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Income Tax Appellate Tribunal, “SMC” “C’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against order of NFAC for the assessment year 2017-18 dated 21.9.2023 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). The assessee has raised following grounds of appeal: 1. “The order passed by the learned Commissioner of Income Tax (Appeals) in the case of the appellant, in the facts and under the circumstances, is grossly opposed to law and facts of the case
2. The learned Commissioner of Income Tax (Appeals) has grossly erred in law and in fact in confirming the addition of a sum of Rs.16 lakhs being the cash deposited by the Appellant in his bank account during the FY 2016-17 as unexplained money under Sec.69A.
3. The learned Commissioner of Income Tax (Appeals) has failed to appreciate that the sources of the cash that were deposited into the bank account of the appellant were duly explained by legitimate sources, which included but were not limited to the Sri Nanjappa Umashanker, Bangalore Page 2 of 17 opening cash balance as reflected in the books of accounts maintained by the appellant as well as the return of income filed by him for the previous assessment year, i.e., AY 2016-17.
4. The learned Commissioner of Income Tax (Appeals) has assumed the armchair of the appellant in surmising that the cash held in hand was too distant in time to have remained intact, and therefore was unexplained.
The learned Commissioner of Income Tax (Appeals) has grossly erred in law, in upholding the additions made under Sec.69A by adopting the "theory of probability", as admitted by him in the impugned appellate order, without refuting actual facts on cogent grounds.
6. The learned Commissioner of Income Tax (Appeals) has also erred in facts in holding that the income of the appellant was not commensurate to explain the cash deposits, by ignoring that the appellant was in receipt of income from numerous sources, including rental income, business income, interest income, etc. all of which were duly declared in the returns of income filed by him for 7 years prior to the relevant assessment year.
The learned Commissioner of Income Tax (Appeals) has erred in law in holding that the appellant was not required to maintain any cash book, in order to surmise that the cash produced by the appellant during the appellate proceedings was a "self- serving document", when factually the , appellant having regard to the provisions of Sec,44AA (2), was required to maintain books of accounts and had duly maintained them.
8. The learned Commissioner of Income Tax 19,30,828 (Appeals) was grossly in error in disregarding the cash book maintained by the appellant during the course of his business, which was filed during the appellate proceedings on the grounds that the "quantum of money in the hands of the appellant was not backed by the transactions in the bank accounts and the income tax returns so filed", and that merely; indicating the cash balance in the ITR did not constitute a valid explanation.
Without prejudice, the learned Commissoner of Income Tax (Appeals) has failed to note that invoking of the provisions of Sec.69A requires the satisfaction of dual conditions, namely that the appellant must be found to be the owner of money that is not recorded in the books of accounts maintained by him, and that the explanation offered by him in the opinion of the Assessing Officer is not satisfactory, which were not satisfied in the present case.
10. The appellant craves for leave to add to, to delete from or to amend the grounds of appeal.”
The ld. A.R. submitted that the assessee, an individual earlier engaged in the business of executing civil contracts, had filed his return of income electronically for the AY 2017-18 on 24-06-2017, returning
Sri Nanjappa Umashanker, Bangalore Page 3 of 17 rental income and interest income. Scrutiny assessment proceedings in respect of the said return were initiated by the issuance of notice u/s. 143(2) of the Act dated 09-08-2018, which was followed by the notices u/s. 142(1) of the Act in response to which the assessee filed details, documents and information as requisitioned from time to time.
2.1 Acting on information said to be available with the office of the Learned Assessing Officer, to the effect that the assessee had made cash deposits aggregating to Rs. 11 lakhs in the savings bank accounts maintained by him with the Karnataka Bank Ltd., Nehru Nagar Branch, and a sum of Rs. 8 Lakhs in the savings account maintained in Kaveri the Gramin Bank, Thanisandra Branch, Bangalore, during demonetization period, i.e. the date after which the note denomination of Rs. 1,000/-and Rs. 500/- were notified as ceasing to be legal tender, the Learned Assessing Officer required the assessee to show cause as to why the said cash deposits aggregating to Rs. 19 Lakh should not be treated as unexplained income for the FY 2016-17 relevant to the AY 2017-18.
2.2. The ld. A.R. submitted that in response to this, the assessee filed his objections to the said show cause notice dated 16-10-2019, submitting that during the preceding previous year, i.e. FY 2015-16, he had carried on the business of executing civil contracts and accordingly filed his balance sheet and income and income and expenditure account for the year ended 31-03-2016, which indicated that the closing balance of cash in a sum of Rs. 19,71,2447- was available with him at the end of the FY 2015-16. He also submitted that all the cash deposits were made from out of the opening balance of the cash available with him as well as the cash generated during the FY 2016-17 from out of the rental income etc. during the year.
2.3. The Learned Assessing Officer however, on a reasoning that as there were subsequent cash withdrawals, by usage of the ATM cards,
Sri Nanjappa Umashanker, Bangalore Page 4 of 17 despite the substantial opening balance of cash available with the assessee, and further having regard to the fact that the entire cash deposits were made after the demonetization of specified bank notes by the Central Government, has disregarded the explanations furnished by the assessee as an afterthought and has proceeded to treat the entire cash deposits aggregating to Rs. 19 Lakh as unexplained money u/s. 69A of the Act, vide the order of assessment u7s. 143(3) dated 30-10-2019.
2.4. The assessee contested the order of assessment in appeal before the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, and during the course of the appellate proceedings filed detailed written submissions reiterating what was submitted during the course of the assessment proceedings to the effect that the cash deposits made by the assessee during the FY 2016-17 were from out of the opening balance of cash on hand and the cash generated during the year from out of the rental income and the business income. In addition thereto, the ld. A.R. also filed copies of the cash book prepared by him for the FY 2016-17, particulars regarding the immovable property on which the assessee had proposed to construct a residential house in connection with which the cash withdrawals were originally made etc., The Learned Commissioner of Income Tax (Appeals) has however declined to accept the submissions of the assessee on the grounds that the cash held on hand was too distinct in time from the date of deposit and that there was no reason for the assessee to hold substantial cash on hand, that the assessee's income was not commensurate with the cash deposits made, that the cash book submitted was a self serving dumb document and that merely indicating the cash balance in the income tax returns was not sufficient and has proceeded to hold that from out of the aggregate sum of Rs. 19 Lakhs being the cash deposited into the bank account of the assessee, only a sum of Rs. 3 lakhs was reasonable and has accordingly reduced the addition made u/s. 69A from Rs. 19 Lakh to Rs. 16 Lakhs, vide the appellate order dated 21-09- 2023. Aggrieved by this order, the assessee was in appeal before this Bench.
Sri Nanjappa Umashanker, Bangalore Page 5 of 17 2.5. The ld. A.R. further submitted that the assessee was engaged in the business of executing civil contracts in and around the city of Bangalore up to and inclusive of the FY 2015-16. For the FY 2016-17 relevant to the AY 2017-18, i.e. the year under appeal, the assessee had not carried on the said business of executing civil contracts and consequently no income was returned under the head "profits and gains of business or profession". However, as is a common requirement in the nature of business carried on by the assessee, he had set aside a significant sum of money to meet costs of labour, raw material, etc., in the event that any contracts were awarded to him. That apart, the assessee had, on 13-06-2006, purchased the immovable property, being the vacant site No. 1, K. Narayanapura Village, K R Puram Hobli, Bangalore for the purpose of construction of a residential house thereon. During the FY 2016-17 had withdrawn significant sums of money by way of cash from his business for the purpose of meeting the costs of construction, particularly labour, and expenses which mostly have to be incurred by way of cash. However, when the demonetization of the specified bank notes was announced, the assessee had no other choice but to deposit entire cash available with him, which was originally withdrawn for the purpose of meeting the construction expenditure, in the savings bank account held by him with Karnataka Bank as well as a new bank account opened by him with the Cauvery Gramin Bank, Tanisandra Branch, Bangalore, as evidenced by the extracts by the cash book for the FY 2016-17.
2.6. He further submitted that despite having a substantial cash balance of the beginning of the financial year, the assessee had ostensibly withdrawn relatively smaller sums of money from time to time during the year, as the said withdrawals were made by way of the ATM card belonging to the assessee which was being used by his wife, who withdrew the said funds for the said purpose of meeting the household expenses during the year. The cash available in the business was set
Sri Nanjappa Umashanker, Bangalore Page 6 of 17 aside for business purposes, and as submitted earlier, some cash was withdrawn for the purpose of meeting the initial construction expenses relating to his residential house. He further submitted that the withdrawn cash was set aside only to meet the costs of working capital as well as the initial costs of the construction of the residential house on the property purchased by the assessee. He further submitted that the amounts withdrawn for the purpose of construction were indeed utilized in the construction of the residential house referred above.
2.7. He submitted that it is the contention of the learned Commissioner of Income Tax (Appeals) that the cash held on the assessee's hand was too distinct in time, meaning to say that according to him there was no reason for the assessee who had an opening cash balance of Rs. 19.71.244/- to have held it till the month of November 2016 when the demonetization of specified bank notes was announced by the Reserve Bank of India. The learned Commissioner in doing so has disregarded the bona-fide submissions of the assessee that it was customary for people engaged in the business of executing civil contract to hold a certain amount of cash to meet initial working capital requirements such as labour, material etc., as well as the submissions regarding the residential house that was proposed to be constructed by the assessee on the land at K. Narayanpura, Bengaluru acquired by him and in respect of which, bills relevant to the subsequent construction expenses incurred were produced by the assessee during the appellate proceedings. The Learned Commissioner himself has conceded in paragraph 5.2.3 of the impugned order that he is inclined to go by the "theory of probability" to hold that the closing cash balance as on 31-03- 2016 was too distinct in time to have remained intact till its deposit upon demonetization of the specified bank notes, without adducing any concrete or tangible evidence on the basis of which an adverse inference could have been drawn that the assessee had indeed utilized the cash for other purposes and that therefore the cash deposited did not represent
Sri Nanjappa Umashanker, Bangalore Page 7 of 17 the cash held as at the beginning of the financial year. In doing so, the Learned Commissioner has grossly erred in confirming the additions based on a mere surmise rather than relying on empirical evidence to justify his contention. 2.8. The ld. A.R. submitted that the learned CIT (Appeals) in confirming the addition made under Sec.69A to the extent of Rs.16 lakhs, has chosen to disregard the evidence fifed by the assessee and has instead made additions based on a mere suspicion without adducing any counter evidence or any information that suggested otherwise. In this regard, he referred to the decision of the Delhi Bench of the ITAT in Moongipa Investment Ltd. vs. ITO: [2013] 30 taxman.com 113 (Delhi Trib), wherein it was held that where deposits in bank were from cash balance available to assessee in its books of account, no addition could be made under section 68. It was further held that the addition could not be made on the basis that there was time gap between withdrawal and deposits. Reliance is also placed on the decision of this Hon'ble Bench in Karishma Sharma Vs. ITO (2022 ITL 2230) wherein, your Honours in a case where there was an inordinate delay between the date of withdrawal of the money from the bank account to the date of deposit in the loan account, as long as the Revenue had not brought anything on record to suggest that the cash was utilized or put to use in any other manner, held that no disallowance u/s. 69A in respect of such cash deposit made during the period of demonetization could be sustained and ordered deletion of such addition u/s. 69A. A similar view was affirmed in the case of Kavitaben Chintanbhai Patel vs. ITO (ITA No. 306/Ahd/2021) wherein, the Hon'ble bench upon relying on the decisions of the Gujarat High Court in CIT Vs. Shaileshkumar Rasiklal Mehta (Tax Appeal Nos. 977 to 980 of 2013) and CIT Vs. Manoj Indravadan Choshi ([2014] 50 Taxmann.com 419), held that in the absence of any finding that the amount which was previously withdrawn by the assessee was utilised for any other purpose merely on the basis of conjecture that the amount might have been utilised for any Sri Nanjappa Umashanker, Bangalore Page 8 of 17 other purpose and was not available with the assessee for making the deposits, addition u/s. 69A could not be upheld.
2.9. He further referred to the more recent decision of the Delhi Bench of the ITAT Om Prakash Nahar Vs. ITO (100 ITR Trib. 345) wherein the Bench relied upon cash withdrawals made over a period of four to five years leading to the cash on * hand as per books that was deposited upon demonetisation of the specified bank notes to hold that the deposits were well explained and that without any adverse material brought on record it could not be presumed that the cash deposited by the assessee was out of undisclosed source of income and accordingly deleted the addition sustained by the CIT(A) u/s. 69A of the Act. The same bench of the ITAT in ACIT, Central Circle-1, Gurugram Vs. Omaxe Forest Spa and Hills Developers Ltd., (ITA No. 2/Del/2023) held that were the source of cash deposited was from out of the opening cash balance as well as the cash withdrawals made during the pre demonetization period, as evidenced by the cash book produced by the assessee, no interference was called for with the findings arrived by the learned Commissioner of Income Tax (Appeals) who had deleted the disallowance u/s. 69A. Reliance is also placed by him on another decision of the same bench of the ITAT in Smt. Perminder Kumar Matharoo Vs. ITO (ITA No. 840/Del/2021) wherein the Hon'ble Bench held that where cash flow statement is not controverted by the Assessing Officer as well as Commissioner of Income Tax (Appeals) in the light of the submissions with the cash flow was based on the entries in the cash book, the source of cash deposited in the bank account could not be disregarded by the lower authorities. He submitted that in doing so, the Hon'ble Bench has placed reliance on the decision of the Hon'ble High Court of Delhi in Omni Info (ITA No. 364/2016 dated 29- 07-2016). Similarly, reliance is also placed on the following decision:
Sri Nanjappa Umashanker, Bangalore Page 9 of 17 a. ITAT Delhi in Thangzamuan Hangshing vs. ITO - b. ITAT Ahd. in Vijaykumar Vithaldas Prajapathi v. ITO No. 1536/Ahd/2019 2.10. He further submitted that it is also the view of the Learned Commissioner that the assessee's income was not commensurate to satisfactorily explain the cash deposits. He submitted that the assessee was in the business of executing civil contracts from FY 2010-11 onwards and was also simultaneously in respect of income from rent from four properties owned by him and other income in the nature of interest. The assessee had achieved substantial business turnovers of Rs.57,50,217/- and Rs.1,38,70,504/- during as early as FY 2010-11 and FY 2011-12 respectively. He submitted that the assessee has also been regularly assessed to tax since AY 2011-12 and has been maintaining books of accounts till AY 2016-17 on account of being required to do so in terms of the provisions of Section 44AA of the Act. The learned Commissioner has merely referred to the income of the previous financial year namely FY 2015-16, ignoring the substantial income returned during earlier assessment years, from out of which the cash was generated, to allege and contend that no surplus could have been generated that was significant enough to justify the extent of cash deposits made by the assessee. In doing so, the learned Commissioner has ignored the income generated year on year by the assessee from various sources all of which were duly declared in the returns filed by him and so assessed. He referred to the statement enclosed with the written submissions, containing the summary of incomes earned by the assessee over the preceding six previous years, a perusal of which will indicate that the cash deposits made by the assessee, especially in a case were proper books of accounts were maintained and the income tax returns were filed, were not only commensurate but sufficiently explained.
Sri Nanjappa Umashanker, Bangalore Page 10 of 17 2.11. He further submitted that the Learned Commissioner of Income Tax (Appeals) has also stated that the cash book submitted during the appellate proceedings was a dumb document and that going by the turnover of the business activities of the assessee, he was not required to maintain any cash book and that therefore the cash book filed in support of his transaction was merely a self serving document which could not be given much credence. He submitted that this finding of the learned Commissioner is perverse in so far as a statutory duty was cast upon the assessee by the provisions of Section 44AA(2)(i) which required any person whose income from business or profession exceeded Rs. 1,20,000/- or whose sales turnover or gross receipts in business exceeded Rs. 10 lakhs in any one of the three years immediately preceding the previous year, to maintain such books of accounts and other documents as may enable the assessing officer to compute his total income in accordance with the provisions of the Act. A perusal of the statement will reveal that the business turnover of the assessee for the AY 2014-15 was Rs. 13.86.823/- and the corresponding business income returned was Rs. 1,29,362/- and consequently he was required to maintain proper books of accounts, which he duly did, and the financial statements drawn up on the basis of such books of accounts were duly declared in the income tax returns filed by him. Admittedly, the assessee was not in receipt of any income from business during the FY 2016-17 relevant to the AY 2017-18, and consequently was not required to compiled any financial statements, but did so for the purpose of substantiating his stand during the scrutiny assessment proceedings. Accordingly, in the said financial statements compiled by him for the FY 2015-16 relevant to the AY 2016-17, the assessee had declared a closing cash balance of Rs. 19.71.244/- which was the opening cash on hand from out of which deposits were made upon demonetization. As the assessee was not on receipt from any income from business or profession during the FY 2016-17 relevant to the AY 2017-18, no books of accounts were originally compiled by him for the said year and the cash book that Sri Nanjappa Umashanker, Bangalore Page 11 of 17 was submitted during course of the assessment/appellate proceedings, was compiled on the basis of the entries in the bank statements as well as the opening statement affairs which included the cash on hand in a sum of Rs.19,71,244/-. The said cash book therefore having been compiled on the basis of legitimate documents, bank statement, as well as the financial statements for the previous years which have been duly filed with income tax department, contrary to what has been alleged by the learned Commissioner could not be held to be a dumb document or a self-serving document but instead constituted irrefutable evidence as to the source of cash that was deposited to the assessee's bank accounts post demonetization of the specified bank notes by the RBI.
2.12. The ld. A.R. submitted that the learned Commissioner, with a view to justify his upholding the disallowance under Sec.69A has also stated that merely indicating a figure of cash balance in the Income Tax Returns was not sufficient but has failed to indicate as to what else could be held to be sacrosanct, if not for the financial statements prepared in the usual course of business and which were duly declared in the income tax returns filed for the proper assessment years. He submitted that the assessee has duly discharged the onus cast upon him to substantiate the sources of the cash that was deposited into the bank account during the year by producing copies of the cash book as well as the bank statements and the income tax returns filed for prior assessment years. Having so discharged the onus, there was no occasion for the learned Assessing Officer to estimate the gross contract receipts that ought to have arisen if the opening cash balance were reckoned at 8% of such sum. In doing so, the learned Commissioner has proceeded on the erroneous assumption in fact and in law, that the net surplus generated from the business was the sole source of cash on hand, thereby ignoring all other sources of cash. Such a view, he submitted, must not be sustained and deserves to be expunged.
Sri Nanjappa Umashanker, Bangalore Page 12 of 17 2.13. Without prejudice, he further submitted that this is not a case where the said sum of Rs.19 lakhs "is not recorded in the books of account" of the assessee, which is a sine-qua-non for the invoking of the provisions of Sec.69A. This is evidenced by the extracts of the Cash Book which show not only the deposits of cash but even the source of the cash that was deposited. Reference is invited to the decisions in Vinod Behari Jain vs. ITO: 117 ITD 220 (Del ITAT), ITO vs. Naveen Kumar Agarwal: 25 SOT 253 (Del ITAT) and Smt. Renu Agarwal vs. ITO : 51 taxmann.com 207 (Agra ITAT), wherein it was held that where any sum is not credited in the books of account, the same would be treated as unexplained money under section 69A, and if such sum was credited in the books, addition could be made under Sec.68 of the Act. We may add that the assessee herein had maintained books of accounts for the year in question despite not being required to do so, and the extracts of the cash book where such deposits are figuring, were filed during the course of the assessment proceedings. However, as submitted earlier, some of the cash withdrawals that were made from the business for construction purposes were re-deposited in the savings bank account of the assessee with the Karnataka Bank and the Kaveri Gramin Bank.
2.14 He further submitted that this is not even a case where any finding was recorded that the cash was utilized for any other purposes. He referred to the decision of the Ahmedabad Bench of the ITAT in Sudhirbhai Pravinkant Thaker vs. ITO: [2017] 88 taxmann.com 382 (Ahm Trib) wherein it was held that where assessee demonstrated that cash was withdrawn and there was no finding by authorities that such cash was invested or utilized for any other purpose, it was not open to authority to make addition on basis that assessee failed to explain source of deposits. Also noteworthy is the much earlier decision of the Patna High Court in the case of M/s. Lakshmi Mills vs. CIT (97 ITR 258) which was also rendered in the context of an earlier instance of demonetization where their Lordships held that where the books of accounts of the assessee
Sri Nanjappa Umashanker, Bangalore Page 13 of 17 were not rejected by the learned assessing officer and the cash balance was shown in the accounts of the assessee, there was no occasion to tax the deposit of high denomination notes as undisclosed income in the hands of the assessee. He submitted that the same decision applies with equal force in the present case.
2.15. For the reasons stated herein above, in view of the fact that the assessee has duly discharged the onus cast upon him by explaining the source of cash deposits, and in view of the settled position in law on the subject, the ld. A.R. prayed that the disallowance u/s. 69A of the Act in a sum of Rs.16 lakhs as upheld by the Learned Commissioner of Income Tax (Appeals) be deleted at the ends of justice.
The ld. D.R. submitted that assessee has deposited an amount of Rs.11 lakhs to Karnataka Bank and Rs.8 lakhs to Kaveri Grameena Bank for which assessee has not furnished proper explanation, so that the addition was made and the same to be sustained. He relied on the order of this Tribunal in the case of Afrozkhan in dated 5.12.2023 wherein held as under: 3. We have heard the rival submissions and perused the materials available on record. Similar issue came for consideration before this Tribunal in the case of Bhoopalam Marketing Services Pvt. Ltd. in ITA No.375/Bang/2022 dated 15.9.2022 wherein held as under: “7. We have carefully considered the rival contention and perused the orders of the lower authorities.
Admittedly the assessee has deposited Rs.298,08,080/- during the post- demonetization between 09/11/2016 and 30/12/2016.
Therefore, Ld.AO made addition of INR 5,82,76,300/- as income of the assessee u/s. 68 of the income tax act, by passing assessment order u/s. 144 of the Act. The Ld.AO made such addition as the assessee could not file requisite details as the notice was issued to the email address that was not functional. In the interest of justice, we deem it proper to remand the issues back to the Ld.AO for a de novo verification.
7.1 We have carefully gone through the various standard operating procedures laid down by the central board of direct taxes
Sri Nanjappa Umashanker, Bangalore Page 14 of 17 issued from time to time in case of operation clean. The 1st of such instruction was issued on 21/02/2017 by instruction number 03/2017. The 2nd instruction was issued on 03/03/2017 instruction number 4/2017. The 3rd instruction was in the form of a circular dated 15/11/2017 in F.No. 225/363/2017-ITA.II and the last one dated 09/08/2019 in F.no.225/145/2019-ITA.II. These instructions gives a hint regarding what kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases.
In one of such instructions dated 09/08/2019 speaks about the comparative analysis of cash deposits, cash sales, month wise cash sales and cash deposits. It also provides that whether in such cases the books of accounts have been rejected or not where substantial evidences of vide variation be found between these statistical analyses. Therefore, it is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money.
8.1 The instruction dated 21/02/2017 that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. The instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non- availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not.”
3.1 In view of the above order of the Tribunal, we inclined to remit the issue in dispute to the file of ld. AO for fresh consideration to examine in the light of above order of the Tribunal.”
I heard the rival submissions and perused the materials available on record. In this case, main contention of ld. A.R. is that the assessee is having opening balance as on 31.3.2016 at Rs.19,71,244/-. This has been disclosed to the department in ITR-4 Sri Nanjappa Umashanker, Bangalore Page 15 of 17 filed for the assessment year 2016-17. According to the ld. A.R., this amount is available to the assessee to deposit it into these two bank accounts. The department has no contra evidence to deny the availability of said opening balance to deposit into assessee’s bank accounts. In my opinion, similar issue came for consideration before this Tribunal in the case of Shri Narayana Shibaroor Shibaraya Vs. ITO Ward-3(3)(3) in dated 23.11.2022 wherein held as under: “5. I have considered the rival submission. I am of the view that the explanation offered by the Assessee with regard to the source of deposit of Rs.15.00 lakhs in his bank account is satisfactory and therefore, no addition can be made on account of unexplained cash. As rightly contended by the ld.counsel for the Assessee, the withdrawal of cash from the bank account prior to deposit of cash is not disputed by the revenue. The fact that the Assessee did not explain the reasons for withdrawal of cash from his bank account cannot be the basis to hold that the source of deposit of cash was not explained by the Assessee. The legal position in this regard is that if the deposit of money in the bank account is preceded by withdrawal of money from the very same bank account, then the source of funds is prima facie demonstrated or explained by the Assessee. The Honourable Karnataka High Court in the case of S.R.Ventakaratnam Vs CIT, Karnataka-I & Others 127 ITR 807 has held that once the Assessee discloses the source as having come from the withdrawals made on a given date from a given bank, it was not open to the revenue to examine as to what the Assessee did with that money and cannot chose to disbelieve the plea of the Assessee merely on the surmise that it would not be probable for the Assessee to keep the money unutilized. The decision of the Hon’ble Karnataka High Court supports the plea of the assessee. It is seen that the cash deposits in the bank account are preceded by withdrawal from the very same bank account. I am of the view that the ratio laid down in the aforesaid judgment will apply to the facts of the present case. If the revenue wants to disbelieve the plea of the Assessee then it must show that the previous withdrawal of cash would not have been available with the Assessee on the date of deposit of cash in the bank account. The AO and CIT(A) have proceeded purely on assumption and surmises that cash withdrawn was not available to the Assessee on completely extraneous factors. In our view, the Assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. I therefore delete the addition made in this regard. Consequently, the appeal of the Assessee is allowed.
In the result, appeal of the assessee is allowed.”
Sri Nanjappa Umashanker, Bangalore Page 16 of 17 4.1 Similar view was taken by this Tribunal in the case of Shri Girigowda Dasegowda Vs. ITO Ward 2(2)(8) in dated 10.8.2022 wherein held as under: “9. I have carefully considered the rival submission. The Hon'ble Karnataka High Court in the case of Smt. P. Padmavathy (supra) clearly laid down that earlier withdrawals of cash from Bank account have to be accepted as available to 4an assessee to explain a later deposit as source. The Hon'ble Court held that it was not open to the Revenue to contend that the assessee has to explain as to how the cash withdrawn earlier was utilized by an assessee and was still available with the assessee. The decisions cited by the learned DR are contrary to the law laid down by the Hon'ble Karnataka High Court and therefore not binding. I, therefore, hold the past withdrawals as claimed by the assessee from 2013 should be considered as being available to the assessee to explain the source of deposit. We are also of the view that a reasonable quantum of cash available out of past savings should also be considered as being available to the assessee to explain the source of cash deposited in the bank account.”
I, therefore, set aside the order of the CIT(A) and remand the case to the AO to consider the issue denovo in the light of the observations as made above.
The appeal of the assessee is accordingly treated as allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.”
4.2 The facts of the present case are similar to that one considered by the Coordinate bench in those cases cited (supra). Being so, taking a consistent view, I am inclined to delete the addition on similar lines. 5. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 1st Jan, 2024