SHRI HARISH PESSWANI,BHOPAL vs. THE ITO 3(2), BHOPAL

आदेश /O R D E R

PER O.P.MEENA, ACCOUNTANT MEMBER This appeal is filed by the assessee against the order of ld.

Commissioner of Income tax (Appeals)-II-Bhopal[hereinafter

referred to as the CIT (A)] dated 19.12.2014. This appeal pertains

to Assessment Year 2010-11 as against appeal decided in respect

of assessment order dated 04.03.2013 passed u/s. 143(3) of

Income Tax Act, 1961(herein after referred to as "the Act) by the

Shri Harish Pesswani, I.T.A. No. 153/Ind/2015/A.Y.:2010-11 Page 2 of 11

ITO- 3(2) Bhopal [hereinafter referred to as the AO]. The assessee

has taken following grounds of appeal:

On the facts and circumstances of the case, the Ld. CIT(A)-II, Bhopal erred and was not justified in: 1. Dismissing the appeal and sustaining the assessment order of the Ld. AO under this appeal which is contrary to the material on records and provisions of the Act, unjust, bad in law and without jurisdiction. 2. Sustaining the addition of Rs. 34,60,100/- out of Rs. 39,35,400/- made by the Ld. AO on account of unexplained cash deposits disregarding the facts of the case, settled legal position and explanation submitted by the appellant. 3. Sustaining the addition of Rs. 84,400/- made by the Ld. AO on account of unexplained investment in immovable property disregarding the facts of the case, settled legal position and explanation submitted by the appellant.

assessee hence, the same is treated as dismissed as not

pressed. 3. Ground no. 2 relates to sustaining addition of Rs.

34,60,100/- out of Rs. 39,35,400/- made by the AO on

account of unexplained cash deposit. 4. Briefly stated the facts of the case are that the assessee is a

bank employee in Bank of Baroda posted at Vidisha during the

year under consideration. The assessee has filed his return of

income on 26.07.2010 disclosing total income at Rs. 1,32,380/-.

During the course of assessment proceedings, it was noticed that

Shri Harish Pesswani, I.T.A. No. 153/Ind/2015/A.Y.:2010-11 Page 3 of 11

the assessee has made cash deposits in his various bank

accounts amounting to Rs. 39,35,400/-. The assessee has

furnished the source of aforesaid cash deposits and also

submitted ‘cash flow statement’ but the Ld. AO has declined to

accept the sources stating that explanation of the assessee is not

acceptable.

CIT(A). The submissions made before the AO were reiterated and

the explanation of the source of deposit was furnished and same

was explained by cash flow statements. The submission made

before CIT(A) is reproduced as under:

The details of cash deposits in various bank accounts along with their sources in the tabulated form are given as under: A-[Axis Bank- Account No. 646010100014094]

Date Cash Deposit Remarks [Rs.] 23/06/2009 5,000/- Out of withdrawal from BOB, Vidisha a/c no. 31370400000029 on 23/06/2009. 15/09/2009 1,00,000/- Advance for salw of plot received in cash on 14/09/2009 amounting to Rs. 1,00,000/- 25/09/2009 4,50,000/- Cash received on sale of plot on 25/09/2009- Rs. 2,72,000/-. Rs. 55,000/- withdrawn from same bank on 18/09/2009 and Rs. 1,23,000/- received from mother. 06/10/2009 4,00,000/- Cash withdrawal from same bank on 01/10/2009 21/10/2009 4,00,000/- Cash withdrawal from same bank on 19/10/2009 29/10/2009 4,00,000/- Cash withdrawal from same bank on 24/10/2009 16/11/2009 4,00,000/- Cash withdrawal from same bank on 04/11/2009 12/01/2010 5,000/- Out of withdrawal from BOB, Vidisha account no. 31370400000206 on 09/10/2010. 10/03/2010 5,000/- Out of salary and past savings Total 21,65,000/-

B-[Bank of Baroda, Vidisha, SB Account No. 31370100000206]

Shri Harish Pesswani, I.T.A. No. 153/Ind/2015/A.Y.:2010-11 Page 4 of 11

Total cash deposits as per bank statement during the year under consideration is Rs. 11,25,500/- whereas the Ld. AO has erratically considered the cash deposits at Rs. 13,74,800/-. Copy of the bank statement is enclosed herewith. Date Cash Deposit [Rs.] Remarks 15/04/2009 50,300/- Out of withdrawal from same bank on 11/04/2009 04/07/2009 25,000/- Cash received from mother. 16/07/2009 1,00,000/- Out of withdrawal from BOB, Vidisha account no. 31370400000029 on 14/07/2009- Rs. 50,000/- and out of withdrawal from same bank on 14/07/2009- Rs. 50,000/- 21/07/2009 1,00,000/- Out of withdrawal from BOB, Vidisha account no. 31370400000029 on 20/07/2009- Rs. 1,00,000/- 24/12/2009 2,50,000/- Out of withdrawal from same bank on 22/12/2009- Rs. 1,00,000/-. Withdrawal from Axis Bank on 19/12/2009- Rs. 1,50,000/- 05/01/2010 2,00,000/- Out of withdrawal from same bank on 01/01/2010- Rs. 2,00,000/-. 01/02/2010 2,24,000/- Out of withdrawal from same bank on 01/02/2010- Rs. 44,000/- and cash received from mother Rs. 1,80,000/- 1,56,000/- Out of withdrawal from same bank on 19/03/2010 02/02.2010- Rs. 2,24,000/- 20,200/- Petty cash deposits on different dates. Total 11,25,500/-

C-[Bank of Baroda, Habibganj, SB Account No. 18600100005126]

There are no cash deposits in the above said bank during the year under consideration. Copy of the bank account is enclosed herewith [annexure-]. The Ld. AO has erratically considered a sum of Rs. 1,84,000/- as ‘unexplained cash deposits’ in the above said bank. Thus, the addition is erratic on the facts and therefore, is liable to be deleted. D-[Bank of Baroda, Vidisha, OD Account No. 31370400000029]

Total cash deposits as per bank statement during the year under consideration is Rs. 1,64,600/- whereas the Ld. AO has erratically considered the cash deposits at Rs. 2,11,600/-. Copy of the bank statement is enclosed herewith. Date Cash Remarks Deposit [Rs.] 22/04/2009 50,000/- Out of withdrawal from same bank on 21/04/2009- Rs. 50,000/- 29/04/2009 50,000/- Out of withdrawal from same bank on 28/04/2009- Rs. 50,000/- 02/05/2009 5,000/- Out of withdrawal from same bank on 01/05/2009- Rs. 5,000/-

Shri Harish Pesswani, I.T.A. No. 153/Ind/2015/A.Y.:2010-11 Page 5 of 11

07/07/2009 7,500/- Out of salary and past savings. 20/07/2009 44,600/- Out of withdrawal from same bank on 14/07/2009- Rs. 50,000/- 7,500/- Petty cash deposits on different dates. Total 1,64,600/- From the factual position narrated above, it is apparent that the addition of Rs. 39,35,400/- is totally misconceived and therefore, it is prayed that the same may kindly be deleted.” 4.2. Assessee’s submissions along with assessment order have been considered carefully. Assessment records of the AO along with relevant bank account statement have also been perused. As per AIR information on record, total cash deposits of Rs. 28,92,500/- been made by the appellant in his bank account at BOB. Accordingly, the case been selected for scrutiny through CASS. During the course of assessment proceedings, the assessee has submitted his various bank accounts statements from where AO has computed total cash deposits of Rs. 39,35,400/-. However, on perusal, assessee’s submissions regarding amount of cash deposits are found acceptable, except for BOB A/c No. 18600100005126, since at many places AO has either taken O/D amount or even cheque amount as cash deposits. The correct position of bank deposits is found as under: S. Bank Name A/c no. Cash Cash Excess N deposits deposits taken by o. taken by AO made as per AO. (Rs.) bank (Rs.) statement (Rs) 1 BOB, 31370400000206 13,74,800/- 11,25,500/- 2,49,300 Vidisha 2 BOB, 1860010005126 1,84,000/- 5,000/- 1,79,000 Habibganj 3 BOB, 3137040000029 2,11,600/- 1,64,600/- 47,000 Vidisha 4 Axis Bank, 646010100014094 21,65,000/- 21,65,000/- NIL Bhopal Total 39,35,400/- 34,60,100/- 4,75,300 4.3 Regarding source of these cash deposits of Rs. 34,60,100/- it is seen that the assessee has not been able to explain satisfactorily the amounts of cash deposits made in his various bank accounts with the help of supporting documentary evidences in his favour despite being given adequate opportunities in this regard. The assessee has merely stated these amounts as deposits from cash in hand, received from mother- Mrs. Madhu Pesswani, Mr. Naveen Kumar and out of money withdrawn earlier. Mere filing of income tax return of the lender i.e. his mother does not absolve the assessee of his duty to explain these cash deposits found made in his bank accounts. The income declared by his mother is not found commensurate with the amounts given to the assessee nor there have been equivalent withdrawals from her bank account. The assessee’s further contention that such frequent deposits and withdrawals of huge amounts have been necessitated for his mother’s

Shri Harish Pesswani, I.T.A. No. 153/Ind/2015/A.Y.:2010-11 Page 6 of 11

treatment and certain property deals are also not found acceptable on the basis of evidences produced. The assessee has also failed to prove satisfactorily that the various amounts deposited in these bank accounts are, indeed made from withdrawals as purpose of these withdrawals has also not been proved. Therefore, theory of peak credit is also not found applicable in his case. 4.4 After perusal of entire material on record, addition of Rs. 34,60,100/- is, hereby, confirmed out of total of Rs. 39,35,400/- made by the AO.

Being aggrieved the assessee is filed an appeal before the 6.

Tribunal.

The Ld. A.R. submitted the CIT(A) has confirmed the addition on

account of cash deposit of Rs. 34,60,100 out of cash deposit of

Rs. 39,35,400 added by the AO. The source of these cash

deposits of Rs. 34,60,100 is explained as under:-

Total cash deposit in 4 bank account 34,60,100 Less :out of earlier withdrawal 32,79,400 Less: Received from mother 1,48,000 Less: Cash received against sale of property 3,72,000 Less: petty cash deposit from savings and salary 32,700 Total 34,60,100 34,60,100 Balance NIL

cash flow statement (Copy filed Paper Book Page No. 39-42)

whereby the cash withdrawal and deposit are given. It could be

seen from that deposit in cash are majority out of earlier

withdrawals from bank. Out of the total deposit in bank, Rs.

Shri Harish Pesswani, I.T.A. No. 153/Ind/2015/A.Y.:2010-11 Page 7 of 11

32,79,400/- pertain to earlier withdrawals from the bank

account. Each deposit entry in the bank were submitted to

before the Ld. CIT (A) which are reproduced by the CIT(A) at page

No 10 to 12 of appellate order. The Ld. A.R. contended that the

glimpse of the cash flow would show that deposit are out of the

earlier cash withdrawals, and there is no short fall of at any time

. As regards , an amount of Rs. 3,72,000 , the Ld. A.R. submitted

that the assessee has sold a property on 25.09.2009 of which

registry is appearing at Paper Book Page No. 26 for Rs. 3,72,000.

The assessee has received Rs. 1,00,000 on 15.09.2009 as

advance against the sale of this property which has been

deposited in bank account and same is being reflected in the

cash flow statement at Page No 40 and Similarly an amount of

Rs. 2,72,000 was received on 25.09.2009, which is also

appearing at Paper Book Page No. 40 back. The sale deeds of this

property depicts the said transaction , hence, the source of cash

deposit of Rs. 2,72,000 is explained out of cash received from

sale of property. Further, it was claimed that the assessee has

received an amount of Rs. 1,23,000 on 25.09.2009 from her

mother and similarly an amount of Rs. 25,000 was received in

cash from his mother on 04.07.2009 . Thus, total cash amount of

Shri Harish Pesswani, I.T.A. No. 153/Ind/2015/A.Y.:2010-11 Page 8 of 11

Rs. 1,48,000 has been received from the mother of the assessee,

and same is deposited in the various bank accounts of the

assessee and same is reflected in cash flow statement filed by the

assessee. Therefore, it was urged to delete the addition made by

the AO.

has sold the property during the year under consideration,

hence, there is a possibility that the amount deposited in various

bank account is out of on money receipts. Therefore, the

explanation of the assessee should not be accepted.

have perused the material available on record. We find that there

are four bank accounts of the assessee viz : two are with BOB at

Vidhisha , one is BOB Habibganj, and other one is with Axis

Bank. It is noticed that the assessee has made withdrawal of

cash from one bank account and same is claimed to have been

deposited with other bank account in cash. The assessee has

filed cash flow statement in respect by merging all four accounts

therein which explains the cash deposits. The peak amount as

per cash flow statement comes to NIL. However, if we considered

the individual bank account and cash deposit therein , then there

Shri Harish Pesswani, I.T.A. No. 153/Ind/2015/A.Y.:2010-11 Page 9 of 11

would be some amount on account of peak, therefore, in such a

cash where no books of accounts are maintained the peak theory

is best method to assess the actual income earned from such

transactions. After taking into account, all the facts and

circumstances of the case, we find it appropriate to send this

issue back to the file of the AO to examine the cash flow

statement in the light of explanation as offered in respect of each

and every entry and peak theory. The will calculate the peaks of

each bank accounts separately. The assessee shall submit all the

evidences before the AO in support of its claim and shall be free

to raise all legal and factual issues before the AO. The AO shall

give adequate opportunity of hearing to the assessee and shall

decide this issue afresh after considering all the details and

evidences and judgements as may be placed by the assessee

before him. The assessee shall also file its submissions along

with requisite evidences with regard to all the reasons given by

the AO in the assessment order which shall be duly considered

by the AO before deciding this issue afresh. With these

directions, this issue is sent back to the file of the AO. This

ground may be treated as allowed for statistical purposes.

Shri Harish Pesswani, I.T.A. No. 153/Ind/2015/A.Y.:2010-11 Page 10 of 11

investment in property.

purchased a property for Rs. 3,09,400. The source of

investment in this property is explained as Rs. 2,25,000 paid by

cheque and balance Rs. 84,000 was paid in cash, which was

claimed to have been received from mother of assessee,

withdrawn from bank and cash in hand. However, the AO not

satisfied with explanation, hence, made addition of Rs. 84,000.

assessee has claimed the said amount is paid out of withdrawal

made from Axis Bank account of Rs. 3,04,000 on 2-2-2010.

However, the Ld. CIT (A) did not agree with explanation, hence,

echoed the order of the AO.

Tribunal. The Ld. A.R. submitted that the assessee had

withdrawn a sum of Rs. 1,50,000 on 02-02-2010 from Axis Bank

account as appearing at Paper Book Page No. 42 from cash book

for registry and permission of house , out of which an amount of

Rs. 84000 has been paid in cash towards acquisition of property.

Shri Harish Pesswani, I.T.A. No. 153/Ind/2015/A.Y.:2010-11 Page 11 of 11

Thus, this amount was sufficient to explain to source of cash

deposit of Rs. 84,000.

authorities.

have perused the material available on record. We find that the

assessee had withdrawn a sum of Rs. 1,50,000 as reflected as

Paper Book Page No. 42 of cash flow statement. Out of this an

amount of Rs. 35,000 was paid in cash on Rs.49000 was paid in

cash on towards purchase of property. Thus, the source of cash

payment of Rs. 84,000 is explained. Hence, addition of Rs.

84,000 is deleted. This grounds of appeal is allowed.

Sd/- Sd/- (सी.एम.गग�)/(C.M. GARG) (ओ.पी.मीना) /(O.P.MEENA) �या�यक सद�य /JUDICIAL MEMBER लेखा सद�य /ACCOUNTANT MEMBER

Dated:17.04.2017 Sb*