ABHAY BENARA,AGRA vs. INCOME TAX OFFICER, AGRA

Brief facts of the case are assessee filed his return of income for the A.Y 2010-11 on 03.08.2010 declaring total income of Rs. 570420/-. The total income declared are from salary, house property and from other sources. The interest income consist of income from bank and income from money lending. The case was selected for scrutiny through CASS. Subsequently, notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee. In response, AR of the assessee attended the

During the assessment proceeding, the Assessing Officer observed that the assessee made cash deposits in State Bank of India and ICICI Bank and frequent intervals. The assessee was asked to explain source of the same. In response the assessee submitted that the source of cash deposit is out of cash withdrawals from bank from time to time. Since the assessee lends the same to others and read opposite the same. The Assessing Officer observed from the cash flow statement submitted by the assessee, It has declared opening cash balance of Rs. 3,50,000/- when the assessee was asked to substantiate the same, it was submitted that assessee maintained cash balance of about 3,00,000/- on each day. Not convinced with the above submission the Assessing Officer sustained above said cash as unexplained cash to the total income of assessee.

Aggrieved with the above order, the assessee preferred an appeal before ld. CIT(A)-Kanpur-4. The assessee filed a detailed submissions including cash flow statement from 21.10.2005 to 31.03.2010 demonstrating the opening and closing balances of the end of each year. After considering the above, ld. CIT(A) called for the remand report from 2 | P a g e

Aggrieved, the assessee is in appeal before ITAT, raising following grounds:

At the time of hearing, ld. AR of the assessee brought to my notice detail submissions submitted before First Appellate Authority and made similar submissions has submitted before ld. CIT(A).

On the other hand, ld. DR relied on the findings of lower authorities.

Considered the rival submissions and material placed on record. I observe that the assessee has made cash deposit in his bank account and in order to verify the same the Assessing Officer asked the assessee the submit the relevant details. After considering the cash flow statement submitted by the assessee. The Assessing Officer observed that assessee has declared opening cash balance of Rs. 3,50,000/- and not convinced with submission of the assessee on carrying in such cash balance in hand. He proceeded to make the above cash in hand as undisclosed income. After considering the submissions of both parties, I noticed from the cash flow statement submitted for the period 01.04.2009 to 31.03.2010, the assessee has withdrawn cash from State Bank of India, ICICI Bank to the extent of Rs. 32.04 lakhs and deposited Rs. 25.75 lakhs, out of cash withdrawn assessee has utilized Rs. 2.24 lakhs toward household expenses. I observe that the difference between cash withdrawals and cash deposit plus household expenses is about Rs. 5.05 lakhs excess. Since the cash deposit is out of cash withdrawals made by the assessee, it matches with the submission made by the assessee that he lends money to others out of cash in hand. In my considered view the Assessing Officer proceeded to treat the opening cash in hand as undisclosed income, the cash deposit are out of cash withdrawals, that being the case, the opening cash balance cannot be treated as income from the years under 4 | P a g e