TaxTMI 
TaxTMI 
2025 (6) TMI 1211
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....Hence, the impugned order so passed deserves to be quashed being in violation thereof. 3. Rs. 12,30,000/-: The ld. CIT(A) has erred in law as well as in facts in confirming the additions made on account of unexplained cash deposit in bank account u/s 69A of the Act. The addition so made and the confirmation thereof by the ld. CIT(A) being contrary to the provisions of law and facts of the case, the same kindly be allowed in full. 4. The ld. AO further erred in law as well as on the facts of the case in imposing tax, surcharge, cess etc. as per provision of S. 115BBE of the Act. The invoking of S. 115BBE is contrary to the provisions of law, on facts and without jurisdiction. The appellant totally denies its liability. The tax liability so created, kindly be deleted in full. 5. The ld. CIT(A) erred in law as well as in facts of the case in confirming the levy of interest u/s 234A, 234B, 234C & 234D of the Act. The levy interest being charged, is contrary to the provisions of law and facts, kindly be deleted in full. 6. The appellant prays your honor indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of ....
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....otal income at Rs. 24,04,760/- as was originally declared. Subsequently show-cause notice was sent on 25.04.2023, requesting the assessee to clarify why the cash deposit in assessee's bank account should not be treated as unexplained u/s 69A of the Act. The assessee vide its various replies explained that the cash deposited was derived from the prior withdrawals from the assessee's own bank account. Despite this, the AO observed that the cash book provided by the assessee was an afterthought, created just to justify the cash deposit made by the assessee during the year under consideration. The AO while discussing these cash deposit observed the following:- • On perusal of the cash book, it is seen that the assessee withdrew cash on different dates and has also deposited cash on different dates from his bank account. However, there is gap between the date of withdrawal and date of deposit. • The assessee's books of account are not audited and the cash book s not acceptable. Secondly the assessee is not required to maintain to cash book. • The assessee is a man of high Net worth and allocation of Rs. 20,000/- per month only towards house hold....
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....48 dated 25.05.2023 determining the total income at Rs. 39,37,666/- by making an addition of Rs. 12,30,000/-. 5. Aggrieved by the order of the AO, the assessee preferred appeal before the ld. CIT (A), who confirmed the addition by observing in para 6.5 and 6.6 page 15 of his order as under:- "6.5 As the assessee has not substantiated the source of cash deposits, the assessment was completed by AO adding entire cash deposits in the background of lack of documentary evidence. Even before the CIT(A)'s the assessee has not submitted any documentary evidence in support of the claim. 6.6 The main claim of the assessee is that the AO has added income from cash deposits to the income filed by the assessee. On going through the submission of the assessee and the assessment order it is clear that the assessee has not submitted any details to the AO or this office on why the income should not be as adopted by the AO. No documentary proof that such submission were made are submitted to this office. It is the duty of the assessee to explain to the satisfaction of the AO or appellate authorities on why such receipts are not to be treated as income. As the assessee has not pr....
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..../her belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the provision of law. 1.4 In fact, by over stressing the contention that prima facie belief was there one cannot convert a suspicion into a belief. Therefore, unless a specific reliable and meaningful (Non vague) is in possession of the ld. AO, there was no existing reason i.e. cause or justification to have a reasonable belief. Surprisingly, no exercise at all was done by him, to further enquire into the information received. Thus, he did not have a bona-fide and honest reason to believe. 1.5 Based on the facts of the present case, it is clear that all the documents including the cash book (PB 29-32) &bank statements (PB 16-28), were originally submitted to the authorities below. The cash deposited was out of the cash withdrawals from the bank on different dates which can be understood from the table below. Therefore, there exist no reason for the ld. AO, even to suspect or to believe and invoke S. 147 of the Act. Hence, the invocation of S. 147 of the Act itself is incorrect and notice u/s 148 of the Act deserves to be quashed. ....
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....ceedings, the assessee clearly depicted that the cash deposited into bank was out of withdrawals from the bank time to time. In support of which the day-to-day cash book (PB 29-32) along with proper narrations and the bank statement (PB 16-28) were furnished from time to time. This fact clearly establishes that the source of cash deposit was out of cash withdrawals from assessee's own bank account. 3.1 The ld. AO while making this addition alleged that the assessee's books of account are not audited and the cash book is not acceptable. He further alleged that the assessee is not required to maintain cash book andkeeping in view the contention of ld.AO it may be submitted that though the assessee is not required to maintain cash book as per law but it doesn't mean that by maintaining cash book, he has committed any offense. Just because that the law does not require him to maintain the books of account the ld. AO cannot consider the cash book unacceptable without bringing any contrary evidence on record. It clearly shows that the addition has been made by the ld. AO arbitrarily without pointing out any defects in the cash book produced during the course of assessment procee....
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....n of the Assessing Officer for not accepting the explanation offered by the assessee's as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion". xxx xxx xxx xxx 3.6 That the ld. AO has made the alleged addition to the income on the basis of an alleged mismatch between the dates of withdrawal and deposit of cash in the assessee's bank account. The ld. AO has drawn a conclusion that since there exists a significant gap between the withdrawal and subsequent deposit of cash, its implies that there exist Ain consistency in the financial transactions. However, this conclusion is factually incorrect and contrary to the evidence available on record. A perusal of the Cash Book maintained by the assessee clearly demonstrates that there is no substantial gap between the dates of withdrawal and deposit. The gap between the dates of withdrawal and deposit in certain instances is no more than 15 to 20 days, whi....
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....ioned that the explanation of regular cash withdrawal was not given. (Pr. No. 5). In this regard it was submitted that during the assessment proceedings the assessee during the year was exploring to start some new project and for that purpose he approached to the banker to have idea about the financing for the said project. The bank officials suggested that because the assessee was not having any existing business or industry, he should have appropriate transactions in his bank account so that the healthy net worth may be established. Therefore, the assessee regularly withdrawn cash and thereafter depositing cash out of the same into the bank account, so that appropriate transaction may be reflected in the bank account. Later on, the assessee started a proprietary firm in the name of M/S Mystique Ventures and he made continuing efforts to get some viable project during the year under consideration. The ld. AO in the assessment order at pr. (5) at pg. no. (4) stated that these transactions were fictitious and done with the intention to cheat the bank for obtaining loan/finance and it was illegal. From the aforesaid apprehension of the ld. AO it seems that he himself cooked ....
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....undisputed fact of sufficient cash withdrawals immediately prior to the subjected bank deposits, the AO was not supposed to doubt the explanation of the assessee, more particularly, in view of the following cases, which is a settled law now: 4.2.1 Kindlyrefer CIT v/s P.V. Bhoopathy(2006) 205 CTR 495 (Mad) held: "Appeal (High Court)-Substantial question of law-Income from undisclosed sources-AO did not accept various sources of income explained by the assessee and made additions under ss. 68 and 69 in respect of difference between the investments and the sources accepted by him-Tribunal accepted the explanation of the assessee vis-a-vis availability of funds with the assessee from the sale proceeds of jewellery belonging to his mother- in-law, receipt from a party and also the amount of opening balance and savings from earlier years and deleted all the additions-Findings recorded by the Tribunal are purely findings of fact-There is no reason to interfere with the same-No substantial question of law arises-CIT vs. Pradeep Shantaram Padgaonkar (1983) 143 ITR 785 (MP) relied on" 4.2.2 Also refer CIT vs Kulwant Rai (2007) 210 CTR 380 (Delhi) para 16-17, wherei....
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....uthorities that he was living in a joint family of two sons. With these facts on record, there was no reason for the lower authorities to hold that the assessee was living alone which could be the reason for any adverse inference that cash in hand could not be retained by the assessee for 10 months. There is no factual basis in the presumption drawn by the AO and the ld. CIT(A), besides the assessee may be aged but remained active in his business affairs. Consequently we see no justification in addition of Rs. 6 lacs more so when the facts about cash books, cash flow and receipt of cheque of Rs. 13 lacs from M/s. S.G. Fiscal have not been controverted. In view thereof, we are unable to uphold the addition of Rs. 6.00 lacs which is deleted. Thus Ground No. 2 of the assessee is allowed." "Apropos low house hold withdrawals, the assessee is an active person, earning from two partnership firms. It has been contended that his two sons have borne the house hold expenses and have sufficient withdrawals. There is no evidence on record to demonstrate that quantum of withdrawals by two sons and statement to the fact that their father did not contribute any house hold expenses. Besid....
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....the nature as referred in S. 68,69,69A of the Act being the income from other sources. Therefore, subjected income has essentially to be classified u/s 14 of the Act as income from other sources and that is possible only when the income is not capable of being classified under any other head being income from salary, house property, capital gain, business or profession. A combined reading of S. 14 with S. 56 of the Act makes is evidently clear that for the assessment of an income it must have to be classified under four heads of income as enumerated u/s 14 of the Act and if it doesn't fall under any specific head of income as per item A to E of S. 14 of the Act, such income has to be assessed under the residuary head of income i.e. item F of S. 14 of the Act. Therefore, income added u/s 68 or 69 of the Act etc. has to be given a specific head in terms of S. 14 of the Act, however, since there is no income as such which could be added u/s 68,69, 69A of the Act etc. hence there is no question of invoking of S.115BBE of the act. 1.2 Supporting Case Law: 1.2.1 A reference has been made to the decision of Hon'ble Supreme Court in the case of Karanpura Developm....
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.... the newly inserted S. 149 by Finance Act, 2021, has reduced the general period for issuance of notice u/s 148 of the Act to 3 years as against the earlier period of 4 year/6 year or 16 years in the pre amended law. In other words, no notice u/s 148 can validly be issued beyond the period of 3 years from the end of relevant assessment year unless the case clearly falls within the parameters of section 149(1)(b) for a larger period of 10 years on the fulfillment of certain additional conditions prescribed therein. In any case however, S. 149(1)(b) is circumscribed by the Proviso further reducing the period up to 6 years only. Consequently, the impugned Show Cause Notice issued u/s 148A(b) dated 27.05.2022, impugned order u/s 148A(d) dated 26.07.2022 and notice u/s 148 could not have been issued by the Respondent-AO on dated 13.05.2021/26.07.2022 w.r.t A.Y. 2016-17 as reckoning 3 years falls on 31.03.2020 respectively hence, the same is beyond the time permissible as per the as per the existing provisions of law. 1.3 A bare reading of the proviso to Sec 149(1)(b) clearly indicate that the alleged escaped taxable income must be Rs. 50 lakh or more then only the benefit of the....
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....sessee withdrew cash on different dates and has also deposited cash on different dates from his bank account. However, there is gap between the date of withdrawal and date of deposit. The assessee's books of account are not audited and the cash book is not acceptable. Secondly the assessee is not required to maintain to cash book. The assessee is a man of high Net worth and allocation of Rs. 20,000/- per month only towards house hold expenditure is not justifiable. He is partner in three firms namely Noble Dyers, Shyam Sunder Minerals, Associated Exports and getting huge profit from these firms as share of profit. He is also a trustee in M/s P S Loyalka Charitable Trust. The assessee has also shown income form capital gain on sale of shares and other income. Considering his income and net worth his house hold expenses are estimated at Rs. 1,25,000/- per month. Considering his worth and stature it is quite possible that money withdrawn from banks are utilized towards house hold expenses. In the assessment order of the assessee's own case for AY 2017-18 was perused and it was found that during the assessment proceeding for that year the assessee, while justifying the cash deposited i....
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....ed to this office. It is the duty of the assessee to explain to the satisfaction of the AO or appellate authorities on why such receipts are not to be treated as income. As the assessee has not provided with any documentary proof or logical explanation on why the same could not be added, the action of the AO in adding such receipts as income is right. In the above background it is very clear that what AO has done is as per law and I do not find any infirmity on part of the AO. Thus the ld. CIT (A) upheld the addition. 8.3 Before us, the ld. AR of the assessee submitted that the assessee has duly explained the source of cash deposit of Rs. 12,30,000/- made in the bank account during A.Y. 2016-17 with the help of the regularly maintained cash book on day- to-day basis and bank statement. That complete copy of the said cashbook for the subjected period starting from 01.04.2015 to 31.03.2016 (for A.Y. 16-17) was duly submitted in earlier submission thereof. A bare perusal of the cash book on the different dates of deposits shall reveal that the appellant was having sufficient cash in hand on the eve of the cash deposits out of cash withdrawals from assessee's bank. On the contrary, ....