AVINASH CHAUDHRY,GHAZIABAD vs. ITO, WARD-1(1), GHAZIABAD
Income Tax Appellate Tribunal, DELHI BENCH ‘A’: NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI S. RIFAUR RAHMANShri Avinash Chaudhry, vs.
PER S.RIFAUR RAHMAN, ACCOUNTANT MEMBER :
This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-2, Noida [hereinafter referred to as ‘ld. CIT (A)] dated 27.02.2018 for Assessment Year 2009-10 raising following grounds of appeal :- “1. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned reassessment order u/s 147/144 and that too without assuming juri iction as per law and without complying with the mandatory conditions u/s 147 to 151 as envisaged under the Income Tax Act, 1961. 2 2. That in any case and in any view of the matter, action of Ld. CIT (A) in confirming the action of Ld. AO in framing the impugned reassessment order u/s 147/144, is bad in law and against the facts and circumstances of the case.
That having regard to the facts and circumstances of the case, d. CIT(A) has erred in law and on facts in confirming the addition of Rs.39,76,185/- allegedly on the ground that the cash deposits are unexplained and that too by recording incorrect facts and findings and without observing the principles of natural justice.
That in any case and in any view of the matter, action of Ld. CIT (A) in confirming the addition of Rs.39,76,185/- allegedly on the ground that assessee has failed to explain the cash deposit, received from his grandfather and out of cash withdrawals from the bank of assessee, is bad in law and against the facts and circumstances of the case.
That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the addition of Rs. 1,58,117/- allegedly on the ground that the assessee has earned long term capital gain on sale of land and that too by recording incorrect facts and findings and without observing the principles of natural justice.
That in any case and in any view of the matter, action of Ld. CIT (A) in confirming the addition of Rs. 1,58,117/- as long term capital gain which in fact is a short term capital loss, is bad in law and against the facts and circumstances of the case.”
At the time of hearing, ld. AR of the assessee made submissions on juri ictional issue which was heard and not accepted by the Bench, accordingly ld. AR chose not to press the same. 3. Ld. AR of the assessee argued Ground No.4 on merits relating to the cash deposit of Rs.39,76,185/- during the year. The relevant facts are, during assessment proceedings, the AO observed that assessee has made cash deposit of Rs.43,54,000/- in his bank account maintained with Bank of India, Mehrauli Branch. Since no satisfactory submissions were made before the AO, the AO proceeded to make the entire cash deposit as unexplained cash deposit under section 68/69 of the Income-tax Act, 1961 (for short ‘the Act’).
3
4. Aggrieved, assessee preferred an appeal before the ld. CIT (A) and filed detailed submissions. Ld. CIT (A) called for the remand report from the AO and the relevant findings in the remand report are as under :-
“The contention of the assessee that the cash has been withdrawn from the bank account and then deposited back to bank account is not acceptable as it was not the business of the assessee. The assessee has submitted cash flow at page 07 to 09 of the paper book in support of his contention. On examination of the same, it has been found that the assessee was having substantial cash in hand on 07.05.2008 at Rs.3,07,600/- but in spite of this, he made withdrawal of cash of Rs.5,00,000/- and after four and five days has deposited cash of Rs.4,92,000/- to the bank account.
Similarly the assessee was having substantial cash in hand on 11/09/2008 at Rs.3,84,900/- but in spite of this, he made withdrawal of cash of Rs. 4,00,000/- on 12.09.2008 and Rs.2,00,000/- on 17.09.2008 and after one month has deposited cash of Rs.5,00,000/- to the bank account. Further, it is noticed that the assessee has not shown any withdrawals for household expenses in his cash flow. Thus, in view of the above, it is clear that the contention of the assessee that the cash has been withdrawn from the bank account and then deposited back to bank account and furnishing the cash flow in support of the source of deposit of cash to the bank account is an afterthought and a concocted story.
On being asked the reason for withdrawing cash from the bank account and depositing back it to the bank account, the assessee did not furnish any reason thereof. Thus, in view of the above, the contention of the assessee that he has deposited cash to the bank account from the earlier withdrawals of cash is not acceptable.
Further, the assessee grandfather has made withdrawal of cash of Rs. 24,00,000/- on 28/05/2008 and made gift of Rs. 15,00,000/- to the assessee, but it could not be substantiated by the assessee by furnishing any documentary evidence i.e. gift deed etc. On being asked the reason for not receiving the gift through banking channel, the assessee submitted that the grandfather of the assessee did not have cheque book so he could not make gift through banking channel. The contention of the assessee is not acceptable as the assessee and his grandfather were maintaining bank account in the same bank branch, so the gift can be made by the grandfather of the assessee by transfer of funds through transfer voucher.
Thus, in view of the above, ii is clear that the cash deposited to the bank account is unexplained investment and deserved to be added to the income of the assessee.
Thus, in view of the above facts, the ground taken by the assessee that the cash deposited by the assessee from the earlier withdrawals of cash is not acceptable and deserves to be rejected.”
4
5. After considering the remand report and submissions filed by the assessee, ld.
CIT (A) partly allowed the grounds raised by the assessee and sustained the addition to the extent of Rs.39,76,185/- by observing as under :-
“4.19 On examination of the bank statement it is found that amount of Rs.8,50,000/, Rs.1,00,000/ and Rs.4,00,000/ respectively on 26.06.2008,
03.07.2008 and 22.01.2009 are returned cheque entries and therefore, explained entries. Other sundry entries of Rs.5,000/- (refund ATM Transn), Rs.5,746,
Rs.9563 (Interest) and Rs. 4400/- (ATM Credit) have also been considered as explained.
20 It is evident from the details tabulated above that the first cash withdrawal is made out of B/f balance in the account of the appellant. Cash balance out of cash withdrawal is mentioned at Col.6 of the table. Last Col. is for the bank balance available in the bank account which was available for cash withdrawal on next occasion. Subsequent cash deposits are considered to be made out of the cash balance available to the appellant on the date of cash deposits. For example, on 17.05.2008, the cash balance available to the appellant out of earlier cash withdrawal was Rs.7,45,000/-. Cash deposits of Rs.2,92,000/- on 21.05.2008 and of Rs. 2,00,000/- as on 22.05.2008 has been considered to be explained out of cash balance available to the appellant. On 27.05.2008, the cash balance has been only Rs. 2,64,000/- wherein the appellant had deposited cash of Rs.6,00,000/- on 29.05.2008. Remaining cash of Rs. 3,66,000/- has been considered as unexplained as the appellant had only Rs. 2,64,000/- cash available to him for deposit on 29.05.2008. Same pattern has been followed to consider the unexplained cash deposit of Rs. 7,85,000/- on 31.05.2008, Rs. 2,00,000/- on 02.06.2008, Rs.91,000/- on 10.07.2008, Rs.85,000/- on 20.08.2008, Rs.20,000/- on 07.08.2008 & Rs.4,90,000/- on 23.10.2008. In view of above discussion, total unexplained cash deposits comes to Rs.20,37,000/-.
21 The appellant has claimed that he was engaged in business activity. The AO in his remand report has also accepted such argument of the appellant on the basis of that some Nitin Arora, CA had appeared on 23.11.2016 & submitted P & L account & balance sheet as on 31.03.2010. I have perusal the assessment order and found the impugned order was passed ex-parte and nobody had appeared before the AO during assessment proceedings. There is no mention about the P & L account, balance sheet etc. in the relevant part of the assessment order. The AO had arbitrarily applied the provision of section 44AD and has assessed income @8% of the total credit entries of Rs.76,66,894/-. Whatever it may be, the AO has not appreciated the facts properly, both in the assessment order and the remand report. The appellant has not shown any evidence that he has engaged in the business activity. All the credit and cash entries have not been supported with corresponding ledger A/c, sales book, purchase book, parties ledger etc. Without any corroborative evidences, it is held that the appellant has failed to prove that the credit and cash entries on the bank account are in regard to any business activity.
5
4.22 In view of such situation, the assessee was required to explain all the entries in the bank account. Since the appellant has failed to explain the credit
(clearing) entries in the bank account, all such entries are considered as unexplained u/s 68 of the Act. On so many occasions the appellant had shown cash withdrawal out of such credit entries and effect of such cash withdrawal had been given against the cash deposits made by him. Since the cash deposits have been considered to be explained out of cash withdrawal from the bank balance which is maintained due to such credit entries, all such clearing credit entries have been considered as unexplained.
23 In view of such, the credit entries of Rs.5,00,000/- on 14.05.2008, Rs.2,45,700/- on 10.06.2006, Rs.9,52,785/- on 10.06.2008, Rs.85,700/- on 07.08.2008, Rs.80,000/- on 17.10.2008 & Rs.75,000/- on 03.11.2008 (Total: 19,39,185/-) has been considered as unexplained in addition of unexplained cash deposit of Rs.20,37,000/(Para 4.20).
24 Total unexplained cash credit u/s 68 then comes out to Rs.39,76,185/-. Addition of Rs.39,76,185/- is, therefore, confirmed. Appellant get relief of Rs.3,77,185/-. Ground of appeal 3 is partly allowed.”
Aggrieved with the above order, assessee is in appeal before us. 7. At the time of hearing, ld AR of the assessee submitted that the assessee has withdrawn cash from his own bank account and due to some reason, assessee has not utilized the same and redeposited the same in his bank account. In this regard, he brought to our notice detailed bank statement indicating cash withdrawal and cash deposits which were submitted before the ld. CIT (A) which was reproduced at pages 10 to 12 of the appellate order. He further brought to our notice pages 7 to 9 of the paper book wherein assessee has tabulated the cash withdrawals and cash deposits made during the year datewise and also gift of Rs.9 lakhs from the assessee’s grandfather on 31.05.2008 and Rs.6 lakhs on 29.05.2008, prayed that the assessee has already explained the sources of cash deposit in his bank account.
6
8. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities and specifically brought to our notice remand report from the AO.
9. Considered the rival submissions and material placed on record. We observe that there are several cash withdrawals made by the assessee during the year and maintained the cash balance consistently and held the balance of about
Rs.5 lakhs in hand as per the cash book submitted before us and assessee has redeposited the cash in his bank account which are unutilized funds out of cash withdrawals. We observe that assessee has several withdrawals of cash during the year and the assessee may have deposited the unutilized cash withdrawals during the year to his own account and there are several decisions in favour of the assessee in this regard which are as under :-
(i)
Jaya Agarwal vs. ITO (2018) 92 taxmann.com 108 (Delhi);
(ii)
Hardeep Dalal vs. ITO (2025) 174 taxmann.com 968 (Delhi-
Trib.)
With regard to gift from assessee’s grandfather in this regard, assessee has filed bank account of Shri Jildy Singh, grandfather of the assessee which is placed at page 10 of the paper book wherein he has withdrawn Rs.24 lakhs on 28.05.2008 and also submitted sale agreement for the value of Rs.30 lakhs. These corroborative evidences prove that assessee may have received Rs.15 lakhs as gift from his grandfather which coincides with the cash
7
deposit made by the assessee during the year. Therefore, we are inclined to accept the above and give relief to the assessee.
11. With regard to ground nos.5 to 7, the assessee has not pressed the same and accordingly, the same are dismissed as such.
12. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on this 14th day of May, 2025 after the conclusion of the hearing. (SATBEER SINGH GODARA)
ACCOUNTANT MEMBER
Dated: 14.05.2025
TS