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Income Tax Appellate Tribunal, JAIPUR BENCHES “B”, JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM
ORDER PER: SANDEEP GOSAIN, J.M. This appeal has been filed by the assessee against the order of the ld. CIT(A), Alwar dated 21/12/2018 for the A.Y. 2013-14, wherein following grounds have been taken: “1. On the facts and circumstances of the case and in law also ld. Lower authorities grossly erred in making and confirming addition of Rs. 3,75,000/- on account of opening cash in hand.
2. On the facts and circumstances of the case and in law also ld. Lower authorities grossly erred in making and confirming addition of Rs. 12,50,000/- on account of unexplained cash deposit without considering the fact that assessee has sold his plot in consideration of Rs. 12,50,000/- during the year under consideration.”
2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic.
2 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO 3. The brief facts of the case are that the assessee is engaged in the profession of advocacy and he filed his return of income on 30/03/2015 declaring total income of Rs. 1,98,900/-. The case of the assessee was selected for scrutiny and various statutory notices were issued and served upon the assessee and finally the assessment was completed U/s 143(3) of the Income Tax Act, 1961 (in short, the Act) on 18/03/2016 by assessing total income of the assessee at Rs. 21,48,900/- by making addition of Rs. 19.50 lacs.
Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who after considering the submissions of both the parties and material placed on record, given part relief to the assessee. Against the said order of the ld. CIT(A), the assessee has preferred the present appeal before the ITAT on the grounds mentioned above.
Grounds No.1 and 2 of the appeal raised by the assessee relates to challenging the order of the ld. CIT(A) in sustaining the addition. In this regard, the ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied upon the written submissions filed before the ld. CIT(A) and the contents of the same are reproduced as under:
3 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO “Your honour Ld AO has made the additions of Rs. 19,50,000/- on a/c of deposits made in ICICI Bank a/c no. 023501530955 during the F.Y. 2012- 13. Ld AO rejected the explanation filed by assessee without making any independent enquiry and without considering the track record of the assessee. Your honour at the very outset, we would like your kind attention on the copy of alleged bank a/c. Your honour the maximum peak balance in the account is Rs. 19,10,016.64/- on dated 18/06/2012. It is also verifiable from the bank a/c itself that the assessee has made several cash deposits and several cash withdrawal from the said bank account. Your honour it is also on the record that the above referred peak balance includes the opening balance at bank of Rs. 3,85,016.64/-. If we prepare an account of cash withdrawals and cash deposit till 18/06/2012 i.e. the day on which there was maximum peak balance the following position emerges :-
4 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO Your honour it is therefore clear that the net deposit upto this period during the year is Rs. 15,25,000/- only.
Your honour explaining the above deposits the assessee explained that he was having an opening cash balance of Rs. 7,00,000/- and he got a sum of Rs. 12,50,000/-, which was received from Shri Gaurav Singh Tanwar against agreement of sale of immovable property situated at Buchahera, Kotputli. This agreement to sale was produced before Ld AO.
Ld AO did not accept the explanations filed by the assessee and without making any enquiry independently rejected the explanation and made the additions.
In regards to opening cash balance it is submitted that the assessee is 31 year young advocate. Assessee is assessed to the Income Tax since last so many years. He was living in the joint family with the all family members. His declared income for some years is as under :-
Your honour apart from above declared income, the assessee made following withdrawals from the same bank account for A.Y. 2012-13 (F.Y. 2011-12):-
5 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO It is therefore clear that the assessee was having a cash balance of Rs. 3,25,500/-as on 31/03/2012 out of hank withdrawals, which was not used by the assessee anywhere else. No such material is on the record.
Your honour not showing any cash amount in the Return of income for A.Y. 2012-13 as alleged by Ld AO is not understandable as the assessee is to declare the cash of business only and there is no requirement to declare personal cash balance for the assessees having meager income. Moreover the bonafide mistakes in filing the Return of income cannot be used against the assessee without bringing any contrary material on the record. Copy of the bank a/c for the F.Y. 2011-12 is submitted herewith.
Apart from above Rs. 3,25,500/- the assessee was having Rs. 3,74,500/- in cash out of his saving and incomes for 31 years.
It is therefore clear that the assessee was having opening cash balance of Rs. 7,00,000/- and the assessee should be given a credit of Rs. 7,00,000/- to explain the cash peak deposit balance of Rs. 15,25,000/-.
Your honour assessee received a sum of Rs, 12,50,000/- from Shri Gaurav Singh S/o Shri Vijaypal Singh Tanwar Banethi vide agreement to sale of plot. This amount was received on 09/05/2012 Rs. 6,50,000/- and Rs. 6,00,000/- was received on 13/06/2012. This agreement was not registered, and was also cancelled later.
Ld AO rejected the explanation of assessee wrongly without making any enquiry from the buyer despite having complete address. It is 6 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO therefore submitted that the source of deposit should have been accepted by Ld AO. Your honour it is also submitted that this addition has wrongly been made for Rs. 19,50,000/-. The maximum cash requirement to maintain the deposited balance in above bank a/c was Rs. 15,25,000/- only and the assessee has explained the source of deposits which Ld AO rejected on surmises and conjectures.”
On the other hand, the ld. DR has vehemently supported the orders of the lower authorities and submitted that on the basis of the material placed on record, the ld. CIT(A) had given part relief to the assessee.
We have considered the rival contentions of both the parties and have perused the material placed on record. From perusal of the record, we noticed that the A.O had made additions of Rs. 19,50,000/- on account of deposits made in ICICI Bank a/c no. 023501530955 during the F.Y. 2012-13 and at the same time, the AO rejected the explanation filed by the assessee. Before us, the assessee has drawn our attention to the copy of the bank account wherein it was pointed out maximum peak balance in the account is Rs. 19,10,016.64/- on 18/06/2012. It was submitted that the assessee had made several withdrawals as well as cash deposits in the said bank account and the peak balance also includes the opening balance at bank of Rs. 3,85,016.64/-. The ld. AR had also prepared an account of cash withdrawals and cash deposit till
7 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO 18/06/2012 which has already been reflected at para 5.2 of the impugned order and the same is reproduced below:-
From the said chart, it is clear that the net deposit up to this period during the year under consideration is Rs. 15,25,000/- only and in order to explain the said amount, the assessee had taken a categorical stand that he was having an opening cash balance of Rs. 7,00,000/- and also got a sum of Rs. 12,50,000/-, which was received from Shri Gaurav Singh Tanwar against the agreement of sale of immovable property situated at Buchahera, Kotputli. The ld. AR had also drawn our attention to the 8 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO different documents which were filed before the lower authorities and the same are also filed before us in the paper book which includes copy of bank statement for the period from 01/04/2012 to 31/03/2013 which is at page No. 5-7 of the paper book, copy of cash book for the period from 01/04/2012 to 31/03/2013 which is at page No. 8-13 of the paper book and the copy of sale agreement between Gaurav Singh and Uday Singh i.e. the assessee which is at page No. 14-15 of the paper book. The ld. AR also submitted with regard to cash balance that the assessee is an advocate and is assessed to the income tax since last so many years. It was also submitted that he was living in the joint family with the all family members and had declared income for some years which are depicted in the chart submitted by the assessee as under: - It was further submitted that the assessee had also made withdrawals from the same bank account for the year under consideration and the details of the withdrawals have also been depicted in the chart submitted by the assessee as under:
9 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO From the above chart, it was pointed out that the assessee was having a cash balance of Rs. 3,25,500/- as on 31/03/2012 out of bank withdrawals etc. Thus, the ld. CIT(A) had rightly relied upon the said contention of the assessee and had deleted the additions to the tune of Rs. 3.25 lacs by holding that a sum of Rs. 3.25 lacs out of opening account is treated as explained. However, the ld. CIT(A) made addition of Rs. 3,75 lacs, in this regard, the ld. AR has specifically submitted that while making additions of Rs. 3.75 lacs, the lower authorities were under misconception as the lower authorities had categorically mentioned that the assessee had not declared any cash in hand in his tax returns. It was specifically submitted that the assessee was not required to declare any cash in hand in his personal income tax return and there is no such requirement under the I.T. Act. As the assessee is to declare the cash of business only and there is no requirement to declare personal cash balance in the hands of the assessee. It was further submitted that the assessee was having Rs. 3,74,500/- in cash out of his saving from his profession as a lawyer. It is an undisputed fact that the assessee in a young lawyer and we cannot lose sight of the fact that a practicing lawyer have income in 10 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO cash also, therefore, considering the background of the assessee, it can be very well presume that since the assessee is in the profession of lawyer for the last so many years, therefore, he might be having his savings to the tune of Rs. 3.75 lacs. At the same time, it is also important to mention here that the A.O. had not made any independent inquiry to the specific stand taken by the assessee. Thus, considering the totality of facts and circumstances of the case, we are of the view that the assessee has duly proved that he was having opening cash balance of Rs. 7.00 lacs and thus should have been given credit of Rs. 7.00 lacs to explain the cash peak deposit balance of Rs. 15.25 lacs. Thus, we delete the addition of Rs. 3.75 lacs confirmed by the ld. CIT(A) on account of opening cash in hand of the assessee. Thus, the A.O. is directed accordingly.
Now the addition of Rs. 12.50 lacs on account of unexplained cash deposit is concerned, in this regard, the ld. AR has taken a specific stand that he has received the said amount from Shri Gaurav Singh S/o Shri Vijaypal Singh Tanwar Banethi vide agreement to sale in respect of his plot. An amount of Rs. 6.50 lacs was received by the assessee on 09/05/2012- and Rs. 6.00 lacs were received on 13/06/2012. The assessee had also placed on record the agreement regarding the cancellation of the said deal which is at page No. 14-15 of the paper book wherein also the said Shri Gaurav Singh S/o Shri Vijaypal Singh
11 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO Tanwar Banethi has admitted the factum of making payment to the assessee. However, the lower authorities rejected the contention of the assessee merely by holding that the assessee has not placed on record any proof that on cancellation of said deal, the assessee had returned the said amount to said Shri Gaurav Singh S/o Shri Vijaypal Singh Tanwar Banethi. However, we are of the view that the assessee had duly discharged his onus of proving the deposit of Rs. 12.50 lacs in the bank account as he has categorically submitted that the assessee had received the said amount from Shri Gaurav Singh S/o Shri Vijaypal Singh Tanwar Banethi towards sale of his plot to the said purchaser and the A.O. had not even enquired or carried out any enquiry with regard to factum of said categorical stand taken by the assessee by calling or recording the statement of Shri Gaurav Singh S/o Shri Vijaypal Singh Tanwar Banethi. Thus, in our view, the stand taken by the assessee went unrebutted as the A.O. who is investigator has failed to carry out any investigation to disprove the categorical stand taken by the assessee supported by documents. Thus, in our view, the said amount of Rs. 12.50 lacs deposited by the assessee in the bank account cannot be termed as unexplained rather the assessee has duly proved the source of the said amount by giving complete address of the buyer i.e. Shri Gaurav Singh S/o Shri Vijaypal Singh Tanwar Banethi to the A.O. Thus, the source of said
12 ITA 226/JP/2019_ Sh. Udai Singh Tawar Vs ITO amount of Rs. 12.50 lacs was duly explained and in view of the above facts and circumstances we direct to delete the same. We order accordingly.
In the result, this appeal of the assessee is allowed. Order pronounced in the open court on 31st January, 2022.