SUMITRA DEVI AGRAWAL,JAIPUR vs. ITO, WARD-4(4), JAIPUR

During the course of hearing, the ld. AR submitted that the assessee is an old lady and has withdrawn a sum of Rs. 7,00,000/- in preceding financial year and Rs. 1,00,000/- in current financial year from her capital account and the same has been reintroduced as capital in her business during the year under consideration. It was submitted that being an old lady, she used to keep cash with her for emergency requirement and the same was available at the beginning of the financial year. It was further submitted that the AO did not bring any evidence or material that withdrawals of preceding financial year were utilized elsewhere and in the assessment order, he has stated that the withdrawals may have been utilized for some other purposes. It was accordingly submitted that it was a mere suspicion on part of the Assessing Officer that cash so withdrawn was not available and mere suspicion cannot be made the basis for making the addition in the hands of the assessee. Further, in support of the fact that there were withdrawals made on various dates in the preceding financial year amounting to Rs. 7 lac and same was available at the beginning of the financial year and which was reintroduced in the capital account during the year under consideration, copy of capital account of previous financial year and an affidavit of the assessee was also submitted. It was accordingly submitted that the addition so made by the AO may be directed to be deleted. Further, in support of the proposition that merely because there is time gap between withdrawals and deposits, no addition can be made in absence of any cogent material in possession of the Assessing officer, the ld AR has placed reliance on the following decisions:- • ACIT vs Baldevraj Charla and Ors. (2009) 121 TTJ 366 (Delhi) • S.R. Venkatta Ratnam vs. Cit (1981) 127 ITR 807 (KAR) • ITO vs. Mrs. Deepali Sehgal (ITAT Delhi), • Kolli Gopi Krishna vs. DCIT (2015) 42 ITR (Trib) 638(Hyderbad)

Per contra, the ld. DR is heard who has relied on the findings of the lower authorities. It was submitted that the assessee has failed to submit any material to prove that cash so withdrawn in the previous financial year was available at the beginning of the financial year which was reintroduced in the capital account during the year under consideration. Accordingly, the addition made by the AO should be confirmed.

We have heard the rival contentions and perused the material available on record. The limited issue under consideration is whether the assessee has reasonably explained the source of capital introduction during the year or not. We find that there are cash withdrawals on 4 different dates in the latter half of immediately preceding financial year totalling to Rs. 7 lac from the assessee’s capital account and also there is a withdrawal of Rs. 1 lac during the current financial year. We therefore find that there is no dispute that the withdrawals have been made by the assessee in the preceding financial year as well as current financial year from her capital account. Even the Assessing officer has also not disputed that these withdrawals have been made by the assessee from her capital account. Regarding the availability of cash so withdrawn at the time of reintroduction of capital during the year, the Assessing officer has raised an apprehension that withdrawals might have been utilized for some other purposes and it cannot be retained by the assessee in anticipation of proposed capital introduction during the year under consideration. In her support, the assessee has submitted that being an old lady, she had kept the amount so withdrawn with her for emergency requirement, the same was not utilized elsewhere, was available with her at the beginning of the financial year and was used for reintroduction of capital and has also submitted an affidavit in support of her contentions. We therefore find that the finding of the authorities below is in the realm of suspicion and conjectures as the source of capital introduction has been reasonably explained by the assessee as out of her withdrawals from her capital account in the latter half of immediate past financial year which were available at the beginning of the financial year as well as from the current financial year