available in the very bank account. Otherwise also, the assessee explained the difficulties and the circumstances which were beyond its control in producing RI due to their non­cooperation. The Id DR also could not convert these facts. At the same time, it is also a fact that the AO chose not to make any inquiry directly from those parties who transferred funds but merely suspected. It may be clarified that the Id CIT(A) has not denied the admission of the certificate from RJ which he has even discussed and adjudicated. Moreover, all other additional evidences submitted by the assessee were duly admitted and considered. We thus, find no justification behind the allegation of not proving the certificate given by RJ. The Id CIT(A) therefore, was not justified in excluding the cash withdrawals Rs.9,90,000/-, Rs. 1 lakh, Rs. 4,02000/, Rs. 5 lakhs and Rs. 3 Iakhs made on 11.12.2007, 01.03.2008, 04.03.2008, 06.03.2008 and 25.03.2008 respectively shown by the assessee in its cash flow statement. At the same time, we fully agree with the contention of the Id CIT(A) based on the decisions in the cases of Sind Medical Store(Supra) and Eshwardas Mutha (Supra) by, Hon’ble Rajasthan High Court holding that when any amount is paid and later on withdrawn from the bank, such cash would be available for recycling and rotation unless otherwise established as invested elsewhere by the revenue. Hence, the onus is upon the AO to prove that unless the cash withdrawals has been spent or utilized (by the Assessee) elsewhere and the cash availability is not disproved or rebutted in any manner, the AO is bound to accept the availability of such cash for onward use towards cash deposits in the bank account/investment as claimed. Pertinently, the Id. CIT(A) obscured that no specific finding was recorded by the AO regarding utilization of cash withdrawals by the assessee in some other investment or expenditure at pg 31 pr (VI). So far as the availability of opening cash of Rs. 2,50,000/- is concerned, the Id. CIT(A) alleged that no evidence was filed to substantiate such a claim but looking to the totality of facts & circumstances, he estimated the opening cash balance on 01.04.2007 at Rs 50,000/-only because the assessee was not filing return of income in the earlier years. However, it is an admitted fact that the assessee had been getting salary from RJ. He was aged 34 years at that relevant time and therefore the saving of a meager Rs 2,50,000/- is not beyond the pre-ponderance of human probability so as to be disbelieved. Otherwise also the Id. CIT(A) has not completely rejected the contention but estimated the same at Rs. 50,000/- but without any basis. In these circumstances, we find no justification in rejecting the contention of availability of opening cash in and of Rs. 2,50,000/- as claimed and the same is also allowed. The provisions of s. 68 & 69 use the word may indicating discretion conferred upon the AO by the statute, who is supposed to use such discretion judiciously and is not obliged always to make an addition. In view of the above discussion and in absence of any contrary evidence brought on record by the Revenue, we do not find any justification M making the addition of Rs. 22,54,250/- considered u/s. 69 of the Act by the Id. CIT(A) and the same is directed to be deleted. The Ground No. 2 taken by the assessee is allowed.

4.0 In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on 29/09/2023.

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