PARAG PRABHAKAR BAROLE,JALGAON vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, JALGAON

Briefly stated, the facts of the case are that the assessee is a Director in M/s.Orbit Infopark Private Limited. A return was filed declaring total income at Rs.10,68,520/-.

During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee deposited a sum of Rs.15,77,500/- in his SBI Home Loan Account on 12-11-2016. On being called upon to explain the source of the amount, the assessee placed on record details of certain withdrawals made from the bank accounts maintained by him with SBI, HDFC, SBI Home Loan etc. totalling to Rs.15,45,500/-. He submitted that cash was withdrawn from bank accounts for construction of his residential house and such cash earlier withdrawn was re-deposited. The assessee gave details of such cash withdrawn on various dates from 29-11-2016 to 11-11-2016, which was re-deposited in SBI Home Loan account on 12-11-2016. The AO did not accept the assessee’s contention regarding three sums withdrawn on 29-11-2016, 07-05-2016 and 16-07-2016 amounting to Rs.2,25,000/-; Rs.2.00 lakh; and Rs.2.00 lakh respectively totalling to Rs.6,25,000/- on the ground that the amount withdrawn on such dates could not have been kept for safe custody for so many months before re-deposit. He also held that the cash withdrawn must have been utilised for the construction activity. Consequently, the addition of Rs.6,25,000/- was made. The ld. CIT(A) affirmed the addition, which has brought the assessee to the Tribunal.

I have heard both the sides and gone through the relevant material on record. It is seen as an admitted position that the assessee withdrew a sum of Rs.15,45,500/- from his bank accounts on various dates starting with 29-04-2016 and ending on 11-11-2016. A sum of Rs.15.00 lakh was deposited in SBI Home Loan account on 12-11-2016. Ordinarily, if some amount is withdrawn from a bank and there is further deposit also after the date of withdrawal, the presumption is that the amount withdrawn was utilised for re-deposit unless it is shown that such withdrawn amount was utilised elsewhere. Here is a case in which the assessee admitted before the AO that he was constructing his residential house for which the amount was withdrawn from bank. The assessee has also shown a receipt of SBI Home loan of Rs.6.00 lakh on 24.10.2016 included in the total receipts of Rs.15.45 lakh. Normally, housing loan is paid only for utilization in house construction and the amount cannot be retained in cash for a long time. The amount of investment in the house construction is not available on record. If the amount was withdrawn for construction and utilised in such construction, obviously the same cannot be available for re-deposit in the bank account on a later date. In the given circumstances, I set-aside the impugned order and remit the matter to the file of the AO for verifying the amount of investment in the construction activity. If the amounts withdrawn on different dates totalling to Rs.15,45,500/ are found to have been fully or partly utilised in the construction, then such amount cannot be considered to be available for re-deposit in the bank account on 12-11-2016, warranting addition. If, however, the amount withdrawn is not shown to have been utilised elsewhere, then credit for such withdrawal must be given against the re-deposit. Needless to say, the assessee will be allowed reasonable opportunity of hearing in such fresh proceedings.

In the result, the appeal is allowed for statistical purposes. Order pronounced in the Open Court on 14th November, 2022. Sd/-