PREMJIBHAI AVCHARBHAI DALSANIA,NA vs. ARIVS.ITO, WARD-4, NAVSARI

Grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer in reopening the assessment u/s 147 after issuing notice u/s 148 of the Act and passing the reassessment order which is bad in law. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in partly confirming the action of assessing Officer by sustaining the addition of Rs.5,00,000/- out of total of Rs.15,00,000/- on account of alleged unexplained cash deposit in the bank account of the assessee u/s 68 of the Act.

Succinct facts are that during the assessment proceedings, Assessing Officer noted that assessee had purchased property being land for Rs.2,00,00,001/- wherein his share was 1/10th. The total cost of acquisition for 1/10th share of land was Rs.21,21,033/- (Rs.20 lacs + Rs.1,21,033/- expenses). The appellant was required to explain the source of fund for investment in the immovable property. In reply, the appellant had furnished the detail of unsecured loan of Rs.10 lacs, taken from Rajesh T. Likhiya and sundry creditors of Rs.12,90,000/-. However, the Assessing Officer found that the balance sheet filed with the original return of income indicated Rs.12,90,000/- as loans and advances and there was no sundry creditors in the balance sheet. The Assessing Officer examined the bank statement and found that cash deposit of Rs.5 lacs was made on 21.01.2009. Further, transfer of Rs.5 lacs on 28.01.2009 and another Rs.5 lacs on 16.02.2009 from Harsukhlal Manilal Kachrola was noted by the Assessing Officer. The bank statement of Shri Harsukhlal M. Karchola. was also analysed by the Assessing Officer and it was found that cash deposit of Rs.5 lacs on 28.01.2009 and another cash deposit of Rs.5 lacs on 16.02.2009 in the bank account of Harsukhlal M. Kachrola were made. Thus, the Assessing Officer noted that the receipt of Rs.10 lacs from Harsukhlal M. Kachrola was preceded by equivalent amount of cash deposits. These findings by the Assessing Officer led to the conclusion than the appellant had no explanation for the cash deposit of Rs.5 lacs in his own bank account and transfer of Rs.10 lacs from Harsukhlal M. Kachrola. Hence, this amount was added as unexplained cash credit u/s. 68 of the Act. The Assessing Officer also noted that

On appeal, ld. CIT(A) deleted the addition at Rs.10,00,000/- out of total addition of Rs.21,21,033/- and restricted addition to Rs.11,21,003/- (Rs.5,00,000 + Rs.6,21,033). Aggrieved the assessee is in further appeal before us.

The Ld. Counsel submits that addition of Rs.10 lacs pertaining to unsecured loan of Shri Harskhial M. Kachroia was made by the AO merely on presumption and without any inquiry conducted u/s 133(6) or 131 of the Act. With regard to the cash deposit of Rs.5 lacs in his bank account and cash expense of Rs.6,21,033/-, it was stated that the said amounts were out of regular construction business as well as sundry creditors of Rs.12,90,000/-. The issue was remanded to the AO for verification and inquiry of Harsukhlal M. Kachroia u/s 133(6)/131 of the Act was made. In the remand report dated 24.10.2018 and 30.05.2019, the AO submitted detailed report. In the remand report dated 30.05.2019, the AO noted that the source of cash deposits of Rs.10 lacs in the hands of Harsukhlal M. Kachrolal was explained to be out of sale of trucks. However, documents pertaining to sale of trucks were not submitted to the AO and therefore, it was stated by the AO that creditworthiness of Harsukhlal M. Kachroia was not proved. As regards cash deposit of Rs.5 lacs in the saving account of the appellant and cash expenses of Rs.6,21,033/-, the AO stated in the remand report that no cogent documentary evidences were produced to prove the availability of cash of Rs.11,21,033/-. In the rejoinder reply to the remand report, the appellant submitted notarized copy of vehicles sale agreement dated 09.01.2009 between Harsukhalal M. Kachroia and Narshinbhai L. Ghhanga. Another agreement for sale of vehicles dated 09.01.2009 was

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 7. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. As regards the cash availability of Rs.11,21,033/- in the hands of the appellant for cash deposit of Rs.5 lacs on 21.01.2009 and cash expense of Rs.6,21,033/-, the appellant has filed computerized cash book. In the said cash book statement, the appellant has shown receipts of loan and advances of Rs.20,000/- on various dates. The assessee submitted Balance Sheet, Profit and loss account and capital account which is placed at paper book page no.43 to 44. The assessee also submitted cash book for the year ending 31.03.2009, which is placed at paper book page no. 45 to 47.The cash deposit of Rs.5 lacs in the saving bank account of the assessee and cash expenses of Rs.6,21,033/- are getting reflected in the financial statements. We note that Assessing Officer has note refuted or discredited the cash book, cash statement, Balance Sheet, Profit and loss account and capital account. The Assessing Officer does not mention why he is not accepting these evidences and financial statements? It is well-settled law that when an assessee has all possible evidence in support of his claim they cannot be brushed aside based on surmise. Hence we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition of Rs.11,21,003/- (Rs.5,00,000 + Rs.6,21,033), so made is deleted. Hence this ground of the assessee is allowed.

In the result, the appeal of the assessee is allowed.