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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri S.S.Godara & Shri, M. Balaganesh
आदेश /O R D E R PER S.S.Godara, Judicial Member:- This assessee’s appeal for assessment year 2013-14 arises against Commissioner of Income Tax (Appeals)-13, Kolkata’s order dated 28.02.2017 passed in case No.32/CIT(A)-13/Kol/2015-16, upholding Assessing Officer’s action adding unexplained cash deposits of ₹16,21,000/- and ₹34,75,000/- totaling to ₹50,96,000/-, in proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.
We advert to the assessment order dated 03.03.2016. There is no dispute that the assessee had indeed made cash deposits of ₹16,21,000/- and
ITA No.1342/Kol/2017 A.Y.2013-14 Sh Bimal Singh Kothari Vs. ITO Wd-43(1), Kol. Page 2 ₹34,75,000/- in his saving bank account maintained with Bank of Baroda and HDFC Bank Ltd; respectively. The Assessing Officer issued section 142(1) notice seeking to know about the source of the said deposits. He records in para-4 in his order that the assessee failed to file his reply to the said show- cause notice. This made that the Assessing Officer to treat the above deposits as undisclosed cash income to the tune of ₹50,96,000/- inviting addition u/s. 69 of the Act as undisclosed investments.
The CIT(A) affirms Assessing Officer’s action as under:- “5. I have gone through the contention of the assessee, the order passed by the AO and the submissions made by the Appellant. The decision of this appeal is given as under:- In this case the appellant has raised various grounds of appeal which arose on account of addition of Rs.16,21,000/- & Rs.34,75,000/- as unexplained cash deposit in the bank account which were not explained before the AO. While making the addition it was observed by the AO that from the AIR information that the assessee has deposited Rs.50,96,000/- in cash in the following bank account maintained by the appellant during the year. Sl Name of bank and branch Type of account Details of cash Total cash No. address deposits deposits 1 Bank of Baroda, Fort Univer Saving bank Rs.16,21,000/- Rs.16,21,000/- Branch, C-26, 2, Baroda dt. 31.03.13 Corporate Centre, BKC, Mumbai-400051 2 HDFC Bank limited Tulsiani Saving bank Rs.34,75,000/- Rs.34,75,000/- Chamber, Nariman Poit dt.31.03.13 101104, Free Press Journal marg, Mumbai-400 013 The AO issued show cause notice for explaining the aforesaid cash deposit in spite of several opportunities provided to the appellant. The appellant did not come forward to explain the aforesaid cash deposit. Therefore, the AO added the aforesaid amount. At appellate stage also the appellant did not established its business activity. No proof of sale purchase submitted. Only bank account was submitted. Perusal of bank account submitted before the AO and under signed shows that cash has been deposited and cheque has been issued the appellant cannot claim that cash deposits was made out of cash withdrawal because all the money has been utilized by the cheque transfer. During the course of appellate proceeding the appellant claimed that the appellant was having opening balances and therefore Rs.30.51 lac was his opening balance and to that extent the appellant asked for the credit. Perusal of ITR of Sri Bimal Singh Raichand Kothari shows that he has earned income of Rs.2,97,000/- for assessment year 2013-14. The appellant has shown two head for the aforesaid income one is income from salary of
ITA No.1342/Kol/2017 A.Y.2013-14 Sh Bimal Singh Kothari Vs. ITO Wd-43(1), Kol. Page 3 Rs.1,20,00/- and another one is income from house property of Rs.1,77,208/-. During the appellate proceeding the clime of the appellant was not found supported by the earlier withdrawals. The appellant has submitted that money was out of his business but his return of income which has been filled never speaks about any kind of business. The appellant has failed to establish the business activity of himself. Had it been genuine business the appellant should have shown sale and purchase of the business. No details were filed before the AO nor it was during the appellate proceeding. The appeal was filled only for the sake of argument without any subsistence evidences. At appellate proceeding keeping in view of his salary income and house property it was asked as how the appellant has withdrawn Rs.30,51,000/- in previous year and what was the source of it whereas his salary income was of Rs.2,97,000/- only. The appellant kept quiet over this issue. In view of above the act that the appellant did not establish that it was his business activity and cash deposit was out of his sale. The appellant, on the contrary, is a salary employee who has a meager income and the source of the so-called claim withdrawal as opening balance of earlier year has not been proved and neither it was the capacity of the appellant who have such huge cash in hand without any purpose or source. Keeping in view of the aforesaid facts and the decision of Hon'ble Gujarat High Court in the case of commissioner of Income Tax vs. Sarwankumar Sharma, appeal no. 252 of 2014 dated 15.07.2014m 49 Taxman 101 where it has held that assessee declaring income from salary and interest, was found in possession of certain cash, in view of fact that assessee failed to bring any evidence on record in support of his explanation that said amount belonged to his business transactions, AO was justified in adding same to assessee’s taxable income as unexplained money section 69A of the Income tax Act, 1961. In this case the appellant was showing income from salary and interest – In course of assessment, Assessing Officer found that assessee had a bank account in which a sum of Rs.45 lakh was deposited – Assessee explained that said mount belonged to its business transactions relating to sale of cloth – Assessing Officer having rejected assessee’s explanation, added amount deposited in bank to assessee’s income under section 69A – Whether since assessee had not produced a single document to substantiate his case that he was also engaged in business of trading activities of art silk, cloth, impugned addition was to be confirmed. The Hon'ble High Court held that: ‘It was for the assessee to establish and prove by leading evidences and producing relevant material and documentary evidences that the aforesaid cash deposits in the bank account was his undisclosed income with respect to the undisclosed business of trading in art silk cloth’ ‘In the case of Modi Stone Ltd. (supra), the Delhi High Court has observed and held that the onus is upon the assessee to prove the alleged payment. In the said case the assessee claimed deduction of commission payments under head “commission/discount”. A similar view has been taken by the Punjab & Haryana High Court in the cases of Dayal Singh and Sons (supra) and Sanjay Chhabra (supra). In the aforesaid two decisions the Punjab & Haryana High Curt has held that
ITA No.1342/Kol/2017 A.Y.2013-14 Sh Bimal Singh Kothari Vs. ITO Wd-43(1), Kol. Page 4 when unexplained investment / unaccounted sales are not substantiated, the entire investment is to be added under Section 69A of the IT Act and not merely sales commission.’ Keeping in view of the aforesaid facts the decision of the Honourable Gujarat High Court it I found that the argument of assessee is without any basis therefore the addition made by the AO is hereby upheld and the ground of appeal is hereby dismissed. All the grounds of this appeal are hereby dismissed.” 4. We have given our thoughtful consideration to rival submissions against and in favour of the impugned addition. The question that arises for our apt adjudication is as whether assessee has been able to explain source of above stated cash deposits or not. We come to assessee’s paper book comprising of his cash account from 1.4.12 to 31.03.2013, HDFC bank’s statement for the relevant accounting period, the said bank’s ledger account, bank statement as well as ledger account of the other bank i.e. Bank of Baroda and his acknowledgement of filing of income tax return, profit and loss account and balance-sheet for AY 2012-13; respectively. It emerges therefrom that assessee’s cash-in-hand at the end of relevant accounting period of ₹80,24,699.63. His cash book at page 8 reveals debit withdrawals of ₹54.66,819.02 up to 21.04.2012. Coupled with this, his opening cash balance as on 01.04.2012 as per balance-sheet for the accounting period ending 31.03.2012 is ₹31,01,142.55. All this sufficiently indicates the assessee to be having cash-in-hand exceeding two sums of ₹16,21,000/- and ₹34,75,000/- (supra).
Learned. Departmental Representative at this stage invites our attention to CIT(A)’s detailed findings extracted hereinabove. His case is that assessee has not carried out any business in the relevant previous year as he has derived only salary and house property income. We find no merit in Revenue’s instant argument as the sole issue before us is that of explanation of the impugned cash deposits of ₹50,96,000/- which have been sufficiently explained as per above stated income tax return, balance-sheet, profit and
ITA No.1342/Kol/2017 A.Y.2013-14 Sh Bimal Singh Kothari Vs. ITO Wd-43(1), Kol. Page 5 loss account, cash book and bank statements vis-à-vis the corresponding ledger books. We therefore hold that the assessee has been able to explain source of his impugned cash deposits. The impugned addition forming subject matter of challenge is deleted. 6. This assessee’s appeal is allowed. Order pronounced in the open court 20/07/2018 Sd/- Sd/- (लेखा सद%य) (�या'यक सद%य) (M.Balaganesh) (S.S.Godara) (Accountant Member) (Judicial Member) Kolkata, *Dkp, Sr.P.S (दनांकः- 20/07/2018 कोलकाता । आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-Shri Bimal Singh Kothari, C/o Mahalchand Motilal Kothari & Co. 207, M.D. Road, Kolkata-007 2. ��यथ�/Respondent-ITO, Ward-43(1), 3, Govt. Place, Kolkata-001 3. संबं3धत आयकर आयु4त / Concerned CIT Kolkata 4. आयकर आयु4त- अपील / CIT (A) Kolkata 5. 7वभागीय �'त'न3ध, आयकर अपील�य अ3धकरण, कोलकाता / DR, ITAT, Kolkata 6. गाड< फाइल / Guard file. By order/आदेश से, /True Copy/ Sr. Private Secretary, Head of Office/DDO आयकर अपील�य अ3धकरण, कोलकाता ।