Sanjay Devendraparsad Rai, Jalna V. Assistant Commissioner of Income-tax, Jalna Circle, Jalna

CO 17/PUN/2021

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had allowed the appeal of the assessee, Sanjay Devendraprasad Rai, proprietor of Shivshakti Services. The primary issue was the addition of Rs.1,50,14,949/- as unexplained cash deposits in the assessee's bank accounts for the assessment year 2014-15. The AO had treated these deposits as unexplained under section 69A of the Income Tax Act, 1961, due to lack of evidence of their source. However, the CIT(A) found that the AO had not properly examined the cash withdrawals that could explain these deposits. The Tribunal agreed with the CIT(A)'s decision, noting that the AO had admitted during the proceedings that there were no discrepancies in the cash book and that the cash withdrawals were sufficient to justify the cash deposits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134437 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-06-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-04-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 16-09-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PRATEEK JHA S
• Keywords: Depreciation; Peak credit; Additional evidence
• Section: 144; 115JB; 69A

Judgement Text

आयकर अपीलीय अिधकरण ”ए” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “A” :: PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.801/PUN/2018 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 The Asst. Commissioner of Income Tax, Jalna Circle, Jalna. Vs Sanjay Devendraprasad Rai, Prop. Shivshakti Services, 343, Manik Nagar, Lakkadkot, Jalna – 431 203. PAN: AKQPR 3680 K Appellant/ Assessee Respondent /Revenue Cross Objection No.17/PUN/2021 (arising out of ITA No.801/PUN/2018) िनधाᭅरणवषᭅ / Assessment Year : 2014-15 Sanjay Devendraprasad Rai, Prop. Shivshakti Services, 343, Manik Nagar, Lakkadkot, Jalna – 431 203. PAN: AKQPR 3680 K Vs The Asst. Commissioner of Income Tax, Jalna Circle, Jalna. Appellant/ Assessee Respondent / Revenue Assessee by Dr.Prayag Jha & Shri Prateek Jha – AR’s Revenue by Shri Ramnath P Murkunde – DR Date of hearing 12/04/2023 Date of pronouncement 23/06/2023 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Revenue and Cross Appeal of Assessee are directed against the common order of ld.Commissioner of Income Tax (Appeal)-1,[ld.CIT(A)], Pune dated 05.02.2018 for ITA No.801/PUN/2018 & C.O.No.17/PUN/2021 Sanjay Devendraprasad Rai 2 A.Y.2014-15 emanating from assessment order under section 144 dated 31.12.2016. Also, the assessee is before us as a Cross-Objector for the aforementioned year. The Revenue has raised the following grounds of appeal : “i) The Ld. CIT(A) erred in law and in facts in passing the order. ii) The Ld CIT(A)-1,Aurangabad erred in not appreciation the fact that cash deposited in bank HDFC account No 06872560000623 at Rs. 56,50,000/- and ICICI Bank account No. 64691000370 of Rs. 14,00,000/- remained unexplained as the said account are not reflected in balance sheet as on 31.03.2014 and therefore not accounted for. iii) The Ld.CIT(A)-l, Aurangabad erred in not appreciating the fact that with regard to the Axis bank statement of account no 910010048441224 that no opportunity was given to the Assessing Officer to examine the following bank account entries as to whether it is cash withdrawal or by way of cheque. Date of transaction Cheque No. through which Name of the party in whose account amount Amount 06/08/2013 13822 To SANJAY RAI Rs. 3,35,000/- 14/11/2013 13824 To SANJAY RAI Rs. 26,00,000/- 11/12/2013 13825 To SANJAY RAI Rs. 5,10,000/- 24/02/2014 22009 To SANJAY RAI Rs. 23,00,000/- 23/07/2013 13821 To CASH SELF Rs. 3,00,000/- iv) The Ld. CIT(A)-1 Aurangabad erred in not appreciating the fact that the cash book and the bank account extract of ICICI Bank account 00370 wherein it is seen that in the bank account the amount of Rs. 2.5 Lakhs deposited on 27.07.2013 & Rs. 2.5 Lakhs deposited on 29/07/2013 under the narration TRF FROM ROOPESH but same amount shown as cash withdrawn in the cash ITA No.801/PUN/2018 & C.O.No.17/PUN/2021 Sanjay Devendraprasad Rai 3 book. Hence cash book produced in appellate proceedings cannot be relied upon. v) The Ld.CIT(A)-l, Aurangabad erred in delerting additions made on account of unexplained cash of Rs. 56,50,000/- (HDFC Bank A/c), Peak deposit of HDFC bank a/c 00272 Rs. 26,19,449/- and unexplained cash of ICICI bank account no. 371 Rs. 10,00,000/- and Rs. 57,45,500/- in HDFC Bank a/c No. 273 when cash book produced in appellate proceedings is not reliable and not verified by the AO/CIT(A) based on the above facts and in the circumstances of the case. vi) The appellant craves the permission to add, amend, modify alter, revise, substitute delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal. vii) On the facts & in the circumstances of the case, the Ld. CIT(A), Aurangabad has erred in deleting the excess claimed depreciation of Rs.59,01,774/- on account of subsidy received to that extent. viii) On the facts & in the circumstances of the case, the Ld. CIT(A), Aurangabad has erred in reducing the capital subsidy received from the profits for computation of book profits u/s 115JB of the IT Act. ix) On the facts & in the circumstances of the case, the order of the Ld. CIT(A), Aurangabad be quashed and that the Order of the AO be restored.” 2. The assessee in Cross Objection Appeal has raised the following grounds of appeal : “1) On the facts and prevailing circumstances of the case and in law, Hon’ble CIT (Appeal) erred in rejecting assessee’s ground of objection of Assessment is not valid. As the same does not adhere to ITA No.801/PUN/2018 & C.O.No.17/PUN/2021 Sanjay Devendraprasad Rai 4 the CBDT CIRCULAR on CASS assessment. 2) On the facts and prevailing circumstances of the case and in law, the Dept appeal raises grounds not arising out of orders passed by CIT(A) and contrary to facts on record and may be dismissed in liminie. 3) Dept appeal may be dismissed and justice done to Assessee.” Brief facts of the case : 3. The assessee is an individual and proprietor of Shivshakti Services, engaged in the services of Civil Contractor. The assessee filed his e-return for A.Y.2014-15 on 26.11.2014 declaring total income at Rs.28,63,973/-. The assessee’s Return of Income was selected for scrutiny. In the assessment order, AO has made addition of Rs.1,50,14,949/-. The relevant para 4 of the assessment order is reproduced as under : “4. On verification of computation of income the gross receipts as reflected in 26AS is tallied with receipts shown in Income & Expenditure account. Further on verification of bank statement, it is observed that the assessee during the year under consideration has made following transaction as under: Sr. No. Name of the Bank Cash Deposit Cash withdrawal 01 Axis Bank(Savings A/c No.910010048441224) 70,60,000/- 66,92,000/- 02 ICICI(Savings A/c No. 646901000370) 14,00,000/- 11,00,000/- 03 HDFC(Savings A/c No. 07352000000273) 57,45,500/- Nil 04 HDFC( Current A/c No. 06872560000623) 56,50,000/- Nil ITA No.801/PUN/2018 & C.O.No.17/PUN/2021 Sanjay Devendraprasad Rai 5 On verification of the bank accounts as maintained by the assessee with HDFC, it is observed that the assessee has made cash deposits at Rs. 57,45,500/- & Rs. 56,50,000/- and against the said deposits there is no self withdrawal by the assessee. It is therefore clear that the said deposits totaling to Rs. (1,13,95,500/-) is made from out of undisclosed sources. Further on verification of bank statement of Axis Bank, it is observed that the assessee has made cash deposits and made self withdrawal in cash on various dates. Thus there is cash deposits and cash withdrawals. Hence by applying peak credit theory the peak credit is determined. On verification of bank account, it is seen that there is a peak credit in the said bank account as on date 12.11.2013 of Rs. 26,19,449/-, which is not matched with the figure of total withdrawal prior to that period in the said bank account. Further on verification of bank account as maintained with the ICICI Bank, it is observed that the assessee has made cash deposits at Rs. 9,50,000/- & Rs. 50,000/- on 11/11/2013 & 12/11/2013 respectively totaling to Rs.10,00,000/-. As the assessee during the assessment proceedings despite repeated reminder letter as referred above did not produced any supporting details i.e. cash book, bank book to substantiate his cash deposits in the said bank accounts. In absence of the same the source of the above cash deposits remained to be verified. The silence of the assessee on this issue is presumed that he has nothing to say on this issue and the said deposits (i.e. Rs. 1,13,95,500 + 26,19,449 + 10,00,000 =1,50,14,949/-) is treated as un-explained cash deposits as per section 69A of the act and added to the total income of the assessee. Since the assessee had concealed the income and also furnished inaccurate particulars of income therefore penal proceedings u/s 271(l)(c) of the Income tax Act, 1961 are initiated separately.” ITA No.801/PUN/2018 & C.O.No.17/PUN/2021 Sanjay Devendraprasad Rai 6 4. Aggrieved by the assessment order, assessee filed appeal before ld.CIT(A)-1, Aurangabad. The ld.CIT(A) admitted additional evidence under Rule 46A and has discussed the reasons for admitting additional evidence. The ld.CIT(A) gave opportunity to the AO to examine the additional evidence. The ld.CIT(A) in para 5 has mentioned that the ACIT, Jalna had attended the hearing before CIT(A) on 29.01.2018 and ACIT submitted that no discrepancies were noticed in the cash book submitted by the assessee. The ld.ACIT has also admitted that there were cash withdrawals on earlier dates justifying cash deposits. In para 5.2, ld.CIT(A) has observed as under : “5.2 As regards the addition of Rs.1,50,14,949/- made by the AO, it is noticed that the appellant had disclosed as many as nine bank accounts in the balance sheet as on 31.03.2014 namely Axis Bank (account no.910010048441224), ICICI Bank (account no.646901000370), HDFC Bank (account no.21/07352320001803), HDFC Bank Varanasi (account no.7150), HDFC Bank (account no.5920), HDFC Bank (account no.7352000000273), HDFC Bank (account no.6872560000623), ICICI Bank (account no.646905500029) and State Bank of India, Jalna. These details were available in the records of the AO. Further the cash deposits as well as cash withdrawals in these bank accounts were duly supported by the entries in cashbook/bankbook. The AO had himself admitted in para 4 of the assessment order that there were cash withdrawals of Rs.66,92,000/- and Rs.11,00,000/- respectively from the bank accounts maintained with Axis Bank and ICICI Bank. Hence there was no case for applying peak credit in respect of ITA No.801/PUN/2018 & C.O.No.17/PUN/2021 Sanjay Devendraprasad Rai 7 above mentioned accounts. As far as saving bank account and current account with HDFC are concerned, the AO proceeded to assume in haste that there were no cash withdrawals in these accounts and treated the entire cash deposits of Rs.1,13,95,500/- as unexplained. However he did not peruse/examine the other bank accounts wherein there were huge cash withdrawals justifying the cash deposits in the above bank accounts. Such a huge addition could have been avoided it the AO had provided an opportunity to the appellant to explain the sources of cash deposits. During the course of present appellate proceedings, the counsel of the appellant has demonstrated that cash deposits to the extent of Rs.1,50,14,949/- were out of earlier cash withdrawals made from the different bank accounts. This fact is also evidenced by the bank statements and cash book maintained by the appellant. For example, on careful examination of the cash book, it is seen that cash of Rs. 1,75,000/- was deposited on 02.04.2013 in HDFC bank (account no.273) and cash of Rs. 10,00,000/- wasdeposited on 04.04.2013 in HDFC Bank (account no.273) out of cash withdrawal of Rs.15,30,000/- on 02.04.2013 from another bank account no.1803 with HDFC bank in the name of his proprietary concern M/s Shivshakti Agency. Similarly cash of Rs.1,70,000/- was deposited on 12.04.2013 in ICICI Bank (account no.370) out of available cash on hand of Rs.4,33,045/-. ...................In fact, the onus totally lay on the AO to prove that cash withdrawn on various dates was utilized for some other purposes or invested somewhere else and was not available with the appellant.” ITA No.801/PUN/2018 & C.O.No.17/PUN/2021 Sanjay Devendraprasad Rai 8 4.1 Thus, ld.CIT(A) directed the AO to delete the addition of Rs.1,50,14,949/-. Accordingly, assessee’s appeal was allowed by the ld.CIT(A). 5. Aggrieved by the order of the ld.CIT(A), Revenue has filed appeal and Cross Objection by assessee. Submission of ld.Departmental Representative (ld.DR) : 6. The ld.DR relied on the order of Assessing Officer(AO). Ld.DR argued that the assessee’s claim that cash was available with the assessee and the same was deposited is factually incorrect as held by the AO. Submission of ld.Authorised Representative (ld.AR) : 7. The ld.AR at the outset submitted that Ground No.vii and viii of the Revenue are not emanating from the assessment order or CIT(A)’s order. This explains that there is no application of mind while filing appeal. 7.1 The ld.AR submitted that cash book and bank books were produced before the ld.CIT(A). The ld.CIT(A) gave opportunity to the AO to verify the same. The AO verified the cash books and bank books and as observed by ld.CIT(A), the ACIT has categorically stated that there was no discrepancy in the cash book, there were ITA No.801/PUN/2018 & C.O.No.17/PUN/2021 Sanjay Devendraprasad Rai 9 sufficient cash withdrawals to justify cash deposits. The ld.AR read out the relevant part of the ld.CIT(A)’s order. The ld.AR submitted that once the AO has admitted before ld.CIT(A) that there was sufficient cash withdrawal to explain cash deposits, Revenue had no right to file the appeal. The ld.AR relied on the case laws. 7.2 Ld.AR took us through the cash book and bank book to explain that there was sufficient cash withdrawals by the assessee which assessee has deposited. Findings &Analysis : 8. On perusal of the ld.CIT(A)’s order, it is observed that ld.CIT(A) has categorically mentioned that the ACIT(AO), Jalna had attended hearing before him. The ACIT, Jalna had verified cash book and bank book submitted by assessee. The ACIT, Jalna admitted that there were no discrepancies and there was sufficient cash withdrawals to explain the cash deposit. This is the findings given in the order of ld.CIT(A). We have verified the Case records of Ld.CIT(A) with the help of ld.DR, we observed from the order sheet entries that the ld.ACIT had attended hearing on 16/01/2018, when the Ld.CIT(A) provided him copies of the documents which were filed by the assessee and asked ld.ACIT to submit remand report. On 29/01/2018, the ld.ACIT again attended hearing before the Ld.CIT(A) and submitted that no discrepancies were noted in the ITA No.801/PUN/2018 & C.O.No.17/PUN/2021 Sanjay Devendraprasad Rai 10 cash book and there were sufficient cash withdrawals to justify the cash deposits. The order sheets are duly signed by the ld.ACIT and ld.CIT(A). Once the AO (ACIT) has verified the cash book, bank book and arrived at the conclusion that there were sufficient cash withdrawals to explain cash deposits, we agree with ld.CIT(A) that no addition can be made on account of cash deposits. We agree with the ld.CIT(A) that there was sufficient cash withdrawals to explain the cash deposits. The onus is on the Revenue. The Revenue has not brought on record any evidence to establish that the cash deposits were not sourced from the cash withdrawals, especially when the AO himself had admitted that there were sufficient cash withdrawals. In these facts and circumstances of the case, we do not find any merit in the Revenue’s grounds, therefore, Revenue’s Ground No.i, ii, iii, iv, v & vi are dismissed. 8. Ground No.ix’ and ‘x’ are general in nature and does not need any adjudication, hence dismissed. 9. Ground No.‘vii’ and ‘viii’ does emanate from the assessment order or CIT(A)’s order. Ld.DR could not explain how these grounds were relevant for the case under consideration. Therefore, Ground No.‘vii’ and ‘viii’ are dismissed. 10. In the result, appeal of the Revenue is dismissed. ITA No.801/PUN/2018 & C.O.No.17/PUN/2021 Sanjay Devendraprasad Rai 11 C.O.No.17/PUN/2021(Assessee) : 11. Since we have already dismissed the appeal of the Revenue as above, the Cross Objection appeal filed by the assessee becomes academic in nature, hence, it is not adjudicated. 12. In the result, Cross Objections appeal of the assessee is dismissed as not adjudicated. Order pronounced in the open Court on 23 rd June, 2023. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 23 rd June, 2023/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.