ITO, Meerut V. Deepali Sehgal, Meerut

ITA 5660/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81665 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: RAMA KANT JAIN
• Keywords: Income from undisclosed sources
• Section: 6; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI G. D. AGRAWAL, HONBLE VICE-PRESIDENT AND SHRI C. M. GARG, HONBLE JUDICIAL MEMBER I.T.A .NO.-5660/DEL/2012 (ASSESSMENT YEAR-2009-10) INCOME TAX OFFICER VS. MRS. DEEPALI SEHGAL, WARD 1 (2), 339 DASHMESH NAGAR MEERUT BAGPAT ROAD, MEERUT. PAN: AEBPS5120C (APPELLANT) (RESPONDENT) REVENUE BY:-SMT. ASHIMA NEB, SR. DR ASSESSEE BY:-SH. RAMA KANT JAIN, CA. ORDER PER C. M. GARG, JM. 1. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE A GAINST THE ORDER OF THE CIT(A) DATED 31.08.2012 IN APPEAL NO. 321 OF 2011-1 2 FOR A.Y. 2009-10. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS AP PEAL:- 1 . WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS . 2438000 / - BEIN G UNEXPLAINED CASH DEPO S IT S IN TH E SAVING BANK A L E WITH HDFC BA NK U / S 6 9A O F THE I . T . ACT , 1961 , I G NORIN G TH E F ACT THA T THE CASH WAS ALLEGEDLY WITHDRAWN FORM PARTNERSHIP F IRM WHICH ITSELF WITHDRE W THE CASH FROM ITS BANK A L E OUT OF BUSINESS OD ACCOUNT WITH CORPORATION BANK WHERE D E BIT BALANCE REMAINED IN THE RANGE OF 57 LAC TO 64 LAC ON WHCH HEAVY INTEREST WA S PAID BY THE FIRM AND THUS THE ALLEGED W ITHDRAWALS B Y THE P A RTNER DID NOT REL A TE TO FIRM ' S BUSINESS IN ANY WAY. I.T.A .NO.-5660/DEL/2012 2 2. WHETHER I N THE F ACTS AND CIR C UM S T A NCE S O F TH E CASE THE LD. CIT ( A ) HA S ERRED I N LA W IN HOLDING H A T THERE WA S NO N EGAT I VE CAS H B A L A N CE A ND TH A T TH E R E I S N O LAW OF L AN D MANDATING ASSESSEE TO KEEP HER BAL A NC E IN BANK ONL Y BUT I G NORIN G T H A T TH E C A P I T A L AL E OF ASSESSEE IN THE FIRM ALWAYS REMAINED IN NEGATIVE I . E . BEFORE ALLEGED WITHDRA WA LS AS WELL AS DURING AND AFTER SUCH WITHDRAWALS THAT TOO OUT OF W ITHDRAWALS B Y FIRM M A D E F ROM OD B A NK AL E S HOWIN G HEAVY DEBIT BAL A NC E , W HICH WAS IN STARK CONTRADICTION O F PRI NC I PL E OF TEST OF THE HUMAN PROBABIL I TIES AS LAID DO W N B Y THE HON ' BLE AP EX COURT . RELIANC E IS PLACED ON FOLLOWING CASE LAWS: - I) SUMATI DAYAL VS. CIT 214 ITR 801 (SC) II) DURGA PRASAD MORYA VS CIT 82 ITR 540 (1971) 3. THAT THE APPELLANT CRA V ES LEA V E TO ADD , MODI FY AND / OR DELETE A N Y GROUND ( S ) O F A PPE A L . . 4. IN THE FACTS AND CIRCUMST A NCES OF THE C A SE , TH E ORDER OF THE COMMISSIONER O F INCOME-TA X( APPEALS ) MA Y BE S ET A S ID E AND THAT OF TH E A .O RE S TORED . 2. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL ARE THAT THE ASSESSING OFFICER (AO) NOTED THAT THE ASSESSEE HAS WITHDRAWN HUGE CASH FROM BANK ACCOUNT AND THE SAME AMOUNT HAS BEEN DEPOSITED TO T HE SAME ACCOUNT AFTER LAPSE OF SUBSTANTIAL TIME. ON QUERY FROM THE AO THE ASSESSEE REPLIED THAT THE CASH WAS DEPOSITED OUT OF CASH WITHDRAWN. THE AO RE JECTED THE EXPLANATION AND HELD THAT THE ASSESSEE HAS CASH DEPOSIT OF RS.2 4,38,000/- AS UNEXPLAINED MONEY AND HE ASSESSEE FOUND TO BE THE OWNER OF THE MONEY AND THE ASSESSEE HAS NOT OFFERED ANY ACCEPTABLE AND COGENT EXPLANATI ON THEREFORE, THE AO CONCLUDED THAT THE ENTIRE CASH DEPOSIT OF RS.24,38, 000/- WAS DEEMED TO THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AND THE AO MADE AN I.T.A .NO.-5660/DEL/2012 3 ADDITION OF RS.24,38,000/- U/S 69 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) FOR A.Y. 2009-10. 3. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFOR E CIT(A) WHICH WAS ALLOWED BY PASSING THE IMPUGNED ORDER. NOW THE AGGR IEVED REVENUE IS BEFORE THIS TRIBUNAL WITH THE GROUNDS AS REPRODUCED HEREIN ABOVE. GROUND NO. 1 & 2 OF THE REVENUE 4 APROPOS THESE GROUNDS WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) PLACED HIS RELIANC E ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL V S. CIT 214 ITR 801(SC) AND DURGA PRASAD MOURYA VS. CIT 82 ITR 540 (SC) AND SUBMITTED THAT THE CASH WAS WITHDRAWN FROM PARTNERSHIP FIRM B ANK ACCOUNT OUT OF BUSINESS OVERDRAFT ACCOUNT WITH CORPORATION BANK WH ERE DEBIT BALANCE REMAINED BETWEEN 57 LAC TO 64 LAC ON WHICH HEAVY IN TEREST WAS PAID BY THE FIRM AND THUS ALLEGED WITHDRAWALS BY PARTNER ASSESS EE DID NOT RELATE TO FIRMS BUSINESS IN ANY MANNER. THE D.R. FURTHER CONTENDED THAT THE CIT(A) ALSO IGNORED THE FACT THAT THE CAPITAL ACCOUNT OF THE AS SESSEE IN THE FIRM ALWAYS REMAINED IN NEGATIVE BEFORE IMPUGNED WITHDRAWALS AS WELL AS DURING AND AFTER SUCH WITHDRAWALS AND ALSO THE WITHDRAWALS MAD E BY THE FIRM FROM OVERDRAFT WAS INCREASING HEAVY DEBIT BALANCE RESULT ING INTO HEAVY INTEREST I.T.A .NO.-5660/DEL/2012 4 LIABILITY ON THE FIRM WHICH IS NOT IN ACCORDANCE WI TH BEHAVIOR OF A MAN OF ORDINARY PRUDENCE RATHER THE ABOVE CONDUCT OF THE A SSESSEE WAS IN CONTRADICTION OF PRINCIPLES TEST OF HUMAN PROBABILI TIES. THE D.R. ALSO CONTENDED THAT THE AO MADE ADDITION ON JUSTIFIED RE ASONING WHICH WAS DELETED BY CIT(A) WITHOUT AND BASIS. THEREFORE, IMP UGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 5. REPLYING TO THE ABOVE THE LD. ASSESSEES REPRESE NTATIVE (AR) SUBMITTED THAT THE AO MERELY ACTED ON THE BASIS THA T IT WAS HARD TO BELIEVE THAT HUGE CASH WAS KEPT BY THE ASSESSEE FOR DEPOSIT BACK IN THE BANK ACCOUNT CREATING INTEREST LIABILITY AGAINST THE PARTNERSHIP FIRM AND THE AO REJECTED THE EXPLANATION OF THE ASSESSEE DEEMING THE SAME TO BE IMPRACTICAL AND ILLOGICAL BUT THE CASH FLOW STATEMENT CLEARLY SHOW THAT THE A SSESSEE WITHDREW CASH OF RS.19 LACS AND 13 LACS FROM HER SAVING BANK ACCOUNT WITH HDFC BANK AND FROM CAPITAL ACCOUNT OF PARTNERSHIP FIRM M/S SHAKTI TRADERS, MEERUT, RESPECTIVELY BUT THIS FACT WAS NOT APPRECIATED BY T HE AO AND THE CIT(A) WAS QUITE JUSTIFIED IN ACCEPTING THE EXPLANATION OF THE ASSESSEE. THE AR DRAWN OUR ATTENTION TOWARDS AUDITED ACCOUNTS OF THE PARTN ERSHIP FIRM AND SUBMITTED THAT NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE ABOUT THE IMPUGNED CASH DEPOSITS AS THIS IS NOT THE CASE OF T HE AO THAT THE AMOUNTS WITHDRAWN FROM BANK WERE UTILIZED SOMEWHERE ELSE FO R SOME IRRELEVANT I.T.A .NO.-5660/DEL/2012 5 PURPOSE. THE AR SUPPORTED THE IMPUGNED ORDER AND SU BMITTED THAT THE APPEAL IS DEVOID OF MERITS AND CASE LAWS RELIED BY THE REVENUE ARE DISTINGUISHABLE. 6. ON A CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS AND CONTENTION WE OBSERVE THAT THE AO MADE ADDITION U/S 69A OF THE AC T WITH FOLLOWING CONCLUSION: FROM THE PERUSAL OF RETURN AND THE VARIOUS DOCUME NTS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, IT IS GATHERED THE ASSESSEE HAS MADE H UGE CASH DEPOSITS IN SAVING BANK A/C BEARING NO.028513000285 3 AT HDFC BANK, W.K. ROAD, MEERUT. THE CASH FLOW STATEME NT SUBMITTED BY THE ASSESSEE HAS MANY LACUNAE. FROM TH E SAID CASH FLOW STATEMENT, IT IS GATHERED THAT: 1. CASH WITHDRAWAL OF RS.3,00,000/- MADE ON 08/04/2 008 WAS DEPOSITED ON 13/5/2008 AND THE EXPLANATION OFFE RED BY THE ASSESSEE IS CASH DEPOSITED OUT OF CASH. THIS EXPL ANATION OF THE ASSESSEE IS ILLOGICAL AS IT IS IMPOSSIBLE TO BELIEV E THAT SUCH A HUGE AMOUNT OF CASH WILL BE KEPT BY THE ASSESSEE FO R SO LONG AS TO DEPOSIT THE SAME AMOUNT IN THE BANK AFTER UNNECE SSARILY WAITING FOR SUCH A LONG DURATION. SIMILAR EXPLANATI ON HAS BEEN OFFERED BY THE ASSESSEE FOR CASH OF RS.5,00,000/- W ITHDRAWN ON 3/10/2008 AND DEPOSITED ON 4/3/09. 2. NO REASON HAS BEEN OFFERED BY THE ASSESSEE IN RE SPECT OF CASH DEPOSITS OF RS.5,00,000/- MADE ON 16/3/2009; RS.8,00,000/- MADE ON 25/3/2009 AND RS.3,38,000/- M ADE ON 26/3/2009. I, THEREFORE, TREAT THIS ABOVE-MENTIONED CASH DEPOS IT OF RS.24,38,000/- AS UNEXPLAINED MONEY U/S 69A OF THE I.T. ACT, 1961, SINCE THE ASSESSEE HAS BEEN FOUND TO BE THE O WNER OF THIS MONEY AND HAS NOT OFFERED ANY EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THIS MONEY AND THEREFO RE, THIS I.T.A .NO.-5660/DEL/2012 6 ENTIRE CASH DEPOSIT OF RS.24,38,000/- IS DEEMED TO BE THE INCOME OF THE ASSESSEE FOR THE F.Y. 2008-09. 7. DURING FIRST APPELLATE PROCEEDING THE CIT(A) CAL LED REMAND REPORT FROM THE AO ON THE SUBMISSIONS OF THE ASSESSEE AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, REMAND REPORT OF THE A O, ASSESSEES REJOINDER AND ASSESEES ADDITIONAL SUBMISSIONS THE CIT(A) DEL ETED THE ADDITION WITH FOLLOWING OBSERVATIONS AND FINDINGS: I HAVE CONSIDERED THE FACTS OF THE CASE , AR ' S SUBMISSIONS , AO ' S REMAND REPORT, ARS REJOINDER AND FURTHER SUBMISS IONS OF THE AR CAREFULLY. THE ONLY REASON HARPED ON THE AO FOR THE ADDITION IS THAT IT WAS HARD TO BELIEVE BY HER THAT CASH WAS KEPT BY THE ASSESSEE FOR DEPOSIT BACK IN THE BANK. SHE H AS NOTED THAT THE EXPLANATION OFFERED BY THE A S SESSEE APPEARED TO BE IMPRACT I CAL AND ILLOGICAL . THE AR HAS PLACED ON RECORD THE CASH FLOW STATEMENT BOTH DURING THE ASSESSMENT PROCEEDIN GS AS WELL AS THE APPELLATE P R OCEEDINGS. THE CASH FLOW STATEMENT DULY SHOWS THAT THE APPELLANT WITHDREW CASH FROM H E R SB A / C IN THE HDFC BANK AND ALSO WITHDREW C A PITAL BALANCE FROM HER CAPITAL ACCOUNT HER PARTNERSHIP FIRM . M/S. SHAKTI TRADERS , MEERUT . A COPY OF BANK ACCOUNT ALSO HAS B E EN PLACED ON RECORD. THE CASH FLOW STATEMENT SHOWS THAT THERE AR E CASH WITHDRAWAL OF .R S .1 9 LAKH FROM HDFC B A NK ON DIFFERENT DATES AND WITHDRAWAL OF RS.13 LAKH FROM HER C A PITAL ACCOUNT IN HER PARTNERSHIP FIRM M/ S. SHAKTI TRADERS ON DIFFERENT DATES. THERE IS NO N EG ATIVE CASH BALANCE AT ANY POINT OF TIME. IT IS NOT THE CASE OF THE AO THAT THE AMOUNTS W IT HDRAWN WERE UTILIZED ANYWHERE ELSE. THE AR HAS ALSO PLACED ON RECORD THE AUDIT R E PORT OF M/S. SH A KTI TRADERS ALONG WITH THE LEDGER ACCOUNT OF THE AP PELLANT . IN VIEW OF MA T ERIAL PLACED ON RECORD , NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE APPELLANT FOR EX PLANATION THAT . CASH WITHDRAWN FROM THE BANK AND THE CAPITAL ACCOUNT OF HER P A RTNE RSHIP FIRM WAS DEPOSITED IN BANK . IT I S NOT MANDATOR Y UNDER AN Y LA W OF THE LAND THAT N I NDIV IDUAL H AS T O KEEP H I S/HER SAVINGS I N TH E B A NK AC C OUNT ON L Y A ND NO T A S CASH IN HAND . THE A R 'S RELIANCE O N THE F OL LO W ING C ASE L AW S ALSO SUPPORT HI S CA S E : I.T.A .NO.-5660/DEL/2012 7 I. A CIT VS. BALDE V RAJ CHALRA , 121 ( TTJ ) 3 66 ( DELHI ) 2 009 ; II. R. K. D AV E VS . INCOME TA X OFFICER R E P ORTED IN 94 ITJ JODHPUR 19 ( 09.08.2004 ) III. HEM A NT PR A BHAKAR VS. D Y . CIT 31 TA X WORLD 198 ( JP ) IN THE LIGHT OF THE TOTALITY OF THE FACTS, THE ADDI TION MADE BY THE AO IS DELETED. 8. IN VIEW OF ABOVE WE NOTED THAT THE AO, IN HIS RE MAND REPORT COULD NOT BRING OUT ANY FACT THAT THE CASH WITHDRAWN FROM SAV ING BANK ACCOUNT AND PARTNERSHIP OVERDRAFT ACCOUNT WAS USED FOR OTHER PU RPOSE ANYWHERE ELSE THEN, MERELY BECAUSE THERE WAS A TIME GAP BETWEEN W ITHDRAWAL OF CASH AND ITS FURTHER DEPOSIT TO THE BANK ACCOUNT, THE AMOUNT CAN NOT BE TREATED AS INCOME FROM UNDISCLOSED SOURCES U/S 69 OF THE ACT I N THE HANDS OF THE ASSESSEE. THE AO REJECTED THE EXPLANATION OF THE AS SESSEE ON HYPER TECHNICAL BASIS WHICH IS NOT ACCEPTABLE. ON CAREFUL PERUSAL O F THE DECISIONS RELIED BY THE LD. D.R. WE ARE OF THE VIEW THAT THE FACTS OF T HE PRESENT CASE ARE CLEARLY DISTINGUISHABLE AS IN THE PRESENT CASE THE EXPLANAT ION OFFERED BY THE ASSESSEE IS RELIABLE AND ACCEPTABLE ON THE TOUCHSTONE OF THE PRUDENCE OF AN ORDINARY MAN BUT MERELY ON THE GROUND THAT THE ACT OF ASSESS EE CREATED HUGE INTEREST LIABILITY ON PARTNERSHIP FIRM DOES NOT ENABLE REVEN UE AUTHORITIES TO CONSIDER THE CASH WITHDRAWN AND IT DEPOSIT TO SAME BANK ACCO UNT AFTER A SUBSTANTIAL GAP OF TIME, AS UNEXPLAINED INCOME U/S 69 A OF THE ACT. HENCE, WE REACH TO I.T.A .NO.-5660/DEL/2012 8 A CONCLUSION THAT THE AO MADE ADDITION WITHOUT ANY LEGAL AND JUSTIFIED REASON WHICH WAS RIGHTLY DELETED BY THE CIT(A). HEN CE, BOTH THE GROUNDS OF THE ASSESSEE ARE BEING DEVOID OF MERITS AND DISMISS ED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 05/09/2014. SD/- SD/- (G. D. AGRAWAL) (C. M. G ARG) VICE-PRESIDENT JUDICIAL MEMBER DATED: 05/09/2014 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR