SHRI NANJIBHAI ANANDJIBHAI BHADJA,KESHOD vs. THE ITO, WARD-1,, JUNAGADH

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ITA 28/RJT/2023Status: DisposedITAT Rajkot14 December 2023AY 2011-12Bench: Ms SUCHITRA KAMBLE (Judicial Member), SHRI WASEEM AHMED (Accountant Member)5 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had provided a cash book showing sufficient cash withdrawals to justify the deposits. The revenue failed to discharge its onus to prove the cash was used for other purposes, thus no addition was warranted.

What were the facts?

The assessee deposited cash into a joint bank account. The Assessing Officer (AO) initially made an addition based on 8% of the deposits, but later initiated reassessment proceedings under Section 147 to tax the entire deposit amount under Section 69A.

What were the issues?

Whether cash deposits in a bank account can be added as income under Section 69A when the assessee demonstrates sufficient cash withdrawals to explain the source. Whether reassessment proceedings under Section 147 were validly initiated.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: Ms SUCHITRA KAMBLE & SHRI WASEEM AHMED

For Appellant: Shri Samir Buptani, A.R
Hearing: 06/12/2023Pronounced: 15/12/2023

PAN: AFLPB3051N (Applicant) (Respondent) Assessee by : Shri Samir Buptani, A.R Revenue by : Shri Shakeel Ansari, Sr. DR सुिणाईकीतारीख/Date of Hearing : 06/12/2023 घोवणाकीतारीख/Date of Pronouncement: 15/12/2023 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:

The captioned appeal has been filed at the instance of the assessee against the order of the Ld. Commissioner of Income Tax, (Appeals), Rajkot arising in the matter of order passed under section 143(3) of the Income Tax Act, 1961 (here- in-after referred to as "the Act") relevant to the Assessment Year 2011-12.

2.

The assessee has raised the following grounds of appeals:

2 1. Ld. CIT(A) erred in law as well as on facts passing appellate order without taking any cognizance of and dealing with the submission made by the appellant containing relevant facts, legal position and decisions of Hon'ble Supreme Court, High Courts, Tribunals during the course of the hearing by stating that "the submission has been filed in routine manner and without any substance". The order of Id. CIT(A) is contrary to the principles of natural justice and hence liable to be set-aside for fresh adjudication.

2. Ld. CIT(A) erred in law as well as on facts in not giving credit of the cash withdrawal made from the bank statement and reflected in the cash-book submitted by the appellant without assigning any reason for the same.

3. Ld. AO erred in law as well as on facts in reopening the assessment already concluded by passing assessment order under section 143(3) of the act. Ld. CIT(A) erred in law as well as on facts in upholding validity of the same without passing any comment on the submission of the appellant.

4. Ld. AO erred in law as well as on facts in making addition of ₹. 42,53,620/- 69A of the act on account of allege unexplained cash deposits in the bank account.

5. Ld.AO and Ld.CIT(A) erred in law as well as on facts in not restricting the addition to the profit element only.

6. Ld.AO and ld.CIT(A) erred in law as well as on facts in not restricting the addition to the peak investment only.

3.

The issue raised by the assessee in ground No. 4 is that the Ld. CIT(A), erred in confirming the addition of Rs. 42,53,620/- u/s 69A of the Act, on account of cash deposits in the bank account.

4.

The necessary facts in the present case are that the assessee, an individual, is engaged in the trading business of agricultural related products. There was a bank account of the assessee which was jointly held along with his two brothers. There were cash deposits in the bank account of the assessee amounting to Rs. 46,23,500/-, the income from which was determined at Rs. 3,69,880/- being 8% of Rs. 46,23,500/- only. Thus, the addition of Rs. 3,69,880/- was made in the assessment framed u/s 143(3) of the Act, vide order dated 13/02/2014.

5.

Subsequently, the proceedings u/s 147 of the Act, were initiated against the assessee on the reasoning that the entire amount of cash deposits was liable to be taxed u/s 69A of the Act. Finally, the AO treated the entire amount of Rs. 46,23,500/- as income of the assessee u/s 69A of the Act, which was reduced by the amount of Rs. 3,69,880/- which was subject matter of addition in the assessment u/s 143(3) of the Act.

6.

Aggrieved assessee preferred an appeal to the Ld. CIT(A), who confirmed the order of the AO.

7.

Being aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us.

8.

The Ld. AR before us filed a paper book running from pages 1 to 117 and contended that there was sufficient cash withdrawal from the bank account which is enough to justify the source of cash deposit in the bank account of the assessee. The ld. AR also filed the copy of the cash book available on pages 40 to 41 of the paper book. As per the Ld. AR, the impugned cash book was filed during the original assessment proceedings and appellate proceedings. According to the Ld. AR, the fact of filing the cash book by the assessee was very much arising from the original assessment order and Ld. CIT(A), order which is not in dispute. Accordingly, the Ld. AR contended that there cannot be any addition u/s 69A of the Act in the given facts and circumstances.

9.

On the other hand, the Ld. DR contended that no prudent businessman/person will withdraw the money from the bank and re-deposit the same after the lapse of substantial period. According to the Ld. DR, the cash withdrawal from the bank must have been used by the assessee for some other purpose. As such, the cash withdrawal from the bank was not available with the assessee for re-deposit in the bank account. The ld. DR vehemently supported the order of the authorities below.

10.

We have heard the rival contentions of both the parties and perused the materials available on record. On perusal of the original assessment order, we note that there was some observation by the AO which is reproduced as under: The source of deposits, being cash in hand, was furnished in support of claim.

4 10.1 Likewise, we note that the assessee before the Ld. CIT(A), has submitted as under: It can be seen from the cash book enclosed herewith that there is no peak credit. Also, cash book is prepared by taking opening balance on 01/04/2010 as zero. Hence, the entire cash deposits are made purely out of withdrawals made by appellant. Thus, there is no element of undisclosed income in the case of appellant. 10.2 On conjoint reading of the facts discussed above, we hold that the assessee in support of the cash deposits has filed the cash book placed on pages 41 and 42 of the paper books. On perusal of the cash book, we note that there was sufficient cash available with the assessee for re-depositing the same in the bank account. Indeed, transaction of withdrawing money in cash from the bank account and re- depositing the same in the bank account is not a regular kind of transaction but there is no prohibition under the law for withdrawal of money in cash and re- deposit the same in the bank account of the assessee in cash.

10.3 The primary onus lies upon the revenue to prove that the cash withdrawal from the bank account has been used by the assessee for any other purposes. But we note that such onus has not been discharge by the revenue based on the cogent materials. Accordingly, we assume, though the cash withdrawal from the bank account and re-deposit is very unusual, but there is no bar under the statute. Thus, in such fact and circumstances, no addition is warranted on account of cash deposit in the bank account. Hence, we set-aside, the order of the Ld. CIT(A) and direct the AO to delete the addition made by him. Thus, the ground of appeal of the assessee is hereby allowed.

11. The assessee in the ground Nos. 1 to 3 has challenged the validity of the initiation of the proceeding’s u/s 147 of the Act.

12. At the outset, we note that the assessee has succeeded in the ground raised by it on merit. Accordingly, we are not inclined to adjudicate the issue raised by the assessee on the validity of the proceedings framed u/s 143(3) r.w.s.

5 147 of the Act. Thus, technical ground raised by the assessee is dismissed as infructuous. Hence, the ground of appeal of the assessee is dismissed.

13.

In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the Court on 15/12/2023 at Ahmedabad.

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