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आदेश/Order
PER N.K. SAINI, VICE PRESIDENT
This is an appeal by the Assessee against the order dt. 18/09/2018 of Ld. CIT(A)-3, Ludhiana.
The main grievance of the assessee in this appeal relates to the sustenance of addition of Rs. 16,40,000/- made by the A.O. on account of unexplained money under section 69A of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’).
Facts of the case in brief are that the assessee filed his return of income on 27/03/2011 declaring an income of Rs. 4,99,500/-. Later on a survey was conducted at the business premises of M/s Ceigall India Limited and M/s Ceigal Highways. During the course of survey a copy of allotment letter for Flat No. C- 103, Park View Spa, Sector-14,Gurgaon in the name of assessee and Smt. Paramjit Kaur for a value of Rs. 1,43,31,250/- dt. 23/09/2009 was found. The A.O. reopened the assessment under section 147 of the Act after recording the reasons that the income to the extent of Rs. 1,60,30,265/- escaped the assessment. The A.O. asked the assessee to furnish his return of income and also come forward to explain the source of cash deposited in the bank account. The Assessee in response to the notice issued under section 148 submitted that the return originally filed on 27/03/2011 may be treated the return filed in response to the notice issued under section 148 of the Act.
During the course of assessment proceedings the A.O. noticed that the assessee had deposited cash amounting to Rs. 52,05,000/- in his bank account and asked the assessee to explain the source of cash deposited in his bank account. The Assessee had stated that the source of cash received was from M/s Ceigall Builders Pvt. Ltd. and also furnished details of repayment to M/s Ceigall India Ltd., on various dates out of cash withdrawal from his bank account. The detail submitted was as under:
Date Amount of repayment Remarks (Rs.) 12.10.2009 16,40,000 It is clarified here that the said entry has been wrongly posted on 12.10.2009 instead of 21.10.2009 in the copy of account of the assessee in the books of company and there was self-withdrawal of the same amount on 21.10.2009 from PNB saving account bearing A/c no. 2406000100117800 15.12.2009 7,25,000 There was self withdrawal of the same amount on 15.12.2009 from PNB savings account bearing no. 240600010011 7800 23.01.2010 1,40,000 There was self withdrawal of the same amount on 23.01.2010 from PNB savings account bearing no. 24060001001 1 7800 19.02.2010 27,00,000 'There was self withdrawal of the same amount on 19.02.2010 from PNB savings account bearing no. 240600010011 7800
The A.O. asked the assessee to show cause as to why the aforesaid payments to M/s Ceigall India Ltd. may not be added to his income. In response the assessee submitted as under:
Your goodself has asked as to why the payments made by M/s Ceigal India Ltd. (‘the Company') for the purchase of flat for the assessee or for other persona! payments in the nature of insurance premium and credit card payments etc. for the assessee should not be treated as income of the assessee, in this respect, we have already filed a detailed reply in the form of objections dated October 16, 2017 filed before your goodself. It is again reiterated that the said payments are in the nature of loans given by the company to the assessee and have been accordingly recorded in the books of accounts of the company. We have already filed the copy of the ledger account of the assessee wherein the said payments made by the Company are debited to the assessee and the repayments made by the assessee are credited to his account. Thus, there is no income accruing to the assessee on account of these payments made by the company. 2. Your goodself has asked as to why repayments made by the assessee to the company amounting to Rs.52,05,000 may not be added to the income of the assessee. In this respect we have already filed before your goodself the details of the deposits and the corresponding withdrawals being made by the assessee vide objections dated October 16, 2017 and the copy of the bank statement duly signed and stamped by the bank vide reply dated November 15, 2017. Thus, there are corresponding withdrawals for every cash repayment and moreover, the assessee has not utilized the said withdrawals for his own use. The date-wise explanation of the sources of the cash as required by your goodself is provided as under:-
Date Amount Remarks 12.10.2009 16,40,000 With regard to the same it has been submitted that there has been corresponding cash withdrawals from the bank account of the assessee on 21.10.2009 and it is to be appreciated that there has been an inadvertent error of recording the date in the books of the company as 12.10.2009 instead of 21.10.2009 but the same cannot be denied that such withdrawal has been made from the assessee's account and has not been utilized anywhere else,- 15.12.2009 7,25,000 There is a clear cash-withdrawal mentioned In the bank statement on the same date and of the same amount. Further, it is clarified here that the bank withdrawal on 15.12.2009 amounting to Rs.725000 was actually self- withdrawal made by one of the company's employee namely Rakesh Bhandari and thus, on the particulars of the bank statement the narration was written as Rakesh Bhandari even if the same was actually cash withdrawal. This fact have been acknowledged by the bank itself vide certificate dated 16.11.2017 enclosed herewith as Annexure-. Sometimes, it is very much a practice that the name of the person making the self-withdrawal is mentioned by the bank in their system and thus, the source stands explained. 23.01.2010 1,40,000 With regard to the same it has been submitted that there ' has been corresponding cash withdrawals from the bank account of the assessee of the same amount Further, it is submitted that the assessee has issued a self cheque to the company on 23.01.2010 and the same was recorded \ as such in the books of the company on the said date whereas the encashment of the said cheque has been made on 25.10.2010 but the same cannot be denied that such withdrawal has been made from the assessee's account and has not been utilized anywhere else. 19.02.2010 27,00,000 There is a clear cash withdrawal mentioned in the bank statement on the same date and of the same amount. Furthermore, your goodself during the last hearing have called for the evidence to justify that the withdrawal of Rs. 27,00,000 made on 19.02.2010 was actually the rectified entry made by the bank which was wrongly debited as Rs. 3,00,000 instead of Rs. 30,00,000/-. With regard to the same we are filing before your goodself the certificate (as enclosed above) issued by the bank acknowledging the fact that the cash payment of Rs. 30,00,000 has been mistakenly debited by Rs. 3,00,000 and in order to rectify the same the bank has again manually debited the assessee’s account with Rs. 27,00,000.
After considering the above submissions of the assessee, A.O. observed that the company M/s Ceigall India Ltd. had shown the entry of Rs. 16,40,000/- in its books of account on 12/10/2009 where as the assessee had withdrawn this amount on 21/10/2009. The A.O. held that the assessee could not substantiate the source of repayment of Rs.16,40,000/-. He therefore treated the same as unexplained money and added to the income of the assessee under section 69A of the Act.
Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under:
1.2 The brief facts of the case are that during the relevant assessment year, the assessee has regularly withdrawn cash from his personal bank account and deposited in the bank account of the Company as and when required by the Company and has withdrawn cash from the bank account of the Company and deposited in his personal savings accounts as and when required by him. The same has been duly disclosed in the books of accounts maintained by the Company. In one of the reasons of reopening the case of the assessee, it has been alleged that out of the said transactions, there are certain payments amounting to Rs.52,05,000 which have been made by the assessee to the Company, but against which there hasn't been any corresponding withdrawals from the bank account of the assessee (Copy of the said reasons reproduced on Pages 4-8 of the assessment order).
1.2 During the course of the assessment proceedings, the assessee duly furnished the sources of the said repayments backed by the copies of the relevant bank statements depicting the corresponding cash withdrawals. (Reproduced on pages 21-23 of the assessment order) The said sources of the cash deposit was accepted, however, there was one particular repayment amounting to Rs. 16,40,000 which even though has a corresponding withdrawal from the bank account of the assessee, however, was recorded on the different date in the books of accounts of the Company and thus, was not accepted by the Ld. AO.
1.3 With regard to the same, At the outset it is submitted that the sources as filed during the course of the assessment proceedings also includes the relevant extract of the bank statement of the savings account of the assessee from which there was a cash withdrawal of Rs. 16,40,000 and the same was withdrawn on 21.10.2009, however, due to an inadvertent error the same has been recorded in the books of the company as 12.10.2009 instead of 21.10.2009. Therefore, it is not the case that there isn't any corresponding cash withdrawal of the said amount from the bank account of the assessee but it is only because of one mistake of recording of the date, because of which the Ld. AO did not accept the source of the said repayment.
1.4 Further, it is submitted that the assessee is a regular and an independent income tax assessee filing his return of income from the past many years. The sources of income shown by the assessee in his return of income from the said many years are Salary from Ceigall Builders Pvt. Ltd., capital gains or income from other sources and the same has been regularly accepted by the department. Thus, when there are no other sources of income from which the assessee earns his income, then the source of the said cash repayment cannot be other than the said self-withdrawal made by the assessee and moreover, when there are regular corresponding withdrawals of cash of the same amount and when there is a fixed modus operandi which is prima facie clear from the bank statements filed before the Ld. AO. It is submitted that the AO has himself tabulated in the assessment order that during the year under consideration, the total cash withdrawn by the assessee from the company is Rs. 58.05 lakhs which has been correspondingly deposited in the bank account of the assessee and on the other hand, there are total cash withdrawals of Rs. 82.07 lakhs from the bank account of the assessee which are then recorded in the books of the company as repayment and deposited in its branch account. Moreover, we are also enclosing before your goodselfthe cash book of the Company for the month of October 2009, from a perusal of which it is clear that the Company has sufficient cash in hand in its books of accounts during the month and the Company does not need to intentionally record any entry before the date of actual cash withdrawal which makes it clear that it was merely a typographical error. Thus, there cannot be possibly any reason of -withdrawing such a substantial amount for the utilization of the same for any other purpose, specially when no such purpose has been noticed by the Ld. AO during the assessment proceedings.
1.5 Therefore, on the basis of the above, it is clear that the impugned cash withdrawal is similar to the other cash withdrawal made by the assessee from his own bank account and recorded in the books of accounts of the Company which was also of the same amount and which has been accepted by the Ld. AO during the assessment proceedings. However, due to typographical error the same was recorded in the books of the Company on 12.10.2009 instead of 21.10.2009 and thus, it is humbly requested before your goodself that the addition made on account of the said cash withdrawal deserves to be deleted and oblige.
7.1. The Ld. CIT(A) after considering the submissions of the assessee observed that the assessee tried to explain that there was a cash withdrawal of Rs. 16,40,000/- on 21/10/2009 however due to inadvertent error the same had been recorded in the books of the company as 12/10/2009 instead of 21/10/2009. The Ld. CIT(A) observed that he was unable to understand the direct link with the cash withdrawal from the bank account on 21/10/2009 and the nexus of the claim of the assessee of getting the same cash deposited in the books of accounts on 12/10/2009. She also observed that the frequent cash withdrawn and the deposit of the same money getting debited in the bank account vice versa has no direct documentary evidence of being the same money. She therefore sustained the addition made by the A.O.
Now the assessee is in appeal.
Ld. Counsel for the Assessee reiterated the submissions made before the authorities below and further submitted that the assessee was having the sufficient cash balance in hands on 12/10/2009 and that even on all the other dates the closing balance from 01/10/2009 to 23/10/2009 was more than Rs. 2,00,00,000/- on each date. However, inadvertently the withdrawal for Rs. 16,40,000/- was wrongly recorded on 12/10/2009 instead of actual withdrawal from the bank account on 21/10/2009. It was further stated that since the assessee was having more than Rs. 2,00,00,000/- cash in hand always during the period from 01/10/2009 to 23/10/2009, therefore, whether the entry could be recorded on 21/10/2009 or on 12/10/2009 it would not have been made any difference as more than sufficient cash was always available with the assessee. The reference was made to page no. 3 to 14 of the assessee’s paper book which is the copy of cash books for the aforesaid period.
In her rival submissions the Ld. Sr. DR strongly supported the orders of the authorities below and further submitted that the assessee had made the withdrawal from the bank account on 21/10/2009 but it was recorded in the
books of accounts on 12/10/2009, therefore the receipt of cash on 12/10/2009 was not fully explained, as such the A.O. rightly made the addition and the Ld. CIT(A) was justified in sustaining the same.
I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case it is not in dispute that the assessee was having sufficient cash in hand from 01/10/2009 to 22/10/2009, copy of which is evident from the copy of the cash book placed at page no. 3 to 14 of the assessee’s paper book which revealed that the cash in hand on each of the aforesaid dates was more than Rs. 2,00,00,000/-, therefore the explanation of the Ld. Counsel for the Assessee that it does not make any difference whether the cash amounting to Rs. 16,40,000/- withdrawn from the bank was entered on 12/10/2009 or 21/10/2009 in the cash book. It is also not in dispute that the assessee had withdrawn an amount of Rs. 16,40,000/- from the bank account on 21/10/2009 and on the said date there is no entry in the cash book of the assessee but the same amount has been entered on 12/10/2009 in the cash books and it is not the case of the A.O. that the amount withdrawn by the assessee from the bank account was utilized elsewhere therefore the explanation given by the assessee that inadvertently the entry was made on 12/102009 instead of 21/10/2009 appears to be plausible. I therefore, by considering the totality of the facts deem it appropriate to delete the addition made by the A.O. and sustained by the Ld. CIT(A).
In the result, appeal of the Assessee is allowed.
(Order pronounced in the open Court on 20/08/2019 )
Sd/- एन.के.सैनी, ( N.K. SAINI) उपा�य� / VICE PRESIDENT AG Date: 20/08/2019
आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :
अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File