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TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 514
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....rawal. Thus the action is bad in law, thus order deserves to be quashed. 3. Under the facts and circumstances of the case, the ld. CIT(A) has erred in confirming addition of Rs. 25.04 lacs alleging unexplained money u/s 69A of the Act based upon surmises, presumptions and without appreciation of facts. Thus the addition is contrary to the provisions of law, unjustified or excessive and findings is contradictory." 2.1 At the outset of the hearing of the appeal of the assessee, the Bench noted that the ld. AR of the assessee has not pressed the Ground No. 1. Hence, the same is dismissed being not pressed. 3.1 Apropos Ground No. 2 & 3, Brief facts of the case are that the assessee is an individual and was deriving salary income from working in Vibrant Academy Pvt. Ltd, Kota as a faculty. Further, the assessee was also earning rental income, in cash, from house property let out to students, and interest on his Saving Account. It is noted from the assessment order that the assessee has e-filed his return of income for assessment year 2017-18 on 26-12-2017 declaring total income of Rs. 4,0,03,580/- which was processed u/s 143(1) of the Act on 15-07-2018 at income of Rs. 40,13,580/-. ....
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....withdrawals of cash cannot explain impugned current cash deposits. Preponderance of possibility overwhelming supports AO's view. 7. Considering the facts and circumstances of the case, the grounds of appeal are decided against the appellant." 3.3 During the course of hearing the ld. AR of the assessee prayed that the additions confirmed by the ld. CIT(A) amounting to Rs. 25.04 lacs u/s 69A is not justified which needs to be deleted. To this effect, the ld. AR of the assessee has advanced the following written submission alongwith case laws as under:- Submission for Ground No. 2 and 3 1. In the present case, the appellant had deposited INR 25,04,000/-, in cash, in his bank accounts, during the period of demonetization. The details of cash deposited are tabulated below for reference: Bank Account No. Amount Date of Deposit PNB 5294009900000282 4,00,000/- 28.11.2016 PNB 5294009900000103 8,00,000/- 12.11.2016 PNB 5294009900000103 7,50,000/- 18.11.2016 PNB 5294009900000103 46,000/- 28.11.2016 PNB 529400NC00003705 3,00,000/- 28.11.2016 SBI 51101653945 2,08,000/- 29.11.2016 2. Consequently, the appellant was enquired, vide notice(s) u/s 142(1), to expl....
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....T(A), the appellant explained that the cash was deposited out of cash in hand accumulated over a period of time for which cash flow statement for the period 01.10.2015 to 31.12.2016 demonstrating the history and status of the cash in hand with the appellant was submitted before the Ld. AO and Ld. CIT(A). To the surprise of the appellant, the Ld. AO rejected the cash flow statement outrightly by classifying it as statement of small withdrawals which might be considered for household expenses and the Ld. CIT(A) did not even care to discuss anything on cash flow statement. Relevant extract of the assessment order is reproduced below for your reference: "...The cash flow statement is also not found acceptable as assessee has withdrawn small amounts from ATM which may be considered for household expenses". e. Perusal of the cash flow statement shows that the appellant was having cash balance of INR 25,09,620/- as on 08.11.2016 which justify the cash lying with the appellant and more importantly such balance was never disputed either during the assessment proceedings by the Ld. AO or the Ld. CIT(A) during first appellate proceedings. In this regard, following judgement have been reli....
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....xplained cash deposits and ground no. 2 of assessee's appeal is allowed." f. Furthermore, time gap between withdrawals and deposits, which is less than 1 year, has also been taken as one of the basis for making addition u/s 69A of the Act. It is relevant to note that, firstly as explained supra, withdrawing the cash, holding it and then depositing in the bank account was past practice of the appellant. Secondly a detailed date wise cash flow was also filed, thereby discharge his burden to explain the source and nature of the deposit. However, without disputing the same or bringing evidence on record of utilization of withdrawal other than shown as in cash flow is unjustified and against the law on the part of the Ld. AO and Ld. CIT(A). g. The view point of the Ld. AO as well as the CIT(A) in not accepting the explanation of the appellant about the source of cash deposit on the premise that cash was deposited after a long period of time and the withdrawal were made on various occasions is not tenable under the facts and circumstances of the case. In fact, the Hon'ble Kerala High Court in CIT Vs K. Sreedharan [(1993) 201ITR 1010] held that "the period of four years between 1976-....
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....rmed by the Ld. CIT (A) cannot be, in any way, be the basis for making addition u/s 69A of the Income Tax Act. In this regard, the appellant wants to draw attention to the following judgements of various Hon'ble ITATs to support his argument: * Hon'ble ITAT, Delhi in case of Muon Computing Pvt. Ltd. vs. ITO [ ITA No. 7606/Del/2019] held as under: "9. There is no dispute with regard to the fact that Revenue has not brought any material suggesting that the withdrawal made by the assessee were utilized for making payments. It is also not brought on record that the amounts so withdrawn from the bank account was utilized for any other undisclosed purposes. Further, it is noticed that Ld. CIT(A) observed that despite having sufficient cash in hand, the assessee withdraw the amount. It is correct that the assessee has withdrawn higher amounts than the immediate preceding years but that cannot be sole reason for making addition purely on the basis of suspicion. Further, I failed to understand the reasoning of the Assessing Officer that the amount was withdrawn to justify the cash deposits during demonetization period i.e. between 09.11.2016 to 30.12.2016. It is also seen that the cash....
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....ash balance is Rs. 10,40,779/- as on 31.03.2016. The assessee also submitted the details of cash deposited for the period under consideration which is placed at paper book page nos.18 and 19. The assessee also submitted the return of income and ledger account of Shivam Polishing LLP wherein the assessee is a partner. 13. From the above facts, it is vivid that assessee has sufficient cash in hand, at the beginning of 01.04.2016, and the documents and evidences submitted by assessee, prove the cash in hand, as on 01.04.2016, which has not been rebutted and discredited by the Assessing Officer. The assessee has submitted plethora of documents to prove its claim of cash deposit, such as, the return of income and computation of income for assessment year (AY.) 2017-18, the detail of cash deposited during the year under consideration of Rs. 5,07,000/-, the details of cash withdrawal from bank and cash withdrawal from Shivam Polishing LLP, bank statement, the copy of the cash book from period of 01.04.2016 to 31.03.2017, and the cash flow statement. I observe that assessing officer has not stated in anyplace in the assessment order that the above documents and evidences are bogus and f....
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....hen the Departmental Authorities have not been able to identify the utilization of cash withdrawals from the current account in any other assets/ mode or manner. That being the case, the explanation of the assessee that being a contractor he required sufficient cash and the unutilized cash is again re-deposited to savings bank account cannot be disbelieved on mere presumption and surmises. That being the case, since assessee's contention has not been proved to be false through proper reasoning and supporting material, the addition made under section 68 of the Act cannot be sustained. Accordingly, I delete the addition made by the Assessing Officer. This ground is allowed." Therefore, in view of the facts and circumstances of the case and judicial precedents, in is mostly humbly requested to kindly delete the addition made u/s 69A of the Act since the appellant has explained properly with supporting evidence the source of cash deposit during demonetization and no material has been placed on record on the contrary to the claim of the appellant by the Ld. AO or Ld. CIT(A). III. Grounds of Appeal No. 3 Under the facts and circumstances, the learned CIT(A) has erred in confirming....
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....on mere presumption, without any basis rather ignoring the prevailing circumstances. As we are aware that during the demonetization period a chaos was created in the society and the prevailing circumstances forced the government to issue number of notifications for clarification on daily basis, arrangements in banks were short of requirement and various persons were reported died standing in line. Carrying huge amount in waiting lines always carries risk. Various banks were reported to have maximum limit of single deposits. Under such circumstances even Theory of Human Probability support the conduct of appellant. The inference is arbitrary, unjustified based upon surmises. The Income Tax Department have complete data of the pattern of deposit into the bank, therefore without referring any such analysis, it is merely an arbitrary attempt to make addition. b. The appellant wants to submit further that the whole foundation of making addition u/s 69A of the Act and the confirmation thereof by the Ld. CIT(A) is the 'Theory of Human Probability" and no ground work with respect to substantiating the allegation with actual material or records has been done either by the ld. AO or the Ld....
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....ecide the case under consideration. g. Review and detailed analysis of all the findings of the Ld. AO and Ld. CIT(A) brings on the surface of the discussion the fact that the addition of INR 25,04,000/- made u/s 69A of the Act is purely on surmises, conjectures and with a predetermined mindset without providing any corroborative evidence to support it which is grossly illegal on the part of Ld. AO and CIT(A)and cannot be justified. h. As evident from forgoing discussion, the entire addition is based upon surmises or suspicion. Whereas it is settled legal position that no addition can be made based upon the surmises or suspicion, how so ever it may strong. In this regard, we place our reliance on following case law:- * The Hon'ble Supreme Court in the case of Lalchand Bhagat Ambical Vs CIT [1959 AIR 1295] dismissed the appeal of the revenue and held as under: "In arriving at the above decision the High Court referred to the cases of Mehta Parikh & Co. v. Commissioner of Income- tax, Bombay (1) and Chunilal Ticamchand Coal Co., Ltd. v. Commissioner of Incometax, Bihar and Orissa (2). It is, therefore, clear that the Tribunal in arriving at the conclusion it did in the present....
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.... Respectfully following the ratio laid down by the Hon'ble Supreme Court in the said cases, we hold that the AO made the assessment merely on suspicion and without bringing any cogent material on record to establish that assessee cannot keep the cash in his hand being a NRI. Accordingly, we uphold the order of the CIT(A) in deleting the addition of Rs. 34,70,000/- made by the AO and dismiss the grounds raised by the revenue in this regard". * The Hon'ble ITAT, Jaipur Bench "B", Jaipur in the case of Abhilasha Jain Vs DCIT, Circle (Intl Tax), Jaipur [ITA No. 05/JP/2022] by relying on the judgement of the ITAT, Hyderabad(supra) allowed the appeal of the appellant and held as under: "In the above judgment the Coordinate Bench decided that the addition made by the AO merely on suspicion and without bringing any cogent material on record to establish that assessee cannot be keep the cash on hand being a non-resident of India. It has been observed from the record that the assessee as meticulously given case flow statement giving different date wise cash available is supported by the bank statement placed on record. The assessee has also placed on record the affidavit of his mother ....
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....d that the assessee was having balance of Rs. 25,09,620/- as on 8-11-2-016 which shows that the cash was lying with the assessee and it is also noted that cash balance was never disputed by the lower authorities during the proceedings. We also note the finding of AO as mentioned at page 6 & 7 of the assessment order as to Human Probability Test which is mentioned at para (a) to (d) as under:- "(b) In the ordinary course, it is human tendency that a person who possesses a large amount of cash in hand, will deposit the same into the bank account immediately, once he comes to know that the currencies which he holds/possesses are banned by the prescribed authorities from circulation and that too, he will deposit all the currencies in on a single day as one time deposit and not inpiece-meal at different dates. If it is not done within a reasonable time, it is for the assessee to prove the reasons for not doing so. ... (d) Applying the ratio in the "Theory of Human Probability", no prudent person will hold such Specified Bank Notes (SBNs) in hand in large number in his possession and deposit the same into the bank account on various dates spread over for 15 to 20 days. It has bee....