SMT. R.K. SARASWATHI vs. ITO,

Facts apropos are that assessee having income from business had filed her return declaring income of Rs.5,29,250/- for the impugned ITA.92/Bang/2014 Page - 2 assessment year. Business of the assessee was providing consultancy in education. Assessee was having a bank account with Canara Bank, Vijayanagar, Bengaluru, jointly held with her daughter. In the said account there were deposits totalling to Rs.28 lakhs during the relevant previous year, for which explanation of the source was sought by the AO. As per the assessee, the sum represented opening cash balance with her as on 01.04.2008. Assessee also produced statement of affairs as on 31.03.2008 wherein cash balance of Rs.36 lakhs was shown. Assessee was required to substantiate the cash held by her as on 01.04.2008 whereupon she gave the following details :

AO has made a verification of the loan account with Sree Charan Souhardha Co-operative Bank and found that the total loan of an amount of Rs.10,55,000/- stood released to the assessee on 07.07.2005. As per the AO it was difficult to believe that any part of the said loan would have been kept by the assessee as cash on 31.03.2008. Similarly AO also noted that ITA.92/Bang/2014 Page - 3 loan of Rs.17 lakhs taken from Kalidhasa Sahakara Bank was sanctioned on 13.07.2003 and there was no further loans from the said bank after the said date. Vis-a-vis, claim of the assessee that she had savings of Rs.17,62,454/-, AO found that there was no acceptable evidence showing cash accumulation. Further as per the AO, loans taken from Sri Kalidhasa Sahakara Bank Niyamitha and Shree Charan Cooperative Bank carried interests of 14.75% and 14.5% respectively and it was not probable for somebody to keep money at home in cash, paying huge interest on loans. He thus refused to accept the contentions of the assessee and made an addition of Rs.36 lakhs, being opening balance of cash claimed by the assessee.

Appeal of the assessee before the CIT (A) did not meet with any success. CIT (A) also refused to accept fresh evidence from the assessee in the form of declaration from her husband Dr. H. V. Krishnaswamy, wherein he stated that he had deposited a sum of Rs.10 lakhs each every year from his agricultural income in the bank account of the assessee. CIT (A) was of the opinion that this was not a piece of evidence, but only a statement given as an after thought. Thus he confirmed the order of AO.

Now before us, Ld. AR assailing the orders of lower authorities submitted that assessee had produced cash book for the period 01.04.2008 to 31.03.2009 and the opening balance of Rs.36 lakhs was clearly shown therein. As per the Ld. AR, the bank accounts reflected withdrawal of money by assessee. In any case, Ld. AR submitted that the confirmation given by assessee’s husband Dr. H. V. Krishnaswamy was not accepted by CIT (A) and not even considered by him. According to her in any case, opening balance could not be considered as income of the relevant previous year.

Per contra, Ld. DR supported the orders of authorities below.

I have perused the orders and heard the rival contentions. Case of the assessee is that the sum of Rs.36 lakhs was the opening balance as on 01.04.2008 and this was duly shown in its cash book for previous year ending 31.03.2008. If this contention of the assessee is accepted, any investment made by any assessee could be easily explained away as coming out of the opening cash balance. No doubt an assessee is free to claim that she/he was holding substantial cash balance on the opening day of a year. However onus is on the assessee to establish beyond reasonable doubt that he / she had held such cash balance. In the case before me, ITA.92/Bang/2014 Page - 5 claim of the assessee is that out of Rs.36 lakhs a sum of Rs.8,37,546/- was out of loan taken from Sree Charan Cooperative Bank and a loan of Rs.10 lakhs from Sri Kalidhasa Sahakara Bank Niyamitha. AO has clearly established that the loans from these banks were taken much earlier to the first day of the relevant previous year. In the case of loan from Sree Charan Cooperative Bank, loans were released to the assessee three years prior to the relevant previous year. Further no person in right sense would have taken loans carrying interest of 14.75% and 14.5 % and kept the cash at his / her home.

As for the contention of the assessee that a sum of Rs.17,62,454/- came out of earlier savings, just because a cash flow statement was filed or just for a reason that assessee had filed returns of income in the earlier years would not be sufficient to show accumulation of so much cash. Admittedly assessee was having a number of bank accounts. In such a situation it is difficult to believe that assessee was carrying a cash of Rs.36 lakhs in her cash book as on 01.04.2008. Preponderance of probability is that cash was introduced only to explain the investments made by the assessee during the relevant previous year. I do not find any reason to interfere with the orders of the authorities below.

In the result, appeal of the assessee stands dismissed.