TaxTMI 
TaxTMI 
2024 (9) TMI 514
X X X X Extracts X X X X
X X X X Extracts X X X X
....or cash deposited during demonetization out of cash withdrawal. 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 processe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g period, the appellant has made substantial cash deposits in his bank accounts on03-08-2016, 05-08-2016 & 11-08-2016. On this count as well, earlier 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....king to the peculiar admitted fact as discussed above, the deposition in demonetization out of previous bank withdrawal cannot be doubted rather well within the past practice of the appellant. d. During the proceedings before the Ld. AO and the Ld. CIT(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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wife and therefore, availability of cash in hand at the beginning of the year has been sufficiently explained. In the result, considering the entirety of facts and circumstances of the present case, we hereby direct the Assessing officer to delete the addition so made in the hands of the assessee towards unexplained 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 cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ght on record contrary to the explanation/ documents submitted by the appellant then what else the appellant was supposed to prove in order to satisfy the Ld. AO. The satisfaction of the Ld. AO, as required u/s 69A of the Act, must be based on some material which is not present in the current case. Hence, the reasons provided by the Ld. AO and confirmed 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 with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....also submitted the copy of the cash book from period of 01.04.2016 to 31.03.2017, wherein all the transactions relating to the cash withdrawal from the bank and deposited in the bank, have been duly recorded. The Ld. Counsel also submitted before me the cash flow statement, which is placed at paper book page no.16, and I have observed that, as per cash flow statement, the closing cash 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 dur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s made sufficient cash withdrawals from the current account has not been disputed by the Assessing Officer and learned Commissioner (Appeals). This fact is very much evident from the observations of the learned Commissioner (Appeals) in Para 5.3 of his order. Therefore, the availability of sufficient cash at the hands of the assessee to make the deposits in the saving bank account cannot be doubted. More so, when 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 mos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....usal of the findings shows that the Ld. CIT(A) reiterated, more or less, the same basis as of the Ld. A.O. Submissions 1. Inference has been drawn based upon suspicion, presumption and without appreciating the surrounding circumstances. In this regard, we submit our response as follows: - a. Ld. A.O. as well as CIT(A) by applying Human Probability Test hold that in demonetization period person should deposit entire cash in one go. The entire finding is based upon 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... explanation since as per this principal the apparent documents etc. must be presumed to be real until the contrary is proved. The cash withdrawal from bank was apparent, rent received in cash was apparent, non-utilization of cash withdrawal for any purpose other than household expenses and cash deposit was apparent and the state of affairs depicted by cash flow statement was apparent. However, both the Ld. AO and Ld. CIT(A) disregarded of all the apparent facts and material and relied solely on the human probability to decide 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade the addition merely on conjectures/surmises/suspicion and no proper reasons were given why he cannot keep the cash in hand except the remark of being an NRI. In our view, the Hon'ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd. (supra) has held that the AO cannot complete the assessment purely on guess and without any reference to evidence or any material at all. Also in the case of Umacharan Shaw & Brothers (supra), the Apex Court has held that AO cannot complete the assessment merely on suspicion which cannot take the place of proof in these matters. 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 I....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was also not disputed. It is also noted that the assessee had admitted that he had deposited Rs. 1.500 lacs prior to demonetization out of cash withdrawal from bank. It is also noted that during the proceedings before the AO and ld. CIT(A), the assessee had 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 hands was submitted which was rejected by the lower authorities. From the perusal of the cash flow statement, it is noted 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 cur....