SANDEEP RAMESH SHAH,MUMBAI vs. ITO 19(3)(2), MUMBAI

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ITA 745/MUM/2019Status: DisposedITAT Mumbai10 February 2020AY 2008-095 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal upheld the reopening of the assessment. However, it found that the assessee had provided sufficient evidence, including cash summaries and bank withdrawal details, to explain the cash deposits. The Tribunal directed the AO to accept a portion of the opening cash balance and the cash withdrawn from the bank as explained.

What were the facts?

The assessee's assessment was reopened based on cash deposits in a bank account. The assessee argued that the reopening was invalid as the return of income was filed and accepted, and the reasons recorded were flawed. The assessee also provided cash summaries to explain the deposits.

What were the issues?

Whether the reopening of assessment was valid and whether the cash deposits in the bank account were sufficiently explained by the assessee.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”, BENCH

Before: SHRI R.C.SHARMAShri

For Appellant: Shri Dhirendra M Shah (AR)
For Respondent: Shri R.K. Gubgotra (JCIT-DR)
Hearing: 04/02/2020Pronounced: 10/02/2020

Assessee by Shri Dhirendra M Shah (AR) Revenue by Shri R.K. Gubgotra (JCIT-DR) Date of Hearing 04/02/2020 Date of Pronouncement 10/02/2020 आदेश / O R D E R PER: R.C. SHARMA, A.M. This appeal by the assessee is directed against the order dated 14/12/2018 of ld. CIT(A)-30, Mumbai for the A.Y. 2008-09 in the matter of order passed U/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, the Act).

2.

In this appeal, the assessee is aggrieved for reopening of assessment as well as addition made on account of cash deposited in the bank account.

3.

It was argued by the ld AR of the assessee that in the reasons recorded, the A.O. has wrongly noted the fact that the assessee has Shri Sandeep Rramesh Shah Vs ITO not filed return of income whereas the assessee has filed his return of income on 30/03/2010 declaring total income of Rs. 4,25,682/- which was accompanied with regular statement of computation of income.

This return was also accepted U/s 143(1) of the Act as the same was found to be correct and proper. He further contended that in the reasons recording, there is no recording of amount of tax as payable on the alleged reasons recorded. Accordingly, it was requested that the reassessment should be quashed.

4.

On the other hand, the ld DR has relied on the orders of the authorities below.

5.

I have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that after recording proper reasons with regard to cash deposited in the bank account, the A.O. has reopened the assessment. As per the reasons recorded, the A.O. has sufficient reason to believe that there was escapement of income to the extent of cash deposited in the bank account, accordingly, I uphold the reopening of the assessment.

6.

With regard to merit of addition, the ld AR of the assessee has drawn our attention to the cash summary filed before the lower authorities in the entire year which indicated withdrawal of cash from the bank account and expenditure incurred out of the same and the Shri Sandeep Rramesh Shah Vs ITO cash deposited again in the bank account. The assessee has also filed cash summary for the year under consideration on 31/3/2007 so as to justify availability of cash at the beginning of the year. Our attention was also invited to the summary of bank account maintained with ING Vysya Bank Ltd. and summary of bank deposits and withdrawals with ING Vysya Bank Ltd. In view of these documentary evidences, it was contention of the assessee that cash so deposited was duly explained and no addition was warranted.

7.

On the other hand, the ld DR has relied on the order of the A.O. and contended that the assessee was unable to explain the purpose for which cash was withdrawn from the bank and thereafter deposited in the same bank account. Accordingly, the A.O. was justified in disregarding such withdrawal of cash.

8.

I have gone through the orders of the authorities below and found from the record that during the reassessment proceedings, the assessee has filed cash summary indicating withdrawal of cash and deposit of same in the bank account, merely because there was a time gap between withdrawal of cash and thereafter deposit of same in the bank account, it cannot be made a reason to disbelieve the availability of cash without indicating that the such cash withdrawal had been used by the assessee for some other purposes. The A.O. also did not accept

Shri Sandeep Rramesh Shah Vs ITO the cash withdrawal on the plea that the assessed did not give the reasons of withdrawal. Nowhere in the assessment order the A.O. has indicated that the cash so withdrawn from the bank has been used by the assessee for some purpose other than deposit in the bank account.

The ld. CIT(A) did not accept withdrawal of cash because the assessee was not maintaining books of account. Since the assessee was not carrying on any business, maintenance of books is not statutorily required. Thus it cannot be made the reason to disbelieve availability of cash withdrawn from bank account. In these facts and circumstances, I do not find any justification for the denial of assessee’s claim of deposit of cash in the bank account which was withdrawn by the assessee on earlier occasion. Thus, to the extent of availability of cash through withdrawal is accepted and same cannot be taken as unexplained cash deposit. The opening cash balance of Rs. 5,42,145/- was sought to be explained by the assessee through his cash summary statement for the year 2007. Looking to the average income of the assessee out of the opening cash balance of Rs. 5,42,145/-, I direct the A.O. to accept Rs. 2.50 lacs as cash in hand as on 04/01/2007. Thus, I direct the A.O. to accept availability of cash to the extent of Rs. 2.50 lacs as opening cash balance and the cash amount withdrawn from bank which was utilized for again deposit in the bank account. I direct accordingly.

Shri Sandeep Rramesh Shah Vs ITO 9. In the result, appeal of the assessee is allowed in part.

Order pronounced in the open court on 10th February, 2020.

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