SMT. SHVETA AGGARWAL,DELHI vs. ITO, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘SMC-1’ NEW DELHI BEFORE SH. N.K. SAINI, ACCOUNTANT MEMBER ITA No. 3705/Del/2015 Assessment Year: 2010-11 Smt. Shveta Aggarwal, C- Vs. Income Tax Officer, Ward- 3/1, Rana Pratap Bagh, 20(4), New Delhi Delhi PAN : AFIPA9668P (Appellant) (Respondent) Appellant by Sh. Pramod Kapur, CA Respondent by Ms. Anima Barnwal, Sr.DR Date of hearing 28.07.2016 Date of pronouncement 12.09.2016 ORDER This is an appeal by the assessee against the order dated 24.02.2015 of learned Commissioner of Income Tax (Appeals)- 12, New Delhi. 2. In this appeal, the assessee has raised as many as six grounds, however, the grievance of the assessee relates to the sustenance of addition of Rs. 16,00,000/- made by the Assessing Officer on account of credits in the saving bank accounts. 3. The facts of the case in brief are that the assessee filed return of income on 27.10.2010, declaring total income of Rs.7,22,450/- vide e-filing. The said return was processed under Section 143(1) of the Income-tax Act, 1961 (hereinafter

2 ITA No. 3705/Del/2015 AY: 2010-11 referred to as “the Act”) on 24.05.2011. Later on, the case was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer asked the assessee about the cash deposits of Rs.8,00,000/- each on 09.02.2010 and 26.02.2010 in ICICI Bank accounts. In response the assessee submitted as under: “As regards cash deposited in the bank during the year it is submitted that the same has been deposited out of cash withdrawals made from the banks during the year itself for which day wise cash account is enclosed herewith evidencing the source of deposit of cash in the bank by the assessee.” 3.1 Thereafter, the Assessing Officer analyzed the cash in hand position and raised the following query: “As per cash flow statement, cash availability as on 01.05.2009 was Rs.2,19,245/- than what was the purpose of withdrawal of Rs.9,00,000/- on 05.05.2009 and Rs.6,00,000/- on 06.05.2009. Similarly cash in hand as on 01.08.2009 was Rs.17,57,245/- than for what purpose cash amounting to Rs. 50,000/- and Rs.1,50,000/- was withdrawn on 13.08.2009 and 27.08.2009 respectively. File the explanation along with evidence failing which decision will be taken as per provisions of the I.T. Act.” 3.2 In response to the aforesaid query, the assessee submitted as under: "The assessee had to make balance payment of Rs.12,00,000/- to Shri Bhupinder Aggarwal against the property purchase as per details given above for which a cheque dated 04.05.2009 was prepared to be given to him for sale deed to be executed on 06.05.2009 and in case he insists upon payment to be made in cash the assessee had also withdrawn cash amounting to Rs.9,00,000/- on

3 ITA No. 3705/Del/2015 AY: 2010-11 05.05.2009 and Rs.6,00,000/- on 06.05.2009 to remain ready with the cash payment. This may kindly be noted that the cheque dated 04.05.2009 for Rs.12,00,000/- was enchased by the party from the bank on 09.05.2009 as per copy of bank statement already filed with you. This was the reason why cash was withdrawn and the same was deposited back into the bank after sometime. The assessee had withdrawn small amounts of Rs.50,000/- and Rs.1,50,000/- as per your query inspite of cash in hand it is submitted that the money which she had drawn for the buying of property she did not want to touch due to sentimental reasons and also the beliefs which generally the Indian ladies have that money drawn for a particular purpose should not be used for the other purpose as otherwise it may wither away and therefore they generally don't mix up the cash drawn for a particular purpose with cash required for another purpose. This happens because they are not engaged in any business activity and go by their own understanding and beliefs. The day to day cash account of the assessee has been furnished to you from which you can gauge that the assessee maintains the accounts to keep track of her financials otherwise. These transactions are duly reflected in that cash account."

3.3 However, the Assessing Officer was not satisfied with the submissions of the assessee and made the additions of Rs.16,00,000/- by observing in paras 3.3, 3.4, 3.10 and 3.11 of the assessment order dated 22.03.2013, which read as under: “3.3 From the above para, it is very much clear that amount of Rs.15,00,000/- (Rs.9,00,000/- on 05.05.2009 and Rs.6,00,000/- on 06.05.2009) was not touched at all and the same was deposited back in to the bank after some time. To verify the contention of the assessee details of cash withdrawals amounting to Rs.15,00,000/- and deposits of Rs.16,00,000/- were collected from the ICICI Bank Limited and is discussed here as under:”

4 ITA No. 3705/Del/2015 AY: 2010-11 Cash Withdrawals Denomination No. Rs.9,00,000/- on 05.05.2009 though cheque no. 000259 500 X1800 Rs.6,00,000/- on 06.05.2009 through cheque No. 000260 500 X1200 Cash deposits Rs.8,00,000/- on 09.02.2010 1000 X300 500 X800 100 X1000 Rs.8,00,000/-on 26.02.2010 1,000 X600 100 X2000 3.4 From the above details it is very much clear that cash withdrawals and cash deposits are two independent transactions i.e. cash deposits has not been made out of cash withdrawals as stated by the assessee. Moreover, cash was withdrawn in the month of May and was deposited in the month of February which implies that cash was kept at home for almost 9 months. Since, assessee belongs to a business family, possibility of keeping the cash amounting to Rs. 15-16 lakhs at home for a period of more than 9 months is almost nil and same is ruled out. 3.10 While interpreting the meaning and scope of Section 68, one has to bear in mind that normally interpretation of a statute shall be general in nature subject only to such exception as may be logically permitted by the statute itself or by some other law connected therewith or relevant thereto. 3.11 Coming to the factual matrix of the case during the year under assessment the assessee has deposited cash of Rs.16,00,000/- in her bank account. Thus it is concluded that cash was deposited by the assessee out of her income from the other sources not disclosed to the department and as such same is added to the income of the assessee as per provisions of section 68 of the I.T. Act. Penalty proceedings u/s 271(a)(c) of the I.T. Act are initiated separately for concealment/filing inaccurate particulars of income.

5 ITA No. 3705/Del/2015 AY: 2010-11 3.5 The Assessing Officer placed reliance on the following case laws: i. Commissioner of Income Tax Vs. Durga Prasad More (1971) 82 ITR (SC) ii. Seth Kale Khan Md. Hanif Vs. Commissioner of Income Tax, (1958) 34 ITR (MP)

3.6 Being aggrieved, the assessee carried out the matter before the learned Commissioner of Income Tax (Appeals) and submitted as under: "The assesses had filed her income tax return electronically on 22.07.2010 vide e-filing acknowledgment no. 132951880220710 declaring total income of Rs. 722450/-. The assesse’s sources of income during the year were income from salary, income from house property and income from other sources. The Assessee had withdrawn cash from her savings bank account during the year under Assessment on various dates. Out of the said withdrawals cash was deposited back in her savings bank account. The total cash deposited was Rs. 16.00.000/- which was adequately covered by the withdrawals made by the assessee during the year. The assesses had deposited cash in her saving bank account with ICICI Bank amounting to Rs.16.00.000/- . The said cash was deposited out of cash withdrawals made from the saving’s bank account by the assesses on earlier dates during the year itself. The daily cash book / account is maintained by the assessee which was submitted explaining the source of cash deposit to the Ld. Assessing officer. The Ld. Assessing officer has made an enquiry from the bank and collected the details of the cash with drawn by the assesses and the cash deposited by the assesses during the year with particulars of denomination of currency notes at the time of withdrawal and denomination of notes at the time of deposit of cash. The assessment has been completed by the Ld.-AO. based on these details collected from the bank by drawing adverse

6 ITA No. 3705/Del/2015 AY: 2010-11 inference that because there is some variation in the denomination of currency notes of cash withdrawn and cash deposited and therefore the cash deposited at a later date is not out of the cash withdrawn from the bank and held that the cash deposited by the assesses is out of her income from the other sources not disclosed to the department and thus added the amount of cash deposited to the income of the assesses as per the provisions of section of the Act. These details/material which the Ld AO. had collected without any knowledge or intimation to the assesses and also used against the assessee by drawing adverse inferences, were never shown or provided to the assessee and denied any opportunity to her to rebut the findings and /or to explain the difference in the denomination of currency notes at the point of withdrawal of cash and at the point of deposit of cash in the bank. 3.7 The assessee also distinguished the case-laws relied by the Assessing Officer. It was also submitted that the daily cash book was maintained by the assessee, copy of which was furnished to the Assessing Officer during the course of assessment proceedings. It was stated that the cash withdrawn from the bank on different dates was duly entered and recorded as receipts in the cash book. Out of this cash in hand, certain cash was deposited at a later date, however, the Assessing Officer ignored this evidence without assigning any reason. Although, the purpose for which the cash was withdrawn was explained and the source of cash deposited in bank account had been duly explained. Therefore, simply on the basis of difference in the denomination of currency notes without corroborating it with any of the financial transaction done by

7 ITA No. 3705/Del/2015 AY: 2010-11 the assessee during the year was without any basis and was based on surmises and conjectures. 3.8 The learned Commissioner of Income Tax (Appeals), however, did not find any merit in the submissions of the assessee and sustained the addition by observing as under: “8.1 In this case, information was received that the Assessee had made Cash deposits in the ICICI Bank Limited, being Rs.8,00,000/- on 09.02.2010 and Rs.8,00,000/- on 26.02.2010, amounting to a total of Rs. 16,00,000/- in the F.Y. 09-10 relevant to A.Y. 10-11. On being required to explain the source of Cash deposited in the bank account, it was claimed that the deposit was out of Cash withdrawals made from the banks during the year itself. It was claimed that the Assessee had to make payment of Rs. 12,00,000/- to Sh. Bhupinder Aggarwal against purchase of property and that a cheque dated 04.05.09 was prepared to be given to him for Sale Deed to be executed on 06.05.09. It has been claimed that the Assessee withdrew Cash amounting to Rs.9,00,000/- on 05.05.09 and Rs.6,00,000/- on 06.05.09, to pay to him, in case Sh. Bhupinder Aggarwal demanded Cash. It has been further claimed that the cheque dated 04.05.09 for Rs. 12,00,000/- was encashed by that party on 09.05.09. 8.2 The Assessee has sought to claim that the amount was withdrawn to pay to Sh. Bhupinder Aggarwal in case he demanded Cash. There is no doubt that the Assessee had withdrawn this Cash, and also that the Assessee purchased a property from Sh. Bhupinder Aggarwal. A copy of the Purchase Deed of the property was examined as per which the Deed was presented on 06.05.09 in the office of the Sub-Registrar, VI A Delhi, the sale consideration being Rs.27,00,000/-, out of which Rs. 15,00,000/- was paid by cheque on 04.02.09 and the balance of Rs. 12,00,000/- was paid by cheque dated 04.05.09. It is seen that the Assessee had to pay a balance of only Rs. 12,00,000/- and in such a situation once the cheque of Rs. 12,00,000/- was

8 ITA No. 3705/Del/2015 AY: 2010-11 ready on 04.05.09 there was no need for any further Cash withdrawals amounting to Rs. 15,00,000/- on 05.05.09 and 06.05.09. 8.3 It is further noteworthy that if the Assessee claims that this amount was withdrawn to pay to the seller as a substitute of the cheque dated 04.05.09 of Rs. 12,00,000/-, then the amount withdrawn should have been Rs. 12,00,000/-. That the Assessee withdrew Rs. 15,00,000/- can have only two implications : A. The amount of Rs. 15,00,000/- was given to the Seller of the property as Undisclosed Premium on the property being given in Cash, over and above the disclosed Sale Consideration of Rs.27,00,000/-. B. The amount of Rs. 15,00,000/- was utilized for some other purpose. 8.4 In any case, there is no merit in the claim of the Assessee that the amount of Rs. 15,00,000/- was withdrawn in Cash on 05.05.09 and 06.05.09 as a substitute to the cheque of Rs. 12,00,000/-, nor there is any merit in the claim of the Assessee that the same Cash was deposited back into the Bank after sometime. 8.5 It is seen that the Learned Assessing Officer very rightly pointed out that if the Assessee was actually having so much of Cash in hand, what was the purpose of withdrawing Cash amounting to Rs.50,000/- and Rs. 1,50,000/- on 13.08.09 and 27.08.09 respectively. 8.6 Though the Assessee claims that "Cash was withdrawn and the same was deposited back into the bank after sometime". It is seen that the claimed "sometime" was a period as long as 9 months, the Assessee claiming that the Cash was withdrawn in May 2009 and that it was deposited back with Rs. 1,00,000/- more. However, a careful perusal of the time frame shows the false nature of

9 ITA No. 3705/Del/2015 AY: 2010-11 the claims of the Assessee. On one hand it is claimed that Cash required on 05.05.09 and 06.05.09 was withdrawn on these dates itself, and on the other hand it is claimed that the withdrawn Cash was kept idle for a total of more than 9 months. There is no reason why any prudent person would keep such a large amount of Cash, particularly when the Assessee did not keep large amounts of Cash with her, which is clear from the fact that the amounts of Rs.9,00,000/- and Rs.6,00,000/- were withdrawn when required, shows that the Assessee was not of the habit of retaining large amount of Cash. If there was any merit in the claim of the Assessee that Rs. 15,00,000/- were withdrawn from the bank to give to Sh. Bhupinder Aggarwal as a substitute of cheque of Rs. 12,00,000/-, then not only the amount would have matched with the balance amount payable, but also the amount would have been put back in the bank within a day or two. It is seen that the Assessee claims to have withdrawn the money just when it was needed, and once if it was not needed, that money would immediately have been deposited back in the bank. This was so, because no prudent person would withdraw huge amounts of Cash from the bank, where it was earning interest and was in safekeeping of the bank, and put it idle and at potential risk of theft, robbery, damage to the currency notes etc. If the money having been withdrawn on 05.05.09 and 06.05.09 for use on 06.05.09 had been deposited back on 06.05.09 or perhaps within a day or two, there could have been some probability in the claim of the Assessee. But the present claim clearly shows that the Assessee having utilized the amount of Rs.15,00,000/- for Undisclosed purposes has deposited Undisclosed amount of Rs. 16,00,000/- in February 2010 8.7 It is seen that the Assessee has stated in the assessment proceedings that: "The assessee had withdrawn small amounts of Rs. 50,000/- and Rs. 1,50,000/- as per your query inspite of cash in hand it is submitted that the money which she

10 ITA No. 3705/Del/2015 AY: 2010-11 had drawn for the buying of property she did not want to touch due to sentimental reasons and also the beliefs which generally the India ladies have that money drawn for a particular purpose should not be used for the other purpose as otherwise it may wither away and therefore they generally don't mix up the cash drawn for a particular purpose with cash required for another purpose. This happens because they are not engaged in any business activity and go by their own understanding and beliefs. The day to day cash account of the assessee has been furnished to you from which you can gauge that the assessee maintains the accounts to keep track of her financials otherwise. These transactions are duly reflected in that cash account. 8.8 As the Assessee made the above claim that the Assessee did not even touched the Cash and also that she did not mix up the Cash drawn for a particular purpose with Cash required for any other purpose, the Learned Assessing Officer made inquiries from the ICICI Bank Limited regarding the denominations of the Cash withdrawn. It was found that the Cash withdrawn both on 05.05.09 (Rs.9,00,000/-) and on 06.05.09 (Rs.6,00,000/-) was exclusively in Rs.500/- Notes. However, the inquiry by the Learned Assessing Officer revealed that the Cash deposited on 09.02.10 (Rs.8,00,000/-) consisted not only of Rs.500/- denomination notes but also a very large number of Notes of denomination of Rs. 1,000/- and also Notes of denomination of Rs.100/-. Further, the Cash deposit on 26.02.10 (Rs.8,00,000/-) was entirely of Notes of denomination of Rs. 1,000/- and Rs. 100/-. 8.9 From the above it is very clear that the Assessee is making false claims, as on one hand she claims that the notes were not even touched and that as per belief of the Assessee she cannot spend money drawn for a particular purpose for any other purpose. It is obvious that the Assessee is making a false claim that the withdrawn cash

11 ITA No. 3705/Del/2015 AY: 2010-11 was kept for more than 9 months and re-deposited in the bank. It is obvious that the Cash available with the Assessee in May 2009 was spent for some other purposes, i.e. that as per option A & B in Para 8.3 above, and that during the year, the Assessee earned unaccounted income of Rs. 16,00,000/- which was deposited in Cash in the bank in February 2010. Hence this unaccounted income of Rs. 16,00,000/- has to be brought to tax, which has rightly been taxed by the Learned Assessing Officer.” 3.8 Aggrieved from the order of learned Commissioner of Income Tax (Appeals), the assessee filed appeal before the ITAT. 4. Learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee maintained the cash book in which cash withdrawn from the bank was entered and the same was re-deposited by making the entry in the cash book. Therefore, the addition made by the Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals) was not justified. It was further submitted that the Assessing Officer while making the addition made the reference to the denomination of the notes etc. and made the addition by observing that the denomination of the notes withdrawn and re-deposited were different. It was stated that the identical issue has been adjudicated by the ITAT, Delhi Benches, New Delhi, in ITA No. 1416/Del/2013 & C.O. No. 102/Del/2013, in the case of Sh. Ganga Singh vide order dated 22nd October, 2014, copy of the said order was furnished, which is placed on

12 ITA No. 3705/Del/2015 AY: 2010-11 record. Learned counsel for the assessee also placed reliance on the following orders: i. Income Tax Officer Vs. Mrs. Deepali Sehgal, ITA No. 5660/Del/2012, AY-2009-10; ii. Gordhan Vs. Income Tax Officer, ITA No. 811/Del/2015, AY 2011-12; iii. Mr. C. Vamsi Mohan Nandyal Vs. Income Tax Officer, ITA No. 469/HYD/2014, AY 2009-10 iv. DCIT Vs. Sh. Nikhil Nanda, ITA No. 3644/Del/2008, AY 2009-10; v. Moongipa Investment Ltd. Vs. Income Tax Officer, ITA No. 2605/Del/2007, AY-2003-04 5. In his rival submission, learned Departmental Representative strongly supported the orders of the authorities below and reiterated the observations made in their respective orders. It was further submitted that the assessee had not given any explanation as to why the cash was withdrawn and a gap was there in re-depositing the cash. It was further stated that the denomination of the notes withdrawn was different from the notes re-deposited in the bank account. Therefore, the addition was rightly made by the Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals). 6. I have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is not in dispute that the assessee had withdrawn cash from the bank account and also re-deposited the similar amount in her bank account and since there was a gap in the withdrawal and the deposit in the bank account and

13 ITA No. 3705/Del/2015 AY: 2010-11 even denominations of the notes were also different, however, nothing was brought on record to substantiate that the cash withdrawn by the assessee from her bank account was utilized elsewhere. Therefore, only on this basis that the denomination of notes was different the addition cannot be made particularly when the assessee proved the source of the deposit which was the withdrawal from her bank account. On a similar issue, a coordinate bench of ITAT, Delhi Benches, New Delhi, in the case of Deputy Commissioner of Income Tax Vs. Sh. Ganga Singh, ITA No. 1416/Del/2013 for assessment year 2009-10, observed in para 16 of the order dated 22nd October, 2014, as under: “16. On an analysis of the record, we find that Ld.AO has overlapped the facts. He assumed that the assessee had transferred agricultural land and must have received Rs.87 lakhs. He has made reference to the 10 denomination of notes etc. But the Ld. First Appellate Authority has observed that the Revenue is concerned with the source of deposit and not with regard to difference in the denomination of notes. It appears that Ld.AO has an expectation that same notes ought to be possessed by any individual which were withdrawn from the bank for redeposit. In other words the amount withdrawn should not be used for any other purpose and the same notes should be redeposited. To our mind such an expectation in the ordinary course of life is little improbable. Ld. First Appellate Authority had appreciated the facts and circumstances of the case and felt that the assessee has explained the facts and source and therefore no addition should be made. We do not find error in the order of Ld. CIT(A) on this issue. Hence this ground is rejected.”

14 ITA No. 3705/Del/2015 AY: 2010-11 withdrawn and re-deposited was different, so respectfully following the aforesaid referred to order, I am of the view that it cannot be a ground to make the impugned addition particularly when nothing is brought on record that the amount withdrawn by the assessee was utilized elsewhere and not re- deposited in the bank account. In that view of the matter, the addition made by the Assessing Officer and sustained by the learned Commissioner of Income Tax(Appeals) is deleted. 15. In the result, appeal of assessee is allowed. The decision is pronounced in the open court on 12th September, 2016.

Sd/- (N.K. SAINI) ACCOUNTANT MEMBER Dated: 12th September, 2016. Rk/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi