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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
The assessee has filed this appeal challenging the order dated 31.10.2019 passed by Ld CIT(A)-24, Mumbai and it relates to the assessment year 2015-16. The assessee is aggrieved by the decision of Learned CIT(A) in confirming the addition of Rs.35,32,500/- made by the AO u/s 68 of the Act.
The facts relating to the issue are stated in brief. During the year under consideration, the assessee had deposited cash aggregating to Rs.35,32,500/- into his bank account maintained with Andhra Bank. The assessee explained that the above said cash deposits have been made out of cash balances available in his books of account. It was submitted that the cash balance available in the books consisted of opening cash balance brought forward from the earlier year, cash withdrawn from banks from time to time and other receipts/income. The assessee also produced cash book and bank statement before the AO. However, the AO assessed the above said amount of Rs.35,32,500/- by observing as under:-
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“The submission of the assessee has been carefully perused but the same is not acceptable. The assessee in his submission has furnished copy of cash book and bank statement. From the same, it can be seen that the assessee has deposited cash in his bank account and no evidences of cash withdrawal can be seen in the same. Further, the assessee has failed to furnish any documentary evidences that the cash deposited in the bank were out of the cash in hand of the assessee and the assessee has not explained the reason for holding such huge balances in cash. Since the onus was on the assessee to prove and explain the source of the said cash which he has failed to do so, the entire cash deposit of Rs.35,32,500/- is added back to the total income of the assessee u/s 68 of the I T Act…..”
The Ld CIT(A) also confirmed the addition by observing that the assessee has failed to furnish any documentary evidence that the cash deposited in bank were out of the cash in hand of the assessee and had not explained the reason for holding such huge balance in cash. The Learned CIT(A) also observed that the bonafides and genuineness of the transaction does not get established. Aggrieved, the assessee has filed this appeal before the Tribunal.
I heard the parties and perused the record. At the time of hearing, the Ld A.R took me to the following documents to substantiate the claim of the assessee that the impugned cash deposits have been made from the cash balance available in the books of accounts of the assessee:- (a) Balance sheet as on 31.03.2014 (Page 22 of paper book) to prove that the assessee was having opening cash balance as on 1.4.2014 to the tune of Rs.15,97,355/-.
(b) Copy of Andhra bank ledger account as per books of accounts. (c) Copy of Statement given by Andhra bank.
The Ld A.R reiterated the contentions that the impugned bank deposits have been made out of cash balance available in the books of account, which consisted of opening cash balance, cash withdrawn from banks and also other receipts/income generated by the assessee. Accordingly, the Ld A.R contended that the deposits made out of book balances cannot be considered as unexplained. The Ld D.R, on the contrary, supported the orders passed by the tax authorities.
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There should not be any dispute that the cash deposits made out of book balance should be considered as explained when the books of accounts of the assessee were not rejected. I notice that neither the AO nor Learned CIT(A) has examined the cash book of the assessee. I notice that both the authorities have rejected the claim of the assessee that the cash deposits have been made out of earlier cash withdrawals made from the bank account on the reasoning that the earlier cash withdrawal has not been proved. However, the cash withdrawal could have very much been verified from the bank account of the assessee as well as from the entries made in the books of account. In the instant case, the books of account maintained by the assessee have not been rejected and it is the submission of the assessee that the cash withdrawals have been recorded in the books of account. In that case, if the cash has been deposited into the bank account from the cash balance available in the books of account, then it should be held that the cash deposits have been explained. However, as noticed earlier, the tax authorities have not examined books of account also.
Accordingly, I am of the view that this issue needs to be set aside to the file of the AO for the limited purpose of examining as to whether the impugned cash deposits have been made out of cash balance available in the books of account. Accordingly, I set aside the order passed by Learned CIT(A) on this issue and restore the same to the file of the AO for the limited purpose of examining as to whether the impugned cash deposits have been made out of cash balance available in the books of account. If the sufficient cash balance is available in the books prior to making of the deposit, then the AO is directed to delete the addition relating to the said deposits. The AO may sustain the addition to the extent of shortfall, if any, if the cash balance available in the books of account falls short of the amount of deposit made on any particular day. The AO shall decide the issue in accordance with the directions given above.
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In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 21.07.2022.