TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 531
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.... bank account of the appellant were duly explained by legitimate sources, which included but were not limited to the opening cash balance as reflected in the books of accounts maintained by the appellant as well as the return of income filed by him for the previous assessment year, i.e., AY 2016-17. 4. The learned Commissioner of Income Tax (Appeals) has assumed the armchair of the appellant in surmising that the cash held in hand was too distant in time to have remained intact, and therefore was unexplained. 5. The learned Commissioner of Income Tax (Appeals) has grossly erred in law, in upholding the additions made under Sec.69A by adopting the "theory of probability", as admitted by him in the impugned appellate order, without refuting actual facts on cogent grounds. 6. The learned Commissioner of Income Tax (Appeals) has also erred in facts in holding that the income of the appellant was not commensurate to explain the cash deposits, by ignoring that the appellant was in receipt of income from numerous sources, including rental income, business income, interest income, etc. all of which were duly declared in the returns of income filed by him for 7 years prior to the r....
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....veri Gramin Bank, Thanisandra Branch, Bangalore, during the demonetization period, i.e. the date after which the note denomination of Rs. 1,000/-and Rs. 500/- were notified as ceasing to be legal tender, the Learned Assessing Officer required the assessee to show cause as to why the said cash deposits aggregating to Rs. 19 Lakh should not be treated as unexplained income for the FY 2016-17 relevant to the AY 2017-18. 2.2. The ld. A.R. submitted that in response to this, the assessee filed his objections to the said show cause notice dated 16-10-2019, submitting that during the preceding previous year, i.e. FY 2015-16, he had carried on the business of executing civil contracts and accordingly filed his balance sheet and income and income and expenditure account for the year ended 31-03-2016, which indicated that the closing balance of cash in a sum of Rs. 19,71,2447- was available with him at the end of the FY 2015-16. He also submitted that all the cash deposits were made from out of the opening balance of the cash available with him as well as the cash generated during the FY 2016-17 from out of the rental income etc. during the year. 2.3. The Learned Assessing Officer however,....
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....uting civil contracts in and around the city of Bangalore up to and inclusive of the FY 2015-16. For the FY 2016-17 relevant to the AY 2017-18, i.e. the year under appeal, the assessee had not carried on the said business of executing civil contracts and consequently no income was returned under the head "profits and gains of business or profession". However, as is a common requirement in the nature of business carried on by the assessee, he had set aside a significant sum of money to meet costs of labour, raw material, etc., in the event that any contracts were awarded to him. That apart, the assessee had, on 13-06-2006, purchased the immovable property, being the vacant site No. 1, K. Narayanapura Village, K R Puram Hobli, Bangalore for the purpose of construction of a residential house thereon. During the FY 2016-17 had withdrawn significant sums of money by way of cash from his business for the purpose of meeting the costs of construction, particularly labour, and expenses which mostly have to be incurred by way of cash. However, when the demonetization of the specified bank notes was announced, the assessee had no other choice but to deposit entire cash available with him, whi....
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....arned Commissioner himself has conceded in paragraph 5.2.3 of the impugned order that he is inclined to go by the "theory of probability" to hold that the closing cash balance as on 31-03- 2016 was too distinct in time to have remained intact till its deposit upon demonetization of the specified bank notes, without adducing any concrete or tangible evidence on the basis of which an adverse inference could have been drawn that the assessee had indeed utilized the cash for other purposes and that therefore the cash deposited did not represent the cash held as at the beginning of the financial year. In doing so, the Learned Commissioner has grossly erred in confirming the additions based on a mere surmise rather than relying on empirical evidence to justify his contention. 2.8. The ld. A.R. submitted that the learned CIT (Appeals) in confirming the addition made under Sec.69A to the extent of Rs.16 lakhs, has chosen to disregard the evidence filed by the assessee and has instead made additions based on a mere suspicion without adducing any counter evidence or any information that suggested otherwise. In this regard, he referred to the decision of the Delhi Bench of the ITAT in Moongi....
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.... deposited was from out of the opening cash balance as well as the cash withdrawals made during the pre demonetization period, as evidenced by the cash book produced by the assessee, no interference was called for with the findings arrived by the learned Commissioner of Income Tax (Appeals) who had deleted the disallowance u/s. 69A. Reliance is also placed by him on another decision of the same bench of the ITAT in Smt. Perminder Kumar Matharoo Vs. ITO (ITA No. 840/Del/2021) wherein the Hon'ble Bench held that where cash flow statement is not controverted by the Assessing Officer as well as Commissioner of Income Tax (Appeals) in the light of the submissions with the cash flow was based on the entries in the cash book, the source of cash deposited in the bank account could not be disregarded by the lower authorities. He submitted that in doing so, the Hon'ble Bench has placed reliance on the decision of the Hon'ble High Court of Delhi in Omni Info (ITA No. 364/2016 dated 29- 07-2016). Similarly, reliance is also placed on the following decision: a. ITAT Delhi in Thangzamuan Hangshing vs. ITO - ITA no. 758/Del/2022 b. ITAT Ahd. in Vijaykumar Vithaldas Prajapathi v. ITO....
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....ions of Section 44AA(2)(i) which required any person whose income from business or profession exceeded Rs. 1,20,000/- or whose sales turnover or gross receipts in business exceeded Rs. 10 lakhs in any one of the three years immediately preceding the previous year, to maintain such books of accounts and other documents as may enable the assessing officer to compute his total income in accordance with the provisions of the Act. A perusal of the statement will reveal that the business turnover of the assessee for the AY 2014-15 was Rs. 13.86.823/- and the corresponding business income returned was Rs. 1,29,362/- and consequently he was required to maintain proper books of accounts, which he duly did, and the financial statements drawn up on the basis of such books of accounts were duly declared in the income tax returns filed by him. Admittedly, the assessee was not in receipt of any income from business during the FY 2016-17 relevant to the AY 2017-18, and consequently was not required to compiled any financial statements, but did so for the purpose of substantiating his stand during the scrutiny assessment proceedings. Accordingly, in the said financial statements compiled by him fo....
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....l other sources of cash. Such a view, he submitted, must not be sustained and deserves to be expunged. 2.13. Without prejudice, he further submitted that this is not a case where the said sum of Rs.19 lakhs "is not recorded in the books of account" of the assessee, which is a sine-qua-non for the invoking of the provisions of Sec.69A. This is evidenced by the extracts of the Cash Book which show not only the deposits of cash but even the source of the cash that was deposited. Reference is invited to the decisions in Vinod Behari Jain vs. ITO: 117 ITD 220 (Del ITAT), ITO vs. Naveen Kumar Agarwal: 25 SOT 253 (Del ITAT) and Smt. Renu Agarwal vs. ITO : 51 taxmann.com 207 (Agra ITAT), wherein it was held that where any sum is not credited in the books of account, the same would be treated as unexplained money under section 69A, and if such sum was credited in the books, addition could be made under Sec.68 of the Act. We may add that the assessee herein had maintained books of accounts for the year in question despite not being required to do so, and the extracts of the cash book where such deposits are figuring, were filed during the course of the assessment proceedings. However, as su....
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....ted 15.9.2022 wherein held as under: "7. We have carefully considered the rival contention and perused the orders of the lower authorities. Admittedly the assessee has deposited Rs. 298,08,080/- during the post- demonetization between 09/11/2016 and 30/12/2016. Therefore, Ld.AO made addition of INR 5,82,76,300/- as income of the assessee u/s. 68 of the income tax act, by passing assessment order u/s. 144 of the Act. The Ld.AO made such addition as the assessee could not file requisite details as the notice was issued to the email address that was not functional. In the interest of justice, we deem it proper to remand the issues back to the Ld.AO for a de novo verification. 7.1 We have carefully gone through the various standard operating procedures laid down by the central board of direct taxes issued from time to time in case of operation clean. The 1st of such instruction was issued on 21/02/2017 by instruction number 03/2017. The 2nd instruction was issued on 03/03/2017 instruction number 4/2017. The 3rd instruction was in the form of a circular dated 15/11/2017 in F.No. 225/363/2017-ITA.II and the last one dated 09/08/2019 in F. No.225/145/2019-ITA.II. These instruc....
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....unt is available to the assessee to deposit it into these two bank accounts. The department has no contra evidence to deny the availability of said opening balance to deposit into assessee's bank accounts. In my opinion, similar issue came for consideration before this Tribunal in the case of Shri Narayana Shibaroor Shibaraya Vs. ITO Ward-3(3)(3) in ITA No.684/Bang/2022 dated 23.11.2022 wherein held as under: "5. I have considered the rival submission. I am of the view that the explanation offered by the Assessee with regard to the source of deposit of Rs.15.00 lakhs in his bank account is satisfactory and therefore, no addition can be made on account of unexplained cash. As rightly contended by the ld.counsel for the Assessee, the withdrawal of cash from the bank account prior to deposit of cash is not disputed by the revenue. The fact that the Assessee did not explain the reasons for withdrawal of cash from his bank account cannot be the basis to hold that the source of deposit of cash was not explained by the Assessee. The legal position in this regard is that if the deposit of money in the bank account is preceded by withdrawal of money from the very same bank account, then t....