HARI RAM BOREDA ,SECUNDERABAD vs. ACIT, CIRCLE-13(1), HYDERABAD

Assessee is an individual and being a retired Indian Air Force employee his source of income is pension and interest from bank. He was found to have deposited a sum of Rs. 13,39,500/- between 16/11/2016 and 14/12/2016 on five occasions in his account with Vijaya Bank. He filed return of income for the assessment year 2017-18 declaring an income of Rs. 10,34,540/-. On verification of the bank account, learned Assessing Officer found that the assessee has been in the habit of withdrawing and re-depositing the amounts in his account. He withdrew a sum of Rs. 27.5 lakhs in the month of April, 2016 apart from the deposits to the tune of Rs. 3.95 lakhs totaling to a sum of Rs. 33.95 lakhs out of which, he paid a sum of Rs. 33.85 lakhs to two persons.

Out of the five deposits in question, learned Assessing Officer opined that the deposits to the tune of Rs. 2,25,500/-, Rs. 1.66 lakhs, Rs. 32,000/- and Rs. 16,000/- on 19/11/2016, 23/11/2016, 01/12/2016 and 14/12/2016 stood explained by the cash balances available with the assessee due to withdrawals on earlier occasions and also the probability of keeping amounts to meet the contingencies, but was particular only in respect of the deposit of Rs. 9 lakhs on 16/11/2016. He, therefore, added it to the income of the assessee.

Assessee preferred appeal and submitted that in order to bring any amount in the purview of section 69A of the Act, Revenue must prove that the assessee must be the owner of such money should not have been recorded in the books of accounts. Assessee submitted before the learned CIT(A) that the learned Assessing Officer considered only a part of withdrawals on earlier occasions and held that only few deposits during demonetization period stood explained but not fully, and as a matter of fact, the withdrawal on 26/02/2016 explains the deposit made on 16/11/2016. Learned CIT(A) was of the opinion that the consideration of withdrawals from 07/09/2016 by the learned Assessing Officer is fair enough in explanation of the source of deposit and the plea of the assessee that the earlier withdrawals must also be considered does not merit consideration. He accordingly dismissed the appeal. 5. Assessee, therefore, preferred this appeal and it is submitted on behalf of the assessee that the assessee is a retired Air Force personnel and re-employed in LIC till 30/04/2022. It is further submitted on behalf of the assessee that except the pension and interest from the bank, he has no other source of income, he is in the habit of withdrawing the cash by keeping a minimum amount in his account and the source of all the deposits is only his pension, bank interest and the earlier withdrawn amount only and all these transactions are recorded in the account pass book, and, therefore, when the earlier withdrawals explain the source of the subsequent deposits, the same cannot be held to be un-explained.

Per contra, it is the submission of the learned DR that the authorities below are fair enough to consider the withdrawals in a period of three months immediately preceding the demonetization and, therefore, there is no merit in the argument of the assessee that the withdrawals earlier thereto should also be considered in explanation of the deposits during the demonetization period.

I have gone through the record in the light of the submissions made on either side. On a perusal of the details of the bank account of the assessee, learned Assessing Officer noted that there are withdrawals from 11/04/2016 and the cash flow statement from such date supports the payments made by the assessee to various persons and also the deposits made on 19/11/2016 and subsequent dates. Learned Assessing Officer, however, was of the opinion that the first deposit on 16/11/2016 to the tune of Rs. 9 lakhs goes un-explained. It goes without saying that the deposits subsequent to this 16/11/2016 were held to be properly explained leaving the deposit on the first occasion doubtful.

According to the assessee, choosing the date of cash flow from 01/04/2016 by the learned Assessing Officer explains all the deposits except the deposit on the first occasion, and if the learned Assessing Officer considers the cash flow for the calendar year, the things would be petty clear.

On a careful consideration of the facts involved in this matter, in the light of the fact that the assessee has been withdrawing the amounts from the account and depositing them only as and when he has to transact through bank, I am of the considered opinion that when the subsequent deposits go properly explained by the withdrawals during the period prior to the demonetization, it would be probable that the earlier deposits could be from such withdrawals during the pre-demonetization period. In this peculiarity of the circumstances, and having regard to the volume of withdrawals and deposits, I find that it would be just and proper to consider the cash flow for the calendar year.

With this view of the matter, I set aside the orders of the authorities below and direct the learned Assessing Officer to take into consideration the withdrawals of the assessee during the calendar year and reach a conclusion according to law. I order accordingly.

In the result, appeal of the assessee is treated as allowed for statistical purposes.