ASHOK VIKRAM PODDAR,KOLKATA V. ACIT, CIRCLE -34, KOLKATA, KOLKATA

ITA 1294/KOL/2023

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The case involves Ashok Vikram Poddar, who appealed against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, which confirmed the addition of Rs. 19.75 lacs to his income for the Assessment Year 2016-17. The addition was initially made by the AO, suspecting the deposits in the assessee's bank account were unexplained. The Tribunal examined the circumstances surrounding the cash deposits and withdrawals in the assessee's bank account and found that the assessee had a substantial income from various sources, including salaries and other investments, which could account for the deposits.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469682 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-10-2024
• Assessment Year: misc
• Appeal Filed On: 25-11-2023
• Other Referred Cases: Saroj Devi Banthia vs. ITO, Gordhan vs. ITO, Nand Kumar Taneja vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Unexplained cash credit; Unexplained investment; Salary income; Source of fund
• Section: 143(3); 68; 69A

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “बी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH: KOLKATA Įी राजेश क ुमार, लेखा सटèय एवं Įी Ĥदȣप क ुमार चौबे, ÛयाǓयक सदèय क े सम¢ [Before Shri Rajesh Kumar, Accountant Member &Shri Pradip Kumar Choubey, Judicial Member] I.T.A. No. 1294/Kol/2023 Assessment Year: 2016-17 Ashok Vikram Poddar (PAN: AFLPP 3209 G) Vs. ACIT, Circle-34, Kolkata Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ Date of Hearing / सुनवाई कȧ Ǔतͬथ 17.10.2024 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 08.11.2024 For the Appellant/ Ǔनधा[ǐरती कȧ ओर से Shri Sunil Surana, A.R Shri Dilip Maroti, A.R For the Respondent/ राजèव कȧ ओर से Shri Divakar Chakraborty, Addl. CIT Sr. D.R ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 26.09.2023 for the AY 2016-17. 2. The assessee did not press ground no. 1 raised at the time of hearing and therefore the same is dismissed as not pressed. 2 I.T.A. No.1294/Kol/2023 Assessment Year: 2016-17 Ashok Vikram Poddar 3. The common issue raised in the other grounds of appeal is against the confirmation of addition of Rs. 19.75 lacs by the Ld. CIT(A) as made by the AO on account of cash deposit in to the savings bank account by the assessee during the year. 4. Facts in brief are that the assessee filed return of income for the instant assessment year on 27.03.2017 declaring total income of Rs. 98,32,260/-. The case of the assessee was selected for limited scrutiny for examining cash deposit during the year. The statutory notices were duly issued and served on the assessee. The AO found that the assessee has deposited Rs. 19.75 Lacs into Allahabad Bank, Raipur Shyam Nagar, Teliabandha Branch, Raipur. The assessee is deriving income from salary from M/s Jain Housing Agency of Rs. 20,77,140/- from M/s Vikash Builders Rs. 81,22,000/- respectively. Besides, the assessee has income from house property, capital gain and other sources. Accordingly, the assessee has called upon to explain the source of deposit. The assessee replied before the AO that the cash deposits during the year into Allahabad Bank account was out of withdrawals made during the year only. The assessee has filed statement of cash flow summary sheet which is extracted by the AO at page 3 and 4 of the assessment order. As apparent from the said statement the assessee has withdrawn Rs. 20,00,000/- from Allahabad Bank on various dates and deposited into bank Rs. 19.75 lacs on various dates. The only allegation of the AO was that the gap between the withdrawals and deposits range from nine days to three months. The details have been given by the AO in para 3.1.8 to 3.1.11 and finally the AO, by disbelieving the contentions of the assessee, treated the deposits made into Allahabad Bank of Rs. 19.75 Lacs as unexplained cash credit and added the same u/s 69A of the Act to the income of the assessee thereby assessing the total income at Rs. 1,18,07,260/- vide order dated 24.12.2018 passed u/s 143(3) of the Act. 5. In the appellate proceedings, the Ld. CIT(A) affirmed the order of AO by citing the same reasons. However, in stead of addition u/s 69A ,the Ld. CIT(A) directed the AO to treat the same as unexplained investments u/s 69A of the Act. 3 I.T.A. No.1294/Kol/2023 Assessment Year: 2016-17 Ashok Vikram Poddar 6. After hearing the rival contentions and perusing the material on record, we find that the assessee was drawing huge salaries of Rs. 1,01,99,140/- from two concerns namely M/s Jain Housing Agency and M/s Vikash Builders. Besides the assessee has income from house property, capital gain and other sources. We note that the assessee has withdrawn Rs. 20.00 Lacs from its saving bank account with Allahabad Bank, Raipur and again redeposited Rs. 19.75 Lacs on various dates. The gap between the withdrawals of the money and redeposits in the same bank account range between nine days to three months. The details of the cash deposits by the assessee were appended by the AO in para 3.1.8 to 3.1.11. We note that only basis for making addition is the time gap between the withdrawals and redeposits into same bank and AO has not recorded any findings of fact that money withdrawn was used somewhere else leaving the cash deposit in the Allahabad Bank as unexplained cash credit in the bank account. In our opinion, the mere suspicion of the AO without corroborating the materials being brought on record is not enough for making the addition. The assessee has explained the sources to be out of withdrawals and the AO has even reproduced the tally of cash withdrawals and deposits at page 3 and 4 of assessment order . The case of the assessee finds support from the decision of Co-ordinate Bench in the case of Saroj Devi Banthia vs. ITO in I TA No. 801/Kol/2024 for AY 2017-18 dated 06.08.2024 and in the case of Gordhan vs. ITO in ITA No. 811/Del/2015 for AY 2011-12 dated 19.10.2015 wherein the similar issue of deposits in the bank after a gap of certain period was held to be genuine where the AO has not given any finding as the money withdrawn was used somewhere else and not available for redeposit into the bank account. The operative part of Saroj Devi Banthia (supra) is reproduced as under: “5. After hearing the rival contentions and perusing the material on record, we find that the assessee has regularly been filing the income tax returns with Department as the assessee has taxable income. The assessee derived income by way of commission on jute dealings besides the assessee has interest and dividend income from investments. We note that during the year, the assessee had deposited Rs. 10,00,000/- into her bank account which were stated to be deposited out of cash available with the assessee stated to be accumulated out of the withdrawals made from the bank account over a period of 3 years as well as during the year. The AO has also extracted the calculation of year-wise cash deposits and withdrawals at page no. 6 of the assessment order.We have also examined the year-wise balance sheet of the assessee in respect of preceding assessment years and find that in the balance sheet as on 31.03.2016, there was cash in hand of Rs. 9,00,000/- which was accumulated out of 4 I.T.A. No.1294/Kol/2023 Assessment Year: 2016-17 Ashok Vikram Poddar withdrawals from the assessee’s bank account details whereof were also examined and verified by us from the bank statement available in the PB which were also filed before the AO. Besides we note that Rs. 1,00,000/- was deposited out of withdrawal made during the instant financial year from the bank account of the assessee before the commencement of demonization period. The AO has simply brushed aside the contentions made by the assessee of having kept and accumulated the cash in hand in order to meet any medical emergency and treated the money as unexplained money because the nature and source were available with the assessee. Only the reason to disbelief the explanation of the assessee was that that nobody would keep the money in hand to that extent. Similarly, the Ld. CIT(A) affirmed the order of AO. In our opinion, the assessee has fully substantiated the nature and sources of cash being accumulated out withdrawals from bank account of the assessee. Therefore in our considered view the source stood fully explained as the authorities below has not controverted the withdrawals from the bank accounts of the assessee or proved otherwise that the cash was utilized elsewhere. The case of assessee finds support from the decision of Co-ordinate Bench in the case of Nand Kumar Taneja vs. ITO in [2019] 105 taxmann.com 390 (Del-Trib) wherein the Co-ordinate Bench has held as under: “5. After hearing both the parties and on perusal of the reasoning given in the impugned order as well as material referred to before me at the time of hearing, I find that entire addition has been made on account of disbelieving the cash-in-hand recorded in books of accounts u/s 69A. The deeming fiction u/s 69A can be invoked, where in any financial year assessee is found to be the owner of any money, bullion, jewellery or other valuable articles and such money, bullion, jewellery or valuable articles is not recorded in the books of accounts and the source is not explained by the assessee. Here in this case, there is no dispute with regard to the fact that the assessee has been filing the income tax return along with the balance sheets, wherein source of income and cash has been disclosed and recorded. Hence in such a situation it is unfathomable as how provision of 69A can be invoked. For instance, right from the financial year 2013- 14 to 2015-16, the balance sheets of the respective assessees reflect huge cash-in-hand available with them, which is evident from the following details :- Cash in hand as on: 31-3-2014 31-3-2015 31-3-2016 Sh. Nand Kumar Taneja: Rs. 9,13,789/- Rs.33,85,789/- Rs. 62,31,326 Smt. Nita Taneja: RS. 1,25,924/- Rs. 18,17,925/- RS. 25,000/- 6. Apart from that, the details of; opening cash, cash withdrawal, cash deposited, cash expenditure; closing cash in hand and increase cash in hand, in case of both the assessees were given before the authorities below, which has been incorporated above in para 3 and 3.1. No discrepancy or any inquiry has been done by Assessing Officer to disapprove the cash disclosed in the books of account and balance sheet. The sole reason for disbelieving the assessee's explanation is that, firstly, no prudent person after withdrawing the cash will keep at home; and secondly, if there was an OD account having negative balance on which interest is being charged, then there was no need to keep such huge cash in hand at home. Such reasoning dehors any contrary material on record that the cash disclosed in the books of accounts has been invested somewhere else, then on mere surmise assessee's explanation cannot be discarded. If assessees have genuine sources of income which are received through banking channels, out of which cash has been withdrawn and have been disclosed in the income tax return and in the balance sheet as cash-in-hand, then I am unable to apprehend how the provision of section 69A is applicable. Because the section can only be invoked where in any financial year the assessee is found to be the owner of any money, etc., which has not been recorded in the books of accounts and assessee offers no explanation. Here in these cases, Assessee's cash in hand duly stands recorded and source has been explained from the income deposited in the bank account and withdrawal, then in my opinion deeming provision of section 69A cannot be invoked. The reasoning given by the AO and Ld. CIT (A) is vague and based on surmise as to what a prudent person should have done. Once assessee has explained that being of senior citizen they have maintained such liquidity of cash out of their own disclosed income with them for certain contingencies, then without any material to controvert such an explanation, addition cannot be sustained. Assessees before the lower authorities have filed following documents to substantiate the cash in hand with them:- a. Income-tax Return with computation of total income. 5 I.T.A. No.1294/Kol/2023 Assessment Year: 2016-17 Ashok Vikram Poddar b. Balance Sheets for FY 2013-14, 2014-15 and FY 2015-16. c. Comparative Chart of cash movement FY 2013-14, 2014-15 and FY 2015-16. d. Cash book maintained by the assessee. e. Kotak Mahindra Bank Statement bearing A/c No. 6311509485 f. Standard Chartered Bank: Statement of account. g. Bank: Book of Kotak Mahindra Bank. h. Bank Book of Standard Chartered Bank. i. Copy of all medical treatment documents. 7. All these documents have neither been rebutted nor there is any finding that cash-in-hand disclosed in the balance sheet was beyond the scope of their income or are not substantiated from the bank account. Simply because after the period of demonetization, that is, 8-11-2016, certain amount of cash has been deposited in the bank account, it does not mean that the cash-in-hand as on 31-3-2015 and 31-3-2016, duly shown in the balance sheet and disclosed to the department in the respective income tax return filed much earlier, is unexplained. Accordingly, in view of the above reasoning, addition made by the AO and sustained by the Ld. CIT (A) is directed to be deleted. 8. In the result both the appeals of the assessee are allowed.” Considering the facts and circumstances and the decision of the coordinate bench ,we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition.” Similarly in the case of Gordhan vs. ITO (supra) the Co-ordinate Bench has held as under: 9. After hearing rival contentions and perusing the documents on record and the orders of the authorities below, I hold as follows. 10. The sole ground on which the additions has been made u/s. 68 of the I.T. Act, is that, there is a gap of 5 months between the withdrawal of the cash from the Bank account and re-deposit of the same in the Bank account. An addition made, solely on this ground cannot be sustained. In this regard, I draw support from the decision of the ITAT, Delhi in the case of AICT vs. Baldev Raj Charla 121 TTJ (Del) 366 wherein it has been held as under:- \"We have heard the rival submissions and perused the material available on record and have gone through the orders of the authorities below. We find that this explanation of the assessee was found correct that against these five deposits on dated 14th June, 1996, Rs. 31,000; 21st July, 1997, Rs. 1,27,000, 19th Sept., 1997, Rs. 22,000; 4th October, 1997, Rs. 26,000 and on 7th November, 1997, Rs. 52,000/- there were sufficient cash withdrawals from AWI and from SBL Mayapuri, but this addition has been confirmed by Ld. CIT(A) on the basis that there is time gap between the assessee's withdrawals from his own partnership M/s AWI or from his own bank. There is finding recorded by the Ld. AO or by the Ld. CIT(A) that apart from depositing these cash into bank as explained by the assessee, there was any other user by the assessee of these amounts and in the absence of that, simply because there was a time gap, the explanation of the assesee cannot be rejected and hence the addition confirmed by the Ld. CIT(A) is not correct. We, therefore, delete the same. This ground of the assessee is allowed.\" We observe that even in the instant case before us the assessee has duly explained the deposits out of withdrawals of the assessee’s own bank account though there was lag 6 I.T.A. No.1294/Kol/2023 Assessment Year: 2016-17 Ashok Vikram Poddar between withdrawals and re-deposits and AO not bringing any materials on record that the money was used by the assessee somewhere else. Therefore since the facts of the case before us are substantially similar to the facts of the cases as cited above we, therefore, respectfully following the same, set aside the order of Ld. CIT(A) and direct the AO to delete the addition. 7. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 8th November, 2024 Sd/- Sd/- (Pradip Kumar Choubey /Ĥदȣप क ुमार चौबे) (Rajesh Kumar/राजेश क ुमार) Judicial Member/ÛयाǓयक सदèय Accountant Member/लेखा सदèय Dated: 8th November, 2024 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- Ashok Vikram Poddar, 5/1, 2nd Floor, Room No. 47, Clive Row, Kolkata-700001 2. Respondent – ACIT, Circle-34, Kolkata 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "