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Income Tax Appellate Tribunal, DELHI BENCH “E” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER AMIT SHUKLA, JM
The aforesaid appeal has been filed by the assessee against the impugned order dated 28.03.2017, passed by Ld. Commissioner of Income Tax (Appeals)-XII, New Delhi for the quantum of assessment passed u/s.143(3) for the Assessment Year 2012-13. In the grounds of appeal
, following issues have been raised:-
1. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in:- a) Confirming the addition of Rs. 52,00,000/- incorrectly and unjustifiably made by the Assessing Officer even when the bank deposits have been made out of the cash book which has been not found to be incorrect and nor rejected. b) Confirming the addition of Rs. 1,20,000/- made on account of house hold expenses rejecting the explanation of the assessee on the basis of assumption and presumption and without finding the explanation of the assessee incorrect or untrue. c) Confirming the addition of Rs. 12,000/- on the basis of estimate without finding the explanation of the assessee untrue and also when the payment of rent under question was not found to be untrue.
2. On the facts and in the circumstances of the case the order passed by the CIT(A) appeal under reference is bad in law, perverse and not sustainable in law since this has been passed on 28.03.2017 as per date given at the top of the appeal order whereas we have received the appeal order on 15.03.2017.”
2. The facts in brief are that the assessee is deriving income from proprietorship concern, namely, M/s. KNT Overseas, who is engaged in the business of export of fabric, garments and miscellaneous items. AIR information was received that assessee has purchased immovable property for consideration of Rs.4.60 crores and assessee was asked to furnish details of payment and its source with evidence. The assessee in reply submitted that it has purchased property along with M/s. Glaze Trading India (P) Ltd. for a consideration of Rs.4.60 crores in which assessee is having only 25% share. The copy of sale deed dated 15.12.2011was also placed on record. Regarding the source, the assessee submitted that he has made drawing of Rs.110,84,978/- from the current account of M/s. KNT Overseas, his proprietorship concern, which was subsequently transferred to his Savings Bank Account from where the payment has been made. Ld. Assessing Officer observed that there are cash deposits for sums aggregating to Rs.52,75,000/-. As per the Assessing Officer, the assessee could give proper explanation for the source of cash deposits. However, he acknowledged from the bank account entries that the assessee has deposited the cash in current account and transferred the amount to his Savings Bank Account for the purpose of purchasing of property, however, he held that the source still remains unexplained. Accordingly, he treated the entire cash deposits amounting to Rs.52,75,000/- as unexplained money u/s.69A which was added to total income of the assessee.
3. Ld. Assessing Officer further noted from the copy of rent agreement wherein mentions rent per month of Rs.9000/-, i.e., annual rent of Rs.108,000/- whereas assessee has debited rent of Rs. 1,20,000/- in his P&L account. Accordingly, difference of Rs.12,000/- was added.
Apart from that, from the perusal of the statement of current account filed by the assessee, he noticed that assessee has withdrawn Rs.110,84,978/- out of which he has purchased his share of property and from this he inferred that assessee was left with no balance to meet his household expenses. Accordingly, he estimated the monthly expense at Rs.10,000/- and made the addition of Rs.1,20,000/- to the total income of the assessee.
Before the ld. CIT(A) in so far as the issue relating to cash deposit of Rs.52,75,000/- and on other two issues submitted as under: “1. The assessee carries on the business of fabric and garments in the name of KNT Overseas of which he is the proprietor in the current account with the bank of Indusind Bank Ltd, he deposited cash of Rs 5275000/- on various dates as per details extracted at page no.2 of the assessment order. The assessing officer required the assessee to explain the source of deposited cash amount in his current bank account, even though the explanation by itself was available in the cash book as produced and seen by the Assessing officer at the time of assessment, yet the Assessing Officer did not listen and even after pointing out his attention to the cash book he proceeded to make the addition. The Assessing officer therefore ignoring the Cash Book held that the assessee had not filed any confirmation relating to the deposit in the bank treated the amount of Rs. 5275000/- as unexplained money liable to be taxed U/s 69 of the Income Tax Act. We are now in appeal and submit as under. We have filed the return of income along with details of Audited books of account. During assessment proceedings books of account including the Cash Book was produced and examined. Each deposit in the bank is supported from the balance available in the cash book. To put it differently the deposit is out of cash book audited and maintained in the regular course of business. The books of account were produced before the assessing officer and examined. After examination the assessing officer enquired about several details and all such details filed, examined and placed on record as is evident from the assessment order itself.
The, Assessing officer did not find any defect or discrepancy of any kind or of any nature and therefore accepted the books of account and also the book results. No proviso to section 145 has been applied. We are now again enclosing a copy of cash book which is an evidence and explanation to the source of deposit in the bank. Hence the source of deposit in the ban explained and the addition may kindly be deleted.
Another addition has been made on account of no withdrawal for household expenses. In the absence of any details such expenses are estimated at Rs. 120000/- and added to the total income. But this is unwarranted since the assessee lives with his father who is responsible for meeting the household expenses. Hence this addition may also be deleted.
3. An addition of Rs 12000.00 has also been made on account of rent difference. The Assessing officer opines that the rent account has been debited for Rs 120000/- whereas as per the rent agreement the same cannot be more than Rs 108000/- being @ Rs. 9000/- per month. Hence the Assessee has debited the rent account by an excess amount of Rs 12000/-and the same is therefore disallowed. The rent agreement is dt. 20.11.2009 which also provides that after the expiry of a period of eleven months fresh rent would be paid. Therefore, I have paid rent @ 10000/- per month totaling to Rs 120000/- hence it is requested that the addition may kindly be deleted.”
However, the ld. CIT(A) made the addition of Rs.52 lac after observing and holding as under:
“9.4 I have carefully considered the observations of the Assessing Officer and submission of the Appellant. It is seen that Appellant has purchased a property alongwith M/s Glaze Trading India (P) Ltd. for a consideration of Rs.4.60 Crores in which Appellant was having 25% shares. Appellant has made drawings of Rs.1,10,84,978/- from the current account of M/s KNT Overseas and Appellant has deposited Rs.52,75,000/- in cash in his bank account in Indusind Bank Ltd. on different dates which are mentioned in page 2 of the Assessment Order. From the perusal of the cash book of the Appellant, it is seen that there are huge cash received by Appellant on different dates out of which cash has been deposited in the Indusind Bank Ltd. However, source of the cash in the cash book has not been submitted. During the course of appellate proceedings, AR of the Appellant was asked to submit the source of cash deposits. AR of the Appellant has stated that Rs. 10,00,000/- and Rs.5,00,000/- were received from M/s PAM Fashion on 31.05.2011 and 02.01.2012 respectively. Regarding the claim that amount of Rs. 15,00,000/- was received from M/s PAM Fashions, it is seen that Appellant has not made any application for admission of additional evidence neither any evidence regarding the receipt of cash from M/s PAM Fashions has been submitted. Apart from this, no submission regarding the balance amount of Rs.37,75,000/- has been submitted by the Appellant. Appellant has to justify his claim that amounts of cash deposited as per cash book are in the regular course of business with supporting evidences. It is seen that either amounts have been withdrawn from the bank or received from M/s PAM Fashions. However, Appellant has not submitted any evidence as to the source of deposits nor he has shown that the amounts are on account of sale and loan etc. neither he has correlated the entries with the ledger for sale etc. There is no basis in the claim of Appellant that explanation was available in the cash book and the books of account are audited. Hon’ble Delhi High Court in the case of Goodyear India Ltd., 246 ITR 116 (Del) have held that the broad proposition that once there is tax audit u/s 44AB, AO should not insist upon production of records or details cannot be laid down and merely because an audit report is available, there is no fetter on the power of Assessing Officer to require the Assessee to justify its claim with reference to records, materials and evidence as such power is inherent in an Assessing Officer in the scheme of the Act. Therefore, it was incumbent on the Appellant to establish his claim that cash was received in the regular course of his business with documentary evidences. Further, from perusal of the Balance Sheet, it is seen that there is negative capital of Rs. 1,00,04,188/- at the end of the year as Appellant has withdrawn Rs. 1,10,84,978/- from M/s KNT Overseas, its proprietary firm during the year. It is also seen that turnover of the Appellant during the year was Rs. 2,15,08,041/- and against it Appellant has withdrawn an amount of Rs.1,10,84,978/-. Therefore, the claim of the Appellant lacks substance. Onus is on the Appellant to prove the source of any cash deposit in his bank account which has not been discharged. 9:5 Moreover, when there is deposit of cash in the cash book of the Appellant, the provisions of Section 68 will operate unless Appellant discharges his onus. Appellant has not submitted any evidence to explain the source of cash deposits in his bank account and cash book and, therefore, initial burden of proving the transaction has not been discharged by the Appellant. There is also no requirement to reject the books of account for making additions on account of deposit in the bank account. Therefore, in view of the facts and circumstances of the case, disallowance of Rs.52,00,000/- is sustained.”
In so far as addition of Rs.1,20,000/- is concern on household expenses, ld. CIT(A) has confirmed the addition on the ground that assessee has not shown household expenses.
As regards addition of Rs.12,000/-, he observed that the lease agreement was for 11 months and there was no renewal of lease agreement as per the clause mentioned therein that fresh deed shall be executed. Since assessee could not furnish any fresh detail for rent agreement after the expiry of earlier agreement. Accordingly, he sustained the addition.
Ld. Counsel before us submitted that during the course of assessment proceedings, the assessee had given following details of cash deposits and drawing. The copy of which is appearing at page 33 of the paper book. 7. Detail of cash deposit and drawings in current a/c A. Opening Balance of cash in hand 746238.39 Drawings From Bank 5360000.00 Total 6106238.39 Add-Cash Deposit in Current A/c and expenditure On various dates during the year 5995858.00 Closing Balance of cash as at 31.03.2014 110380.00
Thus, he submitted that out of total cash deposits made during the year for sums aggregating to Rs.52,75,000/-, the source of cash deposits of Rs.37,75,000/- was from opening cash balance of Rs.7,46,238/- and cash withdrawal of Rs.34,34,000/- from the bank account and remaining cash deposits of Rs.15 lac is received from PAM Fashions. In support, he has filed the summary of cash transaction made during the year and the date-wise detail reproduced hereunder:
Sr. Particulars Amount No. (in Rs.) i) Opening Balance as on 1.4.2011 7,46,238 ii) Add: Cash withdrawal 34,40,000 Add: Cash receipt from PAM 15,00,000 49,40,000 fashion iii) Total 58,86,238 Less: Cash deposit 52,75,000 iv) 56,35,651 Less; Cash payment 3,60,651 v) Cash balance as on 5.3.2012 (last date of cash deposit)
He also submitted a date wise details of cash book which is tabulated hereunder in support of the aforesaid summary:
Sr. Date/Period Opening Cash Cash Cash Cash Closing No. Balance withdrawal received deposit Payment Balance 01.04.2011 7,46,238 -- -- -- -- 7,46,238 1. 06.04.2011 7,46,238 -- - -- 19,380 7,46,238 to 2. 14.04.2011
15.04.2011 7,26,858 -- -- 2,50,000 -- 4,76,858 18.04. 2011 4,76,858 -- -- -- 1,950 474908 4. to 25.04.2011 26.04.2011 4,74,908 3,00,000 -- -- -- 7,74,908 5.
29.04.2011 7,74,908 -- -- -- 720 7,74,188 6. 30.04.2011 7,74,188 2,00,000 -- -- 10,290 9,63,898 7. 05.05.2011 9,63,898 -- -- -- 650 9,63,248 8. 07.05.2011 9,63,248 -- -- 3,00,000 17,405 6,45,843 9.
15.05.2011 6,45,843 -- -- -- 1630 6,44,213 to 10. 20.05.2011 23.05.2011 6,44,213 -- -- 1,00,000 -- 5,44,213 11.
25.05.2011 5,44,213 -- -- -- 410 5,43,803 12. 30.05.2011 5,43,803 -- -- 2,50,000 -- 2,93,803 13. 31.05.2011 2,93,803 -- 10,00,000 -- 10,510 12,83,293 14. 04.06.2011 12,83,293 -- -- 1,02,000 530 11,80,763 15. 08.06.2011 11,80,763 -- -- 3,00,000 -- 8,80,763 16. 09.06.2011 8,80,763 -- -- 3,10,000 17,705 5,53,058 17.
11.06.2011 5,53,058 -- -- -- 1,500 5,51,558 to 18. 19.06.2011 23.06.2011 5,51,558 -- -- 3,00,000 -- 2,51,558 19.
25.06.2011 2,51,558 -- -- 1,10,000 -- 1,41,558 20.
26.06.2011 1,41,558 -- -- -- 12,270 1,29,288 21. to 06.07.2011 07.07.2011 1,29,288 4,00,000 -- -- 17,320 5,11,968 22.
08.07.2011 5,11,968 5,30,000 -- -- 480 10,41,488 23. 12.07.2011 10,41,488 5,20,000 -- -- -- 15,61,488 24.
15.07.2011 15,61,488 -- -- -- 1,645 15,59,843 25. to 22.07.2011 23.07.2011 15,59,843 -- -- 15,000 -- 15,44,843 26.
25.07.2011 15,44,843 -- -- - 63,115 14,81,728 to 8.9.2011 27.
09.09.2011 14,81,728 -- -- 4,00,000 -- 10,81,728 29. 13.09.2011 10,81,728 -- -- 2,00,000 -- 8,81,728 30. 15.09.2011 8,81,728 -- -- -- 1,680 8,80,048 to 20.09.2011 31. 23.09.2011 8,80,048 6,00,000 - -- -- 14,80,048 32. 24.09.2011 14,80,048 -- -- -- 430 14,79,618 33. 26.09.2011 14,79,618 3,50,000 -- --- -- 18,29,618 34. 28.9.2011 18,29,618 -- -- -- 395 18,29,223 35. 29.09.2011 18,29,223 1,60,000 -- -- -- 19,89,223 36. 30.09.2011 19,89,223 -- -- -- 10,295 19,78,928 37. 01.10.2011 19,78,928 3,80,000 -- -- -- 23,58,928 38. 06.10.2011 23,58,928 -- -- -- 17,805 23,41,123 to 07.10.2011 39. 12.10.2011 23,41,123 -- -- 12,70,000 -- 10,71,123 40. 14.10.2011 10,71,123 -- -- 3,51,000 470 7,19,653 41. 16.10.2011 7,19,653 -- -- -- 380 7,19,273 17.10.2011 7,19,273 -- -- 1,00,000 ---- 6,19,273 42. 43. 21.10.2011 6,19,273 -- -- -- 350 6,18,923 44. 22.10.2011 6,18,923 -- -- 1,05,000 -- 5,13,923
24.10.2011 5,13,923 -- -- -- 31,267 4,82,656 to 21.11.2011 26.11.2011 4,82,656 -- -- 1,50,000 905 3,31,751 46.
3,31,751 -- -- -- 10,990 3,20,761 28.11.2011 47. to 30.11.2011 05.12.2011 3,20,761 -- -- 1,50,000 950 1,69,811 48.
07.12.2011 1,69,811 -- -- -- 19,385 1,50,426 to 49. 22.12.2011 26.12.2011 1,50,426 -- -- 72,000 10,765 67,661 to 50. 30.12.2011 02.01.2012 67,661 -- 5,00,000 -- 905 5,66,756 51.
06.01.2012 5,66,756 -- -- 80,000 -- 4,86,756 52.
07.01.2012 4,86,756 -- -- -- 29,259 4,57,497 to 53. 11.01.2012 12.01.2012 4,57,497 -- -- 85,000 -- 3,72,497 54.
3,72,497 -- -- -- 3,620 3,68,877 16.01.2012 55. to 23.01.2012 56. 24.1.2012 3,68,877 -- -- 1,00,000 610 2,68,267 57. 30.01.2012 2,68,267 -- -- -- 30,920 2,37,347 to 22.2.2012 58. 23.02.2012 2,37,347 -- -- 1,60,000 -- 77,347 59. 27.02.2012 77,347 -- -- -- 10,940 66,407 to 28.02.2012 60. 05.03.2012 (Last cash 66,407 -- -- 15,000 50,587 deposit during the year under consideration) Total -- 34,40,000 15,00,000 52,75,000 3,60,651 --
Thus, he submitted that the source and the cash deposits were fully explainable from the cash books. He also relied upon the various case laws which are not being discussed by us as the issues involved is purely based on facts and material on record.
Regarding addition of Rs.1,20,000/- made on account of household expenses, he submitted that before the Assessing Officer following explanation was given:- 12.1 It is submitted that appellant during the year under consideration is living with his parents and is not having any child. It is further submitted that during the course of assessment proceedings vide his reply placed at page 32 of Paper Book has submitted as under: “2. Detail of Drawings made in capital account of Proprietor from KNT Overseas A. Amount transferred from Current a/c to Saving account shown in drawings: 10,62,500 B. LIC Paid 22,478 Total 1,10,84,978 …. 4. Detail of household expenses LIC paid from KNT Overseas 22,478 LIC 12,262 Household expenses Cash drawing 60,000 from Saving A/c.
Thus, he submitted that the addition is based on assumption from bare perusal of the current account, and therefore, same cannot be sustained.
Lastly, with regard to addition of Rs.12,000/- on the basis of difference as per the amount mentioned in rent agreement and shown in the P&L account, he submitted that rent agreement was executed on 30.11.2009 which was for the period of 11 months. He drew our attention to the last clause of the agreement wherein there was a stipulation that the rent was increased 10% per month and the increment of Rs.1000/- per month has been made as per the agreement itself and instead of rent of Rs.9,000/- the same was payable at Rs.10,000/-.
On the other hand, ld. DR has strongly relied upon the observation and the finding given by the Assessing Officer and CIT(A) and submitted that the onus was heavily upon the assessee to prove the source of the cash deposits which has not been properly explained.
After considering the rival submissions and on perusal of the relevant finding given in the impugned orders as well as documents referred to before us, we find that the entire payment for purchase of property has been made by the assessee from his bank account and the details of cash deposits has been incorporated above. The source of cash deposits was from the business carried out by the assessee for which the assessee has given details of sales with the name of the parties which was to the tune of Rs.2.13 crores. The summary of cash transactions along with date-wise detail of cash book which was produced before the authorities below has already been incorporated above. From the perusal of the same, it is seen that all the source of the cash deposits are from the regular books of account and cash books entry is also matching with the bank statement filed by the assessee in the paper book. In the light of the clear cut explanation which is duly supported by; firstly, the sale receipt of the assessee; and secondly, the amount which has been transferred from current account to his savings bank account which was duly appearing in cash book, explains the entire source. Therefore, it cannot be held that the cash deposits remain unexplained. In the light of the aforesaid explanation as submitted by the ld. counsel duly corroborated by the evidence on record, we hold that the entire cash deposits of Rs.52 lac stands explained. Accordingly, this issue is in the favour of the assessee.
In so far as addition on account of household withdrawal of Rs.1,20,000/- is concerned, we find that the assessee had shown household expenses and cash drawings from savings bank account at Rs.60,000/- and approximately Rs.35,000/- for LIC payments. Apart from that, assessee has also explained that he was staying with his father and majority of the household expenses was borne out by him. Without there any specific finding or material, the addition based on pure surmises and presumption cannot be sustained. Accordingly, the same is directed to be deleted.
On the issue of difference of Rs.12,000/-, it is clear from the rent agreement itself that on the expiry of the period mentions rent will be further increased by 10% per annum. The rent agreement was dated 20.11.2009 and year under consideration is Assessment Year 2012-13, therefore, increment of 10% as per the clause of the rent agreement itself justifies the payment of Rs.10,000/- per month which has been duly shown by the assessee. Accordingly, there is no reason for making the addition of Rs.12,000/-, same is deleted.
In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 18th March, 2021