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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: SHRI R. S. SYAL & SHRI N. K. CHOUDHRY
PER N. K. CHAUDHRY, JM:
This is an appeal preferred by the assessee against the order dated 14.02.2014 passed by Ld. CIT(A), Rohtak for the Assessment Year 2007-08 on the following grounds: 1) That the CIT(A) erred in upholding an addition of Rs.14,97,000/- under section 68 of the income tax Act 1961. 2) That CIT(A) failed to appreciate that the cash deposits made in the bank account from 01.04.2006 to March 2007 stood fully explained being the sash withdrawal made earlier from the very bank account. That no material existed to make the said addition.”
2 I.T.A.No.2149/Del/2014
The brief facts of the case are as under: 2.1 On 19.02.2013 the Assessee filed his return of income. Statutory notices and questionnaire asking the assessee to explain the source of cash deposits were issued. Sh. Pankaj Sharma, CA counsel of the assessee attended the proceedings. The assessee filed his final reply on 26.02.2013. The assessee has made cash deposits in his bank account as per details given hereunder: Date Amount 25.04.06 948000/- 15.11.06 480000/- 01.02.07 350000/- 14.02.07 230000/- 19.03.07 437000/- 2.2 The assessee vide his reply stated that he along-with his family members agreed to sell his agriculture land situated in V. Dawana (Approx. distance' from Rewari 4 KMs.) and on the date of agreement i.e. 24.04.2006 received total amount of Rs.29,84,625/- in which his share was Rs.9,94,875/-. Further the purchasers did not meet their obligation and the amount remained with them. The assessee also furnished proof in 'the shape of copy of document/affidavit given before the Magistrate Rewari, which shows that there was a deal and it did not mature due to denial / non presence of purchasers. The assessee further explained that he
3 I.T.A.No.2149/Del/2014 deposited his share of Rs.9,94,875/- (2984625/3) in bank account on 25.04.2006. According to the assessee this amount was withdrawn by him on various dates and deposited back in the account as per his personal requirements. The assessee also submitted a cash flow statement in this regard.
Ld. A.O. observed as under: “ I have gone through the contention as well as documents furnished by the assessee. Documents show that Assessee's share in agreement money of Rs.29,84,625/- was 1/4th and not 1/3rd . Thus the thus the amount of difference of Rs. 2,48720/:- (994875(113 ) - 746155(114 )) does not belong to the assessee. No explanation has been furnished in this regard. Hence the amount of Rs.2,48720/- is held as unexplained investment u/s 68 and treated as income of the assessee. I am satisfied that the assessee has concealed income/furnished inaccurate particulars ,of his income to the tune of Rs. 2,48,720/-“. It is also noticed that the assessee has made withdrawals of Rs.2,37,000/- on 26.04.06, Rs.2,00,000/- on 20.05.06, Rs.3,00,000/- on 20.07.06 and Rs. 2,10,000/- on 28.08.06. According to the Assessee, he kept these amounts with him and out of it, he deposited Rs.4,80,000/- on 15.11.06 i.e. after a gap of 3-5 months. Again the money was withdrawn and deposited and the process was repeated again and again. The assessee has not given any cogent reasons for these deposits and withdrawals. Thus there is no explanation regarding the sources of deposits of Rs.4,80,000/-made on 15.11.06, Rs.3,50,000/- made on 4 I.T.A.No.2149/Del/2014
01.02.07 Rs.2,30,000/- made on 14.02.07 and Rs.4,37,000/- made on 19.03.07. Contention of withdrawals and deposits "according to personals requirements" cannot be accepted until the personal requirements for which the cash was withdrawn and deposited are proved as fulfilled. If there was some purpose of withdrawals then why it did not meet out? Why the cash was withdrawn in piece meals and why the cash kept at home was not deposited in one time? The assessee has not discharged his onus casted upon him through the questions. No fanciful explanation of deposits can be accepted without presenting evidences. Ld. Assessing Officer by concluding passed assessment order as under: The assessee made the above mentioned Income of the assessee is computed as under: Returned Income of the assessee: Rs. 6,130/- Add: Addition as per para 2 Rs.2,48,720/- Add: Addition as per para 3 Rs.14,97,000/- Total income R. O. Rs.17,51,850/-
“Assessed. Issue requisite documents. Charge interest u/s 234A and 234B. Penalty notice u/s 271 (1)( c) for concealment of income / furnishing of inaccurate particulars of income has been issued separately.”
Feeling aggrieved by the order of Ld. A.O., the Assessee preferred appeal before Ld. CIT(A). Ld. CIT(A) while deciding the appeal, observed as under: “The first ground relates to that facts that the Assesssee received the amount of Rs. 9,94,845/- from his share (being 1/3rd ) of sale proceeds of the ancestral land. The sale proceeds of Rs. 29,84,625/- were 5 I.T.A.No.2149/Del/2014
distributed in 3 parts which were apportioned between the 3 brothers. The AO has not made finding as to how he concluded that the appellalnt’s share was ¼. No specific documents have been brought on record to show that the Assesseee’s share was 1/3 . In the absence of any evidence to the constarary, I delete the addition of Rs. 2,48,720/-. This ground of appeal is allowed. The next ground related toan additoion of all deposits entries made during the FY 2006-07 exfept for the first deposit of Rs. 9,48,8000/- made on 25-04-2006. The Appellant submitted a cash flow flow statement on the basis of which he stated that therr were depostis made out of withdrawals made from the first deposits of Rs. 9,48,000/-. ………………… ………………… ………………...
“From the above although it is seen that a continuous cycle of withdrawals followed by deposits has been made, it cannot be concluded that the deposits are explained. No material has been brought on record to show that the withdrawals were used to make such deposit. There is no evidence to prove that the said deposits relate to the sums withdrawn earlier. It is difficult to believe that the sum so withdrawn was lying idle for three to four months before being re-deposited. Therefore no correlation can be made with the amounts being withdrawn on various dates and the amounts deposited on other dates. It is incomprehensible and beyond the bounds of financial prudence to keep cash like idle at home. In the absence of any conclusive
6 I.T.A.No.2149/Del/2014 evidence I confirm the said addition. This ground of appeal is dismissed. In the result, the appeal is partly allowed.”
5. Now, aggrieved by the order of Ld. CIT(A), the Assessee is in appeal before us.
We have heard the ld. DR and perused the relevant material on record. There is no appearance from the side of the Assessee despite notice. As such, we are proceeding to dispose of this appeal ex parte qua the Assessee. It is noticed that the authorities below have made and confirmed the addition by considering all the deposits in the bank account by totally ignoring several withdrawals made by the assessee also. It goes without saying that there is no mandate for making an addition by totalling the deposits in the bank. When there are deposits and withdrawals in a bank account, it is the peak amount which can be taxed unless the AO establishes that the amount withdrawn was spent elsewhere. Here is a case in which there is no finding recorded by the AO that the assessee withdrew some amount and spent it elsewhere. In such 7 I.T.A.No.2149/Del/2014 circumstances, we direct that only the peak amount should be brought to tax. We are, therefore, not inclined to countenance the addition made on the strength of all the deposits in the bank account. The impugned order is set aside to this extent and the AO is directed to compute the peak credit and then make the addition accordingly after due opportunity to the assessee.
In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 17th Aug., 2016.