TaxTMI 
TaxTMI 
2024 (7) TMI 645
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....es i.e. out of b/f. cash balance and from practice income as Gynecology Doctor, appearing in audited books of account, duly examined and accepted without application of provisions of section 145(3) of Act. 2 Ld. CIT(A) was not justified in allowing only partial relief of Rs. 19,00,000/- out of total addition of Rs. 99,96,000/- under sec. 68 of I.T. Act made by the Id. AO by avoiding the fact that from total practice income of Rs. 1,73,27,300/-, major part was deposited in bank a / c after declaration of demonetization of currency notes. 3 Ld. CIT(A) has erred in accepting but not disposing of the ground of appeal in respect of levy of special rate of tax under sec. 115BBE of I.T. Act for the debit side of cash book (deposits in bank a/c) whereas credit side i.e. receipts from practice income was accepted as genuine." 3. Succinctly, the fact as culled out from the records is that the assessee e-filed her return of income on 07.11.2017 declaring total income at Rs. 1,74,96,020/- for the AY 2017-18. The case of the assessee was selected manually for scrutiny as per instruction no. 4/2018 dated 20.08.2018 for cash deposit during the demonetization, after taking app....
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.... given any reason to justify such spike in cash deposit and there is no justification for sudden jump in practice, (d) evidence also emerge that the group has huge amount of unaccounted cash and thus, the genuineness of the argument of the assessee was not accepted. Based on these observations the ld. AO considered Rs. 99,96,000/- as income as per provision of section 68 of the Act. 4. Aggrieved from the order of the assessment, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: "Decision:- From the analysis of the relevant facts brought on record by the parties it can be seen that the appellant is a doctor. Also, there is no reasonable justification for the sudden spike in cash deposits post demonetization. Appellant has not submitted any evidences/documents regarding higher cash balance other than the cash book prepared by the appellant. During the appellate proceedings the appellant has submitted cash book on 25.02.2021 and further submitted the cash book on 22.02.2024. On perusal of both cash book it is found that there are difference....
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....an income nature. The very words 'an undisclosed source' show that the disclosure must come from the assessee and not from the department." (emphasis supplied) It is further observed in this case by the Hon'ble Supreme Court as under:- In the present case, the assessee claimed that the high denomination notes were a part of the cash balance at the head-office. The Income-tax Office found that at first the cash on hand was said to be Rs. 1,62,022, but on scrutiny, it was found to be wrong. Indeed, the assessee himself corrected it before the Appellate Assistant Commissioner and stated there that the balance was Rs. 1,21,875. Ordinarily, this would have prima facie proved that the assessee might have kept a portion of this balance in high denomination notes. But the assessee failed to prove this balance, as books of the assessee did not contain entries in respect of banks. Though cash used to be received from banks and sent to the various places where works were carried on and vice versa, no central account of such transfers was disclosed. There was also no account of personal expenses of the assessee and he had failed to prove why such large su....
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....ific month, the appellant would have withdrawn the cash in that particular month and would have deposited the same back within a short span of time in the same purpose did not remain in existence. At the same time, regarding the observation of the assessment order that the appellant did not produce the details of the patients etcetera is held to be not crucial as no such particular statutory record is required to maintained as noting in this regard is highlighted in the assessment order. And there is no prescribed method of verification by any medical authority from time to time. As per the same analogy, the record referred by the appellant before the Id. AO in this regard to support the practice income cannot be relied. The documents produced stated as patient registers are computer printed, having first names only and having running serial number and running registration number. There is no mention of time of visit. There is no link back of patients who visit second time or further times which is very common in gynecology. In view of the detailed discussion the registers are not reliable. Similar issue had arisen in the case of another individual of the group. H....
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....t as the primary onus for explaining source of cash deposits being SBNs during demonetization period lies only over the appellant. It is binding on the appellant to prove the genuineness and correctness of sources of unexplained money so deposited in bank account. The Hon'ble Supreme Court of India pronounced order in the case of Commissioner of Income Tax, Salem Vs. K. Chinnathamban bearing appeal No. [2007] 162 Taxman 459 (SC)/[2007] 292 dated 24.07.2007 had held that: "Whether onus of proving source of deposit primarily rests on persons in whose names deposit appears in various banks Held, Yes; Whether since assessee had failed to show that amount in question did not represent his income, Department was justified in treating same as assessee's income under section 69A Held Yes." The Hon'ble High Court of Kerala pronounced in the case of K. V.Mathew Vs. Income Tax Officer, Ward-2(3), Range-2, Ernakulam bearingOrder No. [2014] 42 taxmann.com 571 (Kerala) Appeal No. 95 of 2012dated 04.10.2013 had held that: "A huge amount was found deposited in savings bank account of assessee, which he claimed to have been received from his ....
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....tice income appearing in cashbook were found correct and genuinely explained but addition for deposits of demonetized currency in bank a/c. only in demonetization period (09.11.2016 to 31.12.2016) amounting to Rs. 99,96,000/- was made under sec. 68 of I.T. Act. In first appeal, ld. CIT(A) sustained addition of Rs. 80,96,000/- and allowed relief of remaining addition of Rs. 19,00,000/-. GROUNDS OF APPEAL: GROUND No. (1): Ld. CIT(A), has erred in law and on facts in sustaining addition of Rs. 80,96,000/- out of total addition of Rs. 99,96,000/- for the deposits of demonetized currency notes in bank a/c. from explained sources i.e. out of b/f. cash balance and from practice income as Gynecology Doctor, appearing in audited books of account, duly examined and accepted without application of provisions of section 145(3) of Act . Ld. CIT(A) was not justified sustaining addition of Rs. 80,96,000/- out of Rs. 99,96,000/- made by ld. AO for bank deposits in period of demonetization of currency notes more so when the receipts or sources of cash appearing in cashbook (P.B. page 6 to 32) were accepted as genuinely explained. From other point of view, the extra source....
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..... 1,73,27,300/- , major part was deposited in bank a/c. after declaration of demonetization of currency notes. Avoiding the explained sources appearing in books of account and also the figures tabulated as per ground No. (1) hereinabove, ld. CIT(A), while repeating but not implementing all the four allegations made by ld. AO, at page (5) of order dated 31.12.2019 under sec. 143(3) of I.T. Act, had allowed only part relief of Rs. 19,00,000/- out of total addition Rs. 99,96,000/-. The allegations of the ld. AO against the assessee and the explanation/factual position is: (1) Deposit of cash through consultancy fee but details regarding patients from whom consultancy received not furnished: At para No. (1) at page (5) ld. AO had admitted that "the assessee has justified the source of cash deposited from cash generated from consultancy fee". Though against the principles of natural justice by allowing single intervening day vide show-cause notice dated 18th December 2019 (P.B. page No.41), ld. AO required from the assessee, the details of patient like their addresses, phone number etc. Two registers for the patients, giving details like date of consultation, ....
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....00/- and of Rs. 500/- on declaration of demonetization was nil, therefore the only course open with the assessee was to deposit the demonetized currency in her bank account. If the yearly deposit of currency in bank during the relevant year is compared to immediately preceding year, it was more or less same in proportion to assessee's income from medical profession as per following details: Bank deposits Bank deposit % increase Taxable income % increase P.B. Page Asstt. Year 2016-17 1,37,20,500 100% ,49,43,560 100% 37, 39 Asstt. Year 2017-18 1,75,77.700 128%* 1,74,96,020 117% 38, 40 (* higher due to reduction in cash in hand -as per table A at page (1) above) Surprising part of such addition is that when source of cash was found by both the lower authorities as explained how and why part cash deposit in bank was treated as unexplained when deposited in bank as demonetized currency and remaining deposits as explained ? (4) Reference of search in case of NIMS Group: It is true that NIMS Group and its Trustees (including the assessee) were subjected to action u/s. 132 of the Income tax Act on 30th October....
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.... sec. 68 of Act when cash deposited in remaining period during the same year was fund to be out of explained sources. Reliance is further placed on the following judicial pronouncements: (1) Anil Verma Vs. Dy. CIT (2019) 201 TTJ (Chand.'A') 608 (P.B. page No. 44 0 57) (2) Pr. CIT Vs. Agson Global (P) Ltd. (2022) 325 CTR (Del)1 (P.B.page No. 58 to 75) (3) Asstt. CIT Vs. Chandra Surana (2023) 221 TTJ (JP 'A') 515 (P.B. page No.76 to 90) (4) Dhanpat Rai Khatri Vs. ITO (2023) 222 TTJ (Jd) 382 (P.B. No. page No.91 to 99 ) (5) Mewar hospital (P) Ltd. Vs. ACIT (2024) 227 TTJ (Jd) 145 (P.B. page No. 100 to 164) (6) I.T.O. Vs. Mansa Medicals (ITA No. 522/Bang/2022 (P.B. page No. 165 to 173." 6. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: S.No. Particulars/Short description P.B. Page 1. Written synopsis in support of grounds of appeal 1 to 5 2. Cash book (01.04.2016 to 31.03.2017) 6 to 32 3. Proof of cash in hand as on 31.03.2016 ( Opening on 01.04.2016) 33 to 34B 4 Proof of cash....
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....e not arising out of professional income of the assessee. The ld. AR of the assessee based on the table has reflected in the order of assessment explained that there is also increase in income and receipt shown by the assessee. The cash book so produced before the lower authorities has not been rejected upon finding of any fault. The ld. AR of the assessee also submitted that he has submitted a chart controverting the finding of the lower authorities comparing professional income with that of the amount deposited in to the bank account. During the year under consideration, the professional income is duly recorded for an amount of Rs. 1,75,77,700/-. That professional income duly comparable with the bank deposit. Without appreciating that aspect of the matter the finding of the ld. CIT(A) while confirming the addition to the extent of Rs. 80,96,000/- is incorrect and is required to be deleted. The ld. AR of the assessee also argued that the ld. AO has made an addition u/s 68 of the Act whereas the ld. CIT(A) has considered the said amount u/s 69A of the Act. The law does not permit to do such change. The ld. AR of the assessee invited our attention to the provision of sections 68 & 6....
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....herefore, the cash balance recorded in the cash book is not reliable and there is no substance in the entries recorded in that cash book. The records produced are thus, self- serving document rightly rejected and not considered by the lower authorities. The ld. DR referring to page No. 40 of the paper book filed by the assessee wherein the assessee was having cash balance of Rs. 46,00,000/-. He has deposited at Rs. 5,00,000/- into the bank account only and so holding of high cash balance from May, 2016 onwards suggest the reliability of cash so as to justify the deposit of cash in the period of demonetization. The assessee is not a farmer or not an illiterate person who in a habit of having high cash on hand and therefore, so explanation furnished by the assessee is not justifiable. 8.1 The ld. DR referring to the regular practice income shown by the assessee in months of August, September, October 2016 compared with the January, February, March, 2017 demonstrated that assessee has shown much decreasing trend. This fact itself suggest that cash book is self-serving document and is not reliable. To drive whom to this contention, he has relied upon the case laws cited in the order....
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....e already offered the ld. DR submitted that since the income added is in addition to the regular income the assessee rightly denied the benefit of deduction of the income to that extent. 9. In the rejoinder to the submission of the ld. DR, the ld. AR of the assessee referring to page no. 41 [ the show cause notice dated 18.12.2019 ] submitted that the notice was issued on 18.12.2019 and leaving one day only the reply was expected on 20.12.2019. Given that time the assessee submitted the patient register and cash book. The ld. AR of the assessee also submitted that in the previous year, the assessee has shown of Rs. 100,54,450/- out of that receipt, she deposited at Rs. 1,37,20,500/- and based on the chart placed on record. He demonstrated that in the previous year assessee out of 12 month has deposited in cash in 9 month only, this suggest that the assessee is not in a habit of visiting to regularly to the bank. He also submitted that in the year under consideration based on the chart placed on record at paper book page no. 40. The assessee has deposited every month the amount into her bank account and total bank account deposit is almost much with the practice income shown by t....
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.... both that aspect of the matter is considered and keeping in mind that the fact that the assessee is a doctor the deposit of cash for the amount of Rs. 99,96,000/- is nothing but out of the professional income and cash balance is duly supported by a cash book maintained. The assessee also filed a patient register vide letter dated 20.12.2019. The assessee submitted through mail two registers which were made part of the submission and marked as annexure A. In that annexure assessee submitted the details of the total fees charged, receipt per patient along with other details of patients like, date of consultation, name of the patient, registration number, age of patient and gender are given. The ld. AO has not pointed out any defect in the details so submitted. In the show cause notice issued to the assessee only one day time was granted, and the assessee has filed all the required details. Here we note that though, the patient register was submitted to the ld. AO he noted that the assessee has not furnished. Before the ld. CIT(A) the ld. AO not contended that aspect and even the revenue has not raised any appeal or cross objection that the patient register is not filed. The ld. AO b....
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....st 16,26,400 18,72,000 6. September 15,12,800 17,64,500 7. October 17,06,000 19,06,000 8. November 10,22,400 10,72,000 9. December 6,46,000 4,45,000 10. January 5,60,600 4,60,500 11. February 5,80,400 3,85,000 12. March 4,96,800 4,83,500 Total practice Income of assessee 1,54,49,400* 1,73,27,300** 11. As it is evident from the above monthly receipt chart that the receipt from December to March has reduced trend previous year also. Thus, it is usual practice and not only on the reasons of the demonetization. Based on these set of facts we see no force on the contention so raised while confirming the addition by the ld. CIT(A). Therefore, the contention that the income which has not sudden hike and irregular pattern as alleged has no basis. The observation of the ld. CIT(A) that the "assessee has shown regular increase in the monthly closing balance of cash in hand". On the other hand, the ld. AR of the assessee demonstrated that the assessee is regular in depositing the money in cash in her bank account even before the demonetization. As regard the decrease trend i....
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....the Act, but while doing so, he has not pointed out any defects and the same was not confronted to the assessee, as required by that provision. There is no show cause notice issued by the ld. CIT(A) while invoking the provision of section 145(3) of the Act and that too without showing any defects in the books of account of the assessee therefore, that action is against the provision of section 145(3) of the Act. The ld. AO through the ld. DR, did not show any defect in the records so placed by the assessee. Thus, ld. CIT(A) erred in law as well as on fact while rejecting the books of account of the assessee. While arguing the case ld. DR heavily relied upon the fact of the case of Sumati Dayal, which are not applicable in the facts of the case, as the assessee is regularly filling the return, she being doctor having regular practice income and that source is not doubted. Thus, the fact of the case of the assessee and that of the Sumati Dayal is on different aspect cannot apply to the fact of the case. Further the receipt of the income offered has no spike in the current year as compared with that of with last year. The assessee has every month deposited the cash in her bank account....
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....s of facts the lower authority without appreciating the facts when the demonetization announced the assessee has no option to carry the cash on hand but must deposit into the bank account. The source of that cash is duly explained and supported by the clear and cogent evidence placed on record. It has been held in a number of cases that it is trite law that suspicion howsoever strong cannot take place of a legal proof. The ld. CIT(A) has relied on the decision of Sreelekha Banerjee Vs. CIT [ 49 ITR 112 (SC) ] quoting the finding that "the department does not then proceed on no evidence, because the fact that there was receipt of money is itself evidence against the assessee." In that same judgment the apex court also held that "The department cannot by merely rejecting unreasonably a good explanation, convert the good proof into no proof." Further the bench also noted that ld. AO made the addition of cash deposited without considering the fact that income is already included to that extent while calculating the taxable income. The ld. CIT(A) appreciated this fact and directed it to reduce to that extent the total income to remove the duplication. The revenue is not appeal for that ....