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Facts
The Assessing Officer made an addition of Rs. 27,47,000/- for unexplained cash deposits in the assessee's bank accounts, which was upheld by the CIT(A). The assessee contended that these deposits were from prior cash withdrawals, demonstrating a rotation of funds, and provided a statement of withdrawals to support this claim.
Held
The Tribunal remanded the case back to the jurisdictional Assessing Officer. It directed the AO to consider the benefits of cash withdrawals against the cash deposits and re-compute the taxable income after verifying the assessee's cash flow statement.
Key Issues
Whether cash deposits in bank accounts, claimed to be from earlier withdrawals, constitute unexplained income or rotation of funds, requiring verification of the cash flow statement.
Sections Cited
Section 69A, Section 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. Kul BharatDr. B. R. R. Kumar
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of National Faceless Appeal Centre, Delhi dated 24.09.2021.
Following grounds have been raised by the assessee:
“1. That the appellant reiterates all the facts and grounds of appeal raised before the Ld. CIT (A) herein. The CIT(A) has blindly confirmed the Assessment order passed by AO. The CIT(A) erred in upholding the addition made by AO in respect of cash deposit into the Bank Account.
2. The Assessment order passed by the AO is bad in law and fact under the fact and circumstances of the appeal. The order passed by the CIT(A) is against the law and facts on the file as he was not justified to arbitrary uphold the action of AO.
3. That the CIT(A) noted in Para 4.1 of the appeal order that the assessment framed is not bad in law while the assessee has challenged the assessment proceeding not assessment notice.
2 Vinod Gupta 4. That the CIT(A) noted in Para 4.2 of the appeal order that the appellant has not furnish the source and justification of cash deposited into bank while appellant has in his written submission before CIT(A) reiterated all his reply to notice on dated 27-08-2018 about cash deposit and sources thereof along with the copy of ITR AY 2017-18.
5. That the AO has erred in law in treating the income of cash deposit of Rs. 27,47,000/- under section 69A of Income Tax Act 1961. The appellant has furnished all the relevant information in cash statement regarding cash deposits during and pre demonetization period. The appellant hereby declares that the cash deposits was made totally out of the funds withdrawal made from the banks as this was already submitted in cash statement in reply dated 09-11-2019, and same is reproduced as below mentioned: Cash withdrawn from bank account by the assesse during F.Y 2015- 16 & 16-17 is tabulated below: Bank Account Date Amount 42280200000029 16-10-2015 6,20,000.00 42280200000029 17-02-2016 8,00,000.00 42280200000029 22-06-2016 12,00,000.00 42280200000029 01-11-2016 5,00,000.00 42280200000029 22-12-2016 10,000.00 42280200000029 27-12-2016 10,000.00 42280200000029 30-12-2016 10,000.00 42280200000029 07-01-2017 50,000.00 42280200000029 12-01-2017 50,000.00 42280200000029 19-01-2017 1,00,000.00 42280200000029 27-01-2017 1,00,000.00 6. That the AO has nowhere pointed that the cash withdrawn has been used. Now it is unjustified and bad in law that cash kept for emergency use could not be deposited into bank, if deposited, same will be construed as income.
That the appellant hereby requests to allow him an opportunity before taking an adverse view in any of the issues.”
The Assessing Officer made addition of Rs.27,47,000/- on account of the cash deposits in his two bank accounts in Bank of Baroda. The Assessing Officer at page no. 4 of the Assessment Order held “that the assessee has deliberately committed a mischief to cheat the department”. The ld. CIT(A) affirmed the 3 Vinod Gupta addition made by the Assessing Officer on the grounds that the assessee has not furnished the proof that the cash deposits is rotation of funds. The ld. CIT(A) has further held that the assessee’s case cannot be considered u/s 44AD of the Income Tax Act, 1961 and also that the assessee has not furnished the proof of receipt of cash. The ld. CIT(A) held that the assessee has failed to explain the genuineness of the transactions and to establish that the credit in the bank accounts is from the bank account.
Before us, the assessee submitted cash flow statement and argued that owing to the cash flow, the addition be deleted. The ld. DR argued that the primary work of examination of the cash flow has to be verified by the Assessing Officer.
Having gone through the details, we deem it to be a fit case to remand the matter to the jurisdictional Assessing Officer with directions to given benefits of cash withdrawals to the cash deposits and re-compute the taxable income.
In the result, the appeal of the assessee is allowed for statistical purpose. Order Pronounced in the Open Court on 19/04/2024.