SMT.SUSHILADEVI JAIN,MUMBAI vs. ACIT-22(3), MUMBAI

This appeal in A.Y.2011-12 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-34, Mumbai in appeal No.CIT(A)-34/ACIT-19(1)/IT-113/2014-15 dated 22/02/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 20/03/2014 by the ld. Asst. Commissioner of Income Tax-19(1), Mumbai (hereinafter referred to as ld. AO).

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the addition made u/s 68 of the Act in respect of cash deposits made in the bank account, in the facts and circumstances of the case.

We have heard the rival submissions and perused the materials available on record. The assessee is engaged in the business of trading in shares and commodities futures trading. The income earned of Rs 59 lacs thereon is offered under the head business income. Interest income earned is offered under the head income from other sources. During the year under consideration, the ld. AO based on AIR information sought details from the assessee to explain the sources of cash deposits made in HDFC Bank, Santacruz (E) Branch, Mumbai in the sum of Rs 48,20,000/-. The assessee explained that the cash deposits are sourced out of cash withdrawals made from the bank account. In support of this, the assessee submitted the bank statements, bank book and cash book before the ld. AO. The ld. AO observed that the father in law of the assessee is engaged in marble business and alleged that the cash deposited into bank account of assessee has been sourced out of unaccounted income from marble business of father in law. On this allegation, the ld. AO disbelieved the explanation of the assessee that the cash deposits were sourced out of cash withdrawals from bank and proceeded to treat the cash deposits as unexplained cash credit u/s 68 of the Act and added Rs 48,20,000/- to the total income of the assessee. This action of the ld. AO was upheld by the ld. CIT(A).

It is not in dispute that the assessee is engaged in the business of trading in shares and commodities futures trading. All the credits in her bank account represent business proceeds from trading in shares and commodities futures. From the said credits, the assessee has withdrawn cash from the bank and had retained with her for the purpose of meeting emergency needs. It is not the case of the revenue that the cash withdrawals made by the assessee from the bank together with the opening cash balance of Rs 6,25,710/- had been utilized or spent for some other purposes and that the said cash was not available with the assessee for making cash deposits. The only allegation of the revenue is that since the assessee’s father in law is engaged in marble business, his unaccounted income from marble business might be used for making cash deposits into the bank account of the assessee. This, in our considered opinion, is mere surmise and conjecture and arising out of suspicion. This suspicion is absolutely without any basis. No cogent evidence has been brought on record by the revenue to justify the said suspicion.

Before us, the ld. DR argued that no prudent business woman would withdraw cash from bank and keep it in hand. The ld. DR argued that assessee might have used the said cash by advancing loans to outsiders or might have incurred cash expenses outside the books. We find that all these are mere allegations leveled by the ld. DR and the same is not even the case of the lower authorities. The ld. DR was only trying to improve the case of the ld. AO which is not permissible in law.

On the contrary, the assessee had duly furnished the cash book before the ld. AO and there was no negative cash balance on any day during the year. The entire cash deposits stand clearly explained by opening cash balance and cash withdrawals from bank made from time to time. Once the receipts credited in the bank account arising out of business has already been offered to tax by the assessee as business income, there is no need to doubt the cash withdrawals from bank made out of the said business receipts. It is also pertinent to mention that the books of accounts including cash book filed by the assessee has not been rejected by the lower authorities. Only the explanation offered by the assessee has been rejected by the lower authorities, by merely making an allegation (which is not supported with any basis) that the cash pertains to unaccounted income arising out of marble business. Nothing prevented the revenue from making indiscriminate enquiries in the hands of the assessee’s father in law and consider the alleged undisclosed income in his hands. This was admittedly not done by the revenue in the instant case.

In view of the above, we hold that the assessee had duly discharged her onus of proving the three necessary ingredients of section 68 of the Act in the instant case and hence we direct the ld. AO to delete the addition made in the sum of Rs 48,20,000/-. Accordingly, the ground raised by the assessee is allowed.

In the result, the appeal of the assessee is allowed.