Om Prakash Shukla, Allahabad V. ITO, Allahabad

ITA 2/ALLD/2012

• Counselvise Citation: 220714 RSA 2012
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTA VA
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 02/ALLD./2012 ASSTT. YEAR : 2008-09 OM PRAKASH SHUKLA, VS. INCOME-TAX OFFICER, 387, NAINI, ALLAHABAD. RANGE 1(3), ALLAHABAD. (PAN : AGFPS 6382 J) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAVEEN GODBOLE, C.A. RESPONDENT BY : SHRI Y.P. SRIVASTAVA, D.R. DATE OF HEARING : 05.11.2012 DATE OF PRONOUNCEMENT OF ORDER : 08.11.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A), ALLAHABAD DATED 07.09.2011 FOR THE ASSESSMENT YEAR 2008-09, CHALLENGING THE ADDITION OF RS.9,00,000/- U/S. 40A(3) OF THE IT ACT . 2. THE BRIEF FACTS OF THE CASE AS ARISING FROM THE ORDER OF THE ASSESSING OFFICER ARE THAT THE ASSESSEE WITHDREW THE FOLLOWING AMOUNT S FROM THE CASH BOOK AND DEPOSITED IN THE BANK ACCOUNT. BUT THE A.O. NOTICED THAT THESE AMOUNTS WERE NOT DEPOSITED IN THE BANK : ITA NO. 02/ALLD./2012 2 S.NO. DATE VOUCHER NO. WITHDRAWAL AMOUNT 1. 19.12.2007 141 RS.5,00,000/- 2. 26.12.2007 143 RS.3,00,000/- 3. 29.12.2007 145 RS.1,00,000/- 2.1 ON ENQUIRY BY THE A.O., THE ASSESSEE REPLIED TH AT ACTUALLY THESE AMOUNTS WERE NOT DEPOSITED IN PUNJAB NATIONAL BANK BUT IN T IJORI, DESAWAR. ON 15.01.2008, 10.01.2008 & 01.01.2008, THE ABOVE AMOU NTS HAVE BEEN TAKEN BACK AND ENTERED IN THE CASH BOOK AS CONTRA ENTRY. THE A .O. REFERRED TO THE REPORT TO THE ITI THAT THE ASSESSEE DID NOT KEEP ANY CASH BOX OR CASH CHEST. THERE IS ONE STEEL ALMIRAH FOR KEEPING THE CASH. THE BALANCE SHEET ALS O DOES NOT MENTION ANY CASH CHEST. THE A.O. ELABORATED HIS ANALYSIS AS UNDER : ON 19.12.2007, THE CLOSING BALANCE IN CASH BOOK WA S RS.7,96,664/- AND THE OPENING BALANCE WAS RS.7,75,144/-. THE A.O. WAS NOT SATISFIED WITH THE WITHDRAWAL OF RS.5,00,000/- ONLY. HE QUESTIONED AS TO WHY THE WHOLE AMOUNT WAS NOT TRANSFERRED TO THE CASH CHEST. ON 26.12.2007, THE O PENING CASH BALANCE WAS RS.3,14,774/-. WHY WAS ONLY RS.3,00,000/- TRANSFERR ED TO THE CASH CHEST ACCOUNT ? THE A.O. DOUBTED THE PURPOSE OF WITHDRAWAL OF RS.2, 00,000/- FROM PUNJAB NATIONAL BANK WHEN RS.3,00,000/- WAS ALREADY AVAIL ABLE IN THE CASH CHEST. THE BASIC DOUBT IN THE MIND OF THE A.O. WAS THAT IF THE CASH WAS AVAILABLE OR NOT SPENT ANYWHERE, THERE WAS NO NEED TO WITHDRAW THE AMOUNT FROM THE BANK. SIMILARLY, ON ITA NO. 02/ALLD./2012 3 29.12.2007, THE OPENING CASH BALANCE WAS RS.2,12,37 4/-. THE A.O. QUESTIONED AS TO WHY ONLY RS.1,00,000/- WAS WITHDRAWN COUPLED WIT H THE FACT THAT RS.8,00,000/- WAS ALREADY IN THE CASH CHEST. WITH THESE FACTS, TH E A.O. REACHED THE CONCLUSION THAT THE EXISTENCE OF CASH CHEST WAS IMAGINARY ONLY . AS THE ASSESSEE HAS FAILED TO OFFER ANY PLAUSIBLE EXPLANATION WITH REGARD TO THE PURPOSE OF WITHDRAWAL, AN IMAGINARY CASH CHEST WAS CREDITED. ON 10.01.2008, RS.3,00,000/- WAS TAKEN OUT FROM TH E SO-CALLED CASH CHEST AGAINST THE FACT THAT RS.3,54,942/- WAS ALREADY AVA ILABLE AS OPENING CASH BALANCE IN THE CASH BOOK. NO PARTY WAS PAID RS.5,00,000/- OR M ORE ON THIS DATE. ON 15.01.2008, RS.1,00,000/- WAS TAKEN OUT FROM CASH C HEST AGAINST THE FACT THAT RS.6,49,272/- WAS ALREADY AVAILABLE ON THIS DAY AS OPENING CASH BALANCE. NO BIG AMOUNT WAS PAID TO ANYBODY ON THIS DATE. IN VIEW OF THE ABOVE FACTS, THE A.O. CONCLUDED THAT THE CASH CHEST HAS BEEN CREATED IN T HE ABSENCE OF ANY PLAUSIBLE EXPLANATION. HE, THEREFORE, MADE AN ADDITION OF RS. 9,00,000/- U/S. 40A(3) OF THE IT ACT. 3. THE ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A ) AND IT WAS SUBMITTED THAT SECTION 40A(3) IS NOT APPLICABLE BECAUSE THE ASSESS EE HAS NOT INCURRED ANY EXPENDITURE IN TERMS OF THIS PROVISION IN EXCESS OF THE PRESCRIBED AMOUNT. THE ITA NO. 02/ALLD./2012 4 ASSESSEE HAS WITHDRAWN THE AMOUNT, WHICH WAS AGAIN TAKEN BACK TO THE CASH BOOK AND REVERSE ENTRIES HAVE BEEN MADE. IN FACT, THIS A MOUNT WAS KEPT IN TIJORI/ CASH CHEST ACCOUNT, WHICH WAS WRONGLY SHOWN AS DEPOSITED IN PUNJAB NATIONAL BANK. THE ASSESSEE HAS NOT MADE ANY PAYMENT TO ANY PARTY. THEREFORE, THE ADDITION IS UNJUSTIFIED. 3.1 THE LD. CIT(A) AGREED WITH THE SUBMISSIONS OF T HE ASSESSEE THAT THE PROVISIONS OF SECTION 40A(3) ARE NOT APPLICABLE, BU T CONFIRMED THE ADDITION CONSIDERING THE AMOUNT INTRODUCED IN THE CASH BOOK AS UNACCOUNTED. THE FINDINGS OF THE LD. CIT(A) IN PARA 3.3 ARE REPRODUCED AS UND ER : I AGREE WITH THE SUBMISSION OF THE APPELLANT THAT THE PROVISIONS OF SECTION 40A(3) ARE NOT APPLICABLE IN THE CASE BECAUSE, THE A.O. DID NOT HAVE ANY POSITIVE EVIDENCE THAT TH ESE AMOUNTS WERE EXPENDED IN CASH EXCEEDING RS.20,000/- FOR WHICH TH E APPELLANT HAD ALSO CLAIMED THE DEDUCTION. THERE IS NO EVIDENCE TH AT THE APPELLANT CLAIMED RS.9,00,000/- AS EXPENDITURE TOWARDS ANY HE AD. BUT, I DO NOT AGREE WITH THE APPELLANT THAT THE AMOUNTS WERE KEPT IN THE CASH CHEST. IF THE ASSESSEE WAS HAVING BANK ACCOUNT, THERE WAS NO NEED TO KEEP THE MONEY IN THE ASH CHEST. SECONDLY, IF IT IS ADMI TTED THAT THE APPELLANT KEPT THE CASH AS PER THE BUSINESS REQUIRE MENTS, IT SHOULD HAVE KEPT THE ENTIRE CASH AVAILABLE ON A PARTICULAR DAY. THE APPELLANT HAS NOT GIVEN ANY SATISFACTORY EXPLANATION EITHER B EFORE THE A.O. OR BEFORE THE UNDERSIGNED AS TO WHY THE PART AMOUNTS W ERE KEPT IN THE SO CALLED CASH CHEST. IF THE APPELLANT HAD TO SPEND TH E MONEY TOWARDS PURCHASE OF MATERIAL, IT SHOULD MAKE THE PAYMENT T HROUGH ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT IN VIEW OF THE PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT, 1961. AS A MATTER O F FACT, NOTHING CAN BE SAID ABOUT THE DESTINATION OF RS.9,00,000/- FROM THE CASH BOOK. IT COULD BE SPENT FOR ANY PURPOSES INCLUDING THE HOUSE HOLD, INVESTMENT IN SOME UNDISCLOSED ASSET, PURCHASE OF MORE UNDISCL OSED STOCK-IN- ITA NO. 02/ALLD./2012 5 TRADE. BUT I AM NOT IN POSITION TO COMMENT ANYTHING ON THE DESTINATION OF THE MONEY. FURTHER, I DO NOT AGREE WITH THE CONT ENTION OF THE APPELLANT THAT RS.1,00,000/- DEPOSITED IN THE CASH BOOK ON 15.01.2008, RS.3,00,000/- DEPOSITED IN CASH BOOK ON 10.01.2008 AND RS.5,00,000/- DEPOSITED IN CASH BOOK ON 01.01.2008 ARE CONTRA ENTRIES TO THE WITHDRAWALS MADE FROM THE CASH BOOK ON 19.12 .2007, 26.12.2007 AND 29.12.2007. THE DEPOSITS IN THE CASH BOOK MAY BE CONSIDERED CONTRA ENTRIES IN CASE IT IS CREDITED AN D DEBITED ON THE SAME DATE OR MAXIMUM THE FOLLOWING DAY. AS IT MAY B E SEEN THAT THERE IS A GAP OF A FEW DAYS BETWEEN THE WITHDRAWAL FROM THE CASH BOOK AND RETURN TO THE SAME, THE APPELLANT WAS DUTY BOUND TO FURNISH PLAUSIBLE EXPLANATION. FIRSTLY, NO REASON HAS BEEN STATED AS TO WHY THE MONEY WAS KEPT IN THE CASH CHEST AND THAT TOO NOT THE WHO LE AMOUNT AND FURTHER WHY THE MONEY HAS BEEN REINTRODUCED IN THE CASH BOOK TAKING OUT FROM THE CASH CHEST. THIS ONUS OF THE EXPLANATI ON HAS NOT BEEN FULLY DISCHARGED BY THE APPELLANT. EVEN AT THIS STA GE, THE ABOVE QUESTIONS REMAINED UNANSWERED. SINCE, THERE CANNOT BE A CASE OF UNDISCLOSED INCOM E ON ACCOUNT OF EXPENSE / INVESTMENT TOWARDS ANYTHING AFTER WITH DRAWING THE AMOUNT FROM THE CASH BOOK, I DISAGREE WITH THE A.O. TO MAKE DISALLOWANCE OF DEDUCTION U/S. 40A(3) OF THE I.T. A CT. HOWEVER, I AM NOT CONVINCED WITH THE EXPLANATION OF THE APPELLANT THAT THE ENTRIES IN THE CASH BOOK ON 15.01.2008, 10.01.2008 AND 01.01.2 008 ARE THE CONTRA ENTRIES. THE REASON FOR NOT ACCEPTING THE AP PELLANTS EXPLANATION IS GIVEN BY ME IN THE FOREGOING PARAS. THEREFORE, THESE AMOUNTS INTRODUCED IN THE CASH BOOK ARE THE INCOME OF THE APPELLANT WHICH WAS UNACCOUNTED (REMAINING OUTSIDE THE BOOKS) . ACCORDINGLY, I CONFIRM THE ADDITION OF RS.9,00,000/- TO THE TOTAL INCOME OF THE APPELLANT. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO PB-22 TO 25, WHIC H IS COPY OF THE CASH BOOK TO SUPPORT HIS SUBMISSIONS ABOUT THE CONTRA ENTRIES MA DE IN THE CASH BOOK. PB-26 IS TIJORI ACCOUNT AND ALSO FILED COPY OF BANK STATEMEN T TO SAY THAT NO AMOUNT WAS ITA NO. 02/ALLD./2012 6 DEPOSITED IN THE BANK ACCOUNT. ON THE OTHER HAND, T HE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. ON CONSIDERATION OF RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION OF RS.9,00,000/- AGAINST THE A SSESSEE. THE ASSESSEE HAS FILED COPY OF CASH BOOK TO SHOW THAT THE AMOUNTS WERE WIT HDRAWN FROM THE CASH BOOK, WHICH WERE WRONGLY STATED TO HAVE BEEN DEPOSITED IN THE BANK ACCOUNT. THERE IS NO CORRESPONDING BANK ENTRY IN THE BANK ACCOUNT OF THE ASSESSEE OF THE THREE AMOUNTS WITHDRAWN ON DIFFERENT DATES. THE ASSESSEE CLAIMED THAT THE AMOUNT OF RS.9,00,000/- WAS NOT SPENT ANYWHERE, THEREFORE, IT WAS RE-INTRODUCED IN THE BOOKS OF ACCOUNT. THERE IS NO EVIDENCE AVAILABLE ON RECOR D THAT IT INCURRED ANY EXPENDITURE IN VIOLATION OF PROVISIONS OF SECTION 4 0A(3) OF THE IT ACT. THEREFORE, THE LD. CIT(A) RIGHTLY HELD THAT NO DISALLOWANCE CO ULD BE MADE U/S. 40A(3) OF THE IT ACT. THUS, THE ORDER OF THE ASSESSING OFFICER IS WHOLLY UNJUSTIFIED IN MAKING ADDITION AGAINST THE ASSESSEE. THE LD. CIT(A) DESPI TE NOT AGREEING WITH THE FINDINGS OF THE ASSESSING OFFICER, CONSIDERED THE AMOUNTS RE -INTRODUCED IN THE CASH BOOK AS UNACCOUNTED WITHOUT ANY JUSTIFICATION. THERE IS NO HUGE GAP OF THE PERIOD BETWEEN WITHDRAWAL OF THE AMOUNT FROM CASH BOOK AND ITS RE- INTRODUCTION IN THE CASH BOOK. THE ASSESSEE BEING A BUSINESSMAN HAS EVERY RIGHT TO KEEP CASH WITH HIM FOR THE BUSINESS PURPOSES. NO TERMS COULD BE DICTATED TO TH E ASSESSEE. THE ASSESSING ITA NO. 02/ALLD./2012 7 OFFICER HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO P ROVE THAT THE AMOUNT WITHDRAWN FROM THE CASH BOOK AND REINTRODUCED IN TH E CASH BOOK WAS SPENT ANYWHERE ELSE. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHIV CHARAN DASS VS. CIT, 126 ITR 263, CONSIDERED THE FACT THAT THE AMOUNT WAS KEPT WITH THE WIFE OF ASSESSEE FOR FIVE YEARS, WHICH WAS LATER ON DEPOSITED IN THE NAME OF TWO UNMARRIED DAUGHTERS. THE DEPOSIT AFTER 4-5 YEARS WA S NOT CONSIDERED ADVERSE IN NATURE AND IT WAS OBSERVED THAT THE REVENUE SHOULD PROVE THAT THE AMOUNT WITH THE ASSESSEE WAS SOMEWHERE SPENT. IN THE CASE OF THE AS SESSEE, THE ASSESSEE HAS WITHDRAWN THE AMOUNT FROM THE CASH BOOK, WHICH WAS WRONGLY SHOWN AS DEPOSITED IN THE BANK, BUT IN FACT IT WAS REMAINED WITH THE A SSESSEE AND CONTRA ENTRY WAS MADE IN THE CASH BOOK. THEREFORE, THE PROVISIONS OF SECTION 40A(3) WOULD NOT APPLY IN THE CASE OF ASSESSEE. THE LD. CIT(A) WAS A LSO NOT JUSTIFIED IN HOLDING IT TO BE UNACCOUNTED AMOUNT IN THE HANDS OF THE ASSESSEE. CONSIDERING THE ABOVE DISCUSSION, WE SET ASIDE THE ORDERS OF THE AUTHORIT IES BELOW AND DELETE THE ADDITION. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO. 02/ALLD./2012 8 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, ALLAHABAD 6. GUARD FILE ASSTT. REGISTRAR TRUE COPY