MATHURBHAI P. VIRADIYA HUF,SURAT vs. INCOME TAX OFFICER, WARD - 3(1)(5), SURAT

Brief facts of the case are that the assessee is Hindu Undivided Family (HUF), filed its return of income for A.Y. 2015-16 on 29/03/2016 declaring total income of Rs. 3,21,069/-. The case of assessee was selected for scrutiny. During the assessment, the Assessing Officer noted that the assessee made cash deposit of Rs. 24.80 lacs in his savings bank account with Allahabad Bank. The assessee was asked to furnish the source of cash deposit with documentary evidence. The Assessing Officer recorded that the assessee failed to furnish any detail, therefore, a final show cause notice was issued to the assessee on 16/11/2017. The assessee filed its reply on 22/11/2017. In the reply, the assessee stated that during the financial year, they deposited a cash of Rs. 24.80 lacs in their bank account. The assessee submitted that they have withdrawn Rs. 37.22 lacs from bank account and was having sufficient cash balance or deposit in bank. In addition to this, the assessee also received cash of sale of agricultural product of Rs. 4,93,952/-. On the basis of such submission, the assessee stated that they were having sufficient cash balance for making deposit. The reply of assessee was not accepted by Assessing Officer. The Assessing Officer prepared the summary of cash deposit/transactions in the following manner:

Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee made similar submission as made before the Assessing Officer. The assessee reiterated that the cash withdrawal was more than the cash deposit. The ld. CIT(A) confirmed the action of Assessing Officer by taking a view that the assessee has not furnished the bank statement nor the source of details of cash deposit. In absence of such evidence, summary prepaid by assessee about cash flow statement cannot be Mathurabhai P Viradiya HUF Vs ITO relied and confirmed the action of Assessing Officer. Further aggrieved, the assessee has filed present appeal before this Tribunal.

I have heard the submissions of learned Authorised Representative (ld. AR) for the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue and have also perused the orders of the lower authorities carefully. The ld. AR of the assessee submits that the assessee has sufficient cash balance in his hand for making deposits, the assessee had cash withdrawal of Rs. 37.22 lacs from bank account. The assessee also received cash of sale of agricultural product of Rs. 4,93,952/-. The assessee has agriculture holding of 7.25 hectare of land at his native place. The assessee is growing cotton and cotton seeds and other crops. On the basis of such submission, the assessee stated that they were having sufficient cash balance for making deposit.

On the other hand, the ld Sr DR for the revenue submits that he supports the order of lower authorities. The ld Sr DR for the revenue submits that assessing officer in para 3.2 and 3.4 has made summary of all the transactions of the assessee and on the basis of such summary it is clear that the assesse has no cash balance. Before, ld CIT(A) the assessee filed cash flow statement but failed to substantiate such statement as he has not filed corroborative evidence e.g. bank details etc. The ld Sr DR for the revenue submits 5 Mathurabhai P Viradiya HUF Vs ITO that assessing officer as well as ld CIT(A) gave full opportunity to the assessee to file complete details but the assessee failed to substantiate the source of cash deposit, the assessee failed to substantiate such huge cash deposits.

I have considered the submissions of both the parties and perused the material available on record. The assessing officer made addition of Rs. 24.80 lacs by taking view that the only source of income shown by the assessee is agriculture income , which may have been used for house hold purpose. The assessee failed to give any satisfactory explanation and evidence of cash deposit, so cash deposit of Rs. 24.80 lacs was treated as unexplained income. The ld CIT(A) confirmed the addition by holding that source of cash deposit is not explained. Further cash flow summary cannot be relied as the assessee has not furnished the source of cash and cheque deposits. Before me, the ld AR for the assessee except contending that the assessee has sufficient cash balance for making deposit in bank, has not explained the real source of cash and cheque deposits. I find that the assessing officer in his summary has clearly demonstrated the cheque deposits and immediate withdrawal or on deposits of money in cash immediately transferred by way of cheque, the assessee has failed to give any satisfactory reply against the finding of the assessing officer. I am in full agreement with the observation of the 6 Mathurabhai P Viradiya HUF Vs ITO assessing officer that the assesse has only shown source of income from agriculture activities. However, keeping in view the general practice in society that ordinarily peoples keep certain money in cash, therefore, by giving such benefits the assessee is granted benefit of Rs. 2,80,000/- and remaining addition of Rs. 22,00,000/- is upheld. 7. In the result, this appeal of assessee is partly allowed.