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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI WASEEM AHMED & SHRI SIDDHARTHA NAUTIYAL
आदेश/O R D E R
PER BENCH:
The captioned appeal hasbeen filed at the instance of the assesseeagainst the order of the Ld.Commissioner of Income Tax-(Appeals)-3 (in short the Ld. CIT(A)), Rajkotdated 31/01/2020arising in the matter of assessment order passed under Section 143(3) r.w.s. 144 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2008-09.
The assessee has raised the following grounds of appeal: “1. That, the Ld. CIT(A0 has wrongly confirmed addition of Rs. 72,96,000/- on account of Unexplained Cash Credit U/s. 68 of the I.T. Act.
2. That, the findings of the learned CIT(A) are not justified and are bad-in-law.
3. That, the appellant craves to add, amend, alter or delete any of the above grounds of appeals.”
3. The only interconnected issue raised by the assessee is that the Ld. CIT(A) erred in confirming the addition of Rs. 72,96,000/- under the provision of section 68of the Act treating the cash deposits in the bank as unexplained cash credit.
The facts in brief are that the assessee in the present case is an individual and engaged in the business of shipping under the name and style of M/s. Essar Shipping. The AO during the assessment proceedings found that there was cash deposit in the bank account of the assessee in the year under consideration amounting to Rs. 72,96,000/- only. On question by the Ld. AO about the source of cash deposit, the assessee failed to offer any explanation. Therefore, the same was treated as unexplained cash credit under Section 68 of the Act and addition of Rs. 72,96,000/- was made to the total income of the assessee.
Aggrieved assessee preferred an appeal before the Ld. CIT(A) who has confirmed the order of the AO by observing as under: “In this ground, addition u/s. 68 is contested. I find that the assessee has contended that cash deposits were not of cash withdrawals from other account of M/s SR City maintained in Axis Bank and withdrawal from account of M/s Jenus Shipping services Pvt. Ltd. With Axis Bank i.e. the same in which the assessee maintains bank account. The AO has reported that these contentions of the assessee are not tenable as the assessee has failed to show the need/urgency to withdraw cash from one account and deposit the same the other account. It is seen that on various occasions, the fund have been transferred from one bank account to other and therefore there is no justification to withdraw cash from one accountand deposit in the other account. The assessee has not providedany cash book in support of her contention. Therefore, merely because there were cash withdrawalsin one bank account it cannot be assumed that they were re-deposited in other bank account particularly when there were facilities to transfer fund from the one bank account to other bank account.
Similarly, regarding cash withdrawal from account of M/s Jenus Shipping Pvt. Ltd., and depositing in assessee's account, the company did not file return of income for AY 2009-10 and the creditworthiness of the company was unproved. Besides, no nexus was established between the cash withdrawal from bank account of the company and deposit in the account of the assessee. The AO has also contended that no books of accounts or cash book of the assessee were produced in support of contention to match the cash withdrawals from the stated banks account and deposits in the bank account.
Having considered the facts and circumstances of the case and detailed remand report of the assessing officer, I find that the contention of the assessee lack any merit. The assessee has failed to established satisfactorily that the withdrawals from own bank account or the bank account of the company were re-deposited in the impugned bank account. The assessee has not produced any books of account in support of his contentions and the manner in which stated transactions occurred. Therefore the contention of the assessee are rejected. The addition is confirmed, the ground of appeal no. 2 is rejected.”
Being aggrieved by the order of the Ld. CIT(A) the assessee is in appeal before us.
The Ld. A.R. before us filed a Paper Book running from Pages 1 to 49 and contended that there was cash withdrawn from the bank account of the company namely M/s. Genus Shipping Pvt. Ltd. which was used for the purpose of deposit in the bank account of the assessee. The Ld. A.R. to this effect has filed the copy of bank statement of M/s. Genus Shipping Company alongwith financial statements.
The Ld. AR further submitted that similarly there was a withdrawal of cash from the proprietary concern namely M/s Essar Shipping which was used for the deposit of cash in the bank account of the assessee. Similarly, on certain occasions there was cash available with the assessee in his cash book which was utilized for deposit in the bank account. Thus, in view of the above the Ld. A.R. contended that the assessee has discharged her onus by furnishing the details of the identity and creditworthiness of the parties as well genuineness of the transaction. Thus, no addition under section 68 of the Act is warranted in the given facts and circumstances.
On the other hand, the Ld. DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. The provisions of Section 68 of the Act fastens the liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties. These liabilities on the assessee were imposed to justify the cash credit entries under Section 68 of the Act by the Hon’ble Calcutta High Court in the case of CIT Vs. Precision Finance (P) Ltd. reported in 208 ITR 465 wherein it was held as under: “It was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough. “
Undoubtedly, there were cash deposits in the bank account of the assessee amounting to Rs.72,96,000/- and the onus lies upon the assessee to justify the source of such cash deposits in her bank account. From the preceding discussion, we find that the assessee during the appellate proceedings has justified the source of cash deposits in her bank account in the manner as detailed below:
i. There was cash withdrawal from the bank accounts of the company namely M/s. Genus Shipping Pvt. Ltd. on different occasions which has been used for the deposit in the bank account of the assessee. The assessee is also a director in the company namely M/s. Genus Shipping Pvt. Ltd. The assessee in support of her contention has filed the copy of the bank statement and audited financial statements along with the income tax return of M/s Genus Shipping Pvt. Ltd. As per the assessee, the transactions recorded in the bank statement of M/s Genus Shipping Pvt. Ltd.were matching with the bank account of her. The necessary details have been furnished in the paper book. ii. There was cash withdrawal from the bank account of the company namely M/s Essar Shipping on different occasions which has been used for the deposit in the bank account of the assessee. The assessee in support of her contention has filed the copy of the bank statement M/s Essar Shipping. As per the assessee, the transactions recorded in the bank statement of M/s Essar Shipping Pvt. Ltd. were matching with the bank account of her. The necessary details have been furnished in the paper book. iii. The assessee also submitted that there was cash withdrawal form her bank account which was re-deposited in her bank account. The assessee to this effect has given the trail of withdrawal of money from the bank and re-deposit of the same in her bank account. iv. The assessee also submitted that on various occasions the cash was available with her which is evident from the cash book which was used to deposit in her bank account.
Undoubtedly, the pattern of withdrawing the cash from the bank from the accounts of different companies as well as from her own account and re-deposit the same in the bank appears to be very of unusual/ abnormal and the same is not free from the doubts. But no adverse inference can be drawn based on the doubts and surmise. The inference of the AO, how strong it is, but is of no consequence until and unless it is based on some concrete materials.Such observation during the assessment proceedings provides reasons to investigate the matter in detail and the same cannot take the place of the evidence. In the present case, the necessary bank statements and explanation were furnished by the assessee to justify the source of cash and no iota of doubt was pointed out in such documents. To our understanding, such documents are primary documents which cannot be ignored while deciding the issue on hand. Thus, the assessee cannot be penalized if he was prevented from filing the secondary documents due to unavoidable reason such as cash book and other details.
We are also conscious to the fact that there was an amendment under the provisions of Section 68 of the Act wherein a proviso was inserted to justify the source of source in the specific circumstances but the same is not applicable for the year under consideration. It was brought under the statute with effect from 01.04.2013 and the Hon’ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure Pvt. Ltd., reported in 80 taxmann.com 272 has held that such amendment is prospective and applicable from A.Y. 2013-14 onwards. The year before us relates to the assessment year 2008-09 which is not subject to the amendment in the proviso of section 68 of the Act.
In view of the above and after considering the facts in totality we are of the view that the assessee has duly discharged her onus imposed under the provisions of Section 68 of the Act by furnishing the necessary details with respect to the identity, creditworthiness of the parties and genuineness of the transactions. Accordingly, we hold that no addition is warranted in the given facts and circumstances under the provisions of section 68 of the Act. Thus, we set-aside the finding of the Ld. CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the Court on 14/09/2022 at Ahmedabad.