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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 10.08.2023 passed by learned Commissioner of Income-Tax (Appeals), NFAC, Delhi [“CIT(A)”], which in turn arises out of assessment-order dated 23.09.2019 passed by learned ITO Ward-1, Dewas [“AO”] u/s 144 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on following grounds:
(i) That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 11,00,000/- made to the total income of the appellant on account of cash deposit in bank account by treating it as unexplained money u/s 69A r.w.s. 115BBE of the Act without properly appreciating the facts of the case. Page 1 of 8 Smt. Rajubai, Dewas vs. ITO, Ward-1, Deswas AY 2017-18 (ii) That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 11,00,000 made to the total income of the appellant on account of cash deposit in bank account by treating it as unexplained money u/s 69A r.w.s. 115BBE of the Act without properly appreciating the facts of the case even when the appellant during the course of assessment proceedings categorically explained that the said amount of cash deposits were made out of cash withdrawn on prior occasions. (iii) That on the facts and in the circumstances of the case and in law, the Ld. AO erred in computing the amounting of tax liability by invoking the amended provision of section 115BBE of Income-tax Act, 1961, even cash deposit was made in bank account prior to 15.1.2016 i.e. prior to the date of obtaining assent from the President of India and hence, in any case, amended provisions of section 115BBE of the Income-tax Act, 1961, shall not be applicable to the facts of the present case.”
The background facts are such that from ITBA-NMS-Information, the AO came to know that the assessee deposited a cash of Rs. 11,00,000/- in PNB A/c No. 9849002100000797 during demonetization period from 09.11.2016 to 30.12.2016 falling within the previous year 2016-17 relevant to A.Y. 2017-18 under consideration. The AO issued notice dated 09.03.2018 asking the assessee to file return, but, however, the assessee did not file any return. The AO called information directly from PNB u/s 133(6) and ultimately issued another notice u/s 142(1) dated 18.07.2019 in response to which the assessee filed written reply. Then, the AO issued a summon u/s 131 dated 03.09.2019 to assessee which the assessee attended. The AO recorded statement of the assessee wherein the assessee stated that the impugned cash deposit of Rs. 11,00,000/- was made on 21.11.2016 out of cash-withdrawal from another Bank A/c No. 9849000100002524 on 25.03.2015. Further, the assessee also submitted to AO that she sold a parental agricultural land on 31.10.2014 and deposited sale consideration in Bank A/c out of which a cash-withdrawal of Rs.
Smt. Rajubai, Dewas vs. ITO, Ward-1, Deswas AY 2017-18 15,00,000/- was made on 25.03.2015. This cash withdrawn from Bank A/c was kept in hand for personal use and subsequently the unused amount of Rs. 11,00,000/- was re-deposited in Bank A/c. However, the AO was not satisfied with the reply of assessee for the reason that there was a time gap of 20 months between withdrawal from bank and redeposit in bank account.
The AO further observed that the assessee has failed to explain the purpose of withdrawal. This way the AO rejected assessee’s explanation and made an addition of Rs. 11,00,000/- u/s 69A read with Section 115BBE while passing assessment-order. Aggrieved, the assessee carried the matter in first appeal. The CIT(A), however, agreed to the observation to AO and rejected assessee’s submission. Now the assessee has come before us in next appeal assailing the orders of lower authorities.
Ld. AR for assessee submitted that the assessee has made a genuine and factual explanation to lower authorities that the deposit in Bank A/c was made from previous withdrawal made from Bank A/c. He submitted that the withdrawal made from Bank A/c is not disputed by lower authorities. However, the lower authorities have not accepted the assessee’s explanation of re-deposit in Bank A/c from previous withdrawal precisely for the reason that there was a time gap of 20 months. Ld. AR submitted that the earlier withdrawal of cash from Bank A/c was very much available to assessee and it is not the case of revenue that the said cash was utilized elsewhere for any other purpose. He submitted that once the assessee has made an explanation that the cash withdrawal was held for personal
Smt. Rajubai, Dewas vs. ITO, Ward-1, Deswas AY 2017-18 purpose, it was not open to revenue to contend that the assessee has to explain as to how and why the cash was withdrawn earlier, why it was not utilized and why it was available with assessee. Ld. AR submitted that the facts of assessee’s case are squarely covered by a direct decision of ITAT Bangalore in Shri Girigowda Dasegowda Vs. ITO which is a case for identical addition made by revenue authorities.
Ultimately, the ITAT accepted identical claim of assessee and allowed relief to assessee, the relevant paras of order are reproduced below :-
“6. The limited prayer of the learned Counsel for the assessee before the Tribunal was that there were substantial withdrawals prior to 06.04.2015 and 21.05.2015 respectively from the two bank accounts and the CIT(A) erred in not giving credit to these withdrawals on the ground that these withdrawals were at a time which was more than 2 years from the date of deposit. The learned Counsel for the assessee in this regard placed reliance on a decision of the Hon’ble Karnataka High Court in the case of Smt. P. Padmavathi Vs. The ITO of 2009 judgment dated 06.10.2010 wherein the question before the Hon’ble Court relating to Assessment Year 2004-05 was whether the findings of the authorities that the source of cash deposited in the loan account is not properly explained in sustainable. The Court held that earlier withdrawal from the same account shall be held to be proper explanation of the source. The following were the relevant observations of the Court:
“11. Question 3: In so far as the cash deposit in two loan accounts as set out above is concerned, the material on record discloses that the assessee had Rs. 7,00,000/- in cash on 20.8.2003 having withdrawn the same from his bank account. The said Rs.7,00,000/- has suffered tax. No doubt the deposit in the two loan accounts was made on 29.9.2003 and on 25.11.2003. The authorities have disbelieved the ease of the assessee on the ground that there is a gap of 40 days or more between the withdrawal of the amount from the bank account and re-deposit of the same in the loan account. Secondly, on the ground that, it is risky to keep large amount of cash on hand. Thirdly, they are of the view that the explanation offered such as having borrowed a gold loan, yet another loan of Rs.2,00,000/- and sale of paddy, are not established by proper evidence. It is in this context, it is useful to refer to a judgment of this Court in the case of ‘S.R.Venkataratnam Vs. Commissioner of Income Tax, Karnataka-1 and another’ reported in ITR (127) 1981 Page 807, where a learned Single Judge held as under:
Smt. Rajubai, Dewas vs. ITO, Ward-1, Deswas AY 2017-18
"Once the petitioner-assessee disclosed the source as having come from the withdrawal made on a given date from a given bank, it was not for the respondents no.1 and 2, to concern themselves with what the assessee did with the money, i.e., whether he had kept the same in his house or utilised the services of a bank by depositing the same. The ITO has only two choices before him. One was to reject the explanation as not believable for the reason that on his investigation no such pigmy deposit was ever made into the bank. In the alternative, he ought to have called upon the assessee- petitioner to substantiate his claim by documentary evidence. Having exercised neither of the choices, it was not open to the ITO to merely surmise that it would not be probable for the assessee to keep Rs.15,000/- unutilised for a period of two years. The ITO should have given an opportunity to the assessee to substantiate his assertion as to the source of the capital outlay."
In this case, it is not in dispute that the assessee withdrew a sum of Rs.5,00,000/- on 18.8.2003 and Rs.2,00,000/- on 20.8.2003 from her savings account. She is an agriculturist and she had agricultural income. Once she demonstrated that she was in possession of Rs.7,00,000/- cash plus agricultural income on her hands, if after 40 days, a cash deposit is made to the extent of about Rs.5,20,000/- towards loan account, it cannot be said that the source of the said deposit is not properly explained. Merely because there is a delay of 40 days from the date of withdrawal of the money from the bank account to the date of deposit in the loan account. Once money is shown to be in the account and withdrawn, what the assessee did with that money till it was actually deposited, is not the concern of the Department. As long as the source is explained and established and when the money is withdrawn from a savings bank account and paid to discharge loan by deposit into a loan account, it is not possible to hold that the source is not explained. In that interregnum period, if the very same money is utilized for other purpose and thereafter, it is appropriated towards discharge of a loan, that cannot be held against the assessee. In that view of the view, the finding recorded by the Tribunal is erroneous and requires to be set aside. Therefore, the said substantial question of law is also held against the revenue and in favour of the assessee.”
7. The learned Counsel for the assessee also prayed that availability of reasonable quantum of cash in the form of past savings should also be accepted especially when withdrawals to the tune of Rs.24 lakhs are accepted by the AO in para 6 of his order.
The learned DR submitted that withdrawals from 2013 cannot be considered as available to assessee in Financial Year 2016-17. According to him, subsequent withdrawals when cash is already available with the assessee has not been explained. The assessee has also not explained as to why and for what purpose cash withdrawn was kept with the assessee. His
Smt. Rajubai, Dewas vs. ITO, Ward-1, Deswas AY 2017-18 argument was that the plea of the assessee is contrary to hum probability. He relied on order dated 07.04.2021 of ITAT, Bengaluru SMC Bench in the case of Shri Mohammed Sharaq Vs. ITO wherein this Tribunal held that availability of earlier withdrawal of cash for the subsequent deposit must be established by the assessee and in the absence of such evidence, the benefit of earlier withdrawal cannot be given to an assessee. He also relied on similar decision rendered by ITAT, Delhi, in the case of Leela Devi Vs. ITO in ITA No. 1423/Del/2020 order dated 01.02.2021.
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 an 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 de novo in the light of the observations as made above.
The appeal of the assessee is accordingly treated as allowed for statistical purpose.” 4. Ld. AR submitted that in the aforesaid decision of ITAT, Bangalore it has been categorically held that the past withdrawals should be considered as being available to assessee to explain the source of deposits. Therefore, in present case of assessee also, the previous withdrawal from bank a/c must be accepted as source of subsequent re-deposit. Ld. AR went on submitting that in the aforesaid decision, the ITAT, Bangalore has ultimately remanded the matter to AO for the reason that besides previous withdrawal from Bank A/c, the assessee was also claiming a reasonable amount of past savings as source for re-deposit because previous withdrawal was not sufficient. But in Smt. Rajubai, Dewas vs. ITO, Ward-1, Deswas AY 2017-18 present case of assessee, the previous withdrawal was Rs. 15,00,000/- whereas the assessee deposited only Rs. 11,00,000/-. Therefore, the previous withdrawal was more than enough to meet the re-deposited money.
Hence, in present case, there is no necessity of any verification or re- consideration at AO level. Therefore, the addition made by AO needs to be deleted straight-away on the basis of previous withdrawal itself.
Replying to above, Ld. DR for revenue supported the orders of lower- authorities. He submitted that the lower-authorities have rightly rejected assessee’s submission that the re-deposit was made from previous withdrawal because the time-gap is about 20 months, not just 2-3 months.
The Ld. DR urged to uphold the addition.
We have considered rival submissions of both sides and perused the orders of lower-authorities. We have carefully analysed the facts of case as also the facts involved in the decision of ITAT Bangalore cited before us.
After a careful consideration, we find that the assessee’s case is directly covered, on facts, by the decision of ITAT, Bangalore. Ld. DR for revenue although emphasized the very reasoning as have been taken into account by lower authorities but those reasonings have not found favour in the decision of ITAT, Bangalore. Therefore, we hardly need to make any additional finding. Suffice it to say that the case of assessee is directly covered by decision of ITAT, Bangalore. As claimed by Ld. AR, we further agree that the amount of previous withdrawal was more than the amount of re-deposit, therefore there is no shortfall requiring any further verification at AO level.
Smt. Rajubai, Dewas vs. ITO, Ward-1, Deswas AY 2017-18 Being so, we are inclined to delete the addition made by AO. We order accordingly.
Resultantly, this appeal is allowed.
Order pronounced in the open court on 02.02.2024.