JUGAL KISHORE CHOUDHARY,JAIPUR vs. ITO WD 1(2), ALWAR, ALWAR

8. The following case laws are also emphasized here:-

2. The Hon'ble High Court of Kerala in the case of K.P. Abdula Majeed Vs. Assistant Commissioner of Income Tax, Circle-1(1)

3. The Hon'ble High Court of Kerala in the case of C.K. Abdul Azeez Vs. Commissioner of Income Tax, Central Circle, Calicut

From the aforesaid decision, it is clear that Section 68 of the Act suggests that there has to be a credit of an amount in books maintained by an assessee and such credit would be charged to income tax, as the income of the assessee of that previous year, if the explanation offered by the assessee about the nature and source thereof is not found satisfactory. The expression "any sum is found to be credited in the books of the assessee" means all entries on the credit side as well as on the debit side in the books of account. The word "credited" in relation to "any sum" does not mean an entry only on the credit side but would also include any entry on the debit side as well. The word "credited" means an entry of a sum in the books of account of the assessee.

10. Considering the entirety of facts, circumstances and material on record and looking into preponderance of probabilities here the appellant has miserably failed to substantiate its claim of having unexplained investment and has also not even been able to establish that he could himself accumulate such huge amount from the sources disclosed, therefore, the AO is fully justified in making/confirming the disallowance of the amount of Rs. 12,00,000/-, found as unexplained investment of the appellant. In this condition the addition made by AO factually and legally correct is upheld and the plea of the appellant on this issue is dismissed being devoid of any merits.

9. Since the ld. CIT(A) has dismissed, the appeal of the assessee, the assessee has preferred the present appeal on the ground as stated hereinabove. Apropos to the grounds so raised, the ld. AR of the assessee has relied upon the submission made before the ld. CIT(A) which reads as under ;

Facts of the case: 1. Assessee is an individual and he is engaged in RTO consultancy work. Assessee did not file return of income u/s 139 of the I.T. Act, 1961 as he is not having any taxable income.

Jugal Kishore Choudhary vs. ITO 2. That assessee received a notice u/s. 148 of the I.T. Act, 1961 vides dated 26.03.2018. In response to this notice assessee filed his return of income declaring total income amounting to Rs. 40,380/-

3. Further, a notice u/s. 143(2) and Notice u/s. 142(1) of the I.T. Act, 1961 was issued on 20.11.2018.

4. That in response to these notices, assessee submitted the proper reply within the stipulated time along with the required documents/details.

9. That without considering the facts and evidences produced before the Ld. A.O. passed an order by making an addition of Rs. 12,00,000/- on account of Unexplained cash deposit u/s. 69 of the I.T. Act on 11.12.2018. The total income assessed by Ld. Assessing Officer for A.Y. 2012-13 was Rs. 12,40,380/-.

10. That assessee filed an appeal of the said order before the Ld. Commissioner of Income Tax (Appeals).

With Reference to the above Subject the Ground wise submission of the Case:

Submission on Ground No.1:

"Under the facts and circumstance of the case the Ld. A.O has erred in law and facts in making the addition amounting to Rs. 12,00,000/- on account of unexplained cash deposit u/s. 69 of the I.T. Act, 1961, which is bad in law. Kindly delete the same."

Jugal Kishore Choudhary vs. ITO 1. On perusal of cash flow statement the Ld. A.O. treated explained Rs. 9,00,000/- on account of cash received on 05.07.2010 & Rs. 3,00,000/-received on 23.07.2010 (Rs. 6,00,000/- + Rs. 3,00,000/-).

A. Explained from opening cash in hand: That during the year under consideration there were opening cash balance available with assessee was Rs. 1,52,100/-. The cash deposit made by assessee amounting to Rs. 2,100/- vide Jugal Kishore Choudhary vs. ITO dated 29.06.2010, Rs. 1,25,000/- vide dated 29.06.2010 and Rs. 25,000/- vide dated 24.07.2010 (total deposit Rs. 9,25,000/- out of it Rs. 9,00,000/- treated explained by Ld. A.O.) was from that cash balance available with him during the starting of the year.

B. Explained from cash withdrawals from the same bank account:-Assessee had deposited Rs. 2,75,000/- vide dated 26.08.2010 and Rs. 4,50,000/- vide dated 01.09.2010. In this it is submitted that assessee had made withdrawal amounting to Rs. 11,60,000/- vide dated 11.08.2010 and the same can be verifiable from the same bank account statement of assessee submitted before Ld. A.O.

So, in the said circumstances it is submitted that the deposit made by assessee amounting to Rs. 2,75,000/- and Rs. 4,50,000/- was out of this withdrawal (i.e. Rs. 11,60,000/-) which is made within less than 20 days of withdrawal.

C. Explained from cash withdrawals from the same bank account:-Assessee had deposited Rs. 3,25,000/- vide dated 22.10.2010. In this connection it is submitted that assessee had made withdrawal amounting to Rs. 4,50,000/- on 20.09.2010 which is made within less than 32 days of withdrawal.

So, in the said circumstances it is submitted that the deposit made by assessee amounting to Rs. 3,25,000/- was out of withdrawal made on 20.09.2010 (i.e. Rs. 4,50,000/-).

In this connection it is stated that there was sufficient cash balance with assessee at the time of cash deposit made by him during the year under consideration and for supporting his contention assessee had already enclosed copy of bank account statement during assessment proceedings which is also self explanatory

Further, it is also stated that there was no adverse finding made by Ld. A.O. regarding the cash withdrawals was used/utilized by assessee during the year under consideration.

The Ld. Assessing Officer has ignored the withdrawals made by it and has made additions on account of all the credit entries, which is not as per law. Once the Assessing Officer has decided to consider the credit entries in a bank account, he is bound to consider and account for all the withdrawals also. Availability of cash on account of withdrawals by the assessee cannot be disputed, as the same are withdrawn from the same bank account.

Jugal Kishore Choudhary vs. ITO Moreover, in support of his contention, we are submitting chart of cash flow statement for financial year depicting the individual transactions of deposits and withdrawals.

Hon'ble ITAT, Ahmedabad in Sori Nanda kumar Sodhan Vs. JTO in "held that the entries in the bank should not be doubted. Those entries in the banks were in the nature of deposits and withdrawals, which were incorporated in the cash flow statements. The Tribunal held that if the revenue department has not established that the cash available with the assessee was not utilized elsewhere, then on the basis of preponderance of probabilities, it can be assumed that the very cash available with the assessee was re-deposited in the bank."

Hon'ble ITAT, Ahmedabad, In the case of ITO vs Murlidhar Ice-cream & Sweet Parlour, "has held that "where there are deposit and withdrawal entries into the bank account, it would be presumed that the amount withdrawn was available with the assessee for depositing the same. Therefore, it cannot be concluded that the entire deposits were from unexplained source."

In view of this, it is clear that the cash withdrawals from the bank account cannot be ignored, while assessing unexplained cash deposits in the bank account. The evidence of withdrawal from the bank account has to accepted as genuine and once the withdrawal is accepted, in view of the decision of Hon'ble Gujarat High Court in the case of CIT vs Shailesh Rasiklal Mehta [2009] 176 TAXMAN 270 (GUJ), there was no question of deposit to the extent of withdrawal of cash, as unexplained.

DCIT v. Smt. Veena Awasthi, (ITAT Lucknow) "Assessing Officer had noted the behavioral pattern of assessee in frequently withdrawing cash then depositing cash again in the bank account irrespective of having sufficient cash with her. He, therefore, added cash deposit made by assessee under the head "income from undisclosed sources". It was noted that Assessing Officer nowhere in his order had brought out any material on record to show that assessee was not having an additional source of income other than that disclosed in the return of income nor assessing officer could spell out in his order that cash deposits made by assessee were from some undisclosed source. There is no law in the country which prevents citizens to frequently withdraw and deposit his own money. Documentary evidence furnished clearly clarified that on each occasion at the time of deposit in her bank account, assessee had sufficient availability of cash. Entire transaction of withdrawals and deposits were duly reflected in the bank account of assessee and were verifiable from relevant records. Thus, addition was not justified."

Sudhirbhai Pravinkant Thaker v. ITO (2017) 88 taxmann.com 382 (ITAT Ahmedabad) "It was held that where assessee demonstrated that cash was withdrawn and there was no finding by authorities that such cash was invested or utilized for any other purpose, it was not open to authority to make addition on basis that assessee failed to explain sources of deposits."

In the said circumstances it is submitted that there are arbitrary allegations made by the Ld. A.O. in the assessment order on the basis of which the addition has been made.

In view of the above submissions and position of law it is clear that the addition u/s. 69 amounting to Rs. 12,00,000/- on account of unexplained cash deposit is wrong and invalid in the eyes of law and deserves to be deleted.

Ground No. 2 General Ground. In case, any further details/clarifications are required, we shall be pleased to provide the same.”

S. No. Particular Page No. 1 Copy of Redrafted grounds of appeal signed by appellant before 1-2 CIT(Appeals)

2. Copy of Written submission before CIT(Appeals) 8-10

3. Copy of Acknowledgement of written submission before CIT(Appeals) 11

4. Copy of bank account statement of appellant 12 submission so filed vehemently argued that on 25.06.2010 a receipt of Rs.

21,00,000/- reflected and therefrom withdrawal of Rs. 19.50 lacs was made in cash on 06.08.2010 and out of that withdrawal that deposit was made and therefore, the addition made is factually incorrect and thus required to be allowed.

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

Order pronounced in the open court on 03/04/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 03/04/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Jugal Kishore Choudhary, Alwar izR;FkhZ@ The Respondent- ITO, Ward 1(2), Alwar 2.