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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN, VICE PRESEIDENT & SHRI PADMAVATHY S
Date of hearing : 25.05.2022 Date of Pronouncement : 30.05.2022 O R D E R
Per Padmavathy S., Accountant Member
This appeal by the assessee is directed against the order of the CIT(Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 01.1.2021 for the AY 2016-17 on the following grounds:- “1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
The learned Commissioner of Income tax [Appeals] / National Faceless Appeal Centre [NFAC for short] is not justified in sustaining the addition of Rs.79,00,000/- being the cash deposits made by the appellant in her bank account treating the same as unexplained money u/s. 69 of the Act, by rejecting the bonafide explanation tendered by the appellant under the facts and circumstances of the case. 2.1 The learned Commissioner of Income tax [Appeals] / NFAC ought to have appreciated that the explanation tendered by the appellant is genuine having regard to the documentary evidence in support of the same and the rejection of the explanation on the ground that the same is not reasonable behavior and fails the "Theory of the test of Human Probabilities and Surrounding Circumstances" is opposed to law and facts and circumstances of the appellant's case considering the surrounding circumstances in which the appellant is placed and hence, the impugned addition made ought to have been deleted. 2.2 The addition made and sustained by the Commissioner of Income tax [Appeals] / NFAC is arbitrary, unreasonable and out of pure suspicion and surmise, assumptions and presumptions, conjecture and therefore, the addition made requires to be deleted. 2.3 Without prejudice to the above, even in extreme case of disbelief the authorities below ought to have added only the peak of the credits and not the aggregate of deposits themselves in which no addition is warranted. 2.4 Without prejudice to the above, the addition made is excessive and liable to be reduced substantially.
Without prejudice to the right to seek waiver before the Hon'ble DG/CCIT, the appellant denies herself liable to be charged to interest u/s. 234-B and 234-C of the Act, which requires to be cancelled under the facts and in the circumstances of the appellant's case.
4. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.” 2. The assessee is an individual deriving income from business, house property and income from other sources. She filed her return of income on 7.7.2016 declaring total income of Rs.59,13,810. The case was taken up for scrutiny under CASS to examine the large cash deposits in the SB A/c and the assessee was called for to explain these cash deposits. The assessee submitted that these cash deposits were made out of earlier withdrawals from bank and explained the reason for such withdrawals and deposits. The AO rejected the submissions of the assessee regarding source of cash deposits and concluded the assessment by making an addition of Rs.79 lakhs as unexplained u/s. 69 of the Act.
3. On further appeal, the CIT(Appeals) confirmed the order of the AO with the following observations:- “5.1 The A.O.'s and the appellant's contentions have been carefully examined. As has been correctly reasoned by the A.O., the appellant has not given any details regarding the person from whom she was planning to purchase the agricultural land and the details of amount paid to the land owner, etc. Further, the appellant could not also corroborate the cash deposits made and the cheques issued to third parties. Even otherwise, the appellant's contention that she had withdrawn cash from her bank account to pay for the alleged land purchase, is not substantiated by any piece of evidence. No reasonable person would withdraw an amount of Rs. 79 lakhs, that too in 17 instalments over a period of 9 months (from June 2015 to March 2016), only to redeposit the same back to her bank account. It is common sense that any person will withdraw cash only for a particular purpose, in this case for the alleged purchase of land. However, no person in his right mind will keep on continuously withdrawing cash from his bank account only for the purpose of keeping it at home, and thereafter re-depositing the same cash back in to his savings account. Regarding the appellant's contention that she was a widow and did not have any dependable person to accompany her, therefore due to security problem and transportation of cash, she had issued a bearer cheques to her trusted people. This contention of the appellant also cannot be accepted since the cash has been withdrawn by not one or two, but several people namely, Vijaykumar T.J., Shashi Kiran, Srinivasa, Manushankar, Lokesh, Santosh, Srinivasa, Tribhuvan Das etc. A person would generally have one or two trusted people, and not 10 different people on whom she could have blind trust to let them withdraw such large amounts of cash. It is also seen that she had withdrawn cash through self-cheques on 08.10.2015 of Rs. 5,00,000/- and on 16.03.2016 of Rs. 1,50,000/-. Thus, when the appellant could very well withdraw cash herself through self-cheques, there could be no plausible reason for withdrawing cash by issuing bearer cheques to 10 different people. It is extremely strange that on one hand the appellant claims that she withdrew cash through other people due to her old age / security problem / transportation of cash etc., but on the other hand, she herself withdrew cash of Rs. 5,00,000/- and Rs. 1,50,000/- on 08.10.2015 and 16.03.2016. All these factors clearly show that appellant's contentions are not trustworthy and cannot be relied upon. The entire action of withdrawing cash and thereafter allegedly redepositing the same cash totalling to Rs. 79 lakhs, cannot be a behaviour of normal / rational person. The appellant therefore comprehensively fails on the "Theory of the Test of Human Probabilities and Surrounding Circumstances" as laid down by the Supreme Court in the case of CIT V. Durga Prasad More (1971) 82 ITR 540 and in the case of Sumati Dayal v. CIT (1995) 214 ITR 801.”
Aggrieved by the order of the CIT(Appeals), the assessee is in appeal before the Tribunal.
Before us, the ld. AR submitted that the details of cash deposits and withdrawals have been submitted before the lower authorities, who did not consider the same while treating it as unexplained deposits u/s. 69 of the Act. He further submitted that every cash deposit is supported by antecedent withdrawals from the bank and hence it cannot be treated as unexplained deposits.
The ld. DR, on the other hand, submitted that the assessee has not produced the required details to substantiate the claim that deposits are directly relatable to the cash withdrawals from time to time.
We have heard the rival submissions and perused the material on record. We notice that the assessee has submitted details of cash deposits and withdrawals before the lower authorities. A statement showing the date wise consolidation of these details are furnished before at page 74 of PB which is reproduced below:-
From the above statement, it is observed that the withdrawals precede the deposits substantiating the claim of the assessee that deposits are made out of cash withdrawals from time to time.
Similar issue came up before this Tribunal in the case of Shri Jagannatha S. Shetty in and by order dated 19.6.2020, the Tribunal held as under:- “7.1 The jurisdictional High Court in the case of S.R.Venkateswara vs. CIT (127 ITR 807) had an occasion to consider the availability of cash by the assessee from the withdrawals made earlier for depositing subsequently. In that case, amounts stood un-utilised for a period of 2 years. The jurisdictional High Court held as under: ‘Once the petitioner disclosed the source of Rs.15,000 having come from the withdrawal made ona given to from a given bank, it was not for the ITO or the Commissioner to concern themselves with what the petitioner did with that money i.e. whether he had kept the money in his house or deposited the same in a bank. The ITO could have either rejected the explanation given by the petitioner as unbelievable on the ground that on investigation it was found that the amount was not deposited in the bank or he could have called upon the petitioner to substantiate his claim by documentary evidence. Since the ITO did not exercise either of these choices, it was not open to him to merely surmise that it would not be probable for the petitioner to keep Rs.15,000 unutilised for a period of two years. The ITO should have given an opportunity to the assessee to substantiate his assertions as to the source of his capital outlay.' 7.2 The Hon'ble Madras High Court, in the case of CIT vs. K.S.M.Guruswamy Nadar & Sons (149 ITR 127) after referring to decision of Hon'ble Apex Court in the case of CIT vs. Nelliappan (66 ITR 722) upheld the telescoping of business profits (suppressed) with addition of cash credit. The Hon'ble Madras High Court in the case of S.Kuppuswami Mudaliar vs. CIT (51 ITR 757) held that amount added to income in earlier years on estimate basis is to be treated as real income and can be considered for explaining investment in subsequent year. The Hon'ble Supreme Court in the case of Anantharam Veerasinghaiah & Co. vs. CIT (123 ITR 457) observed at page 462 as under: "Now it can hardly be denied that when an 'intangible' addition is made to the book profits during an assessment proceeding, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee. That income, although commonly described as 'intangible, is as much a part of his real income as that disclosed by his account books. It has the same concrete existence. It could be available to the assessee as the book profits could be. In Lagadapati Subba Ramaiah vs. CIT (30 ITR 593), the Andhra Pradesh High Court adverted to this aspect of secret profits and their actual availability for application by the assessee. That view was affirmed by the Madras High Court in S.Kuppuswamy Mudaliar vs. CIT (51 ITR 757). 7.3 The Hon'ble Madhya Pradesh High Court in the case of Addl. CIT vs. Gha Lime Stone & Co. (144 ITR 140) held that if there is sufficient link between the so-called cash credits and intangible additions then telescoping can be allowed. 7.4 Considering the above factual position and the legal aspect of the issue, we feel that the matter is required to be re-considered by the AO. The AO will consider the explanation of the assessee in respect of withdrawals made in earlier years for ascertaining the undisclosed income of the year under reference and the issue of addition of Rs.30,30,065/- is restored back to the file of the AO.”
Respectfully following the above decision of the coordinate Bench of this Tribunal, we remit the matter to the Assessing Officer for fresh consideration in the light of explanation provided by the assessee that the earlier withdrawals are the source for the cash deposits made subsequently in the form of ‘Date wise consolidation’ statement reproduced above for due verification and decision in accordance with law, after affording reasonable opportunity of being heard to the assessee.
In the result, the appeal by the assessee is allowed for statistical purposes.
Pronounced in the open court on this 30th day of May, 2022..