ASHOK VIKRAM PODDAR,KOLKATA vs. ACIT, CIRCLE -34, KOLKATA, KOLKATA

Facts in brief are that the assessee filed return of income for the instant assessment year on 27.03.2017 declaring total income of Rs. 98,32,260/-. The case of the assessee was selected for limited scrutiny for examining cash deposit during the year. The statutory notices were duly issued and served on the assessee. The AO found that the assessee has deposited Rs. 19.75 Lacs into Allahabad Bank, Raipur Shyam Nagar, Teliabandha Branch, Raipur. The assessee is deriving income from salary from M/s Jain Housing Agency of Rs. 20,77,140/- from M/s Vikash Builders Rs. 81,22,000/- respectively. Besides, the assessee has income from house property, capital gain and other sources. Accordingly, the assessee has called upon to explain the source of deposit. The assessee replied before the AO that the cash deposits during the year into Allahabad Bank account was out of withdrawals made during the year only. The assessee has filed statement of cash flow summary sheet which is extracted by the AO at page 3 and 4 of the assessment order. As apparent from the said statement the assessee has withdrawn Rs. 20,00,000/- from Allahabad Bank on various dates and deposited into bank Rs. 19.75 lacs on various dates. The only allegation of the AO was that the gap between the withdrawals and deposits range from nine days to three months. The details have been given by the AO in para 3.1.8 to 3.1.11 and finally the AO, by disbelieving the contentions of the assessee, treated the deposits made into Allahabad Bank of Rs. 19.75 Lacs as unexplained cash credit and added the same u/s 69A of the Act to the income of the assessee thereby assessing the total income at Rs. 1,18,07,260/- vide order dated 24.12.2018 passed u/s 143(3) of the Act.

In the appellate proceedings, the Ld. CIT(A) affirmed the order of AO by citing the same reasons. However, in stead of addition u/s 69A ,the Ld. CIT(A) directed the AO to treat the same as unexplained investments u/s 69A of the Act.

Apart from that, the details of; opening cash, cash withdrawal, cash deposited, cash expenditure; closing cash in hand and increase cash in hand, in case of both the assessees were given before the authorities below, which has been incorporated above in para 3 and 3.1. No discrepancy or any inquiry has been done by Assessing Officer to disapprove the cash disclosed in the books of account and balance sheet. The sole reason for disbelieving the assessee's explanation is that, firstly, no prudent person after withdrawing the cash will keep at home; and secondly, if there was an OD account having negative balance on which interest is being charged, then there was no need to keep such huge cash in hand at home. Such reasoning dehors any contrary material on record that the cash disclosed in the books of accounts has been invested somewhere else, then on mere surmise assessee's explanation cannot be discarded. If assessees have genuine sources of income which are received through banking channels, out of which cash has been withdrawn and have been disclosed in the income tax return and in the balance sheet as cash-in-hand, then I am unable to apprehend how the provision of section 69A is applicable. Because the section can only be invoked where in any financial year the assessee is found to be the owner of any money, etc., which has not been recorded in the books of accounts and assessee offers no explanation. Here in these cases, Assessee's cash in hand duly stands recorded and source has been explained from the income deposited in the bank account and withdrawal, then in my opinion deeming provision of section 69A cannot be invoked. The reasoning given by the AO and Ld. CIT (A) is vague and based on surmise as to what a prudent person should have done. Once assessee has explained that being of senior citizen they have maintained such liquidity of cash out of their own disclosed income with them for certain contingencies, then without any material to controvert such an explanation, addition cannot be sustained. Assessees before the lower authorities have filed following documents to substantiate the cash in hand with them:- a. Income-tax Return with computation of total income. b. Balance Sheets for FY 2013-14, 2014-15 and FY 2015-16. c. Comparative Chart of cash movement FY 2013-14, 2014-15 and FY 2015-16. d. Cash book maintained by the assessee. e. Kotak Mahindra Bank Statement bearing A/c No. 6311509485 f. Standard Chartered Bank: Statement of account. g. Bank: Book of Kotak Mahindra Bank. h. Bank Book of Standard Chartered Bank. i. Copy of all medical treatment documents.

All these documents have neither been rebutted nor there is any finding that cash-in-hand disclosed in the balance sheet was beyond the scope of their income or are not substantiated from the bank account. Simply because after the period of demonetization, that is, 8-11-2016, certain amount of cash has been deposited in the bank account, it does not mean that the cash-in-hand as on 31-3-2015 and 31-3-2016, duly shown in the balance sheet and disclosed to the department in the respective income tax return filed much earlier, is unexplained. Accordingly, in view of the above reasoning, addition made by the AO and sustained by the Ld. CIT (A) is directed to be deleted.

In the result both the appeals of the assessee are allowed.” Considering the facts and circumstances and the decision of the coordinate bench ,we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition.” Similarly in the case of Gordhan vs. ITO (supra) the Co-ordinate Bench has held as under:

After hearing rival contentions and perusing the documents on record and the orders of the authorities below, I hold as follows.

The sole ground on which the additions has been made u/s. 68 of the I.T. Act, is that, there is a gap of 5 months between the withdrawal of the cash from the Bank account and re-deposit of the same in the Bank account. An addition made, solely on this ground cannot be sustained. In this regard, I draw support from the decision of the ITAT, Delhi in the case of AICT vs. Baldev Raj Charla 121 TTJ (Del) 366 wherein it has been held as under:- "We have heard the rival submissions and perused the material available on record and have gone through the orders of the authorities below. We find that this explanation of the assessee was found correct that against these five deposits on dated 14th June, 1996, Rs. 31,000; 21st July, 1997, Rs. 1,27,000, 19th Sept., 1997, Rs. 22,000; 4th October, 1997, Rs. 26,000 and on 7th November, 1997, Rs. 52,000/- there were sufficient cash withdrawals from AWI and from SBL Mayapuri, but this addition has been confirmed by Ld. CIT(A) on the basis that there is time gap between the assessee's withdrawals from his own partnership M/s AWI or from his own bank. There is finding recorded by the Ld. AO or by the Ld. CIT(A) that apart from depositing these cash into bank as explained by the assessee, there was any other user by the assessee of these amounts and in the absence of that, simply because there was a time gap, the explanation of the assesee cannot be rejected and hence the addition confirmed by the Ld. CIT(A) is not correct. We, therefore, delete the same. This ground of the assessee is allowed." We observe that even in the instant case before us the assessee has duly explained the deposits out of withdrawals of the assessee’s own bank account though there was lag Assessment Year: 2016-17 Ashok Vikram Poddar between withdrawals and re-deposits and AO not bringing any materials on record that the money was used by the assessee somewhere else. Therefore since the facts of the case before us are substantially similar to the facts of the cases as cited above we, therefore, respectfully following the same, set aside the order of Ld. CIT(A) and direct the AO to delete the addition. In the result, the appeal of the assessee is allowed. 7.