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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM
आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2010-11, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), Valsad [in short “the ld. CIT(A)”] in Appeal No. CIT(A)/VLS/14/16-17 dated 11.09.2017, which in turn arises out of an order passed by the Assessing Officer (AO) u/s 143(3) r.w.s 147 of the Income Tax Act, 1961 [hereinafter referred to as the “Act”], dated 03.03.2016.
Grounds of appeal
raised by the assessee are as follows: “1. On the other facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer in making the addition of Rs.3,32,669/- on account of unexplained cash deposits in bank account u/s 68 of the IT Act, 1961.
2. It is therefore prayed that the above addition made by assessing officer and confirmed by learned Commissioner of Income-tax (Appeals) may please be deleted.
3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
Assessment Year. 2008-09 Denish M. Gandhi 3. Succinct facts are that during the assessment proceedings, on verification of return of income and capital account filed by the assessee it was noticed by the assessing officer that assessee is derived income from salary and income from interest income. The assessee has declared income of Rs.1,43,767/-. The assessee has maintained the books of accounts like Cash book, Bank book, however not filed any evidential proof of cash deposited during the year. The assessee has stated that he has deposited cash amount from earlier cash balance earned from past by tuition income. The assessee has furnished the copy of cash book showing deposit from earlier balance. The opening balance as on 01.04.2007 was Rs.4,25,250/-. The assessee was asked to explain the cash deposit in bank account.
In response, the AR of the assessee has submitted the following reply: "Our client has deposited the cash amounting to Rs. 10,86,400/- in ICICI Bank during the financial year 2007-08 which amount is deposited from my past saving, withdrawal of cash from bank and cash amount deposited of policy holder. Sir, our client was tutor and carrying a tuition classes in the financial year 2003 to 2006-07 and he has obtained cash from his tuition classes which amount was deposited in his ICICI Bank, Navsari SB A/c. No.020601509245, further he has deposited cash and cheque in Bank during the year which amount was also withdraw from bank and the same was deposited in bank hence, it was rotated. His relative coming from USA, he has intended to invest in Life Insurance Policy hence, he has given cash sum of Rs.75,084/- and Rs.2,00,225/- on 02/01/2008 and 18/02/2008 respectively which cash amount was deposited in bank a/c. (Copy of conformation is attached as per Annexure- 1.) All the cash deposited in bank is explained. Justification of opening balance as on 01.04.2007: Our client running tuition classes in financial year 2003-04 to 2006-07 and all the receipt came in cash and accumulated cash amount of Rs.4,25,250/- as on 31-03-2007. Our client was prepared his books of accounts and declared the income from tuition in his books of accounts for F.Y. 2006-07 related to Asst. Year 2007-08, copy of cash book is submitted herewith as per Annexure-3 for justification of opening cash."
The assessing officer did not accept the above reply. After considering the reply of the assessee, the assessing officer prepared the following cash flow: “Opening Cash Balance.... Rs.4,25,250/- Receipt of Salary.. Rs.1,03,111/- Other Income Rs. Rs. 40,656/- Total receipt...... Rs.5,69,017/- Page | 2
Assessment Year. 2008-09 Denish M. Gandhi Withdrawal... Rs.90,595/- Balance….. Rs.4,78,422/- Further cash received from his relative to pay LIC policy... Rs.275,309/- Total Rs.7,53,731/-”
Thus, assessing officer was of the view that Rs.7,53,731/-, can be routed into bank account by way of cash only. Therefore, balance of Rs.3,32,669/- (Rs.10,86,400- Rs.7,53,731) was added to the total income of the assessee.
On appeal, ld CIT(A) confirmed the action of the assessing officer. Aggrieved, the assessee is in appeal before us.
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. After considering the findings of the assessing officer and submissions of the ld Counsel we find that the AO has noted in the assessment order, the fund flow and cash availability for deposit of cash amounting to Rs.10,86,400/- during the current Assessment year and found shortage of Rs.3,32,669/- which was added as unexplained cash deposits. We note that AO has allowed the assessee`s claim of opening cash balance of Rs.4,25,250/- as on 31.03.2007. The ld Counsel contended that there was cash withdrawal of Rs.5,27,500/- during the year which was redeposited in the bank account and if this cash withdrawal is considered then, there will not be any shortage of fund for cash deposits so as to warrant addition of Rs.3,32,669/-.We note that Assessing Officer did not find any defects in the books of account. The books of accounts were not rejected by the Assessing Officer. The ld Counsel submitted before the Bench, a statement showing the inflow and outflow of cash, which is reproduced below: “Assessment for Asst. Year 2008-09 Summary (Cash Flow) Statement
Assessment Year. 2008-09 Denish M. Gandhi Deposit Particular Payment Particular Amt Amt 42250 Opening Balance 01-04-07 1086400 Cash Deposited in Bank 527500 Cash Withdrawn from Bank 2750 Miscellaneous Expenses 275309 Dhansukhbhai 72000 Cash Withdrawal for Valasadia for Insurance House Hold Expenses 10000 G E Money 250 Stationery Expenses 10000 Mamta Traders 1500 Account Fees 10000 Riddhi Enterprises 1000 Professional Fees 1163900 94159 Closing Balance 31-03-08 1258059 1258059 Considering the above statement of incoming and outgoing of cash, we note that there is no defect in the submissions made by the assessee before the lower authorities. Hence, based on this factual position the addition made by the assessing officer is directed to be deleted.
In the result, appeal filed by the assessee is allowed.
Order is pronounced on 27/12/2021 by placing result on notice board.