KRISHNAPANDIAN BALAJI,CHENNAI vs. DCIT NON CORP CIRCLE 19(1), CHENNAI

Brief facts are that the AO during the course of assessment proceedings noticed that the assessee has deposited cash in his bank account to the tune of Rs.36.73 lakhs during the demonetization period that represents SBNs and the details are as under:- Cash deposit Total Cash Bank Account Nature of during deposit in SBN Bank Number Account Demonetization (demonetized period currency) Andhra Savings 81210100074507 35,53,000/- 35,53,000/- Bank Bank Andhra Savings 81210400080298 1,20,000/- 1,20,000/- Bank Bank The AO required the assessee to explain the cash deposit and assessee in reply furnished extract from his cash book as evidence of having received rental income in cash from the tenants. The 3 assessee also produced cash book extracts indicating opening cash in hand as on 01.04.2016 amounting to Rs.53,39,863/- but the AO after perusal of income-tax return for assessment year 2016-17 which show that cash in hand as on 31.03.2016 was only ‘nil’ noted that there is no cash in hand available as on 01.04.2016. Accordingly, he treated the cash deposit in assessee’s bank account during demonetization period in the form of SBNs as unexplained money u/s.69A of the Act and added to the returned income of the assessee. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) also confirmed the action of AO. Aggrieved, assessee preferred appeal before Tribunal.

Before us, the ld.counsel for the assessee Shri T.N. Seetharaman argued on behalf of the assessee and filed paper-book consisting of pages 1 to 24. On the other hand, the Revenue was represented by ld. Senior DR, Ms. Sheila Parthasarathy, Addl.CIT.

The ld.counsel for the assessee before us filed paper-book and the relevant documents to prove the cash deposits that cash generated out of rental income of property as under:- (i) Statement of Income for A.Y. 2017-18 (ii) Rental Income Property Wise for AY 2017-18 (iii) Month wise and Tenant Wise details of rent received 4 (iv) Balance Sheet and Profit & Loss A/c for the period 01.04.2014 to 31.03.2015 (v) Cash Book for the period 1-Apr-2015 to 31 Mar 2016 (vi) Balance Sheet and Profit & Loss A/c for the period 01.04.2015 to 31.03.2016 (vii) e-Proceedings Response Acknowledgement enclosing Cash Book for the period 01.04.2016 to 31.03.2017 (viii) Details of Amount deposited in Bank during the Demonetization period (ix) Balance Sheet and Profit & Loss A/c for the period 01.04.2016 to 31.03.2017 The ld.counsel for the assessee before us explained from the statement of income, the number of properties rented out and the rent received by cheque and received in cash. The ld.counsel explained before us from the Paper-book that in the computation of income enclosed, there are many types of income earned by assessee i.e., rental income from various properties out of which some rent is received in cash and part rent is received in cheque. Further, there is profit and gains of business i.e., commission and agency business where the assessee has declared profit of Rs.5,27,325/-. The rental income declared for assessment year 2017-18 after claiming deductions is Rs.34,13,298/- that excludes the municipal taxes, standard deduction u/s.24(a), etc. The ld.counsel for the assessee took us through balance sheet as on 31.03.2015, wherein cash in hand declared is Rs.37,89,080/- and accepted by the Department in scrutiny assessment u/s.143(3) of the Act vide order dated 02.11.2017. The ld.counsel also took us 5 through the balance sheet as on 31.03.2016, wherein cash in hand is at Rs.53,39,863/- and out of the same cash of Rs.36.73 lakhs was deposited during demonetization period in SBNs. The ld.counsel then took us through the cash book balance as on 17.11.2016, wherein cash balance is Rs.60,83,257/- and out of this cash, these cash was deposited on various dates and he correlated these entries with the deposits i.e., 36.73 lakhs. The ld.counsel for the assessee also clarified that in assessee’s case deposits was to the tune of Rs.35.53 lakhs and Rs.1.20 lakhs was in the name of assessee’s son. But, however he explained the entire cash is out of cash generated out of rental income and other incomes.

When a specific query was raised by the Bench, as regards to noting made by AO as well as CIT(A) that the closing cash as on 31.03.2006 is ‘nil’ as per ITR, the ld.counsel explained that in ITR the assessee is declaring business cash in hand and not the cash in hand kept in individual capacity and earned out of rental income. He explained that the assessee is maintaining personal accounts in his individual capacity and business account in his proprietorship capacity for business purposes in which, the cash in hand is ‘nil’. When these facts were confronted to ld. Senior DR, she could not reply anything about the cash balance available in the cash book 6 and the rental income earned by the assessee month-wise and tenant-wise and rent earned in cash. The complete paper-book was confronted to ld. Senior DR but she could not controvert the above fact situation.

After going through the facts in entirety, we noted that the source of cash is rental income from where the assessee has generated cash to the tune of Rs.36.73 lakhs which was deposited in the bank accounts as mentioned above. Hence, we treat the cash as explained and allow the appeal of the assessee on this issue.

In the result, the appeal filed by the assessee is allowed.