AI Drafter 
TaxTMI 
TaxTMI 
2025 (6) TMI 1697
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....of the Act and thereby upholding addition of Rs. 46,32,000/- being cash deposited the Bank during demonetization period which was duly explained and hence addition be deleted. II. (a) Your Appellant submits that he has been maintaining Regular Books of Accounts duly Audited on during course of business of the Appellant had made withdrawal and had maintained cash as per books of accounts for purposes of business and the amount of Rs. 44,12,071/- was cash balance available with him on 8-11-2016 and therefore not liable to be added. (b) Your Appellant submits that in view of nature of business and for any be emergency arises cash was maintained as per his business practice followed from year to year. In view of facts and circumstances of the case, and transaction by through Banking Chanel it is submitted that Rs. 46, 32,000/- (Rs. 44,12,071+Rs. 2,19,929/-) is not liable to be added as unaccounted cash credit during demonetarization period." 3. A perusal of the above would reveal that the solitary issue in the present appeal relates to addition made to the income of the assessee on account of the cash deposited in the bank account of the assessee during mo....
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....iod on the following dates. Month Date Amount November 10.11.2016 2,50,000 4,60,000 11.11.2016 2,00,000 30,000 2,00,000 12.11.2016 5,00,000 14.11.2016 3,00,000 19.11.2016 5,00,000 24.11.2016 3,24,000 25.11.2016 4,00,000 December 05.12.2016 2,00,000 07.12.2016 4,99,000 13.12.2016 3,69,000 20.12.2016 2,50,000 From the above pattern of cash deposits, it is quite apparent that the appellant had been depositing the cash on various dates in spaced out intervals during the entire period of demonetisation of close to two months. During the period of demonetisation, there was a specific ban on acceptance of demonetised currency. Business houses were prohibited from accepting demonetised currency after the announcement of demonetisation. The only recourse available for anybody in possession of demonetised currency was to deposit the same into their bank account or exchange for legal currency with the bank upto a certa....
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.... has been manipulated to show an enhanced cash balance as on 08-11-2016 to accommodate the cash deposits. 6.4. The Assessing Officer has analysed the cash books submitted by the appellant and has observed that the cash withdrawals made from the bank account have been allowed to accumulate in the cash book without making any cash expenditure. This is an improbable human conduct where it is important to consider that a prudent man would not withdraw cash and keep with himself at the risk of security. Further, keeping cash with himself which would have earned interest had the money been kept in the bank. Further, the time gap between the withdrawals and the redeposit is quite huge which places the onus to explain that the cash deposit is linked to the earlier cash withdrawals rests on the assessee. The delay in redeposit of the cash withdrawal is against the theory of human probability as propounded by the Hon'ble High Court in the cases of CIT Vs. Durgaprasad Morey 1971 (82) ITR 540 SC and Sumati Dayal Vs. CIT (1995) (80) taxmann 89 (SC). In the ordinary case, a person will not keep cash idle with him without any purpose and further will deposit the cash immediately on a....
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....ring the demonetisation period. The brief facts of the case is that during the demonetisation period, the appellant has deposited cash amounting to Rs. 46.32,000/- in to the Current Bank Accounts held with the State Bank of India, Bank of Baroda and Bank of India. The case was deposited out of the cash on hand on 08.11.2016 and receipt from parties. The addition made is without properly appreciating the submission made during the course of assessment proceeding The brief cash flow for the A. Y. is as under; Sr.# Particulars F.Y. 2016-17 Amount Rs. F.Y. 2015-16 Amount Rs. Details of Cash Inflow/Receipts 1 Opening Balance 20,24,154/- 78,721/- 2 Business Receipts 68,54,517/- 41,41,033/- 3 Amount withdrawn from Bank 1,69,80,500/- 2,36,57,900/- Total Rs. 2,58,59,171/- 2,78,77,654/- Details of Cash Outflow/Payments 1 Business Expenses 78,52,999/- 70,31,300/- 2 Cash Deposited into Bank 1,79,39,600/- 1,88,22,200/- 3 Closing Cash Balance 66,572/- 20,24,154/- Total Rs. 2,58,59,171/- 2,78,77,654/- As seen from the above, it is clear that th....
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....under section 68 of the Act is not justified. Further the assessing officer has not brought on record any cogent material so as to remotely demonstrate that the underlying sum is not out of cast on hand on the date of demonetisation of currency notes on 08.11.2016. The Ld. Assessing Officer on page no.2 (para 3.1) of the assessment order had stated that the appellant has made huge withdrawals during the year on the other hand it was seen that the assessee has incurred less cash expenses, the cash withdrawals made by the appellant were without any cogent reasons. The Ld. Assessing Officer further observed that in previous year i.e. in F.Y. 2015-16 the appellant has made huge cash withdrawals and as compared to the withdrawals there was no cash expenses the cash withdrawals of the appellant was without any justification. In this regard it is submitted that your appellant is having office at Vadodara and mines & plant at Jambugoral, Tal. Desar, Dist. Vadodara which is about 70 km away from Vadodara. Your appellant was maintaining bank accounts at Vadodara only. Your appellant is engaged in the quarry business and extracting the hard rock from the mines with the help ....
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....e holding of cash by your appellant and regularly withdrawals of cash from bank accounts though there is cash on hand. The holding of cash on hand and withdrawals from bank accounts from time to time is for the reason to meet an untoward emergency in case of accident at plant. The plant is situated at around 70Km from Vadodara and generally working 24 hours in a day. Further banks are working only for limited hours and closed on Holidays including Saturday and Sunday. Further here it is pertinent to note that it is the appellants prerogative as to how he should manage his Business Affair and the Assessing Officer in not concerned with it. The ld. AO has not given any details regarding source of undisclosed income and merely stated that your appellant has deposited cash from undisclosed sources which is without any basis and arbitrary. The ld. AO has neither doubted any entry in the cash book not pointed out any adverse findings in the cash book. The ld. AO has made addition only on the basis of analysis of the data of cash deposit, cash withdrawal and cash expenses and without any evidence. It is submitted that from e above findings recorded, it clearly appears th....
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....e explanation of the assessee and by merely reiterating the surmises and conjectures of the AO. 9. Ld. DR, however, relied on the orders of the authorities below. 10. We have heard the contentions of both the parties and we find merit in the contention of the Ld. Counsel for the assessee that the addition made in the present case of cash deposited in the bank account of the assessee of Rs. 46,32,000/- is merely on assumptions and presumption. 11. It is an admitted fact that the assessee had furnished his entire books of account, including his cash book explaining the source of cash deposit in the bank account during the demonetization period. Details of cash flow/ cash book of the preceding year was also filed and these details clearly reflected a pattern of huge withdrawals made by the assessee every month and the same being deposited in the bank account of the assesse. Moreover, the assessee has given the reason for keeping huge cash in hand every month pointing out that it is in the business of quarrying mines and since, it works in remote areas in difficult conditions, it requires cash in hand to meet any medical or other emergency of which there is always a huge risk.....