ACIT Vs Siddhartha Bhargava (ITAT Kolkata)
The issue under consideration is whether Cash deposits in bank account held as unexplained u/s 68 is justified?
During the assessment proceedings, the assessee had produced bank account of the assessee in Punjab National Bank (PNB) and HSBC. On verification of the bank accounts, it was found that there was cash deposit of Rs. 60,18,000 in PNB and Rs. 10,98,000 in HSBC account for the year under consideration. When confronted, the assessee submitted that the assessee was having cash in hand for purchase of a plot of land at New Delhi and he has withdrawn cash from time to time from his own savings bank account and since the purchase of land could not materialize, the amount was deposited back in its bank account.
On examination of cash flow statement for the year under consideration, as also for earlier two years and cross verifying it with entries in bank statements, it was evident that entries were recorded in disclosed bank accounts of assessee which showed that sufficient cash withdrawals were made by assessee from his bank account to cover impugned cash deposit and these deposits were made out of cash balance brought forward from earlier year. Accordingly, addition made by AO could not be sustained.
In the result, the appeal of the revenue is dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal preferred by the revenue is against the order of the learned Commissioner (Appeals)-19, Kolkata, dated 13-9-2017 for assessment year 2012-13.
2. Ground No. 1 is against the action of the learned Commissioner (Appeals) in deleting the addition of Rs. 71,16,000 which the assessing officer had added since according to him, the assessee failed to furnish material in support of source of income.
3. Brief facts of the case as noted by the assessing officer are that during the assessment proceedings, the assessee had produced bank account of the assessee in Punjab National Bank (PNB) and HSBC. On verification of the bank accounts, it was found that there was cash deposit of Rs. 60,18,000 in PNB and Rs. 10,98,000 in HSBC account for the year under consideration. When confronted, the assessee submitted that the assessee was having cash in hand for purchase of a plot of land at New Delhi and he has withdrawn cash from time to time from his own savings bank account and since the purchase of land could not materialize, the amount was deposited back in its bank account. The assessing officer had reproduced the following explanation submitted by the assessee as under:
“During the captioned Financial Year, the assessee deposited certain amount of money in his Bank account from past savings. The detail of cash withdrawals and deposits for the current financial year and prior two financial years are furnished as Anx. 1. As can be seen from Anx. 1, the cash deposits have been made by the assessee from the cash in hand resulting from past savings and cash withdrawals during the captioned financial year. The cash deposits and withdrawals are duly supported by bank statements for the assessee furnished as Anx. 2.”
4. However, the assessing officer was not satisfied with the explanation given (supra) by the assessee and according to him, the cash deposits remain unsubstantiated by the assessee by filing neither any evidence nor the wealth tax return in respect of the source of cash deposit of Rs. 60,18,000 and Rs. 10,98,000. So, he was pleased to add Rs. 71,16,000 under section 68 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”). Aggrieved, the assessee preferred an appeal before the learned Commissioner (Appeals), who was pleased to delete the same.
5. Having heard both the parties, we note that the learned Commissioner (Appeals) has taken note that the assessee had filed the cash flow statement and copies of the bank statement before the assessing officer and that he (AO) has scrutinized the same and thereafter only has made the addition. The learned Commissioner (Appeals) after having gone through the cash flow statement vis-a-vis the bank statement of the assessee noted from the extract of the cash book that as on 1-4-2011 being the first day of the relevant previous year, the assessee was having cash balance of Rs. 44,99,361. Out of the opening cash balance of Rs. 44,93,361 the assessee deposited Rs. 40 lakh in his PNB account in the month of April and May, 2011. Further, the learned Commissioner (Appeals) records the fact that in order to verify the cash balance brought from the preceding years, he had gone through the extract of the cash book/cash flow statement for the immediate previous two years and on verification of these cash flow statements, the learned Commissioner (Appeals) found that the opening cash in hand as on 1-4-2010 of Rs. 41,31,861 and as on 1-4-2009 it was Rs. 8,19,071. It was also taken note by the learned Commissioner (Appeals) that cash balance accounted in the assessee’s books arose out of the withdrawal made by him from his own account in PNB and HSBC bank. The learned Commissioner (Appeals) noted that these two bank accounts were duly reflected by the assessee in his personal balance sheet which has already been examined by the assessing officer After conducting his own scrutiny, the learned Commissioner (Appeals) has confirmed that out of the total deposit of Rs. 71,16,000 made during the relevant year Rs. 40 lakh were deposited in the month of April and May, 2011 and that these deposits were made out of the cash balance brought forward from the earlier year. It was also noted by the learned Commissioner (Appeals) that in the assessment year under consideration, the assessee had withdrawn Rs. 27,25,000 from his accounts maintained in PNB and HSBC and out of these withdrawals, the remaining cash balance was deposited to the tune of Rs. 31,16,000. Thus, the learned Commissioner (Appeals) has recorded a finding of fact as under:
“On examination of the cash flow statement for the year under consideration, as also for the earlier two years and cross verifying it with the entries in the bank statements, I find that the entries are recorded in the disclosed bank accounts of the assessee which showed that sufficient cash withdrawals were made by the assessee from his bank account to cover the cash deposit.”
This finding of fact made by the assessing officer after examination of the cash flow statement for the year under consideration as also for the earlier two years after cross verifying it with the entries in the bank statement could not be dislodged by the departmental representative before us. In such a scenario, we are inclined to uphold the action of the learned Commissioner (Appeals) and dismiss the ground of appeal of the revenue.
6. Ground no.2 is against the action of the learned Commissioner (Appeals) in deleting the disallowance made by the assessing officer under section 17(3)(ii) of the Act at Rs. 1,65,51,054.
7. Brief facts of the case as noted by the assessing officer are that the assessee had shown outstanding loan balance from three companies which according to assessing officer are from companies in which assessee is an employee i.e. director namely in (i) M/s. Rolls Print Co. Pvt. Ltd. Rs. 62,00,449 (ii) M/s. Rolls Print Graphics Pvt. Ltd. Rs. 2,77,820 and (iii) M/s. XPRT Engineered Packaging Solutions Pvt. Ltd. Rs. 6,75,054 totaling to Rs. 71,53,523. The assessing officer noted that assessee has shown this as interest free loans in his Balance Sheet for the relevant assessment year. The assessing officer noted that the assessee has received payments from these three companies in the F.Y. under consideration. The assessing officer has drawn a chart as under:
