Case Law Details

Case Name : DCIT Vs Smt. Veena Awasthi (ITAT Lucknow)
Appeal Number : ITA No.215/LKW/2016
Date of Judgement/Order : 30/11/2018
Related Assessment Year : 2011-12
Courts : All ITAT (6387) ITAT Lucknow (86)

DCIT Vs Smt. Veena Awasthi (ITAT Lucknow)

Conclusion: Addition made by AO merely on the ground that assessee made frequent withdrawal and deposit of his own money was not justified as the same was not prohibited under any law.

Held: AO had noted the behavioural pattern of assessee in frequently withdrawing cash and then depositing cash again in the bank account irrespective of having sufficient cash with her. He, therefore, added cash deposit made by assessee under the head income from undisclosed sources. It was noted that AO nowhere in his order had brought out any material on record to show that assessee was not having an additional source of income other than that disclosed in the return nor AO could spell out in his order that cash deposits made by assessee were from some undisclosed source. There is no law in the country which prevents citizens to frequently withdraw and deposit his own money. Documentary evidence furnished clearly clarified that on each occasion at the time of deposit in her bank account, assessee had sufficient availability of cash. Entire transaction of withdrawals and deposits were duly reflected in the bank account of assessee and were verifiable from relevant records. Thus, addition was not justified.

FULL TEXT OF THE ITAT JUDGMENT

This appeal preferred by the Revenue emanates from the order of ld. CIT(A)-I, Lucknow dated 29/1/2016 as per following grounds of appeal:-

1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.1,35,61,000/- failing to appreciate that the assessee could not establish any nexus between the frequent withdrawals and the subsequent deposit.

2. On the facts and circumstances of the case, the Ld. CIT(A) has failed to appreciate that the assessee could not discharge her onus of proving/ establishing the source of cash deposits and its re-deposits out of withdrawals by filing documentary evidences.

3. Appellant craves leave to add or amend the ground of appeal, as stated above as and when need of doing so arises with the prior permission of the Hon’ble Bench.

2. The only grievance of the Revenue is with regard to the deletion of addition of Rs.1,35,61,000/- by ld. CIT(A) which was added by the Assessing Officer as unexplained cash deposits in the hands of the assessee.

3. The facts in this case are that assessee is earning interest and remuneration as partner in the firm, M/s Arun Construction. Details of income from various sources, copies of bank statements, details of investments, etc. were furnished during assessment proceedings. After examination of bank statements filed during the course of assessment proceedings, it was gathered by the Assessing Officer that during previous year assessee deposited cash in the following bank accounts as per details mentioned against each, totaling to Rs.1,35,61,000/-:-

Bank S/B Account No. Account Holder Cash deposited Date
Union Bank of India 516301 Assessee 2,11,000/- 04.05.2010
-.do- 516332 Assessee 8,00,000/- 24.05.2010
-do- 516333 Shri Himadri Awashi (Son) 7,00,000/- 24.05.2010
-do- 516332 Assessee 6,00,000/- 21.06.2010
-do- 516337 Shri Himadri Awashi (Son) 6,00,000/- 21.06.2010
-do- 516332 Assessee 5,00,000/- 28.06.2010
-do- 516333 Shri Himadri Awashi (Son) 3,50,000/- 28.06.2010
-do- 516301 Assessee 98,00,000/- 12.08.2010
Total 1,35,61,000/-

4. The Assessing Officer in the assessment order observed that it is undisputed fact that during the entire year the cash amounting to Rs.1,35,61,000/- was deposited on different dates in assessee’s bank accounts with Union Bank of India, Unnao. As the amount was deposited in cash in her bank accounts, the onus lies upon the assessee to prove the source of the same. A statement showing source of cash was furnished by the assessee in support of her claim. A perusal of the statement furnished by the assessee shows very frequent huge withdrawals in cash from her bank accounts and simultaneously cash amounts are frequently deposited in the bank account. The Assessing Officer observed that statement shows a very peculiar picture wherein assessee makes cash withdrawals from her bank account when she already has sufficient cash balance in her hands out of earlier withdrawals. Part of the cash so generated is retained and the balance amount is deposited to the bank account only to be withdrawn again in quick succession. It was the view of the Assessing Officer that bank statement showing assessee’s quick withdrawal and deposit in her bank account is full of suspicious features and it cannot be relied upon as evidence. The Assessing Officer further stated that behavioral pattern of the assessee in frequently withdrawing cash and then depositing cash again in the bank account irrespective of having sufficient cash with her, why again assessee is withdrawing and again depositing cash in the bank account. The Assessing Officer was, therefore, of the opinion that considering the facts of the case and surrounding circumstances and conduct of the assessee, cash deposit of Rs.1,35,61,000/- made by the assessee was from her unaccounted money which was not satisfactorily explained. Hence it was added to the income of the assessee under the head income from undisclosed sources.

5. Before the ld. CIT(A) assessee filed detailed written submission wherein vehemently argued by the ld. A.R. of the assessee that a complete cash flow statement in the form of cash book entries, which clearly indicates that on each date of deposits the assessee was having more than sufficient liquid money justifying the source of deposits. Assessee also submitted that details of deposits/withdrawals and copies of bank statements along with cash flow statement for financial year 2010-11 relevant to assessment year 2011-12 have been filed and even acknowledgement of tax return for assessment year 2009-10 was also filed. It was the contention of the assessee before the ld. CIT(A), by placing reliance on these documentary evidences, that nowhere Revenue has doubted availability of cash with the assessee and Assessing Officer has also not brought out any material on record to show that cash which was withdrawn was spent on some other purpose and that cash deposited again was from undisclosed sources. The Assessing Officer has only doubted behavioral pattern of the assessee but has accepted availability of own funds in the hands of the assessee. When source of cash deposit is explained and it is evident that it is the own cash of the assessee, which has been deposited in bank account, then there is no question of making addition under the head as income from undisclosed sources. The ld. CIT(A) after considering the assessment order, submissions of the assessee, facts and circumstances of the case, held as follows:-

“5. I have carefully considered the finding given by the Assessing Officer in the assessment order and written submissions filed by the appellant as well as the documents and papers & affidavit furnished by the appellant during the course of appellate proceedings. It is seen from the assessment order that the assessing officer has made the addition of Rs.1,35,61,000/-, treating the deposits made in her bank account during-the A.Y under consideration as unexplained deposits made on different dates. The Assessing Officer has observed that the appellant has regularly made the withdrawals from her bank account and deposits were also made continuously during the A.Y. under consideration. The Assessing Officer concluded that the appellant did not furnish corroborative evidence in support of her version that the earlier withdrawals made from her bank account were again deposited in her bank account. The AO has also doubted the frequent-withdrawals and deposits made by appellant from her bank account. The assessing officer has also mentioned that the statement through which the assessee sought to explain the cash deposit in her bank account is full of suspicious feature and the AO could not be taken as satisfactory, evidence, of various deposits made by appellant in her bank account. The AO has also mentioned that if the argument of the appellant with regard to the availability of funds after making withdrawal from bank account is to be accepted to exclude the possibility of introduction of unexplained money as cash deposit in her bank account than it has to be held that whomsoever is having sufficient cash available with her which is more than necessary to meet the worldly means than the person will not indulges into tax evasion or evidence. The AO has also observed that mere furnishing the details of availability of funds with the assessee is not enough to prove the source of cash deposits and it cannot absolves assessee from discharging this burden of proving the source of cash deposits. The AO has also mentioned that there is also possibility that cash withdrawn by appellant might have been utilized towards construction of house property and cash was deposited from her undisclosed sources of money.

5.1 The appellant has filed detailed written submissions during assessment proceedings before AO and in appellate proceedings also. The appellant has also filed supporting papers/ documents, copy of bank account, statement of availability of cash in hand during the A.Y. under consideration to prove the genuineness and correctness of the deposits made in her bank account on different dates. The appellant has also submitted that on each occasion at the time of deposits in her bank account she had sufficient availability of cash with her during the A.Y. under consideration. These availability of cash represented from the earlier withdrawals made from her bank accounts. These entire transactions of withdrawals and deposits are duly reflected in her said bank account and the entire transaction are verifiable from the relevant records.

These records were duly produced before AO during assessment proceedings, but the AO did not appreciate the facts of appellant’s case and wrongly concluded that the deposits made in her bank accounts to the extent of Rs.1,35,61,000/- represented her undisclosed investment made out of her unexplained/ unrecorded sources of income. The AO has also arbitrarily and without any basis concluded that the earlier withdrawals made from her bank account were utilized somewhere else, rather than deposited in her said bank account. The AO himself admitted that she had sufficient cash balance on each occasion at the time of deposit in her bank account on different dates during A.Y. under consideration. The AO has himself mentioned in assessment order that the appellant frequently made the withdrawals and deposits in her bank account but he has doubted or raised suspicion in respect of the deposits made out of available Cash with her.

5.2 I found much force in the argument of appellant that the AO’s suspicion and doubts are without any basis and evidence. The appellant has also contended that she had discharged her duty to explain the deposits made in her bank account by furnishing the written explanation along with supporting evidences i.e. bank statement, copy of ITR and computation of income not only A.Y. under consideration but A.Y. 2009-10. The appellant has also submitted that she had disclosed substantial income in A.Y. 2009-10, represented deposits in her and her minor son’s Himandri Awasthi alias Rajat. The appellant had surrendered o f Rs.2,64,00,000/- i.e. in the name of appellant, deposit in SB bank account 4400 UBI Unnao amounting to Rs. 1,51,00,000/- and in the name of Himadri Awasthi alias Rajat in S/B account No. 513975 UBI Unnao Rs.1,13,00,000/- and deposited due tax thereon. The appellant has vehemently argued that these funds were available with the appellant which have been frequently deposited in here various bank account and withdrawals made as and when required. If is also submitted that the AO did not bring any material on record that the withdrawals made from her bank accounts were utilized somewhere else rather than deposited in her bank account on various dates during the A.Y. under consideration, as claimed and shown by the appellant. Merely raising doubt and suspicion on the recorded transactions by AO can not be taken a valid basis to disown the claim of her, which are based on documents/papers and records . The AO has made the addition of Rs. 1,35,61,000/- without any basis and justification and the same deserves to be deleted. The appellant has requested to grant the relief accordingly.

5.3 In view of the above facts, it is amply clear that the addition of Rs. 1,35,61,000/- made by AO treating the deposits made in – the bank account of appellant and her minor son cannot be said proper and justified. The appellant has furnished the written submission alongwith supporting evidences to prove the deposits in these bank accounts during the assessment proceedings as well as appellate proceedings. I found much force in the argument of appellant that the AO could not treated the genuine deposits in the bank account of appellant and her minor son of Rs.1,35,61,000/- as unexplained deposits made out of undisclosed source of income, specifically when the entire deposits on different dates were made out of earlier deposits on each occasion. The AO himself admitted the fact that each deposits in the bank account of appellant are backed by availability of cash in hand with the appellant, which represented earlier withdrawals of her bank accounts. I have also found much force of appellant that the doubt and suspicion on any transaction of appellant by AO cannot be a valid basis to treat the genuine transaction as non-genuine i.e. withdrawals and deposits in the bank account of appellant in present case. The appellant has also filed copy of ITR for A.Y. 2009-10 and computation of income of A.Y 2009-10 in which she had disclosed income of Rs. 2,64,00,000/- and paid tax thereon. I find force in the argument of appellant that said money on which the appellant had paid due tax thereon in earlier years i.e. A.Y. 2009-10 are in the possession of appellant as circulating money in subsequent years including A.Y. under consideration. The AO did not bring any material on record which could prove the destination /utilization of the money which were disclosed in her ITR, were elsewhere rather than transaction reflected in her bank accounts.

The revenue cannot justifiably claim to put itself in the arm chair of the businessman or in the position of board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No business man can be compelled to maximize its profit The Income-tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authority must not look at the matter from their own view point out of a prudent businessman.

Reliance is placed on the decision of SA builders Ltd. vs CIT (2007) 158 Taxman 82 (SC)” It has been held by hon’ble Supreme Court that One has to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount is advanced for earning profits.

5.4 In view of above discussion, I hold that the AO was not justified in treating the deposits of Rs. 1,35,61,000/- as unexplained deposits in the hands of the appellant and the addition made by the AO at Rs. 1,35,61,000/- is unjustified and contrary to the provisions of the I.T. Act and same liable to be deleted. Thus, the addition of Rs. 1,35,61,000/- made by AO is therefore, deleted. Ground no. 1  & 2 are allowed. ”

6. The ld. D.R. placed heavy reliance on the order of the Assessing Officer and conceded that sufficient cash was available with the assessee for deposit in the bank account. It was only peculiar pattern of behavior that was in doubt.

7. Ld. A.R. of the assessee per contra placed reliance on the order of ld. CIT(A) and reiterated the submissions as made before the subordinate authorities emphasizing that entire bank statements and source of cash withdrawal/deposits have been furnished before the Department. Nowhere Assessing Officer has come out with the finding that withdrawal of cash by the assessee was utilized to procure any asset or has been invested elsewhere and that cash deposit in the account was from other sources. Assessing Officer has simply doubted behavioral patter accepting the fact that assessee was having her own cash which has been frequently deposited and withdrawn from her bank account. At threshold, submissions of the ld. A.R. of the assessee, therefore, was that the order of ld. CIT(A) may be upheld and relief granted may be sustained.

8. We have perused the case record and heard the rival contentions. We find that addition has been made by the Assessing Officer, as is evident from his order, on the ground that he has come to the conclusion that cash deposits were from some other source of income which is not disclosed to the Revenue. Assessing Officer nowhere in his order has brought out any material on record to show that assessee is having any additional source of income other than that disclosed in the return nor Assessing Officer could spell out in his order that cash deposits made by the assessee was from some undisclosed source. All throughout Assessing Officer has raised suspicion on the behavioral pattern of frequent withdrawal and deposits by the assessee. There is no law in the country which prevents citizens to frequently withdraw and deposit his own money. Documentary evidences furnished before the Revenue clearly clarifies that on each occasion at the time of deposit in her bank account, assessee had sufficient availability of cash which is also not disputed by the Revenue. Entire transaction of withdrawals and deposits are duly reflected in the bank account of the assessee and are verifiable from relevant records. Assessing Officer himself admitted that assessee had sufficient cash balance on each occasion at the time of deposit in her bank account on different dates during the assessment year under consideration. We have also examined the order of ld. CIT(A) and we find that his decision is based on facts on record and is supported by adequate reasoning and, therefore, we do not want to interfere with the order of ld. CIT(A) and accordingly we uphold the findings of the ld. CIT(A) sustaining relief granted to the assessee.

9. In the result, appeal of the Revenue is dismissed.

Order pronounced in the open Court on 30/11/2018.

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