LATA RANI SAGAR,DELHI vs. ITO, WARD- 69(5), NEW DELHI

The aforesaid appeal has been filed by the assessee against impugned order dated 11.9.2017, passed by Ld. CIT(Appeals) New Delhi, for the quantum of assessment passed u/s 143(3) for the assessment year 2014-15.

3. Ld. AO in so far as loan taken from Jatav Cooperative Society noted that loan was credited in the bank account of the assessee on 21.11.2012, which was withdrawn on 24.11.2012. Further the certificate of loan from the said cooperative society, does not mention the purpose of the loan. He inferred that the interest bearing loan was immediately withdrawn after three days of disbursement which indicates that loan amount was spent and was possibly not available for subsequent deposits in the bank account on 9.4.2013. Accordingly, he held that amount of Rs. 2 lacs claimed to have been received as a loan and subsequently deposited in the bank account remained unexplained and hence it represents undisclosed income of the assessee in terms of section 69A. As regards the source of cash deposits of Rs. 3 lacs which was claimed to have been received upto 8.4.2013 as a part payment of her 50% share in property as advance 2 towards sale of property, AO noted that, sale deed filed during the course assessment proceeds reflects the amount of sale consideration only and not any advance payment received earlier as the property was sold on 17.4.2013 and the sale consideration was received on the date to registration of sale and in this manner he treated the amount of Rs. 3 lacs as undisclosed income of the assessee. With regard to the source of cash deposits of Rs. 7,20,000/- for which assessee had submitted that she was saving Rs. 20,000/- per month salary w.e.f. 1.4.2010 to 31.3.2013 which was subsequently deposited in the bank account, AO disbelieved the assessee’s contention after noting that in the bank statement for this period assessee has made petty withdrawals of Rs. 2,000/- to Rs. 10,000/- frequently, which shows that this was made for house hold and day to day needs. He held that it would be improbable that a person withdrawing salary amount for a period of three years will save this much amount in cash only to be deposited in a lumpsum manner on a particular date. During this period, assessee has withdrawn total amount of Rs. 7,23,000/- and out of that, Rs. 7,20,000/- has been deposited which cannot be believed or can be accepted. In last three years assessee has shown total cash house hold expenses at Rs. 9,20,600/- and such cash withdrawals is not even adequate for house hold expenses, then how it could not have been deposited in the bank account. Thus, it represents undisclosed income of the assessee. Lastly, as regard source of cash deposit of Rs. 20,000/-, assessee has shown total withdrawal of Rs. 42,000/- in the month of April, 2013 on different dates, AO held that, when plenty of cash balance was available with the assessee as claimed by her then there was no need to withdraw small amount for every day from ATM so as to deposit cash on 9.4.2013. in this manner AO treated the whole amount of Rs. 12,40,000/- as unexplained.

4. Ld. CIT(A) too has confirmed the reasoning of the AO and noted the pattern of cash withdrawal show that there were petty withdrawals to meet day to day need and, therefore, it is unbelievable that a person will keep such a huge amount of cash with her to redeposit the same. Similarly, on the issue of amount deposited out of loan also, Ld. CIT(A) has confirmed the same reasoning and the conclusion drawn by the AO and similarly in respect of cash amounting to Rs. 3 lacs which has been stated to be received by way of advance on sale of property, as nothing was mentioned in the sale deed about any kind of advance given. However, he deleted the addition of Rs. 20,000/- observing that same prima facie appears to be deposited out of cash withdrawal amounting to Rs. 42,000/-.

5. After hearing both the parties and on perusal of the relevant finding given in the impugned order as well as material referred to before us at the time of hearing, I find that assessee has tried to explain the source of cash deposited in her bank account for Rs.12,40,000/0 in the following manner: - (i) Loan taken in the month of November, 2012 amounting to Rs. 2,00,000/- from M/s. Jatav Cooperative T&C(U) Society Ltd. (ii) Cash amounting to Rs. 3,00,000/- received upto 08.04.2013 as part payment of 50% share in the property sold. (iii) Savings between 01.04.2010 to 31.03.2013 amounting to Rs. 7,20,000/- which was subsequently deposited in the bank account. (iv) Savings out of withdrawal of Rs. 42,000/- during the month of April, 2013.

6. Such an explanation of source has been disbelieved by the AO and Ld. CIT(A) as discussed above. From the perusal of the statement alongwith the bank statement, I find that assessee has shown received of loan of Rs. 2 lacs from Jatav Cooperative Society received in the month of November, i.e., on 21.11.2012 and later on 24.11.2012, the same was withdrawn in cash. Such a cash has been stated to be re- deposited in the bank account in the month of April, 2013. Both AO and Ld. CIT(A) has disbelieved that assessee’s explanation on the ground that no prudent person will take a loan of interest and withdraw the same amount immediately to keep it idly and to be re- deposited subsequently. From the perusal of the bank statement it is seen that assessee has deposited sum of Rs. 12,40,000/- on 9.4.2013 and thereafter on 16.4.2014 has issued two cheques for Rs. 6,48,310/- and Rs. 6 lacs. The source of these deposits as explained by the assessee above cannot be rejected especially when assessee is only a salaried employee receiving an annual salary of Rs. 5,07,816/- from school. No other activities have been found to be carried out by the assessee which can generate cash or income, at least nothing has been brought on record by the AO. If assessee has explained that loan was taken from a cooperative society which was withdrawn after 3/4 days and later it was re-deposited, when she was making some kind of investment then such an explanation cannot be completely disregard on some surmise that these loan amount could have been utilised somewhere else. The presumption howsoever strong may be cannot be the ground to reject the explanation when assessee does not have any other source of income disclosed or un-disclosed. Without their being any material on record to show that assessee immediately after the withdrawing the loan amount has spent it for house hold purpose, then it does constitute source available with the assessee. Further, assessee had claimed to receive certain advance from sale of asset for which cash advance was received prior to execution of sale deed. From the perusal of the sale deed, it is seen that sums aggregating to Rs. 30 lacs were received in the following manner: - Amount Cheque No. Date Bank 2,50,000/- 772450 21.01.2013 HDFC Bank, Shalimar Garden, Sahibabad 2,00,000/- 207006 20.04.2013 ICICI Bank, Shalimar Garden, Sahibabad 1,50,000/- Cash 12,00,000/- 435050 22.04.2013 Axis Bank Ltd. New Delhi by Diwan Housing Finance Ltd. by Housing loan. 12,00,000/- 435051 22.04.2013 Axis Bank Ltd. New Delhi by Diwan Housing Finance Ltd. by Housing Loan. Sale deed has been executed on 22nd April 2013. Only amount of Rs. 24 lacs have been received at time of execution of sale deed and balance has been received prior to the said date. Thus, the assessee’s explanation that she has received advance of Rs. 3 lacs earlier cannot be denied at least to the extent of Rs. 1,50,000/- because the same has been mentioned in the sale deed itself. Thus, the amount of Rs. 1,50,000/- was available with the assessee for making the deposit. The balance sum of Rs. 1,50,000/- is not borne out from the sale deed and hence the explanation of the assessee to this extent is not tenable and therefore, to the extent of Rs. 1,50,000/- source of deposits remains unexplained. Lastly, with regard to deposit of Rs. 7,20,000/- the assessee’s had shown the following statement of cash movement filed during the course of hearing: - Statement of Cash Movement 2012-13 2011-12 2010-11 Cash flows from operating activities Salary Received 5,07,816.00 4,90,588.00 4.88,366.00 Gift Received from Relatives 50,000.00 31.000.00 21.000.00 less: -cash Expenses-House Hold (2,96,800.00) (3,05,500.00) (3.18,300.00) ____________________________________________________ Cash generated from operations 2,61,016.00 2,16,088.00 1,91,066.00 Interest paid ___________________________________________________ Net cash from operating activities 2,61,016.00 2,16,088.00 1,91,066.00 ___________________________________________________ Cash flows from investing activities Loan from Society 2,00,000.00 Received From friends 50,000.00 Proceeds from sale of equipment 3,00,000.00 __________________________________________________ Net cash used in investing activities 5,50,000.00 ______________________________________________________ Cash flows from financing activities Net increase in cash and cash equipments 8,11,016.00 2,16,088.00 1,91,066.00 Cash and cash equivalents at beginning 4,15,394.00 1,99,306.00 8,240.00 of period Cash and cash equivalent at end of period 12,26,410.00 4,15,394.00 1,99,306.00