SHRI SUNIL MATHUR,KOTA vs. INCOME TAX OFFICER, WARD-2-4, KOTA

During the course of hearing, the ld A/R submitted that the relevant facts in brief are that the assessee filled ROI on 05.07.2014 declaring total income of Rs. 2,05,080/-, consisting of income from Salary from Punjab Kesri, Rental Income from House Property, and Fee receipts and advertising commission and interest from S.B. A/c. During the assessment proceeding, the AO noticed that assessee has deposited cash of Rs.13,50,000/- in his saving account (i.e. Rs.10,00,000/- in SBI A/c and Rs.3,50,000/- in Punjab National Bank) as tabulated at Pg-2 of the impugned assessment order. When asked, the assessee submitted that the same was sourced out of the past savings of the preceding years` withdrawals from the same very accounts. In support, he submitted Bank Books i.e State Bank of India A/c No. 10927256219, State Bank of Bikaner & Jaipur A/c No. 6116128932 and Punjab National Bank A/c No. 07260000300264723. Similarly, the assessee submitted Cash Book / Cash Flow Statement (“CFS”) for three years i.e. A.Y. 2012-13 to 2014-15. The AO however, rejected the contention stating that no cash were withdrawn from Bank account nor received from any person during the current year. The opening Bank Balance was low. He further observed that if the assessee was really having cash balance as shown in his hand, he would have deposited the same in the bank. Hence, the assessee failed to establish the amount as shown in the cash book and concluded that the amount so withdrawn in earlier might have been utilized for households or 3 Sh. Sunil Mathur, Kota Vs. ITO, Ward-2(4), Kota in other expenses. Finally, he added the amount of Rs.13,50,000/- deposited in cash as income from other sources and on appeal, the same was confirmed by the ld CIT(A).

It was submitted by the ld A/R that the ld. AO is completely silent so far as the cash book for the A.Y. 2012-13, 2013-14 and 2014-15 (F.Y. 2011-12 to 2013-14), admittedly, submitted before the AO during the assessment proceedings however, there appears no judicious consideration of the same. Though he expressed some doubts as regard the cash availability based on the cash book that assessee might have utilized the cash but he did not at all rejected/doubted the correctness of the cash book and therefore, such an evidence produced before him was binding upon him. Since the assessee is a salaried class person hence was not required to prepare books of account but to support of its contention of availability of sufficient fund of Rs.12,60,650/- (as on 01.04.2013) prior to the deposits, he submitted cash book before the AO itself. It was submitted that in the non-business cases, submission and consideration of the cash book / cash flow statements to explain the source is not uncommon and even the Hon’ble Courts and Tribunals have taken cognizance and rather accepted such an evidence and explanation based thereon is valid. Therefore, the AO could not have blindly ignored such cash book unless he could reject the same based on the contrary material to support. The said cash book shows opening cash in hand of Rs. 5,43,750/- as on 01.04.2012. The assessee fully explained and established the source of this opening cash in Para-4 of his written submissions before the ld. CIT(A) reproduced at Pg-3 of his order and also reproduced hereunder: “4. The Appellant had taken voluntary retirement from the Dainik Navjyoti Printing Press Pvt. Ltd', Ajmer on 31/ 01/ 2011 and had 4 Sh. Sunil Mathur, Kota Vs. ITO, Ward-2(4), Kota received retirement benefits (1) Gratuity Rs. 2,60,377/- (2) PF Rs. 6,39,146/- (3) Pension Rs. 17,316/- Total Rs. 9,16,839/- and all these sums were deposited in Bank Accounts and the receipt had been shown in computation of Income for A/ Y 2011-12 and were duly withdrawn from the Bank.”

After receiving total amount on retirement of Rs.9,16,839/- i.e. Gratuity Rs. 2,60,377/-was deposited in SBI A/c on 20.04.2011 and PF Rs. 6,39,146/- was deposited in PNB Bank on 24.12.2011 and there after cash withdrawal were made therefrom on various dates as per Cash Book. The amounts withdrawn in cash was partly utilized and partly available and the balance was shows opening cash in hand of Rs. 5,43,750/- as on 01.04.2012 and after recording further cash transactions of receipts / payments, the opening balance was of Rs.12,60,650/- as on 01.04.2013, relating to A.Y. 2014-15.

It was further submitted that both the lower authorities have completely ignored one important aspect and admitted fact that the assessee had sold a residential house no. 5-L-26, Mahaveer Nagar-III, Vistar Yojna, Kota on 23.10.2013 to Shri Pramod Kumar Dhakad for Rs.43.50 Lakhs and the entire consideration was received through cheque/RTGS in the bank account on different dates (i.e Rs.50,000/- on 06.07.2013, Rs.9,50,000/- on 11.07.2013, Rs.23,99,983/- and Rs.9,50,017/- on 22.10.2013). Though Rs.40 Lakhs were transferred yet 3.50 Lakh were still available. In addition, the assessee was also in cash receipts of Salary, Rental Income and Other income in the period of three years and were available till Jul-2013 and onwards. All bank transactions made in cash are fully reflected in the cash book together with the regular withdrawals on monthly basis towards household expenses. Thus, to the 5 Sh. Sunil Mathur, Kota Vs. ITO, Ward-2(4), Kota extent of such income received in three years was fully available (because the household expenses were shown in cash book met with by cash withdrawals). Notably, deposit of Rs.13.50 was met from cash drawings from bank only (See chart at w/s Pg-6). Still cash income of Rs.5-6 lakh for three years was available in addition.

It was further submitted that the cash book has been prepared taking into account all the transactions of cash deposits and cash withdrawal done in two banks i.e. SBI and PNB as also after reducing household expenditure of Rs.75,000/- during the year (which is quite justified and reasonable looking to the size of the family and there standard and habits). Even the AO also did not dispute the claimed amount of the household expenditure. This way, the assessee had sufficient cash balance on all the subjected dates of cash deposits. This is evident from the following table based on the cash book:

Thus, the different cash deposits made between this period (i.e. 22.07.2013 to 08.01.2014), are fully explained with the help of the cash book / cash flow statement submitted for three years i.e. A.Y. 2012-13 to 2014-15 and all the deposits are fully explained therein. However, the AO

It was further submitted that the AO completely misdirected himself by considering the opening balance in the both bank accounts of Rs.1,56,000/- which is not at all relevant once the assessee prepared a cash book considering the cash deposits and cash withdrawal transactions from the banks and other cash withdrawal etc. Further, while cash book / cash flow statement filed and was not rejected, there is no scope for the AO to deem some utilization elsewhere because the settled law is something contrary to approach of the authorities below. The AO was bound to establish the utilization of the available cash elsewhere. In this way, the availability of the sufficient cash on the different dates of deposits could not be disputed.

It was submitted that the AO purportedly ignored these facts by recording a completely incorrect finding of facts that during F.Y. 2013-14 there was no cash withdrawal made by the assessee which was a blatant mistake committed by him in as much as a bare of cash summary of the cash book for F.Y. 2013-14 shows cash withdrawals of more than Rs.3,13,000/- till Dec-2013 itself and in the preceding years also similar cash withdrawals were there. Thus, once sufficient sources being the sale proceeds of Rs.43.50 Lakhs, Rs.9.36 Lakh on the retirement, income from Salary, Rent and Other Income were there and the same were available / withdrawn in cash, the availability of cash in hand could not be denied. All these facts and contentions are fully supported by the Cash Book as stated

Regarding various observations / objections of the ld. CIT(A), it was submitted that all the objections and observations of the ld. CIT(A) are nothing more than suspicion and rather aimed to reject the contention in one way or the other and submissions on each of the issues raised, are as under:

With regard to the strength of family and household withdrawals kindly refer submissions dt.30.07.2020 to the AO, pursuant to specific query raised by the AO during assessment proceedings which read as under:

It was submitted that apart from the cash flow statement and consolidated fund flow statement, even if one broadly considers that the income from salary of 3 years including the current year around Rs. 5-6 lakhs; retirement benefit of Rs. 9.16 lakhs difference in the purchase and sales of house Rs.3,50,000/- (sold for Rs.43.50 lakh less purchase for Rs. 40 lakh), total to Rs.18.50 lakh (app.) from which, reducing household expenses of Rs.2.70 lakh, the assessee is still left with around Rs. 15-16 lakh. In addition, the possibility of saving from the earlier years when assessee has been in service since 1981 of Rs 15-16 lakh cannot be denied. As against this, the deposits were only to the extent of Rs. 13.50 lakh.

It was accordingly submitted that from the findings recorded in the impugned order, it clearly appears that the AO proceeded merely on suspicion. A suspicion remains a suspicion unless the same is established and can never take the place of reality and for making addition/ assessment of the alleged income, it is for the AO to have proved beyond all reasonable doubts which is completely missing as has been held in the case of Dhakeshwari Cotton Mills Ltd. (1975) 26 ITR 775 (SC). The AO completely ignored the settled law that u/s 68, 69 etc. only a discretion has been conferred upon the AO to be exercised judiciously but he is not always obliged to make the addition if the explanation is not found

Per contra, the ld DR relied on the findings of the lower authorities and our reference was drawn to the findings of the ld CIT(A) which read as under: “As regards Ground of appeal no 1 it is observed that the cash was deposited in the State Bank of India account on 08/11/2013 86 08/01/2014 in two installments of Rs. 5 lakhs each and in PNB account in three installments on 22/07/2013 Rs. 1 lakh, on 09.10.2013 Rs. 50,000/- and on 27.11.2013 of Rs. 2 lakhs.

We have heard the rival contentions and perused the material available on record. The issue under consideration relates to source of cash deposits during the year in the two bank accounts maintained by the assessee amounting to Rs 13.5 lacs. In this regard, firstly, it is noted that during the year under consideration, the assessee has sold a property and consideration thereof amounting to Rs 43.50 lacs has been received through banking channels and there is no allegation by the AO in terms of any on-money received by the assessee in cash over and above the 12 Sh. Sunil Mathur, Kota Vs. ITO, Ward-2(4), Kota declared sale consideration. It has been explained by the assessee that the source of cash deposits during the year is out of earlier two years withdrawals and cash in hand at the beginning of the year. In support of his contention, the assessee has submitted cash book and cash flow statement for previous two financial years depicting the individual transactions of receipts and payments/withdrawals. We have gone through these cash flow statements and find that the assessee has sufficiently explained the source of deposits in form of salary and other retirement benefits which have been duly declared and withdrawals towards household expenses which are partly funded by him and partly by his wife and therefore, availability of cash in hand at the beginning of the year has been sufficiently explained. In the result, considering the entirety of facts and circumstances of the present case, we hereby direct the Assessing officer to delete the addition so made in the hands of the assessee towards unexplained cash deposits and ground no. 2 of assessee’s appeal is allowed.

Ground no. 1.1 and 1.2 were not pressed by the ld A/R during the course of hearing and hence, the same are dismissed as not pressed.