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Case Law Details

Case Name : Deputy Commissioner of Income Tax Vs. Shri Manish Kumar Aggarwal (ITAT Delhi)
Appeal Number : ITA No. 3301/Del/2012
Date of Judgement/Order : 13/12/2013
Related Assessment Year : 2008- 09

Assessee has furnished the date-wise cash balance and each and every deposit in the bank account is shown to be out of the cash balance with the assessee. The opening cash balance as per the cash account is 9,13,080/- and the closing cash balance of the year is Rs. 12,50,983/-.

The same is duly reflected in the balance sheet ended on 31st March, 2007 and 31st March, 2008 respectively. 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 assessee. The assessee is a professional whose returned income is more than Rs. 18 lakhs. In view of the above, we are of the opinion that the assessee’s claim that he has an opening cash  balance of 9,13,080/- cannot be disputed. The above opening cash in hand is sufficient to explain the deposit in the bank account on 3rd and 4th April, 2007. Thereafter, admittedly, withdrawal from the bank is much more than the cash deposits. In fact, the total withdrawal from the bank as per Annexure-1 of the assessment order is 44,39,000/- as against the total deposit in the bank of 26,30,000/-. The inference of the Assessing Officer that the amount withdrawn by the assessee from the bank has been utilized for household expenditure or other expenses is without any basis. The total withdrawal by the assessee is more than 44 lakhs and in the absence of any material to presume that such huge cash withdrawal has been spent by the assessee would be incorrect. Some of the withdrawals are of huge amount, say, on 4th April, 2007, the assessee withdrew 7,00,000/-, on 29th June, 2007, the assessee withdrew in cash Rs. 10,50,000/- (Rs. 4,90,000 + 5,60,000). That to presume such huge withdrawal was spent by the assessee in the absence of any evidence of its utilization would be a wrong presumption. In view of the above, we are of the opinion that the entire cash deposit in the bank is duly explained by the assessee. We, therefore, delete the addition of 8,45,000/- sustained by the learned CIT(A).

ITAT BENCH E’ , NEW DELHI

ITA No. 3301/Del/2012 – Assessment Year : 2008-09

ITA No. 3475/Del/2012 – Assessment Year : 2008-09

Deputy Commissioner of Income Tax

Vs.

Shri Manish Kumar Aggarwal

ORDER

PER G.D.AGRAWAL, VP:

The appeal by the Revenue is directed against the order of learned CIT(A)-XXVII, New Delhi dated 16th March, 2012 for the AY 2008-09.

“On the facts and circumstances of the case, the ld.CIT(A) has erred in restricting the addition of Rs. 8,45,000/- u/s 68 of the Income Tax Act on account of unexplained cash credits in the assessee’s bank account as against addition of Rs.26,30,000/- made by the A.Rs. despite the assessee offering no explanation regarding the purpose for cash withdrawals and thus not establishing a clear nexus between cash withdrawals and subsequent deposits in bank.”

3. The grounds raised by the assessee in his appeal read as under:-

“1. The learned CIT(Appeals) has erred in law and on facts in sustaining the addition of Rs. 8,45,000/- on account of unexplained deposit of cash in bank on 3rd and 4th April, 2007 ignoring the opening cash in hand of Rs. 9,13,080/-.

2. The learned CIT(A) has erred on facts and in law in upholding the impugned order of the learned assessing officer which is contrary to law, equity and justice and facts and material on record, devoid of jurisdiction, arbitrary, based on conjectures and surmises, passed without application of mind, without granting proper opportunity to defend.”

4. The facts of the case are that the assessee is an individual who derives income from consultancy. For the year under consideration, the assessee filed the return of income declaring total income of Rs. 18,24,060/-. During assessment proceedings, the Assessing Officer noticed that the assessee made cash deposit of 26,30,000/- in the savings bank account with Axis Bank Limited, Mayur Vihar, New Delhi. He asked the assessee to explain the same. The assessee explained the deposit to be out of opening cash in hand as well as out of cash withdrawal from the bank. It was pointed out that though there was cash deposit during the year under consideration amounting to Rs. 26,30,000/-, but there was cash withdrawal of 44,39,000/-. The date-wise deposit and withdrawal furnished by the assessee is annexed as Annexure ‘A’ to the assessment order. However, the Assessing Officer  did not accept the assessee’s explanation on the ground that “the source of cash deposit and the use of cash withdrawals are entirely different and the assessee is not able to explain exactly the nature and source of these deposits”. Accordingly, he made the addition of Rs. 26,30,000/- as unexplained credit under Section 68 of the Income-tax Act, 1961. On appeal, learned CIT(A) noticed that there was cash deposit in the bank amounting to 8,45,000/- on 3rd April, 2007 and 4th April, 2007. He was of the opinion that the withdrawal made by the assessee from the bank account was after these dates. He, therefore, took the view that there was no explanation for the cash deposits amounting to 8,45,000/- on 3rd April, 2007 & 4th April, 2007. He did not accept the assessee’s explanation of opening balance of cash in hand amounting to 9,13,080/- on the ground that the balance sheet of AY 2007-08 was not filed alongwith the return of income. Both the parties, aggrieved with the order of the learned CIT(A), are in appeal before us. The Revenue is aggrieved with the relief allowed by the learned CIT(A) while the assessee is aggrieved with the addition of Rs. 8,45,000/- sustained by the learned CIT(A).

5. We have heard the submissions of both the sides and perused the material placed before us. It is submitted by the learned counsel that the assessee has maintained regular books of account and no defect therein has been found by the Assessing Officer. That the assessee has filed the return by electronic mode (i.e. e-filing of return). That in the e-filing of the return, the assessee can furnish the details as prescribed. The assessee cannot submit either any additional information or enclose any paper suo motu. That there is no column in such return with regard to disclosing the assets including the cash in hand. Therefore, the balance sheet is not being filed by the assessee year after year since the returns are being furnished through electronic mode. He has enclosed the copy of the balance sheet in the paper  book for AY 2007-08 as well as 2008-09 and has pointed out that the cash balance as on 1st April, 2007 was 9,13,080/- and as on 31st March, 2008, it was Rs. 12,50,983/-. He has also given the date-wise position of cash balance which was also enclosed by the Assessing Officer as annexure to the assessment order. From these date-wise details of cash also, it is apparent that the cash in hand as on 1st April, 2007 was 9,13,080/- and as on 31st March, 2008, it was Rs. 12,50,983/-. He, therefore, submitted that the addition sustained by the learned CIT(A) at 8,45,000/- should be deleted.

6. Learned DR, on the other hand, relied upon the order of the Assessing Officer and stated that the assessee made the deposit of Rs. 26,30,000/- for which specific source has not been explained. That the amount withdrawn by the assessee must have been spent by the assessee for household or other expenditure. He, therefore, submitted that the order of the learned CIT(A) should be reversed and that of the Assessing Officer should be restored.

7. After considering the arguments of both the sides and perusing the material placed before us, we find that the assessee has furnished the date-wise cash balance and each and every deposit in the bank account is shown to be out of the cash balance with the assessee. The opening cash balance as per the cash account is 9,13,080/- and the closing cash balance of the year is Rs. 12,50,983/-. The same is duly reflected in the balance sheet ended on 31st March, 2007 and 31st March, 2008 respectively. 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 assessee. The assessee is a professional whose returned income is more than Rs. 18 lakhs. In view of the above, we are of the opinion that the assessee’s claim that he has an opening cash  balance of 9,13,080/- cannot be disputed. The above opening cash in hand is sufficient to explain the deposit in the bank account on 3rd and 4th April, 2007. Thereafter, admittedly, withdrawal from the bank is much more than the cash deposits. In fact, the total withdrawal from the bank as per Annexure-1 of the assessment order is 44,39,000/- as against the total deposit in the bank of 26,30,000/-. The inference of the Assessing Officer that the amount withdrawn by the assessee from the bank has been utilized for household expenditure or other expenses is without any basis. The total withdrawal by the assessee is more than 44 lakhs and in the absence of any material to presume that such huge cash withdrawal has been spent by the assessee would be incorrect. Some of the withdrawals are of huge amount, say, on 4th April, 2007, the assessee withdrew 7,00,000/-, on 29th June, 2007, the assessee withdrew in cash Rs. 10,50,000/- (Rs. 4,90,000 + 5,60,000). That to presume such huge withdrawal was spent by the assessee in the absence of any evidence of its utilization would be a wrong presumption. In view of the above, we are of the opinion that the entire cash deposit in the bank is duly explained by the assessee. We, therefore, delete the addition of 8,45,000/- sustained by the learned CIT(A).

8. In the result, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed.

Decision pronounced in the open Court on 13th December, 2013.

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