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2024 Supreme(Online)(ITAT) 4110
INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
Smt. Annapurna Gupta, ACM, Shri T.R. Senthil Kumar, J
DIPAK BALUBHAI PATEL - HUF AHMEDABAD – Appellant
Versus
THE INCOME TAX OFFICER WARD-5(3)(1) AHMEDABAD – Respondent
ITA No. 942/Ahd/2023
For the Appellants/Petitioners: Shri Pritesh Shah, CA
For the Respondents: Shri Santosh Kumar, Sr.D.R.
The court ruled that cash deposits during demonetization must be substantiated with evidence to be considered unexplained under the Income Tax Act.
Headnote:(A) Income Tax Act, 1961 - Sections 69A and 115BBE - Cash deposits during demonetization period - Assessee, a Karta of HUF deposited substantial cash in bank, which was declared as accumulated withdrawals - Assessing Officer deemed deposits as unexplained money, invoking Section 69A - CIT(A) upheld this assessment - Tribunal found cash recorded in books, ruling addition was inappropriate and insufficient evidence was provided for unexplained cash. (Paras 6 and 7)
(B) Burden of Proof - It is the assessing officer's duty to provide substantial evidence of any cash considered as unaccounted, especially if the source is explained by the assesseee. (Paras 6.1 and 6.2)
Facts of the case:
The appeal challenged the addition of Rs.10,75,000/- as unexplained income treating cash deposits made during demonetization as non-justifiable, although supported by the cash book entries of income accounted for in the assessee's Return of Income.
Findings of Court:
Tribunal determined the Assessing Officer failed to satisfactorily explain the basis for claiming the cash deposits were unexplained, affirming the assessee's accounts were legitimate and properly maintained showing sources of the deposits.
Issues: The principal issue was whether the cumulative cash explained in the accounts was sufficient or if it fell under unexplained cash as defined by the Act.
Ratio Decidendi: The court held that deposits were adequately documented within the provided records, and unfounded assumptions by the AO led to unjust taxable additions. Thus, the requirements of proof were not established as law mandates.
Result: Appeal filed by the Assessee is allowed.
| Table of Content |
|---|
| 1. facts of cash deposit (Para 2) |
| 2. arguments regarding book accuracy (Para 4 , 5) |
| 3. court observations on evidence (Para 6) |
| 4. final judgment and ruling (Para 7) |
आदेश/ORDER
PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
This appeal is filed by the Assessee as against the appellate order dated 31.10.2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18.
2. The brief facts of the case is that the assessee is a Karta of HUF who derived income from House Property and Income from Other Sources. The assessee filed his Return of Income for the Asst. Year 2017-18 on 11-08-2017 declaring total income of Rs.5,73,170/-. The return was taken up for scrutiny assessment, the Assessing Officer found that the assessee in his Account with Bank of Baroda deposited a sum of Rs.10,75,000/- during demonetization period and issued show cause notice to explain the above source of cash deposit.
2.1. The assessee replied the source of cash deposit in Bank of Baroda is withdrawal from four other banks namely Corporation Bank, State Bank of India and two other Bank of Baroda Accounts. The above cash deposits is duly reflected in the Return of Income filed in ITR-2 at Page No. 4 Serial No. 14. Further the assessee was not having any business income but rental income and other sources income only, therefore he has not filed the Profit and Loss and Balance Sheet along with Return of Income. However filed the same before the Assessing Officer along with cash book, wherein cash on hand as on 01-04-2016 as opening balance is Rs.10,75,000/-, which was deposited in Bank of Baroda during demonetization period, therefore requested not to make any addition. However Assessing Officer rejected the Books of Accounts by stating on the verification of the Return of Income filed for the A.Y. 2016-17, assessee has shown Closing Cash on hand Zero and in the Cash Book of F.Y. 2016-17 i.e. A.Y. 2017-18, assessee has shown Opening Balance to the tune of Rs.10,09,933/- which is not justifiable and therefore made addition as unexplained money u/s. 69A of the Act and tax the same u/s. 115BBE of the Act.
3. Aggrieved against the addition, the assessee filed an appeal before Ld. CIT(A) who confirmed the additions by observing as follows:
“….All grounds are against addition of Rs.10,75,000 u/s 69A and invoking provisions of section 115BBE. The assessing officer raised specific query regarding source of cash deposit of Rs. 10,75,000. The appellant submitted that it is accumulated drawings from banks during previous 3 years which was kept unutilized with him and deposited in bank during demonetization. The appellant submitted the following table to show accumulation of cash in hand which was re-deposited.
| FINANCIAL YEAR | OPENING CASH | CASH WITHDRAWINGS FROM BANK | CASH SPENDING PAYMENTS | CLOSING CASH ON HAND | GROSS INCOME | TAX PAID | ENCLOSED PAGE NO |
| 31/09/2015 | 4,18,827/- | 4,44,500/- | 89,616/- | 7,74,711/- | 7,38,609/- | 34,534/- | ITR AND CASH BOOK |
| 31/09/2016 | 7,74,711/- | 7,29,722/- | 4,94,500/- | 10,09,933/- | 5,91,236/- | 15,120/- | ITR AND CASH BOOK |
| 1/4/16 to 13/11/2016 | 10,09,933/- | 4,19,000/- | 10,75,000/- | 1,73,933/- | 8,58,323/- | 40,823/- | ITR AND CASH BOOK |
Documents submitted by appellant were verified along with cash book. It is seen that cash was withdrawn in small amounts from bank accounts. During the previous 3 years, except 2 or 3 instances, all withdrawals were less than Rs. 10,000. The appellant claims that he has preserved the numerous withdrawals during last 3 years in his hand so as to deposit cash in the year under consideration. This argument of the appellant does not resemble normal human behavior. The law is well settled that the assessee can show earlier cash withdrawals from bank account as source of subsequent cash deposits unless the revenue is able to show that the cash s
