Vijaykumar Vithaldas Prajapati, Mehsana V. Teh ITO, Ward-3, Mehsana

ITA 1536/AHD/2019

AI Insights

The case revolves around an appeal by Vijaykumar Vithaldas Prajapati against the order of the Commissioner of Income Tax (Appeals) which confirmed the addition of Rs. 8,49,000 as unexplained income. The addition was initially made by the Assessing Officer during the assessment year 2012-13, based on unexplained cash deposits in the assessee's bank account. The assessee, engaged in the transportation business, argued that these deposits were from legitimate sources including freight charges and cash withdrawals. The Tribunal, after examining the evidence and the submissions, concluded that the assessee had sufficiently explained the source of the deposits, leading to the allowance of the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125643 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 08-10-2019
• Other Referred Cases: Shailesh Rasiklal Mehta vs. ITO, Sudhirbhai Pravinkant Thaker vs. ITO, Ajit Bapu Satam vs. ITO, Jaspal Singh Sehgal vs. ITO
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o . 15 36 /A h d /2 01 9 ( A s s e s s me nt Y ea r s : 2 0 12 -1 3) Vij a yk u ma r Vi th al d a s Pr aj a p ati , 28, R a n uj a N a ga r S oc i et y, Op p. F C I G od o w n , Mo d h er a R oa d , Me h s a na -3 84 0 0 2 V s .In c o me Ta x Of f ic e r , War d- 3, Me h s a na [P AN N o. A B HP P 5 6 1 3 L ] (Appellant) .. (Respondent) Appellant by : Shri Parimalsinh B. Parmar, A.R. Respondent by: Shri Ashok Kumar Suthar, Sr. D.R. D a t e of H ea r i ng 31.08.2023 D a t e of P r o no u n ce me nt 05.09.2023 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-13, (in short “Ld. CIT(A)”), Ahmedabad Appeal No. CIT(A)-13/Intl. Taxn./Ahd/472/2017- 18 vide order dated 09.08.2019 passed for Assessment Year 2012-13. 2. The assessee has taken the following grounds of appeal:- “1. The Ld. CIT(A) has erred both in law and on facts of the case in confirming addition of Rs. 8,49,000/- on Cash Deposit made in bank account with Kotak Mahindra Bank in a/c no. 08130140024196 without considering sources of cash deposited in bank account and its related want of cogent evidence. It is contended that the appellant has received ITA No. 1536/Ahd/2019 Vijaykumar Vithaldas Prajapati vs. ITO Asst. Years –2012-13 - 2 - freight charges and made withdrawal from bank and the cash on hand has been deposited in to the bank account.” 3. The brief facts in relation to this ground of appeal are that during the course of assessment, on perusal of the Individual Transaction Statement (ITS), the Assessing Officer observed that the assessee had deposited cash of Rs.10,83,000/- in his bank account held with Kotak Mahindra Bank Ltd. On perusal of the bank statement, the AO observed that the assessee had deposited a sum of Rs.8,49,000/- during the relevant year. During the course of assessment, the assessee gave no specific explanation to provide the source of cash deposit of Rs.8,49,000/- in the savings bank account. Accordingly, the Assessing Officer added the amount of Rs.8,49,000/- as unexplained income in the hands of the assessee. 4. In appeal, the assessee submitted before Ld. CIT(Appeals) that he was engaged in transportation business and was a Director in Patel Travels (Mehsana) Private Ltd. During the year under consideration, the assessee generated freight income of Rs.38,90,491/-. The assessee placed certain additional evidences on record such as cash book, Ledger of bank account with Kotak Mahindra Bank, bank statement of Kotak Mahindra Bank etc. The assessee submitted that the source of cash deposits in question was on account of freight charges, cash withdrawals from bank, and cash in hand. The assessee also placed on record cash flow statement which was furnished before the Assessing Officer during remand ITA No. 1536/Ahd/2019 Vijaykumar Vithaldas Prajapati vs. ITO Asst. Years –2012-13 - 3 - proceedings vide letter dated 13.05.2019. However, Ld. CIT(Appeals) confirmed the additions with the following observations: “10.4 So far as merits of the case are concerned, appellant has claimed that he is doing freight business and available cash balance was used for making cash deposits in Kotak Mahindra Bank. The AO in the remand report has refereed to written submission filed by appellant in remand proceedings wherein also similar facts were stated. The AO has stated that such additional evidences should not be admitted only on the ground that various opportunities were provided in assessment proceedings but on merits have not given any comment that cash deposit addition is required to be sustained or not after considering appellant's explanation as well as evidences. The appellant has submitted copy of computation of income for return of income filed on 28/03/2014 and in such computation, only two banks were disclosed i.e ICICI bank and IDBI Bank. The appellant has not disclosed Kotak Mahindra Bank in the list of bank details in return of income. The appellant has submitted copy of Profit & loss account as Annexure D of paper book but such details do not contain copy of balance sheet for year under consideration. The appellant at paper book page no 44 & 45 has stated to have submitted ledger account with Kotak Mahindra Bank(KMB) but same are bank loan accounts and not ledger account of saving bank account number 08130140024196. The appellant has submitted copy of cash book from 01st April 2011 to 31st March 2012 from which it is apparent that appellant has not received freight income in cash. The majority transactions are relating to cash withdrawals and cash deposits in various bank which includes Kotak bank. The appellant ITA No. 1536/Ahd/2019 Vijaykumar Vithaldas Prajapati vs. ITO Asst. Years –2012-13 - 4 - has stated that opening cash on hand was Rs 1,04,674 and Rs 2,35,263 on 19/09/2011 i.e before first cash deposits in KMB. The appellant has claimed that available cash balance were deposited in bank account. The cash balance is not generated out of any major taxable income but out of cash withdrawn from KMB or other bank. No prudent person would keep on withdrawing cash and depositing in bank account. The appellant has shown cash balance of Rs 51255 on 12/11/2011 and cash withdrawal of Rs 85,000 on 12/11/2011 which made cash balance at Rs 1,36,255. Thereafter, appellant has again withdrawn cash of Rs 2,00,000 from KMB on 17/11/2011 even though opening cash balance as per cash book was Rs 1,34,795. Similarly appellant withdrawn cash of Rs 1,00,000 on 19/11/2011 when opening cash balance was Rs 3,34,795. As cash book and fund flow statement submitted by appellant, cash of Rs 5000 is deposited on 22/11/2011 and immediately cash of Rs 11,600 was withdrawn on 23/11/2011, Rs 3000 on 24/11/2011. The appellant was having cash balance of Rs 3,05,761 and still appellant withdrew cash of Rs 50,000 on 03/12/2011. The modus operendi of cash withdrawal from bank inspite of having sufficient cash balance is not explained by appellant. Even from cash book submitted by appellant, it is apparent that appellant was no need for having huge cash balance as there are no major cash expenditure hence continuously withdrawing cash and claiming that cash deposits are out of cash balance cannot be accepted. The cash withdrawn from bank account are used by appellant for some other purpose which are not disclosed in cash book hence contention of appellant that cash deposits are out of available cash balance cannot be accepted. ..... ITA No. 1536/Ahd/2019 Vijaykumar Vithaldas Prajapati vs. ITO Asst. Years –2012-13 - 5 - As appellant ahs failed to justify sources of cash deposits through cogent evidences, explanation of appellant that cash deposits are out available cash balance cannot be accepted and addition made by AO for Rs 8,49,000 is confirmed. This ground of appeal is dismissed.” 5. The assessee is in appeal before us against the aforesaid addition confirmed by Ld. CIT(Appeals). The Counsel for the assessee submitted that from a perusal of the Remand Report submitted by the Assessing Officer (at Pages 9 to 14 of Ld. CIT(Appeals) order) it is evident that the Assessing Officer has made no adverse comments on merits of the case. Further, the Counsel for the assessee drew our attention to cash flow statement (Pages 69-70 of Paper Book), bank statement of Kotak Mahindra Bank (Pages 46-49 of Paper Book) and cash book (Pages 7-43 of Paper Book) and contended that the cash deposits were out of cash withdrawals from bank and cash on hand. Therefore, the source of cash deposits stands duly established. The assessee had made cash withdrawals from time to time and the available cash on hand was the source of deposits in question. It was submitted that the Assessing Officer has not made any adverse comments on the additional evidences while furnishing the Remand Report. Further, it was submitted that the Department has not brought on record any clinching evidence whatsoever to disbelieve or disprove the fact that assessee had sufficient cash available in cash book on the dates when the cash deposits in question were made. Further, it was submitted that the Department has not brought on record any concrete evidence to demonstrate that cash withdrawal was utilised for any other purpose or was invested elsewhere. Further, from ITA No. 1536/Ahd/2019 Vijaykumar Vithaldas Prajapati vs. ITO Asst. Years –2012-13 - 6 - the order passed by Ld. CIT(Appeals), it is evident that he has not doubted the fact that cash withdrawals had been made by the assessee. The only reason why the disallowance was confirmed was because Ld. CIT(Appeals) questioned the need for having huge cash balances to be kept with the assessee. Accordingly, it was submitted that in the instant facts, the source of cash deposits stood fully explained and accordingly, the additions are liable to be deleted. 6. In response, the Ld. DR placed reliance on the observations made by Ld. CIT(Appeals) while confirming the additions. 7. We have heard the rival contentions and perused the material on record. On perusal of the facts of the case and in light of the arguments placed before us, we observe that the assessee has been able to reasonably explain that the source of deposits made in the bank account were out of the cash withdrawals made by the assessee from the bank account from time to time and also from the cash in hand held by the assessee. It is also notable that in the Remand Report, the Assessing Officer has not made any specific adverse inference against the assessee. Further, the Ld. CIT(Appeals) has also made the following observations while confirming the additions: “Even from the cash book submitted by the appellate, it is apparent that appellant was in no need for having huge cash balance as there are no major cash expenditure hence continuously growing cash and claiming that cash deposits are out of cash balance cannot be accepted. The cash withdrawn from the bank are used by the appellate for some other ITA No. 1536/Ahd/2019 Vijaykumar Vithaldas Prajapati vs. ITO Asst. Years –2012-13 - 7 - purpose which are not disclosed in the cash book hence contention of the appellate that cash deposits are out of available cash balance cannot be accepted.” 8. Therefore, perusal of order passed by Ld. CIT(Appeals) shows that no specific evidence has been brought on record to discard the explanation for source of cash deposits which have been given by the assessee. It is well-settled principle of law that unless the Department comes out with any specific evidence to the effect that cash withdrawn by the assessee earlier was not available with assessee for depositing in the bank account (i.e. by showing that the assessee had incurred some specific expenditure on investment in shares, properties or other assets etc.), no presumption can be drawn that such cash withdrawals were not re-deposited by the assessee in its bank account. In the case of Shailesh Rasiklal Mehta176 Taxman 270 (Gujarat), the High Court held that once Tribunal deleted addition holding that Assessing Officer having accepted withdrawal of cash from assessee's bank by 'M', there was no question of treating deposit in question as unexplained and, therefore, no addition was warranted. In the case of Sudhirbhai Pravinkant Thaker 88 taxmann.com 382 (Ahmedabad -Trib.), ITAT held that when assessee had demonstrated that he had withdrawn cash from bank and there was no finding by Authorities below that this cash available with assessee was invested or utilized for any other purpose, it was not open to authority to make addition on basis that assessee failed to explain source of deposits. In the case of Ajit Bapu Satam147 taxmann.com 222 (Mumbai - Trib.), the ITAT held that where cash withdrawn by assessee ITA No. 1536/Ahd/2019 Vijaykumar Vithaldas Prajapati vs. ITO Asst. Years –2012-13 - 8 - during demonetisation period from its bank account was deposited in very same bank account and both cash withdrawal and deposit were duly substantiated from bank statement of very same branch of bank and there was no findings by lower authorities that cash available with assessee was invested or utilised for any other purpose, cash so deposited could not be treated as unexplained money under section 69A of the Act. In the case of Jaspal Singh Sehgal 83 taxmann.com 246 (Mumbai - Trib.), the ITAT held that where assessee submitted detailed cash summary showing inflow and outflow of cash for relevant year, in absence of any materials to show that cash withdrawn was utilised elsewhere by assessee, benefit of cash withdrawn by assessee from bank account against amount of cash deposit into bank should be given. Accordingly, looking into the facts of the instant case, wherein the assessee has given a detailed explanation that the source of cash deposits was out of cash withdrawals from the bank account and the cash in hand generated from the business of transportation, and nothing specific has been placed on record by the revenue authorities to controvert the assertion made by the assessee, then the source of such cash deposits can be said to be explained by the assessee. Further, it is a well-settled principle of law that once there are substantial cash withdrawals which have been made by the assessee from his bank account, then the source of cash deposits in the same bank account can be presumed to have been made from the earlier cash deposits, unless certain specific facts are brought on record to establish that the assessee has spent or invested the aforesaid amount so that such cash is not available with the assessee for redeposit. ITA No. 1536/Ahd/2019 Vijaykumar Vithaldas Prajapati vs. ITO Asst. Years –2012-13 - 9 - Accordingly, looking into the facts of the instant case and the judicial precedents which have been discussed above, we are of the considered view that the additions are liable to be deleted. 9. In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 05/09/2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 05/09/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 05.09.2023 (Dictation given by Hon’ble Member on his Dragon Software on 05.09.2023) 2. Date on which the typed draft is placed before the Dictating Member 05.09.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S .09.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .09.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 05.09.2023 7. Date on which the file goes to the Bench Clerk 05.09.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................