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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: HON’BLE MANISH BORAD, ACCOUNTANT
the order u/s 143(3) r.w.s. 147 of the Income Tax Act 1961(In short the ‘Act’) dated 07.01.2016 framed by ITO-1(4), Bhopal.
Assessee has raised following grounds of appeal:-
Assessment Year 2010-11
1. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in sustaining the order passed by Ld. A.O u/s 143(3) rws 147 which is contrary to the material on records and provisions of the Act, and bad in law.
2. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in not providing the copy of reasons recorded which forms the basis of making assessment under section 147 rws 143(3). 3. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in sustaining the addition of Rs.4,50,000/- as deposit of cash in savings bank account from undisclosed income. 4. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in not considering facts of the case in proper perspective. 5. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in not admitting the additional evidences filed under rule 46A which go the root of the matter. 6. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in sustaining addition of Rs.4,50,000/- 2 Smt. Chandra Sahu & 76/Ind/2019 under section 69A which was made by Ld. A.O of by applying the provisions of section 68 of the Act.
7. That, the appellant, carves leave to add, amend, alter or otherwise raise any other ground of appeal.
Assessment Year 2011-12
On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in sustaining the order passed by Ld. A.O u/s 143(3) rws 147 which is contrary to the material on records and provisions of the Act, and bad in law.
2. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in not providing the copy of reasons recorded which forms the basis of making assessment under section 147 rws 143(3). 3. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in sustaining addition of Rs.35,00,000/- as deposit of cash in savings bank account from undisclosed income. 4. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in not considering the facts and documents available on record in proper perspective. 5. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in not admitting the additional evidences filed under rule 46A which go the root of the matter.
6. On the facts and circumstances of the case and applicable law, Ld. CIT(A)-I, Bhopal erred in sustaining addition of Rs.35,00,000/- under section 69A which was made by Ld. A.O of by applying the provisions of section 68 of the Act.
Smt. Chandra Sahu & 76/Ind/2019 7. That, the appellant, carves leave to add, amend, alter or otherwise raise any other ground of appeal.
Brief facts of the case as culled out from the records are that the assessee is an individual deriving income from House Property and income from running a restaurant. Return of income u/s 139(1) of the Act for Assessment Year 2010-11 was filed on 22.09.2011 at Rs.2,18,555/- and agriculture income of Rs.1,26,500/- and for Assessment Year 2011-12 return of income was filed on 14.02.2012 declaring income of Rs. 2,50,459/- and agriculture income of Rs.84,500/-. Notices u/s 148 of the Act followed by notice u/s 142(1) were served upon the assessee for both the assessment years. During the course of assessment proceedings Ld. A.O enquired about the source of credit in the bank by cheque as well as cash deposited. Explanations filed by the assessee were not found acceptable. The assessment for Assessment Year 2010-11 was completed after making addition for unexplained credit in the bank at Rs.4,50,000/-. For Assessment Year 2011-12 addition for unexplained cash deposit of Rs.35 lakhs Smt. Chandra Sahu & 76/Ind/2019 was made. Against these additions assessee preferred appeal before Ld. CIT(A) but could not succeed.
Now the assessee in appeal before the Tribunal.
At the outset Ld. Counsel for the assessee requested for not pressing the legal ground challenging the validity of assessment proceedings u/s 143(3) r.w.s. 147 of the Act. Written submissions filed by the assessee are reproduced below:-
Synopsis 1. Assessee is an individual deriving income from running of restaurant. 2. AY 2010-11- Addition of Rs. 4,50,000 made u/s 68. Cheque Sr. No. Date Amount {Rs.} No. 1 24.04.2009 1,35,000 644745 2 05.05.2009 1,50,000 644747 3 27.04.2009 1,65,000 506483 TOTAL 4,50,000
For the items at Sr. No.1 and 2 – These amounts were received as loan from Shri Arun Kumar Tiwari. Loan confirmation letter and bank statement of Shri Arun Kumar Tiwari was submitted. Identity of lender - Address of Shri Arun Kumar Tiwari is mentioned both on the loan confirmation letter and his bank statement Genuineness of transaction - Transactions are executed through banking channel Creditworthiness of transaction – Established through bank statement of Shri Arun Kumar Tiwari who has confirmed the transaction. Source of credit of Rs. 2,85,000 appearing in the bank statement stands explained. 5 Smt. Chandra Sahu & 76/Ind/2019 b. Ld. CIT(A) in his order has stated that there is deposit of cash prior to clearing of cheque. It is submitted that assessee is not required to explain (source of source'. Reliance is placed on the decision of Hon'ble Jurisdictional High Court of Madhya Pradesh in the case of Metachem Industries - [2000] 245 ITRV 160 - order pronounced on 01.09.1999 - Para 4 - •••••••••••••••• The assessee is only to explain that this investment has been made by the particular individual and it is responsibility of that individual to account for the investment made by him. If that person owns that entry, then the burden of the assessee-firm is discharged. It is open for the Assessing Officer to undertake further investigation with regard to that individual who has deposited this amount. [emphasis supplied] c. No doubt has been raised on the opening cash balance as on 01.04.2009 of Rs. 6,91,804. Thus, this cash balance of Rs. 6,91,804 is available to the assessee. [PB 6 - AY 2010-11] d. Provisions of section 68 not applicable - In view of the noting in the assessment order at page 4 point (f) •••••••••••••••••• No books of accounts were maintained by the assessee and income trom business has been offered to tax u/s 44AD ofl.T. Act ... N, no addition can be made u/s 68. Bank statements are not the books of accounts of assessee. e. Reliance is placed on following judicial precedents wherein it is held that in case of no books of accounts, no addition is warranted u/s 68- i. Manasi Mahendra Pitkar - [2016] 73 taxmann.com 68 (Mumbai) order dated 12.08.2016 - Para 9 ii. Bhaichand N Gandhi [1982] 1411TR 67 (Born) iii. Rajshibhai Meramanbhai Oderdra - ITA No. 1019 to 1023/Rjt/2010 - Hon'ble Rajkot Bench of ITAT - order dated 14.12.2012 - Para 8.3 iv. Madhu Raitani - [2011] 45 SOT 231 - Hon'ble Gauhati Bench of ITAT (TM) - 07.10.2010 v.Taj Borewells - [2007] 291 ITR 232 - Hon'ble Madras High Court - dated 02.04.2007 - followed the decision of Hon'ble Apex Court in the case of Ananthram Veerasinghaiah & Co [1980] 123 ITR 457 dated 15.04.1981. vi. Hon'ble Delhi Bench (SMC) of ITAT in the case of Amitabh Bansal- [2019] 102 taxmann.com 229 - order pronounced on 11.02.2019- Para 6.2 - "From above provisions it is crystal clear that mere bank 6 Smt. Chandra Sahu & 76/Ind/2019 statement which is issued by bank to its client/account holder can't be elevated to status of books maintained by assessee within the meaning of section 2 clause 12A and section 44AA of the Act.N [emphasis supplied] 3.Considering the above mentioned facts and circumstances of the case and the applicable law, addition made u/s 68 ought to be deleted. The closing balance of cash as on 31.03.2010 of Rs. 20,52,304 is available as opening cash balance as on 01.04.2010 i.e. for AY 2011-12. [PB 7 - AY 2010-11] 4. AY 2011-12 - addition of Rs. 35,00,000 u/s 68 a.Closing balance of cash as on 31.03.2010 of Rs. 20,52,304 is available as opening cash balance as on 01.04.2010 for the impugned year i.e. AY 2011-12. [PB 9 - AY 2011-12] b.Assessment for AY 2011-12 was completed u/s 143(3) on 11.02.2014 by assessing the income same as returned income. [PB 03-04 - AY 2011-12] c.The closing cash balance of Rs. 20,52,304 stands accepted as no doubt has been raised. d.The explanation of source of deposit of cash to the extent of Rs. 30,00,000 is accepted by Ld. AD in the assessment order itself. Details of which are as under- i.Page 3 - " As such sources of only Rs. 30.00 lacs as against Rs. 35.00 lacs are found to be explainable.N ii. Page 4 para 9 - "Notwithstanding the above, the assessee has failed to fully explain the nature and source of cash deposits. The sources of only Rs. 30.00 lacs are explainable in the submission filed before the DDITOnvJ-2, Bhopal and Rs. 28,40,000/ from cash flow statement N furnished during the course of assessment proceedings e. In addition to the above finding, Ld. AO has failed to bring on record any positive material to establish that the cash so withdrawn was not available with the assessee.
5. Reliance is placed on the following judicial precedent- a.Hon'ble Jurisdictional Bench of Indore ITAT in the case of Kakul Yadav - IT(SS)A No. 321jlndj2017 - order pronounced on 16.05.2019 - [enclosed with this submission at page no. OS-12] Para 9 - ••••••••••••••• Keeping the cash in hand idle for almost a year ranging from Rs. 4,91,005/- from February, 2013 to Rs. 9,51,605/- at the end of January, 2014 cannot be a basis to reject the claim of the assessee. There is no bar under the Income Tax Act which restricts a 7 Smt. Chandra Sahu & 76/Ind/2019 person (rom keeping cash in handle idle for a certain period." [emphasis supplied] In the instant case, Ld. CIT(A) has stated that why any person would keep such huge cash in hand in anticipation of immediate need of cash. Per finding given in the above referred decision of Kakul Yadav (supra) there is no bar under the Income Tax Act which restricts a person from keeping cash in hand idle for a certain period. 6.Considering the above facts and circumstances of the case and the applicable law, addition of Rs. 35,00,000 made under section 68 ought to be deleted, more particularly when the Ld. AO himself has given the positive finding on cash deposit of Rs. 30 lacs which he has taken as explained.
Per contra Ld. Departmental Representative supported the orders of both the lower authorities and also submitted that the assessee has not made similar submissions before the Ld. A.O and Ld. CIT(A) and failed to explain the source of cheque and cash deposited in the bank account.
We have heard rival contentions and perused the records placed before us. The assessee is in appeal for Assessment Years 2010-11 and 2011-12.
Legal ground No. 1 & 2 for Assessment Years 2010-11 and 2011-12 challenging the validity of assessment proceedings u/s 143(3) r.w.s. 147 of the Act are dismissed as not pressed.
Common Ground No.5 raised for Assessment Year 2010-11 and Assessment Year 2011-12 alleging that Ld. CIT(A) erred by not admitting additional evidence filed u/s 46A of the Income Tax Rules 8 Smt. Chandra Sahu & 76/Ind/2019 also deserves to be dismissed as no submissions have been putforth before us by the Ld. Counsel for the assessee.
Now the effective grounds on merits are with regard to addition made u/s 68 of the Act at Rs.4,50,000/- for Assessment Year 2010-11 and u/s 69A of the Act at Rs.35,00,000/- for Assessment Year 2011-12.
As regards the addition for Rs.4,50,000/- for Assessment Year 2010-11, we find that the addition has been made for following three amounts credited in the bank account.
Date Amount (Rs.) Cheque No. S.No 1 24.04.2009 1,35,000 644745 2 05.05.2009 1,50,000 644747 3 27.04.2009 1,65,000 506483 Total 4,50,000
Assessee failed to convince both the lower authorities with regard to the genuineness and creditworthiness of the creditors at Rs. 2,85,000/- (Rs.1,35,000/- + Rs.1,50,000/-). Before us also it was submitted that the above stated amount of Rs.2,85,000/- was received from Shri Arun Kumar Tiwari. Loan confirmation letter and bank statement have been filed. In the bank statement of Shri Smt. Chandra Sahu & 76/Ind/2019 Arun Kumar Tiwari equal amount of cash was deposited a day before the issue of cheque to the assessee. No evidence to show the source of cash available with Shri Arun Kumar Tiwari and his financial strength has been filed. Submissions made by the Counsel for the assessee before us are not sufficient to explain the genuineness and creditworthiness of the transaction. Similarly with regard to sum received at Rs.1,65,000/- on 27.4.2009 no specific details have been filed and only general submissions are made.
We thus are of the considered view that assessee has miserably failed to succeed in the test laid down in the provisions of Section 68 of the Act and thus could not explain the source of credit of cheque of Rs.1,65,000/- and creditworthiness and genuineness of amount received from Shri Arun Kumar Tiwari at Rs.2,85,000/- .
We thus find no reason to interfere in the finding of Ld. CIT(A) and thus confirm the addition. Relevant ground No. 3, 4 & 6 raised by the assessee challenging on merits of addition of Rs.4,50,000/- are thus dismissed.
Ground No.7 raised by the assessee for Assessment Year 2010-11 is general in nature which needs no adjudication. 10 Smt. Chandra Sahu & 76/Ind/2019 15. In the result appeal for the assessee for Assessment Year 2010-11 is dismissed.
Now we take up the issue of addition of Rs.35,00,000/- made u/s 69A of the Act for Assessment Year 2011-12. Ld. Counsel for the assessee mainly argued that the cash balance as on 31.3.2010 available with the assessee was Rs.20,52,304/- which has not been doubted by the Ld. A.O. Further Ld. Counsel for the assessee took us through some of the observations of the Ld. A.O accepting that out of the total deposit of Rs.35,00,000/-, assessee had been able to explain the source of Rs.30,00,000/-. Reliance has also been placed on the decision of this Tribunal claiming that keeping idle cash in hand of high amount idle is not illegal and the assessee kept huge cash balance anticipating the transaction of purchase of land to materialise.
Further going through the finding of Ld. CIT(A), we find that he has observed that the assessee is keeping a huge cash in hand.
There were repeated withdrawals during January, 2010 to May, 2010 and the assessee continued to accumulate cash till she deposited Rs.35,00,000/- in bank account in October, 2010.
During the assessment appellant claimed to have made payment to 11 Smt. Chandra Sahu & 76/Ind/2019 Shri Mahesh Sahu and Surendra Sahu but failed to furnish any evidence of nexus between the cash withdrawals and redeposit in the bank account.
So far as assessee’s contention that there is no legal hurdle in keeping idle cash in hand, we find merit but surrounding circumstances also needs to support the contention of keeping idle cash. Now in the case of the assessee admittedly no books of accounts are maintained. Her source of income includes income from House Property and income from restaurant. As there were no details filed about the type of business but prime facie it seems that the assessee is carrying out the business and offering income on presumptive basis, liable to be taxed u/s 44AF/44AD of the Act.
During the proceedings before the lower authorities and before us assessee has referred to the month wise cash flow statement.
Going through the same we find that except certain withdrawals and deposits in round figures no other entries of day to day cash income/expenditure are appearing. It is not clear that the cash flow statement is only for the individual cash transactions or all the transactions carried out by the assessee during the year. Assessee has also failed to explain various entries appearing in the bank 12 Smt. Chandra Sahu & 76/Ind/2019 statement specially with regard to the amount withdrawn by Shri Surendra Saha and Shri Mukesh Sahu during the financial year 2009-10 which has been claimed as source of cash as opening balance. No explanation has also been filed about the withdrawal/utilization of the amount of cash deposited in the bank.
Looking to these facts, we find that since the beginning of the assessment proceedings till now the explanation and submission made by the assessee lacks clarity and it is hard to reach a conclusion about the source of cash deposited. However we find that various submissions were filed by the assessee to explain the source but revenue authorities could not go deeper to bring the truth on record. Further Ld. A.O as well as Ld. CIT(A) have observed that it cannot not be denied that the alleged amount is an unaccounted business receipts. In our considered view and in the given facts and circumstances of the case and being fair to both the parties, we treat the alleged cash deposit of Rs.35,00,000/- as unaccounted business receipt and apply net profit rate of 8% on this amount which comes to Rs.2,80,000/- and the same is added to the income of the assessee in place of Rs.35,00,000/- for unexplained cash deposit. We thus delete the addition of 13 Smt. Chandra Sahu & 76/Ind/2019 Rs.32,20,000/- and confirm the addition of Rs.2,80,000/- and partly allow ground No. 3, 4 & 6 raised on merits.
Other grounds are general in nature which needs no adjudication.
In the result appeal of the assessee for Assessment Year 2010- 11 is dismissed and for Assessment Year 2011-12 is partly allowed.
The order pronounced as per Rule 34 of ITAT Rules, 1963 on 30.04.2021.