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Facts
The assessee, engaged in the fuel business, deposited Rs. 60,11,000/- into his bank account during the demonetization period. He claimed this was out of cash withdrawn earlier. The Assessing Officer treated this as unexplained cash credit and made an addition.
Held
The Tribunal held that the onus is on the Department to prove the cash was utilized elsewhere. Given that the assessee provided evidence of earlier withdrawal and the deposit occurred within a reasonable timeframe, the addition was not warranted.
Key Issues
Whether cash deposited during demonetization, claimed to be from earlier withdrawals, constitutes an unexplained cash credit when the Department cannot prove its alternative use.
Sections Cited
69A, 115BBE, 68, 69
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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY
सुनवाई क� तार�ख/Date of Hearing : 15.07.2025 उदघोषणा क� तार�ख/Date of Pronouncement : 17.07.2025 आदेश/Order Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 15.10.2024 passed by the Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18.
Grounds of appeal are as under:
1188-Chd-2024 Gurjeet Singh, Ludhiana 2
That the Ld. CIT(A) has erred in dismissing the appeal of the assessee and thereby confirming the addition of Rs.60,11,000/-as made by the Assessing Officer and also confirming the action of the Ld. AO in taxing the amount of Rs.60,11,000/- u/s 69A r.w.s provisions of Section 115BBE.
2. That the Ld. CIT(A) has erred in not giving the benefit of the amount withdrawan from the same bank account in the year under consideration and also part amount in earlier years, which was re-deposited in the same bank account of the assessee, during the year consideration.
3. That the Ld. CIT(A) has failed to appreciate that the amount so withdrawn had not been used anywhere and the said denial of the benefit of the earlier withdrawals is against the facts and circumstances of the case. 4. That the Ld. CIT(A) has failed to appreciate and follow the judgement of the Jurisdictional Bench of P&H High Court in the case of Shiv Charan Das Vs. CIT reported in 126 ITR 263, in which, it has been held that if the amount has not been used anywhere the benefit of the same would be available to the assessee, should be allowed. 5. The findings of the Ld. CIT(A) that the amount so deposited is undisclosed money as deposited during the demonetization period is against the facts and circumstances of the case and as such the provisions of Section 115BBE wrongly has been invoked.
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6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
Brief facts of the case, as per the written submissions filed by the Counsel of the Assessee, are as under:
The present appeal is preferred against the order of the Assessing Officer, as upheld by the Commissioner of Income Tax (Appeals,) whereby an addition has been made under Section 69A of the Income Tax Act, 1961, on account of cash deposits made by the assessee in his Kisan Credit Account during the demonetisation period. • The assessee is an individual engaged in the business of fuel under the name and style of M/s Mangat Filling Station along with agricultural income. • The case of the assessee was selected for scrutiny under CASS. During the scrutiny assessment, the AO noted certain cash deposits in the Kisan Cash Credit bank account of the assessee and sought an explanation for the source of such deposits. • The assessee duly submitted that the cash deposited during the year was out of earlier cash withdrawals made from the same bank account nearly two years back.
1188-Chd-2024 Gurjeet Singh, Ludhiana 4 • These withdrawals were neither spent nor utilized for any other purpose and remained available in cash with the assessee for business contingencies and operational flexibility. • Despite this explanation and availability of bank records showing both the earlier withdrawals and the subsequent deposits, the AO rejected the explanation and treated the deposits as unexplained cash credits under Section 69A of the Act.
During the proceedings before us, ld. Counsel for the Assessee argued at length, and his arguments and submissions are summarized as under; -
i) Explanation Supported by Documentary Evidence: • The appellant is owing 22 Killas of land in the village Ghumana, Koom Kalan, District, Ludhiana as per the copies of jamabandi and its English true translation enclosed at Pages 11 to 32 of the Paper Book. • The appellant has duly furnished the bank statements clearly showing that substantial cash was withdrawn in Assessment Years 2015-16 and 2016-17. • The assessee had sufficient cash in hand during the relevant period, as supported by the cash flow statement.
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• There is no evidence on record to suggest that the withdrawn cash was utilized elsewhere or was not available with the assessee. • The AO has not produced any evidence to suggest that the earlier cash withdrawals were not available with the assessee at the time of deposit. • No investigation has been done by the AO to rebut the claim of availability of cash. • The explanation offered by the assessee is reasonable, plausible, and supported by facts and documents, ii. The law is well settled that: • Merely because there is a time gap between the withdrawal and redeposit does not automatically render the explanation unacceptable. • The department must bring on record positive evidence to disprove the explanation furnished by the assessee. iii) In view of the above facts, documents, and judicial pronouncements, it is respectfully submitted that: • The explanation provided by the assessee is credible and substantiated with proper evidence. • No addition is warranted under Section 68/69 of the Act merely on the basis of cash deposit where the source is clearly identified.
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• The addition made is based on suspicion, conjecture, and surmise, without any contrary material. Further we also rely upon the following Judgments wherein it has been held that no addition can be made of the cash deposits in the bank account of the assessee if the cash withdrawn from the bank account is re deposited in the bank account where the department could not prove that cash in hand available was utilised by the assessee elsewhere and there was time gap in cash withdrawals and cash deposits. Shiv Charan Dass Vs CIT, reported in 126 ITR 263 (P&H HC)
ITO vs Ashok Kumar Jain (ITA No. 180/Chd/2013, dated 3.11.15 (Chandigarh Bench)
ACIT vs Baldev Raj Chawla 121 TTJ 366 (DEL) Gordhan Vs ITO,ITA No. 811/Del/2015, order dated 19.10.2015 (Delhi Bench) ITO vs Mrs. Deepali Sehgal, dt. 5.9.2024 (Delhi Bench)
Ravinder Singh Negi vs DCIT, & 812/2014 (Chandigarh Bench) ACIT vs Sh. Joginder Paul, dt. 12.1.2025 (Chandigarh Bench) 1188-Chd-2024 Gurjeet Singh, Ludhiana 7 Harcharan Singh vs ITO, dt. 3.2.2016 (Amritsar Bench) ITO vs Chandan Nijjer in dt. 8,8.2015( Amritsar Bench)
Per Contra, ld. Sr. DR relied on the orders of the authorities below.
We have considered the findings given by the Assessing Officer in the assessment order and by the ld. CIT(A) in his appellate order. We find that the Assessee had withdrawn cash of Rs. 78,00,400/- about two years ago of the demonetization period. Out of Rs. 78,00,400/-, the Assessee has spent around Rs. 17,89,400/- and remaining amount Rs. 60,11,000/- was deposited in its bank account. The Assessee submitted before the Assessing Officer about this fact but it was not accepted by the Assessing Officer and addition of Rs. 60,11,000/- was made.
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Aggrieved with the order of the Assessing Officer, the Assessee preferred an appeal before CIT(A) who has confirmed the additions made by the Assessing Officer. During the proceedings before us, the ld. Counsel for the Assessee argued at length and filed a written submission which has been reproduced above.
Per Contra, ld. DR relied on the orders of the authorities below.
9.. We have considered the findings given by the Assessing Officer in the assessment order and Ld. CIT(A) in the appellate order. We find that both the Revenue authorities below did not accept the claim made by the Assessee. During the proceedings before us, ld. Counsel for the Assessee submitted that the Department could not bring anything on record to prove that the entire amount of Rs. 78,00,400/- which was withdrawn by the Assessee from its bank account about two years back was spent somewhere else. The Assessee sue motto has claimed Rs. 17,89,400/- lacs had been spent by him and the amount of Rs. 60,11,000/- was lying with him. He deposited that 1188-Chd-2024 Gurjeet Singh, Ludhiana 9 amount in his bank account because money withdrawn was in the form of old currency notes. The ld. Counsel for the Assessee relied on the order of the Hon'ble Jurisdictional High Court in the case of ‘Shiv Charan Dass Vs CIT’ reported in 126 ITR 263 wherein, the Hon'ble Jurisdictional High Court has held that onus is on the Department to show that why the explanation of the Assessee should not be accepted. Further it is trite that nobody can be asked to prove a negative, as was sought to be done by the Assessing Officer unless the Income Tax Department prove that the cash was utilized somewhere else, addition cannot be made. In this case, the cash was lying with the Assessee since 1951 and it was deposited in the bank in 1956. The Hon'ble Jurisdictional High Court held that the cash withdrawn from the bank may be accepted by the Department if it is deposited in the bank account even after five years of its initial withdrawal. In the instant case, the Assessee has deposited the cash withdrawal from the bank in just two years. Therefore, keeping in view the findings given by the Hon’ble
1188-Chd-2024 Gurjeet Singh, Ludhiana 10 Jurisdictional High Court, in the case of ‘Shiv Chran Dass vs CIT’ (supra) and other case laws brought on record by the Assessee, we find that the issue in this case is squarely covered by the ratio decided by the Hon'ble Jurisdictional High Court (supra). Accordingly, Assessee’s Appeal is allowed.
In the result, the appeal of the Assessee is allowed.