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Income Tax Appellate Tribunal, ‘’ SMC’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
आदेश/O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-10, Ahmedabad, dated 19/03/2020 arising in the matter of assessment order passed under s. 143 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2011-2012.
The assessee has raised following grounds of appeal: [1] Learned CIT (Appeal) has erred in law and facts in sustaining addition of Rs.3,00,000/- as unexplained investment / deposit in the bank accounts. [2] Learned CIT (Appeal) has erred in law and facts in rejecting the genuineness of cash book maintained by the appellant only on imaginary grounds without any contrary or corroborative evidence to disprove genuineness of cash book regularly maintained by the appellant on day to day basis along with other books of accounts such as P & L accounts and Balance-Sheet. [3] Learned CIT (appeal) has erred in law and facts in partly allowing cash deposit in bank out of total cash deposit of Rs.6.50,0007- and partly disallowing. [4] Learned CIT (appeal) has erred in law and facts in not following Hon'ble Gujarat High- Court decision in case of Piyushkumar O. Desai v/s CIT reported in 247 ITR 568(Guj). [5] Learned CIT (appeal) ought of have accepted the cash deposited in bank out of the cash available in cash book maintained on day to day basis. [6] Appellant reserves the right to add or to alter any further grounds of appeal at the time of hearing.
3. The only effective issue raised by the assessee is that the learned CIT-A erred in sustaining the addition of Rs. 3 Lacs on account of cash deposits in the bank.
The brief fact are that the assessee is an individual and claimed to be engaged in business of embroidery, stitching and labour work. The assessee for the year under consideration did not file return of income under section 139 of the Act. The AO as per Individual Transaction Statement (ITS) report found that the assessee has entered into certain financial transactions. Accordingly, a notice under section 148 of the Act was issued and assessee filed return of income declaring total income of Rs. 1,76,470/- in response to such notice. From the ITS report and verification of bank statement of the assessee, it was found that the assessee in the year under consideration has made cash deposits of Rs. 5,50,000/- only. The assessee explained that cash were deposited out of the opening cash balance available in preceding year and in support, she has furnished copy of cash book of the preceding year and bank statement. The assessee further submitted that she is regularly maintaining books of account being cash book, bank book, capital account and balance sheet, therefore no adverse inference can be drawn merely based on cash deposited in bank and the income shown for the year which is less than the amount of deposits of cash.
4.1 However the AO found that cash book submitted by the assessee during assessment proceeding is not supported by documentary evidence. Similarly, the current year income shown by the assessee from embroidery and stitching business was also not supported by evidence. Further the assessee has not filed return of income for the year under consideration. Therefore in absence of supporting document/ evidence and considering the fact that the assessee has not filed return of income, the explanation of the assessee that cash was deposited from opening cash balance was not accepted by the AO. Furthermore, the AO found that it is hard to believe that the assessee from embroidery and stitching and labour work has accumulated such huge cash of Rs. 6,03,406/- and Kept the same as idle. Thus the AO made the addition of Rs. 5.5 Lacs as income from unexplained sources.
On appeal learned CIT-A confirmed the addition made by the AO in part by observing as under: 10. Ground no. 4 and 5 of the appeal deals with addition of Rs. 5,50,000/- made for unexplained cash deposit of Rs. 4,50,000/- made on 21.04.2020 and unexplained I cash deposit of Rs. 1,00,000- made on 28.04.2010. According to the appellant she | maintains cash book and the deposits were made out of the balances lying in the cash book. The copy of cash book was also filed before me. 10.1 According to the Assessing Officer, the cash book filed by the appellant cannot be treated as sacrosanct for the following reasons; 1. The cash book of preceding year filed by the appellant is not duly supported by documentary evidence. 2. The appellant has not even filed ITR for AY 10-11. 3. The income of appellant from embroidery business is not supported with documentary evidence. 4. Mere filing the statement of cash book does not make it genuine. 10.2 I have gone through the submissions of the appellant and the issues raised by the Assessing Officer, The Assessing Officer has raised some issues about the genuineness of the cash book maintained by the appellant which appears correct. The appellant has only meager income. Entire labour income has been debited in cash book and no business expenses are credited. The cash book of earlier years are also not submitted. There is no way to verify the genuineness of these cash books. The appellant has herself stated that her husband was sick and later on she has to sell the property purchased by her in distress. In such condition it is difficult to consider the genuineness of cash book filed by the appellant.
The various case laws pointed out by the appellant will help her only if the genuineness of the cash book is established. However, considering the facts that there may be some cash in hand in the hands of appellant, I delete the addition of Rs. 2,50,000/- and sustain the addition of Rs. 3,00,000/- as unexplained investments/deposits in the bank account. Accordingly, Ground of appeal no. 4 and 5 are partly allowed.
Being aggrieved by the order of the AO the assessee is in appeal before us.
The learned AR before us submitted that the cash was deposited in the bank out of the savings made in the earlier years. Therefore, no addition can be made in the year under consideration.
On the contrary, the learned DR before us vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. The controversy before us arises to adjudicate the issue relating to the source of cash deposited by the assessee in the bank amounting to ₹3.50 Lacs. From the preceding discussion, we note that the assessee failed to produce any documentary evidence suggesting that she has earned income from the embroidery and stitching activities except making the written submissions.
9.1 There are certain business activities which are not organized in such a way that the assessee is able to maintain proper books of accounts. Even during the present days, the assessees are carrying out their business activities in cash. To curb the cash transactions, there are numerous provisions under the income tax Act whereby cash transactions are discouraged. However, all these provisions of the Act have not completely eradicated the flow of cash transactions from the society but the improvement in controlling the cash transactions is indeed phenomenal. However, the case before us relates to the assessment year 2011-12 wherein such restrictions were not there such as the demonetization scheme was launched in the year November 2016 mainly to curb the black money prevailing in the society.
9.2 It is also interesting to note that there is a culture for saving the money in the form of cash for the future. As such, out of the money given by the male members of the family for the household expenses, the other female members of the family save the money. As such, the money saved by the family members cannot be made subject to tax. This fact cannot be ruled out by deciding the issue on hand. Considering the above facts and amount involved in the dispute, we are of the view that the assessee has been able to save the money out of her business activities carried out in the earlier years. Thus we are not inclined to uphold the finding of the authorities below. Accordingly we set aside the order of the learned CIT-A and direct the AO to delete the addition made by him.
In the result the appeal filed by the assessee is allowed.
Order pronounced in the Court on 20/07/2022 at Ahmedabad.