SHRI LALJIBHAI RAVJIBHAI CHOVATIYA,,AMRELI vs. THE INCOME TAX OFFICER, WD-2(4),, RAJKOT-GUJARAT

The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)–IV, Rajkot [CIT(A) in short] vide appeal no.CIT(A)-IV/0085/12-13 dated 14/10/2014 arising in the assessment order passed under s.143(3) of the Income Tax Act, 1961(hereinafter referred to as "the Act") dated 18/12/2012 relevant to Assessment Year (AY) 2009-10.

Without prejudice, no peak working has been considered by the Ld. C1T(A) which is erroneous needs modification.

The appellant craves leave to add/alter/amend and/or substitute any or all ground of appeal before the actual hearing takes place.

Briefly stated facts are that the assessee is an individual and showing income under the head salary. The assessee in the year under consideration has made cash deposits of Rs. 16,50,000/ - in his SBI saving bank a/c on 15-02-2010. On question about the source of cash deposit by the AO, the assessee submitted as under: Laljibhai Ravjibhai Chovatiya vs. ITO Asst.Year – 2010-11 - 3 - (i) He had opening cash in hand of Rs. 4,77,985/-. (ii) He had three different FDs which were enchased as on 02.04.2009 for Rs. 2,09,054/- and withdrawn the same from the bank on the same day. (iii) He has taken loan of Rs.1,99,300/- on 04-08-2009 from staff co-operative society and withdrawn the same on 04-08-2009. (iv) He has taken loan of Rs. 2,00,000/- on 01-12-2009 from Shri Prakashbhai Paragji bhai through cheque and the same was also withdrawn on the same day.

In view of the above, the assessee claimed that he has deposited the aforesaid sum of Rs. 10,86,339/- in SBI saving bank on 15-02-2010.

The assessee with respect to the opening cash on hand of Rs. 4,77,985/- submitted that he was employee in the bank for more than last 30 year on handsome salary. Therefore the opening balance of cash represents the saving out of such salary amount which is quite possible. Accordingly assessee claimed that the cash deposit of Rs.10,86,339/- from above mentioned source does not represent his additional income. Laljibhai Ravjibhai Chovatiya vs. ITO Asst.Year – 2010-11 - 4 - 6. However, the AO did not believe the submission of the assessee by observing that it is impossible for a bank employee to hold such huge amount of cash in hand for such long period of time i.e. more than 10 months. Accordingly the AO held that the reply of the assessee was not convincing and held that there was no correlation between cash generated by the assessee and making deposit of the same in the saving bank account. As per the AO no prudent person, especially assessee being bank employee will withdraw cash, hold the same for such long period and suffer interest income. Accordingly the AO treated the same as unexplained investment in bank u/s 69 of the Act.

The assessee before learned CIT (A) submitted that he is a salaried person and does not require to maintain any books of account. But he explained the source of cash deposit. However the learned AO without any sufficient or cogent reason held the same as unexplained deposit. Therefore such addition is not sustainable.

The learned CIT(A) after considering the assessment order and submission of assessee confirmed the order of the AO by holding that the explanation submitted by assessee did not establish the nexus between cash deposit and its source. Laljibhai Ravjibhai Chovatiya vs. ITO Asst.Year – 2010-11 - 5 - Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us.

The learned AR before us submitted that the explanation furnished by the assessee before the authorities below has not been doubted or proved incorrect. But, the same was not accepted due to the fact that there was sufficient time between the period when the amount was withdrawn in cash and deposit of the same in cash in the saving bank account.

On the contrary, the learned DR vehemently supported the order of the authorities below.

We have heard the rival contentions of both the parties and perused the materials available on record. The assessee has explained the source of cash deposit as discussed in the preceding paragraph. Thus, the primary onus of the assessee was discharged. Now the onus was on the revenue to hold the submission of the assessee is incorrect. The revenue has not brought anything on record suggesting that the amount of cash withdrawn has either been incurred as an expenditure by the assessee or the same has been utilized for the purpose of the investment. Thus, in the Laljibhai Ravjibhai Chovatiya vs. ITO Asst.Year – 2010-11 - 6 - absence of any contrary information against the submission of the assessee, we hold that the assessee has deposited the amount in the saving bank account out of the cash withdrawal during the year under consideration and out of the opening cash balance as discussed above. The primary reason for treating the cash deposit as unexplained investment under section 69 of the Act by the AO was that no prudent person would keep such huge amount of cash in his house. The reasoning furnished by the AO appears to be logical but such inference cannot be the basis for making the addition to the total income of the assessee by treating the deposit of cash as unexplained investment under section 69 of the Act. As such, the onus was on the revenue to find out the details of the expenses incurred by the assessee vis-a-vis the investment made by him to prove that the so-called cash deposit was not made out of the cash withdrawn or out of the opening cash balance. But the revenue, failed to bring such information/evidence on record. Therefore we are not convinced with the finding of the authorities below. Accordingly we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Thus the ground of appeal