TaxTMI 
TaxTMI 
2012 (12) TMI 1165
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....ash credit under provisions of section 68 of the Income Tax Act, 1961, amounting to Rs. 3,22,63,100/- and the Ld CIT (A)-23, has erred in confirming the same. 3. The ACIT, Circle-12(3)(2), Mumbai has erred in making assessment under section 143(3) dated 30.12.2010 in complete disregard to facts and evidence in the form of bank pass books and books of account and the Ld CIT (A)-23, has erred in confirming the same. 4. The order under section 143(3) dated 2.11.2011 passed by the ACIT, 12(3)(2), Mumbai is bad in law and need to be set aside." 3. Preliminary Issue - Additional Evidence: Shri Mayur Kisnadwala, Ld Counsel for the assessee mentioned that the assessee filed additional evidence invoking the provisions of Rule 29 of the Income Tax Rules, 1962 and prayed for admission of the same. The said additional evidence relates to the confirmation of Mr. Vinod Saraf dated 2.7.2012 and it is relevant in connection with the addition of cash advance of Rs. 15,11,000/-, which is claimed to have been paid by Sri Saraf in the context of a proposed sale of land by the assessee and the land is located at Kannamwar, Nasik. The evidence could not be produced before the Revenu....
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.... the files of the AO. Thus, considering the principles of natural justice, the revenue ought to be given an opportunity to examine the said additional evidences. Accordingly, additional evidences are admitted and remanded to the files of the AO for examining them as well as use of the same for deciding the issue afresh relating to the addition of Rs. 15,11,000/-, which is part of the gross addition of Rs. 3,22,63,100/-. Thus, the preliminary issue of additional evidence is decided accordingly. We shall take up the core issues raised in the grounds in the following paragraphs of this order. 6. We shall now take up the core issues narrated in the grounds raised before us. Briefly stated relevant facts of the case are that the assessee filed return of income declaring the income at Rs. 12,51,010/-. Assessee is a director in M/s. Bastiram Narayandas Sarda Pvt. Ltd. and M/s. Shrirang Prakasahan Pvt. Ltd. Assessee declared the income on account of salary, house property, trading in Futures & Options (F&O), capital gains etc and maintains bank accounts in various banks. During the scrutiny assessment, in 14 bank accounts of the assessee, AO noticed repeated transactions showing the cas....
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....and urgencies for meeting the urgent cash requirements in the alleged land dealings. Finally, AO treated the whole cash credits as unexplained and made addition u/s 68 of the Income Tax Act. Aggrieved with the same, assessee filed an appeal before CIT(A). 7. Before CIT (A), assessee submitted that there is quantitative matching of cash withdrawals and the cash deposits and there exists sources explaining the cash deposits and in such case, there is no case for addition u/s 68 of the Act. For every cash deposit, there is corresponding cash withdrawals from one or more bank accounts of either assessee or his company. All these accounts are disclosed in the Books of account. Further, assessee reasoned that it is not case of the AO that the said cash withdrawn was used by the assessee in other unaccounted asset and sources for cash on hand deposited refers to other unaccounted ones. Further assessee submitted in writing that the said cash was withdrawn for the specified reasons ie meeting the cash requirements of the proposed/unfructified land deals, meeting the expenditure of the company on reimbursement basis and also to meet the domestic needs, and the AO has failed to rebut the ....
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....y evidence that an amount was received from Shri Vinod Sraf against the land. Further, CIT (A) noted the no supporting evidence was produced by the assessee to substantiate that an amount of Rs. 15 lakhs was received from Mr. Satish Mithulal Tiwari relating to land deal and assessee could not furnish the agreement copies. The CIT (A) enlisted certain transactions involving large amounts too. Further, CIT (A) was also critical of the assessee's failure to furnish travelling bills in support of the cash withdrawn on account of travelling advances and the assessee's explanation that cash was withdrawn for company's expenditure and the company reimbursed the same. The explanation of the assessee regarding cash investments in the lands and for travelling expenses were also dismissed in the light of absence of any evidence. Thus, the CIT (A) came to the conclusion that the addition u/s 68 should be confirmed in view of the following reasoning given by him in his order. "Thus, the nexus between the withdrawals from banks and redeposit out of the withdrawals has not been established, since the link between the withdrawals and deposits, viz., the purpose has not been substantiated ....
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....ts. It is also a fact that a proposed immovable property transactions never fructified and therefore, the cash is redeposited back into the accounts of the assessee. As per Ld Counsel, there is no law precluding the assessee from keeping any amount of cash at home and 'cash in hand' is accepted account in the Balance Sheet. 11. Onus: Referring to issue of discharge of onus, the Ld Counsel mentioned that the assessee discharged the same by explaining in writing the reasons for cash withdrawals and re-depositing of the said cash on hand back into the accounts as and when the same were not required. AO merely disbelieved the said explanation and he cannot make additions in the assessments merely on the basis of surmises and conjecture. Further, Ld Counsel mentioned that the assessment is made under normal provisions of the Act and not under the provisions relating to search assessment, which places the assessee on different pedestal in the matters relating to onus. Ld counsel mentioned that when assessee discharged the initial onus, it is for the AO to show the evidence that the 'cash withdrawn' from the accounts are utilized elsewhere for other unaccounted purposes. It is for the ....
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....n the sources for the large deposits enlisted by CIT(A) in her order. At the end, Ld Counsel summed up by stating that the assessee withdrew cash from the company as well as his 14 bank accounts located both in Mumbai and Nasik for the purpose of meeting the proposed land deals one side and the other cash needs of the company and the domestic needs and the unutilized or unused cash was kept with him for some time, of course not for years, before the same is redeposited in the assessee's bank accounts. Of course, there is no dispute on the accounted nature of the Bank accounts and also the cash withdrawals and cash deposits in the books of account, which are not rejected by the Revenue. Thus, the assessee successfully discharged the initial onus successfully and the AO has refused to accept the said explanation as the AO is prejudiced observing large number of cash transactions due to reasons of surmise and conjecture. 14. Further, Ld Counsel for the assessee mentioned that the AO erroneously invoked the provisions of section 68 of the Act to tax the unexplained money. Section 68 deals with the entries of cash credit in the books of the assessee. In the instant case, the AO did n....
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....d the first appellate proceedings, Ld DR should not make a new case before the Hon'ble ITAT. In this regard, Ld Counsel relied on various judgments to support his assertion. When the AO accepted the said documents, Ld DR's duty stops with the defending of the issues raised in the grounds and he is precluded from creating new issues for the first time before the Tribunal. At the end, Ld AR for assessee mentioned that the revenue authorities failed to explain the end use of the cash withdrawn by the assessee from his bank accounts and the company accounts, if they are not used for re-depositing in the said accounts. Therefore, the nexus is established by the assessee and when no discrepancy is made out by the revenue, they should accept the argument of the assessee. Assessee filed written submission to reiterate their line of arguments. Decision of the Tribunal: 18. We have heard the parties and perused the orders of the revenue and the paper books filed by the parties. We have also perused their written submissions. Undisputed facts are that assessee owns 14 bank accounts, which are duly disclosed in the books of accounts. There is no dispute on the fact there exists cash with....
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....s namely for meeting the cash requirements of the company on reimbursement basis, house hold expenditure and maintaining cash on hand for meeting the contingencies of the land business. In this regard, we find that there is repeated withdrawal of cash from and to the company accounts as well as the bank accounts of the assessee and it suggest the flow of cash from company to the assessee and vice versa. Considering the fact that the cash withdrawn from the company accounts is shown re-depositied in the bank accounts of the assessee, the transactional requirement stands satisfied. Further, we find that the assessee explained that the cash withdrawn is kept with him to meet the contingencies relating to domestic and proposed land purchase transactions. In support of the said explanation relating to land deals, papers at page 275 to 280 relates to Sri Satish Mithulal Tiwari, who gave cash advance to the assessee in connection with the purchase of the land, was finally refunded. The fact assessee receiving the cash in similar transaction when he sold land to Sri Rajkumar Mahale and another transaction of unfructified sale of land to Sri Vinod Saraf who paid cash Rs. 15.11 lakhs were al....
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.... Months 9. Tanmoy Chatterjee ITA No.1434/Kol/2009 1 Month 10. ACIT vs. Baldev Raj Charla, 121 TTJ 366 (Delhi) 1-2 Months 11. ITA No.957/M/2009 M/s. Cellplus Telcomes 09 Months 21. The above judgments from various benches of the Tribunal as well as the Higher courts suggest that the assessee can explain the cash deposit in the banks using the cash held by him for period longer than 2 years and there is no restraining provisions against such maintaining balance for the said periods. Hon'ble Karnataka High Court has found an assessee has kept cash for 2 years and the same is accepted as the source for explaining a cash deposit. Of course, Ld DR attempted to distinguish the above cases as cases of few credits and incomparable to the 298 transactions reported in the instant case. In our opinion, number of transactions is not a relevant factor as the transactions number vary from assessees to assessee depending on their requirements relating to business, domestic and their plans and perspective. Therefore, the instant case being the retaining of cash for few weeks/months only, the arguments of Ld DR has to be dismissed and uphold the views of the AR fo....
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.... of adequate cash balance prior to such cash depositing becomes very crucial and decisive factor. In this regard, Ld Counsel relied on a decision of the Tribunal in the case of Shri Bharat Ranawat vide I.T.A. NO.3338/M/2010 for the AY 2008-2009 and read out para 10 of the same which is as under: "10. From the above, it is evident that the assessee mentioned that the source of unexplained gold and diamond jewellery is out of stridhan and customary gifts from nears and dears. ..... ..... On a perusal of the said decision of the CIT(A) we find that there is a need for the assessee to explain about the existence of the secret funds or undisclosed funds prior to the acquisition of the impugned gold and diamond jewellery. So long as assessee has not successfully discharged the onus, the claim of the assessee for telescopic benefit cannot be entertained." 22. Therefore, the existence of the funds/cash withdrawn prior to investment in the unaccounted asset as in that case or depositing in the bank accounts as recorded in the book of accounts, is the essential fact that is required to be established by the assessee in this kind of matters. In the instant case, the assessee has f....
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....an explanation is given, he cannot put to further prove whether the business on the statement of accounts and disallowance of the assessee justify the reasonable inference that he might have kept the whole or part or a particular sum, he prima facie discharges his initial burden when he proves the cash balance. But the department before rejecting the assessee's explanation must either inherent weakness or rebutted by putting to the assessee some information or evidence which it got in its decision. Held: (i) that what the assessee is required to prove is the source of money and once he is successful in proving the same, he cannot be put to further proof of acquisition of such amount in the currency notes of particular denomination. If the explanation shows that the receipt was not of to hold that it was income. Where the business and the state of accounts have for convenience kept the whole or a part of a particular sum in high denomination notes, the assessee, prima facie, discharges his initial burden when he proves the cash balance and that it might have been kept in high denomination notes. Before the Department rejects such evidence, it must either show an inherence w....
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....h prior in time vis avis the cash credits/deposits in the books of the assessee. It is a settled legal proposition that the funds on hand whether real or notional constitutes the source to explain the acquisition of asset or investment as deposit as in this instant case. There is no need for establishing the rupee to rupee nexus. The ratio of the judgment of the jurisdictional High Court in the case of Narendra G Goradia (HUF) 234 ITR 571 supports the above view and mere existence of sufficient cash balance is enough to explain the cash credit. In the absence of adverse finding on the use of available cash balance by the AO, in our opinion, the co-relationship between the cash on hand and cash deposit is presumed existing and to that extent the judgment in the case of Baldev Raj Charla 121 ITR 807 and Moongipa Investment Ltd ITA no 2605/Del/2007, Surendra Singh ITA NO 650/ JP/2011 many other helps the assessee. In the instant, we find that the assessee has discharged the 'initial onus' that is cast on him and it is the AO who has not done his bit of it. As held by the jurisdictional High court, it is not the requirement of the law that the assessee is under obligation to demonstrat....