Ashokbhai Jerambhai Desai, Surat V. Dy. Commissioner of Income Tax, Surat

ITA 206/SRT/2022

AI Insights

The case revolves around the Income Tax Department's scrutiny of cash deposits made by Ashokbhai Jerambhai Desai during the demonetization period in India. The Assessing Officer questioned the source of Rs. 15.90 lacs deposited in his bank account, leading to an addition of Rs. 6.00 lacs as unexplained income under Section 69A of the Income Tax Act. The assessee contested this addition, providing evidence of his salary, provident fund, and gratuity as sources of the deposits. Both the CIT(A) and the Tribunal examined the submissions, with the Tribunal ultimately finding merit in the assessee's arguments and allowing the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301533 (ITAT-SURAT)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-01-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 05-07-2022
• Other Referred Cases: Kavitaben Chintanbhai Patel Vs ITO, Jitesh Vithalbhaia Rashiya Vs ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Salary income; Source of fund; Corroborative evidences; TDS
• Section: 68; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH (SMC), SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 206/Srt/2022 (Assessment Year 2017-18) (Physical hearing) Ashokbhai Jerambhai Desai, 31-A, Deep Jyot Society, B/h Ankur Vidhya Bhavan Aamba Talavdi Chowk, Katargam, Surat-395006. PAN No. AEZPD 1304 H Vs. D.C.I.T., Circle 1(3), Surat. Appellant/ assessee Respondent/ revenue Assessee represented by Shri Mehul Shah, CA Department represented by Shri Vinod Kumar, Sr. DR Date of hearing 05/01/2023 Date of pronouncement 24/03/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi (NFAC)/Commissioner of Income Tax (Appeals), (in short, the ld. CIT(A)) dated 28/06/2022 for the Assessment year (AY) 2017-18 wherein the assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case as well as law on the subject, the ld. CIT(A) has erred in confirming the action of Assessing Officer in making addition of Rs.6,00,000/- on account of unexplained money u/s 69A r.w.s. 115BBE. 2. On the facts and circumstances of the case as well as law on the subject, the ld. Assessing Officer has erred in taxing the addition by taking the rate @ 77.25% by attracting Section 115BBE instead of normal tax rate. 3. On the facts and circumstances of the case as well as law on the subject, the Assessing Officer has erred in taking the income u/s 115BBE @ 77.25% in a retroactive manner by applying the duly substituted S. 115BBE inserted retrospectively instead of taxing it at 35.54% as per the old provisions of S. 115BBE. ITA No. 206/Srt/2022 Ashokbhai Jerambhai Desai Vs DCIT 2 4. It is therefore prayed that addition made by assessing officer and confirmed by CIT(A) may please be deleted. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 2. Brief facts of the case are that the assessee is an individual and filed his return of income declaring NIL income for the A.Y. 2017-18 on 01/08/2017. The case was selected for complete scrutiny as the assessee has made deposit of Rs. 15.90 lacs during demonetization period. During the assessment, the Assessing Officer noted that the assessee has shown received income from salary from Venus Jewels. The assessee was asked to furnish bank statement maintained with ICICI bank. As per direction of Assessing Officer, the assessee furnished bank statement. On perusal of such bank statement, and as per AIR information available with Assessing Officer, the Assessing Officer noted that the assessee made cash deposit of Rs. 9.90 lacs on 24/11/2016 and Rs. 6.00 lacs on 30/11/2016. The Assessing Officer asked to furnish the details of cash in hand on 24/11/2016 as well as on 30/11/2016. The assessee filed his submission dated 27/11/2019 and submitted that the cash deposit made during demonetization period of Rs. 15.90 lacs is from his own savings, withdrawal and as opening cash balance. The Assessing Officer noted that the assessee simply stated about the opening cash balance without any supporting evidence. The assessee stated that the deposits were made from cash withdrawals from bank and accumulated amount was deposited in bank account. The assessee filed cash flow statement from ITA No. 206/Srt/2022 Ashokbhai Jerambhai Desai Vs DCIT 3 01/04/2015 to 31/03/2015. The Assessing Officer after considering the submissions of the assessee and the details so furnished accepted the explanation with regards to deposits of Rs. 9.90 lacs deposited on 26.11.2016, and for remaining amount of Rs. 60.00 lacs, was of the view that deposited on 30/11/2016 is not substantiated with cash flow statement. On the basis of such observation, the Assessing Officer issued another show cause notice dated 25/11/2016 as to why Rs. 6.00 lacs should not be treated as unexplained cash credit and added under Section 68 of the Income Tax Act, 1961 (in short, the Act) to the total income of assessee. The assessee filed his reply dated 25/11/2019. In the reply, the assessee stated that he is a salaried employee since 2000 in Venus Jewels and not maintaining books of account. To substantiate the deposit of Rs. 6.00 lacs, the assessee produced additional cash flow statement. The assessee also furnished only salary slip from 01/06/2006 to 31/03/2015, Form No. 16 from 01/04/2009 to 31/03/2016 and bank statement from 01/04/2011 to 31/03/2014 and submitted that Rs. 6.00 lacs was also from accumulated cash available which was withdrawal from salary income. The reply of assessee was not accepted by the Assessing Officer. The Assessing Officer held that the assessee himself stated that he is a salaried employee and not maintaining books of account. To substantiate the deposits of Rs. 6.00 lacs, the cash deposit from bank account from salary income is not acceptable. The assessee is not maintaining cash book or any books of account, therefore, it is no ITA No. 206/Srt/2022 Ashokbhai Jerambhai Desai Vs DCIT 4 acceptable that huge cash balance of Rs. 6.00 lacs kept in his house. No details of household expenses is furnished. Cash flow statement submitted during the assessment proceedings seems to be manipulated and deviate from the facts of source of cash deposit in the bank. The assessee furnished partnership deed which was prepaid on 01/07/2017 which has no relation with the cash deposit. The Assessing Officer accordingly treated Rs. 6.00 las as undisclosed income of assessee and brought the same to tax under Section 115BBE of the Act. 3. Aggrieved by the additions, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee filed similar submission as made before the Assessing Officer. The submission of assessee is recorded in para 3 of order of ld. CIT(A). The assessee in addition to, submitted that he took voluntary retirement from his services and received Rs. 22,17,402/- from Employees Provident fund and Rs. 10.00 lacs as gratuity from employer which was credited in his bank account. The assessee withdraw the said sum at regular interval and during demonetization, Rs. 15.90 lacs were deposited out of accumulated cash and also furnished cash flow statement. For Rs. 6.00 lacs, the assessee specifically stated that it was out of employees’ fund and gratuity. During ITD initiative of cash transaction 2016 by declaring the amount of cash deposit during demonetization period, the assessee complied on direction. About cash deposit online, the verification query was raised under the link “Cash Transactions 2016”. In case of assessee, the ITA No. 206/Srt/2022 Ashokbhai Jerambhai Desai Vs DCIT 5 assessee made sufficient compliance. After making compliance, no additional information was called. The assessee in such enquiry, stated that Rs. 15,23,000/- is out of cash withdrawal from bank and Rs. 67,000/- is cash of earlier savings. The Assessing Officer made his finding without going through the information available with the department which was satisfactorily closed on the system. The Assessing Officer has not made any reference of such reply furnished by the assessee. The assessee also relied on certain case laws. 4. The ld. CIT(A) after considering the submission of assessee held that the assessee’s submission has no merit. The assessee made cash deposit of Rs. 6.00 lacs by way of specified bank notes (SBN) during demonetization period. Hence, such cash deposit is unexplained money and liable to be taxed under Section 115BBE of the Act. Further aggrieved, the assessee has filed the present appeal before this Tribunal. 5. I have heard the submissions of the learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue and have gone through the orders of the lower authorities carefully. The ld. AR of the assessee submits that the assessee was employed with Venus Jewels from last so many years. The assessee filed its return of income showing business income of Rs. 2,29,875/- and income from other sources. Copy of income tax return is placed on record and has shown gross total income of Rs. 45,239/- which was below the taxable limit. The assessee shown such ITA No. 206/Srt/2022 Ashokbhai Jerambhai Desai Vs DCIT 6 income under the head income from ‘other sources’. During the relevant financial year, the assessee availed voluntary retirement from his employer i.e. Venus Jewels. The assessee received Rs. 22,17,402/- on account of employee’s provident fund and Rs. 10.00 lacs as gratuity from his employer. The assessee made withdrawal from regular interval and during demonetization period he made deposit of Rs. 15.90 lacs out of which Rs. 9.90 lacs was deposited on 24/11/2016 and Rs. 6.00 lacs was deposited on 30/11/2016. During the assessment, the assessee was asked to substantiate such cash deposit. The assessee vide his various reply, submitted that he has received gratuity of Rs. 10.00 lacs and provident fund of Rs. 22,17,402/-. The assessee also received LIC maturity amount through NEFT of Rs. 68,347/- on 30/05/2016, TDS refund of Rs. 17,750/- on 15/09/2016, Rs. 51,129/- from Sahara India on 20/10/2016. The assessee also stated that being a salaried employee, the assessee was not maintaining books of account but based on the bank statement, all sources of income was shown in the bank account. The assessee also furnished cash flow statement from 01/04/2015 to 31/03/2017. The ld. AR submits that copy of salary slip is filed on record. 6. The ld. AR for the assessee submits that the assessee has made cash withdrawal of Rs. 5.00 lacs on 17/08/2016, Rs. 5.00 lacs on 19/08/2016 and again Rs. 5.00 lacs on 23/09/2016, besides such big withdrawal, the assessee also made a number of cash withdrawals and total withdrawal during the financial year were Rs. 20,23,000/- apart from cash available ITA No. 206/Srt/2022 Ashokbhai Jerambhai Desai Vs DCIT 7 with the assessee, the assessee made transaction through cheques. The assessee made a deposit of Rs. 9.90 lacs on 24/11/2016 and Rs. 6.00 lacs on 30/11/2016. The copy of bank statement is placed on record at page No. 66 and 67 of the paper book. The Assessing Officer accepted the cash deposit of Rs. 9.90 lacs, however, Rs. 6.00 lacs was not accepted by taking a view that some cash was deposited after withdrawal from salary account. The assessee was not maintaining cash book or books of account, therefore, theory of cash balance of Rs. 6.00 lacs kept in house is not acceptable and held that the source of such cash deposit remains unexplained and added the same under Section 69A of the Act. The ld. AR of the assessee submits that keeping in view the frequency of transaction and availability of cash, the addition of Rs. 6.00 lacs is not sustainable. The ld. CIT(A) has not given any specific finding except confirming the action of Assessing Officer. To support his submission, the ld. AR relied upon the decision of Ahmedabad Tribunal in Kavitaben Chintanbhai Patel Vs ITO in ITA No. 306/Ahd/2021 order dated 03/08/022 and in Jitesh Vithalbhaia Rashiya Vs ITO in ITA No. 116/Srt/2021 order dated 18/10/2022. 7. On the other hand, the ld. Sr.DR for the revenue supported the orders of lower authorities. The ld. Sr.DR submits that if the assessee was not maintaining books of account, thus the cash flow statement has no relevance. The Assessing Officer has passed a very reasonable and cogent assessment order. Out of total cash deposits of Rs. 15.90 lacs, ITA No. 206/Srt/2022 Ashokbhai Jerambhai Desai Vs DCIT 8 the Assessing Officer has already accepted the explanation with regard to deposit of Rs. 9.90 lacs. The frequency of withdrawal does not suggest that the cash available with the assessee was out of cash withdrawals, most of the amount was withdrawing by assessee through ATM which is usually meant for day to day household expenses. 8. I have considered the submissions of both the parties and have gone through the orders of lower authorities carefully. I have also deliberated on case laws relied upon by the ld. AR of the assessee. There is no dispute that during demonetization period, the assessee made a cash deposit of Rs. 15.90 lacs out of which Rs. 9.90 lacs was deposited on 24/11/2016 and remaining Rs. 6.00 lacs was deposited on 30/11/2016 with ICICI bank, Katargam branch. Before me, the ld. AR of the assessee vehemently submitted that the assessee case cash withdrawals of Rs. 20.23 lacs apart from opening cash of Rs. 82,400/-. I find that apart from regular withdrawal through ATM of amount of Rs. 5,000/- to Rs. 20,000/- on regular interval, which may be used for day to day household expenses. The assessee made cash withdrawal of Rs. 5.00 lacs each on 17/08/2016, 19/08/2016 and 23/09/2016. Source of credit in the bank account is not at dispute as the assessee has received Rs. 10.00 lacs as gratuity on 15/04/2016 and Rs. 22,17,402/- on account of provident fund on 30/06/2016. The assessee made deposit of Rs. 9.90 lacs on 24/11/2016 which has been accepted by the Assessing Officer. However, the Assessing Officer has not accepted Rs. 6.00 lacs deposited on ITA No. 206/Srt/2022 Ashokbhai Jerambhai Desai Vs DCIT 9 30/11/2016. On careful perusal of bank statement, I find that Rs. 15.00 lacs in cash was clearly available from self-withdrawal with the assessee, therefore, the assessee has clearly explained the deposit of Rs. 15.00 lacs. So far as remaining Rs. 90.00 thousands is concerned, I find that the assessee also made cash withdrawal of Rs. 60,000/- on 21/10/2016. Now only a small amount of Rs. 30,000/-is left, considering the smallness of amount that the assessee was having regular withdrawal in his bank account and Rs. 30,000/- is not a big amount which can be doubted on the basis of facts and circumstances of the case and financial transactions of the assessee. Therefore, I do not find any justification in treating Rs. 6.00 lacs as unexplained cash credit. In the result, the grounds taken by the assessee are allowed. 9. In the result, this appeal of the assessee is allowed. Order pronounced in the open court on 24 th March, 2023. Sd/- (PAWAN SINGH) JUDICIAL MEMBER Surat, Dated:24/03/2023 *Ranjan Copy to: 1. Assessee – 2. Revenue -- 3. CIT 4. DR 5. Guard File By order // TRUE COPY // Sr. Private Secretary, ITAT, Surat