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Facts
The assessee filed an income return for AY 2009-10. The AO, after verifying AIR information, found cash deposits of ₹13,49,835/- in the assessee's savings bank account, which appeared inconsistent with the return. The AO initiated reassessment proceedings under Section 148, alleging escaped income.
Held
The Tribunal held that the reassessment proceedings were validly initiated, rejecting the assessee's plea of a 'change of opinion'. Regarding the addition on merits, the Tribunal found the assessee's explanation for the cash deposits to be uncorroborated and inconsistent with normal business practices, and thus upheld the addition.
Key Issues
Whether the reassessment proceedings were validly initiated and whether the cash deposits in the bank account were explained to the satisfaction of the Assessing Officer.
Sections Cited
148, 144, 147, 133(6), 69A, 44AF, 68
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Income Tax Appellate Tribunal, SURAT BENCH “SMC” SURAT
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKASH KANT
ORDER PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 28/03/2025 passed by the learned additional/joint Commissioner of income-tax (Appeals)-11, Delhi [hereafter shall be referred as Ld. CIT(A)] for assessment year 2009-10, raising following grounds:
“1. On the facts and circumstances of the case as well as law on the subject, assessing officer has erred in issuing notice u/s. 148 and passing assessment order u/s.144 r.w.s. 147 of the Act.
On the facts and circumstances of the case as well as law on the subject, 2. On the facts and circumstances of the case as well as law on the subject, 2. On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in partly confirming the action of the assessing the Ld. CIT(A) has erred in partly conf irming the action of the assessing officer by sustaining addition of Rs. 13,49,835/- out of total addition of Rs. officer by sustaining addition of Rs. 13,49,835/ out of total addition of Rs. 13,91,940/- u/s. 69A on account of unexplained cash credit. u/s. 69A on account of unexplained cash credit. u/s. 69A on account of unexplained cash credit.
It is prayed that the assessment framed u/s. 144 r.w.s. 147 may 3. It is prayed that the assessment framed u/s. 144 r.w.s. 147 may please 3. It is prayed that the assessment framed u/s. 144 r.w.s. 147 may be quashed and / or addition made by the assessing officer may please be ed and / or addition made by the assessing officer may please be ed and / or addition made by the assessing officer may please be deleted.” 2. Briefly stated, the facts of the case, as emerging from the the facts of the case, as emerging from the record, are that the assessee filed his return of income for the record, are that the assessee filed his return of income for the record, are that the assessee filed his return of income for the assessment year under consideration on 29.03.2010. Subsequently, assessment year under consideration on 29.03.2010. Subsequently, assessment year under consideration on 29.03.2010. Subsequently, upon verification of the Annual Information Return (AIR), the upon verification of the Annual Information Return (AIR), the upon verification of the Annual Information Return (AIR), the learned Assessing Officer discerned that during the financial year fficer discerned that during the financial year fficer discerned that during the financial year 2008-09, relevant to the assessment year in question, the assessee 09, relevant to the assessment year in question, the assessee 09, relevant to the assessment year in question, the assessee had deposited cash aggregating to had deposited cash aggregating to ₹13,49,835/- in a savings bank in a savings bank account maintained with Axis Bank. The source of such cash account maintained with Axis Bank. The source of such cash account maintained with Axis Bank. The source of such cash deposit, however, appeared inconsistent with the particulars appeared inconsistent with the particulars appeared inconsistent with the particulars disclosed in the return of income. disclosed in the return of income.
2.1 Being so satisfied, the Assessing Officer recorded reasons to Being so satisfied, the Assessing Officer recorded reasons to Being so satisfied, the Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment and, believe that income chargeable to tax had escaped assessment and, believe that income chargeable to tax had escaped assessment and, accordingly, issued notice under section 148 accordingly, issued notice under section 148 of the Income of the Income-tax Act, 1961 (hereinafter referred to as 1961 (hereinafter referred to as “the Act”) on 31.03.2016, duly ) on 31.03.2016, duly served upon the assessee. In response, the assessee intimated that served upon the assessee. In response, the assessee intimated that served upon the assessee. In response, the assessee intimated that the original return filed be treated as one filed in response to the the original return filed be treated as one filed in response to the the original return filed be treated as one filed in response to the notice under section 148 of the A notice under section 148 of the Act.
2.2 During the reassessment proceedings, the Assessing Officer, During the reassessment proceedings, the Assessing Officer, During the reassessment proceedings, the Assessing Officer, invoking his statutory powers under section 133(6) of the Act, invoking his statutory powers under section 133(6) of the Act, invoking his statutory powers under section 133(6) of the Act, procured the bank statement directly from the Axis Bank. It was procured the bank statement directly from the Axis Bank. It was procured the bank statement directly from the Axis Bank. It was noticed there from that the aggregate of credit entries appea from that the aggregate of credit entries appea from that the aggregate of credit entries appearing in the said account amounted to the said account amounted to ₹13,91,936/-. Repeated notices . Repeated notices under section 142(1) were issued to the assessee calling upon him under section 142(1) were issued to the assessee calling upon him under section 142(1) were issued to the assessee calling upon him to explain the nature and source of the said deposits; however, the to explain the nature and source of the said deposits; however, the to explain the nature and source of the said deposits; however, the assessee chose not to respond. A final show cause notice dated assessee chose not to respond. A final show cause noti assessee chose not to respond. A final show cause noti 10.08.2016 also met with no compliance. The Assessing Officer, 10.08.2016 also met with no compliance. The Assessing Officer, 10.08.2016 also met with no compliance. The Assessing Officer, therefore, was constrained to complete the reassessment under therefore, was constrained to complete the reassessment under therefore, was constrained to complete the reassessment under section 147 read with section 144 of the Act on 30.09.2016, section 147 read with section 144 of the Act on 30.09.2016, section 147 read with section 144 of the Act on 30.09.2016, bringing to tax the entire cash deposit of bringing to tax the entire cash deposit of ₹13,91,936/ 13,91,936/- as unexplained credits.
3. In In In appeal, the assessee contended before appeal, the assessee contended before the learned appeal, the assessee contended before the learned the learned Commissioner of Income Commissioner of Income-tax (Appeals) [“Ld. CIT(A)”] that he had not tax (Appeals) [“Ld. CIT(A)”] that he had not received the statutory notices, and therefore could not respond. The received the statutory notices, and therefore could not respond. The received the statutory notices, and therefore could not respond. The assessee challenged validity of the reassessm assessee challenged validity of the reassessment on the ground that ent on the ground that the savings bank account in question had been duly considered the savings bank account in question had been duly considered the savings bank account in question had been duly considered while filing the return. The assessee submitted that he was while filing the return. The assessee submitted that he was while filing the return. The assessee submitted that he was regularly regularly assessed assessed since since A.Y. A.Y. 2006 2006-07 07 under under presumptive presumptive provisions of section 44AF, and it was submitted that cash deposits provisions of section 44AF, and it was submitted that c provisions of section 44AF, and it was submitted that c were made by the assessee out of cash sales of his regular business were made by the assessee out of cash sales of his regular business were made by the assessee out of cash sales of his regular business activity of trading of laser dyed textile, opening cash balance and activity of trading of laser dyed textile, opening cash balance and activity of trading of laser dyed textile, opening cash balance and cash withdrawals made during the year. It was submitted that cash withdrawals made during the year. It was submitted that cash withdrawals made during the year. It was submitted that learned Assessing Officer only considered the learned Assessing Officer only considered the cash deposits but he cash deposits but he failed to considered cash withdrawals made from the same bank failed to considered cash withdrawals made from the same bank failed to considered cash withdrawals made from the same bank account. The assessee further explained that he had deposited Rs. The assessee further explained that he had deposited Rs. The assessee further explained that he had deposited Rs. 13,49,835/-and not and not ₹ 13,91,460/- as claimed by the Assessing as claimed by the Assessing Officer. He further submitted that cash depos Officer. He further submitted that cash deposited of of ₹ 13,49,835/- comprised of ₹ 7,93,652/ 7,93,652/-on account of cash sales of his business on account of cash sales of his business activity, ₹ 5,56,183/ -was re-deposited out of the withdrawal made deposited out of the withdrawal made of ₹ 12,80,400/-during the year during the year.
3.1. The learned CIT(A) sought a remand report. The Assessing The learned CIT(A) sought a remand report. The Assessing The learned CIT(A) sought a remand report. The Assessing Officer, in his report, rejected the assessee’s explanation observing Officer, in his report, rejected the assessee’s explanation observing Officer, in his report, rejected the assessee’s explanation observing that (i) the gross sales of ₹8,35,652/- declared could not justify that (i) the gross sales of declared could not justify deposits of ₹13,91,936/ 13,91,936/-, and (ii) the redeposit of withdrawn , and (ii) the redeposit of withdrawn cash, absent any demonstrated necessity or specific purpose or nexus, absent any demonstrated necessity or specific purpose or nexus, absent any demonstrated necessity or specific purpose or nexus, could not be accepted. could not be accepted.
3.2. Upon consideration, the Ld. CIT(A) dismissed the challenge Upon consideration, the Ld. CIT(A) dismissed the challenge Upon consideration, the Ld. CIT(A) dismissed the challenge both to the validity of reassessment and to the addition on merits. both to the validity of reassessment and to the addition on merits. both to the validity of reassessment and to the addition on merits. Hence, the present appeal befo Hence, the present appeal before us.
Before us the learned counsel for the assessee filed Before us the learned counsel for the assessee filed Before us the learned counsel for the assessee filed a paperbook containing pages 1 paperbook containing pages 1-30 and also filed a a compilation of judicial precedents relied upon. judicial precedents relied upon.
The Ground Nos s.1 and 3 of the appeal pertain to reassessment to reassessment proceeding challenged by the assessee. proceeding challenged by the assessee. The learned counsel for the The learned counsel for the assessee, while assailing the reassessment, contended that the assessee, while assailing the reassessment, contended that the assessee, while assailing the reassessment, contended that the same was a mere change of opinion and devoid of any live nexus same was a mere change of opinion and devoid of any live nexus same was a mere change of opinion and devoid of any live nexus between the material relied upon and the formation of belief. between the material relied upon and the forma between the material relied upon and the forma Reliance was placed upon the decision of the Hon’ble Supreme Reliance was placed upon the decision of the Hon’ble Supreme Reliance was placed upon the decision of the Hon’ble Supreme Court in ITO v. Lakhmani Mewal Das ITO v. Lakhmani Mewal Das [(1976) 103 ITR 437 (SC)]. [(1976) 103 ITR 437 (SC)]. The learned counsel also relied on decisions of learned counsel also relied on decisions of the coordinate bench of the coordinate bench of Tribunal in the case of Bir Bahadur Singh Sij ribunal in the case of Bir Bahadur Singh Sijwani ( 2015) 53 wani ( 2015) 53 taxmann.com 366, Smt Sapna Chauhan ( & taxmann.com 366, Smt Sapna Chauhan ( & taxmann.com 366, Smt Sapna Chauhan ( ITA No. 137 & 138/Ag/2018) ; Ashish natvarlal Vashi I ITA No. 3522/AHD/2016) 138/Ag/2018) ; Ashish natvarlal Vashi I ITA No. 3522/AHD/2016) 138/Ag/2018) ; Ashish natvarlal Vashi I ITA No. 3522/AHD/2016) and Hashmukhbhai B Patel (ITA No. 193/SRT/2019. and Hashmukhbhai B Patel (ITA No. 193/SRT/2019. and Hashmukhbhai B Patel (ITA No. 193/SRT/2019.
5.1 The The The learned learned learned Departmental Departmental Departmental Representative, Representative, Representative, per per per contra, contra, contra, supported the orders supported the orders of the lower authorities, contending that the of the lower authorities, contending that the Assessing Officer had tangible material, namely AIR information, Assessing Officer had tangible material, namely AIR information, Assessing Officer had tangible material, namely AIR information, duly verified with the return of income, on the basis of which he duly verified with the return of income, on the basis of which he duly verified with the return of income, on the basis of which he had formed a bona fide belief that income had escaped assessment. had formed a bona fide belief that income had escaped assessment. had formed a bona fide belief that income had escaped assessment. Reliance was placed upon placed upon ACIT v. Rajesh Jhaveri Stock Brokers (P) ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. [(2007) 291 ITR 500 (SC)] [(2007) 291 ITR 500 (SC)] and submitted that there was a nd submitted that there was a material relevant to the case of the assessee and on that basis he material relevant to the case of the assessee and on that basis he material relevant to the case of the assessee and on that basis he has formed a requisite belief, and therefore, the reassessment have has formed a requisite belief, and therefore, the reassessment have has formed a requisite belief, and therefore, the reassessment have been validly initiated in the case of the assessee. validly initiated in the case of the assessee.
5.2 We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. Before us the assessee has not filed relevant material on record. Before us the assessee has not filed relevant material on record. Before us the assessee has not filed copy of the reasons recorded and referred only to the observation of copy of the reasons recorded and referred only to the observation of copy of the reasons recorded and referred only to the observation of the Assessing Officer regarding the reopening. essing Officer regarding the reopening. We find that Ld. We find that Ld. CIT(A) has rejected the contention of the assessee observing as CIT(A) has rejected the contention of the assessee observing as CIT(A) has rejected the contention of the assessee observing as under:
“(a) First ground of appeal is regarding addition and assessment at Rs. (a) First ground of appeal is regarding addition and assessment at Rs. (a) First ground of appeal is regarding addition and assessment at Rs. 13,91,940/-. The appellant submitted that the appellant . The appellant submitted that the appellant had filed his return had filed his return of income declaring income at Rs. 1,46,260/- on 29.03.2010 for A.Y. 2009 of income declaring income at Rs. 1,46,260/ on 29.03.2010 for A.Y. 2009-
10. The appellant is engaged in the business of textile trading during the 10. The appellant is engaged in the business of textile trading during the 10. The appellant is engaged in the business of textile trading during the year under consideration. The Ld. AO has erred in only considering the year under consideration. The Ld. AO has erred in only considering the year under consideration. The Ld. AO has erred in only considering the credits of the bank account and adding the same to the total income of the ank account and adding the same to the total income of the ank account and adding the same to the total income of the appellant. He ought to have considered cash withdrawals made from the appellant. He ought to have considered cash withdrawals made from the appellant. He ought to have considered cash withdrawals made from the bank account of the appellant while making an addition. This is in view of bank account of the appellant while making an addition. This is in view of bank account of the appellant while making an addition. This is in view of the fact that the appellant had made a total cash de the fact that the appellant had made a total cash deposition of Rs. the fact that the appellant had made a total cash de 13,49,835/- during Asstt. Year 2009 during Asstt. Year 2009-10 and had made a total cash 10 and had made a total cash withdrawal of Rs. 12,80,400/- during Asstt. Year 2009-10. It is also evident withdrawal of Rs. 12,80,400/
10. It is also evident that each and every cash withdrawals has a corresponding cash deposition that each and every cash withdrawals has a corresponding cash deposition that each and every cash withdrawals has a corresponding cash deposition and the same ought to be considered before making any addition to the total and the same ought to be considered before making any addition to the total income declared by the appellant. It is respectfully submitted that cash income declared by the appellant. It is respectfully submitted that cash income declared by the appellant. It is respectfully submitted that cash deposition made by the appellant in his savings bank account was out of deposition made by the appellant in his savings bank account was out of deposition made by the appellant in his savings bank account was out of cash sales made by the appellant from his regular business a cash sales made by the appellant from his regular b siness activities of textiles trading during the year under consideration. The cash deposition textiles trading during the year under consideration. The cash deposition made by the appellant also includes cash generated out of business appellant also includes cash generated out of business appellant also includes cash generated out of business activities carried out by him during earlier years and various cash activities carried out by him during earlier years and various cash activities carried out by him during earlier years and various cash withdrawals made by him during the Asstt. Year 2009 withdrawals made by him during the Asstt. Year 2009-10. The appellant also submitted the summary of cash book which is reproduced as under: also submitted the summary of cash book which is reproduced as under: also submitted the summary of cash book which is reproduced as under:
Particulars Particulars Amount Amount (Rs.) Opening cash Balance as on Opening cash Balance as on 51,360 51,360 01.04.2008 01.04.2008 Add Cash sales receipts Cash sales receipts 7,93,652 7,93,652 Cash withdrawals from bank Cash withdrawals from bank 1,28,04,00 1,28,04,00 a/c a/c Total cash flow Total cash flow 21,25,412 21,25,412 Less Cash deposit into bank account Cash deposit into bank account 13,49,835 13,49,835 Cash purchase of goods Cash purchase of goods 5,02,392 5,02,392 Cash expenses Cash expenses 88,532 88,532 Personal withdrawal Personal withdrawal 1,20,000 1,20,000
Total Cash Flow Total Cash Flow 20,60,759 20,60,759 Closing cash balance as on Closing cash balance as on 64,653 64,653 31.03.2009 31.03.2009 From the above facts it can be concluded that no income has escaped the above facts it can be concluded that no income has escaped the above facts it can be concluded that no income has escaped assessment and that the appellant had duly considered the above received assessment and that the appellant had duly considered the above received assessment and that the appellant had duly considered the above received cash sales receipts while filing his original return of income for Asstt. Year cash sales receipts while filing his original return of income for Asstt. Year cash sales receipts while filing his original return of income for Asstt. Year 2009-10. The AO as per assessment order stated that it is clear that before re The AO as per assessment order stated that it is clear that before re-opening the assessment for the year under assessment, the assessee was given an the assessment for the year under assessment, the assessee was given an the assessment for the year under assessment, the assessee was given an opportunity to clarify the position with regard to deposit of cash amounts in opportunity to clarify the position with regard to deposit of cash amounts in opportunity to clarify the position with regard to deposit of cash amounts in the savings bank account. From the statement of bank accoun the savings bank account. From the statement of bank account No. the savings bank account. From the statement of bank accoun 070010100261920 maintained with Axis Bank, Surat, it is noticed that 070010100261920 maintained with Axis Bank, Surat, it is noticed that 070010100261920 maintained with Axis Bank, Surat, it is noticed that there were substantial cash transactions in the above said bank account, there were substantial cash transactions in the above said bank account, there were substantial cash transactions in the above said bank account, which is not at all disclosed to the Department. Almost all the entries were which is not at all disclosed to the Department. Almost all the entries were which is not at all disclosed to the Department. Almost all the entries were of 'Cash Deposits'. On verification of the bank statement, it is observed that of 'Cash Deposits'. On verifica tion of the bank statement, it is observed that cash has been deposited on various dates and the said amount has been cash has been deposited on various dates and the said amount has been cash has been deposited on various dates and the said amount has been withdrawn either by cash withdrawal through ATM or through transfer or withdrawn either by cash withdrawal through ATM or through transfer or withdrawn either by cash withdrawal through ATM or through transfer or by clearing. However, the sources of cash deposits are not verifiab by clearing. However, the sources of cash deposits are not verifiable as the by clearing. However, the sources of cash deposits are not verifiab assessee has not furnished any details in this regard despite repeated assessee has not furnished any details in this regard despite repeated assessee has not furnished any details in this regard despite repeated opportunities being afforded to the assessee. The cash deposits as opportunities being afforded to the assessee. The cash deposits as opportunities being afforded to the assessee. The cash deposits as appearing in the above said bank account were reported in the AIR appearing in the above said bank account were reported in the AIR appearing in the above said bank account were reported in the AIR information. The source of the credits is neither explained nor disclosed by information. The source of the credits is neither explained nor disclosed by the assessee either in the return of income or during the course of the assessee either in the return of income or during the course of the assessee either in the return of income or during the course of assessment proceedings. assessment proceedings. The explanation of the appellant and material available on records have The explanation of the appellant and material available on records have The explanation of the appellant and material available on records have been considered and I am of the opinion that the facts st been considered and I am of the opinion that the facts stated by the been considered and I am of the opinion that the facts st appellant are not sufficient. Hence, this explanation made by the appellant appellant are not sufficient. Hence, this explanation made by the appellant appellant are not sufficient. Hence, this explanation made by the appellant do not prove the genuineness and creditworthiness of the transaction. The not prove the genuineness and creditworthiness of the transaction. The not prove the genuineness and creditworthiness of the transaction. The appellant has also quoted the judicial judgments in support, but on appellant has also quoted the judicial judgments in support, but on appellant has also quoted the judicial judgments in support, but on verification, it is found that the facts of the case under consideration are verification, it is found that the facts of the case under consideration are different. Therefore, ground no. 1 of the appellant is dismissed. different. Therefore, ground no. 1 of the appellant is dismissed.” different. Therefore, ground no. 1 of the appellant is dismissed. 5.3 It is observed that the Assessing Officer acted upon specific It is observed that the Assessing Officer acted upon specific It is observed that the Assessing Officer acted upon specific information emanating from the Annual Information Return information emanating from the Annual Information Return information emanating from the Annual Information Return furnished by the Axis Bank, indicating cash deposits by the e Axis Bank, indicating cash deposits by the e Axis Bank, indicating cash deposits by the assessee inconsistent with the income declared. Upon verification of assessee inconsistent with the income declared. Upon verification of assessee inconsistent with the income declared. Upon verification of the return, such inconsistency was confirmed. The material thus the return, such inconsistency was confirmed. The material thus the return, such inconsistency was confirmed. The material thus constituted tangible evidence justifying the formation of belief of constituted tangible evidence justifying the formation of belief of constituted tangible evidence justifying the formation of belief of escapement of income. It is trite law that at the stage of recording of income. It is trite law that at the stage of recording of income. It is trite law that at the stage of recording reasons, the Assessing Officer is not required to establish reasons, the Assessing Officer is not required to establish reasons, the Assessing Officer is not required to establish escapement conclusively; it suffices if there exists a rational escapement conclusively; it suffices if there exists a rational escapement conclusively; it suffices if there exists a rational connection or live link between the material and the belief formed. connection or live link between the material and the belief formed. connection or live link between the material and the belief formed. The ratio of Lakhmani Mewal Das Lakhmani Mewal Das (supra), when applied to the facts (supra), when applied to the facts before us, rather fortifies the validity of the reopening. We are thus before us, rather fortifies the validity of the reopening. We are thus before us, rather fortifies the validity of the reopening. We are thus constrained to observe that the plea of the assessee that the constrained to observe that the plea of the assessee that the constrained to observe that the plea of the assessee that the reopening was based on a mere change of opinion stands bereft of reopening was based on a mere change of opinion stands bereft reopening was based on a mere change of opinion stands bereft merit. The ratio in the other decision of the coordinate bench cited The ratio in the other decision of the coordinate bench cited The ratio in the other decision of the coordinate bench cited by the assessee are also considered by the assessee are also considered but the reassessment the reassessment has been validly initiated.
5.4 In the circumstances, we uphold the finding of the learned In the circumstances, we uphold the finding of the learned In the circumstances, we uphold the finding of the learned CIT(A) and hold that the reassessm CIT(A) and hold that the reassessment proceedings were validly ent proceedings were validly initiated. Grounds Nos. 1 and 3 of the appeal are dismissed. initiated. Grounds Nos. 1 and 3 of the appeal are dismissed. initiated. Grounds Nos. 1 and 3 of the appeal are dismissed.
The ground No. two of The ground No. two of the appeal relates to addition the appeal relates to addition on merit. The Ld. CIT(A) has rejected the contention of the assessee observing The Ld. CIT(A) has rejected the contention of the assessee observing The Ld. CIT(A) has rejected the contention of the assessee observing as under:
“c) The next ground of appeal is regarding the amount of cash deposits in “c) The next ground of appeal is regarding the amount of cash deposits in Bank account. The appellant submitted that the actual cash deposit was Rs. Bank account. The appellant submitted that the actual cash deposit was Rs. Bank account. The appellant submitted that the actual cash deposit was Rs. 13,49,835/- and not Rs. 13,91,936/ and not Rs. 13,91,936/-as alleged by the Ld. AO. In this as alleged by the Ld. AO. In this regard, it is found that the AO obtained a copy of Bank st regard, it is found that the AO obtained a copy of Bank statement of Axis regard, it is found that the AO obtained a copy of Bank st Bank, Surat by issuing notice u/s 133(6) of the Act. Hence, the difference Bank, Surat by issuing notice u/s 133(6) of the Act. Hence, the difference Bank, Surat by issuing notice u/s 133(6) of the Act. Hence, the difference comes to Rs. 42,101/-. In this regard, the AO is directed to verify this comes to Rs. 42,101/ . In this regard, the AO is directed to verify this statement and tally the amount of cash deposits whether the actua statement and tally the amount of cash deposits whether the actual amount statement and tally the amount of cash deposits whether the actua is Rs. 13,49,835/- or Rs. 13,91,936/- and allow relief to the tune of Rs. and allow relief to the tune of Rs.
42,101/- if found correct. Grounds of appeal on this ground is allowed if found correct. Grounds of appeal on this ground is allowed if found correct. Grounds of appeal on this ground is allowed subject to verification.” subject to verification.” 6.1 We have perused the relevant material on record and the e have perused the relevant material on record and the e have perused the relevant material on record and the submission of the parties on the issue in submission of the parties on the issue in dispute, ispute, but we find ourselves unable to accede to the plea of the assessee.. The copy of ourselves unable to accede to the plea of the assessee. ourselves unable to accede to the plea of the assessee. the bank statement of the assessee the bank statement of the assessee is available on paperbook page available on paperbook page 27 to 30. For ready reference said statement of bank is reproduced For ready reference said statement of bank is reproduced For ready reference said statement of bank is reproduced as under:
6.2 The pattern revealed by the bank statement is most telling. The pattern revealed by the bank statement is most telling. The pattern revealed by the bank statement is most telling. The deposits are made in small denominations, ranging between The deposits are made in small denominations, ranging between The deposits are made in small denominations, ranging between ₹1,000 and ₹40,000, on numerous occasions throughout the year, 40,000, on numerous occasions throughout the year, 40,000, on numerous occasions throughout the year, and are followed almost immediately and are followed almost immediately — within a day or two within a day or two — by corresponding withdrawals through the Automated Teller Machine nding withdrawals through the Automated Teller Machine nding withdrawals through the Automated Teller Machine located at “Millennium Textile.” Such a rhythmic and mechanical located at “Millennium Textile.” Such a rhythmic and mechanical located at “Millennium Textile.” Such a rhythmic and mechanical sequence of deposits and withdrawals bears the unmistakable sequence of deposits and withdrawals bears the unmistakable sequence of deposits and withdrawals bears the unmistakable imprint of a circuitous transaction and militates against the imprint of a circuitous transaction and militates against the imprint of a circuitous transaction and militates against the conduct expected of a genuine trading concern. The conduct of d of a genuine trading concern. The conduct of d of a genuine trading concern. The conduct of maintaining a savings account, as opposed to a current account maintaining a savings account, as opposed to a current account maintaining a savings account, as opposed to a current account which a prudent trader would normally employ for business which a prudent trader would normally employ for business which a prudent trader would normally employ for business operations, further erodes the credibility of the explanation operations, further erodes the credibility of the explanation operations, further erodes the credibility of the explanation tendered.
6.3 The Section 68, by its very design, casts an initial and 68, by its very design, casts an initial and 68, by its very design, casts an initial and imperative duty upon the assessee to explain, with cogent evidence, imperative duty upon the assessee to explain, with cogent evidence, imperative duty upon the assessee to explain, with cogent evidence, the nature and source of any sum found credited in his books or the nature and source of any sum found credited in his books or the nature and source of any sum found credited in his books or accounts. This duty is not a matter of form but of substance. The accounts. This duty is not a matter of form but of substance. The accounts. This duty is not a matter of form but of substance. The law, in its wisdom, presumes nothing in favour of the taxpayer wisdom, presumes nothing in favour of the taxpayer wisdom, presumes nothing in favour of the taxpayer where unrecorded cash flows are discerned; rather, it demands where unrecorded cash flows are discerned; rather, it demands where unrecorded cash flows are discerned; rather, it demands from him a candid and verifiable explanation consistent with from him a candid and verifiable explanation consistent with from him a candid and verifiable explanation consistent with ordinary human conduct and commercial probability. ordinary human conduct and commercial probability. ordinary human conduct and commercial probability.
6.4 In this connection, one may In this connection, one may profitably refer to the exposition of profitably refer to the exposition of the Hon’ble Supreme Court in the Hon’ble Supreme Court in CIT v. P. Mohankala [(2007) 291 ITR 278 (SC)], wherein it was held that the expression “the assessee 278 (SC)], wherein it was held that the expression “the assessee 278 (SC)], wherein it was held that the expression “the assessee offers no explanation or the explanation offered is not satisfactory in offers no explanation or the explanation offered is not satisfactory in offers no explanation or the explanation offered is not satisfactory in the opinion of the Assessing Officer” vests in the authority a quasi the Assessing Officer” vests in the authority a quasi the Assessing Officer” vests in the authority a quasi- judicial discretion, to be exercised upon objective material. judicial discretion, to be exercised upon objective material. judicial discretion, to be exercised upon objective material. Likewise, in Sumati Dayal v. CIT Sumati Dayal v. CIT [(1995) 214 ITR 801 (SC)], the Apex [(1995) 214 ITR 801 (SC)], the Apex Court enjoined that matters of apparent probability must be Court enjoined that matters of apparent probability must be Court enjoined that matters of apparent probability must be weighed not upon mechanical proof but upon the test of human upon mechanical proof but upon the test of human upon mechanical proof but upon the test of human conduct and surrounding circumstances. Applying those salutary conduct and surrounding circumstances. Applying those salutary conduct and surrounding circumstances. Applying those salutary principles, we find that the explanation of the assessee — that the principles, we find that the explanation of the assessee principles, we find that the explanation of the assessee cash deposits were derived from cash sales and withdrawals — is cash deposits were derived from cash sales and withdrawals cash deposits were derived from cash sales and withdrawals neither supported by any contemporaneous documentary evidence ported by any contemporaneous documentary evidence ported by any contemporaneous documentary evidence nor reconcilable with the pattern of banking transactions. nor reconcilable with the pattern of banking transactions. nor reconcilable with the pattern of banking transactions.
6.5 It is therefore incumbent upon the assessee incumbent upon the assessee, as one invoking , as one invoking the indulgence of the statute, to discharge the burden cast upon the indulgence of the statute, to discharge the burden cast upon the indulgence of the statute, to discharge the burden cast upon him by law. A mere assertion, unsupported re assertion, unsupported by records, cannot by records, cannot satisfy the judicial conscience of this Tribunal. The explanation satisfy the judicial conscience of this Tribunal. The explanation satisfy the judicial conscience of this Tribunal. The explanation tendered is self-serving and fails to inspire confidence, being at serving and fails to inspire confidence, being at serving and fails to inspire confidence, being at variance with the realities of trade and the cadence of normal variance with the realities of trade and the cadence of normal variance with the realities of trade and the cadence of normal mercantile practice. We are constrained mercantile practice. We are constrained to observe that the to observe that the transactions appear contrived to create a façade of business transactions appear contrived to create a façade of business transactions appear contrived to create a façade of business circulation where, in truth, none has been demonstrated. circulation where, in truth, none has been demonstrated. circulation where, in truth, none has been demonstrated.
6.6 The doctrine of presumption cannot operate in aid of one who The doctrine of presumption cannot operate in aid of one who The doctrine of presumption cannot operate in aid of one who has chosen to remain silent in the face of statutory notices and has chosen to remain silent in the face of statutory has chosen to remain silent in the face of statutory who, having had ample opportunity, failed to produce a scintilla of who, having had ample opportunity, failed to produce a scintilla of who, having had ample opportunity, failed to produce a scintilla of corroboration. The conscience of this Tribunal cannot but reject an corroboration. The conscience of this Tribunal cannot but reject an corroboration. The conscience of this Tribunal cannot but reject an explanation resting on conjecture and convenience. We therefore explanation resting on conjecture and convenience. We therefore explanation resting on conjecture and convenience. We therefore uphold the finding of the learned Commission uphold the finding of the learned Commissioner (Appeals) in er (Appeals) in sustaining the addition. The sustaining the addition. The Ground No. 2 of the of the appeal of the assessee accordingly dismissed. accordingly dismissed.
In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed.