RAVIRAJ MOTILAL RUHWANI ,MUMBAI vs. ITO WD 2(3) , KALYAN

The issue raised is that learned CIT(A) erred in confirming the addition of Rs. 11,72,614/-.

Brief facts of the case are that the assessee is engaged in the business of gold smith. In the assessment order the Assessing Officer noted that there is cash deposit during the demonetization period in assessee’s bank account amounting to Rs.11,12,500/-. The assessee was asked to explain the sources thereof. The assessee stated that during the year assessee has withdrawn cash of Rs.7,00,000/- from HDFC Bank on 23.9.2016 and cash generated out of business and opening balance of cash Rs. 9,48,532/- were deposited. However, the Assessing Officer was not satisfied. The Assessing Officer held as under : a. As per the details available, it is seen that the assessee has not shown business income for the last 2 years. However, for the year under 2 Raviraj Motilal Rijhwani consideration, the assessee has shown business income u/s.44AD. However, has not furnished any supporting evidence in support of the business carried out by him for the year under consideration, which clearly implies that no business was carried out during the year under consideration. b. Further, the assessee's contention regarding cash in hand of Rs.948532/-, as on 1.4.2016, it is noticed that for AY 2016-17, cash in hand is not reflected in the return of income. Moreover, the assessee has shown in the computation of income for AY 2016-17, only income from other sources and income from house property, but has not shown income from business. Thus, opening cash in hand of Rs.948532/- as on 1.4.2016 cannot be justified. c. On careful examination of bank statements of Bank of India and HDFC Bank, it is seen that the assessee has deposited cash of Rs.2,92,500/- and Rs.8,20,000/- respectively, immediately after demonetization was announced on various dates. Moreover, from the bank statement of Bank of India and HDFC Bank, it is seen that the cash has been deposited only during demonetization period and in the later part of the year also no cash has been deposited. d. As discussed above, cash which were withdrawn earlier cannot be considered source of the cash deposit made during demonetization period. As stated above, the cash has been deposited on different dates in pieces and in 2 different bank accounts. Even if such huge cash was with him from earlier withdrawals, the same will be deposited into the bank account immediately, once he comes to know that the currencies which he holds/possesses are banned by the prescribed authorities from circulation and that too, he will deposit all the currencies on a single day as one time deposit.

Against the above order the assessee is in appeal before learned CIT(A). Learned CIT(A) confirmed the Assessing Officer’s action.

Against the above order the assessee is in appeal before the ITAT.

I have heard both the parties and perused the records. I note that the assessee’s plea of deposit out of opening balance, cash withdrawal and during the year business has been rejected. However, I note that no cogent reason has been given by the authority below to reject the assessee’s plea. Just because deposits are in a particular period, all other submissions

In the result, the assessee’s appeal is allowed for statistical purposes.