Smita Bhadauri, Bhopal V. ACIT Central -2 Bhopal, Bhopal

ITA 67/Ind/2022

AI Insights

The case involves Smita Bhaduaria, a civil contractor, who appealed against the order of the Commissioner of Income Tax (Appeals) - Bhopal, which sustained an addition of Rs. 22,43,100 to her income for the Assessment Year 2014-15. The addition was initially made by the Assessing Officer (AO) due to unexplained cash deposits totaling Rs. 33,08,100 in her bank account. The assessee argued that these deposits were from cash withdrawals made earlier from the same bank, supported by a cash flow statement and previous assessment records. The CIT(A) had partly confirmed the AO's addition, leading to the appeal before the Tribunal. The Tribunal found that the CIT(A)'s rejection of the opening cash balance and the explanation for the deposits was based on presumption without tangible material, thus allowing the appeal and deleting the addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130795 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-05-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 31-03-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Set aside
• Section: 132

Judgement Text

Page 1 of 5 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No. 67/Ind/2022 (Assessment Year:2014-15) Smita Bhaduaria E-8/11, Basant Kunj, Arera Colony Bhopal Vs. ACIT-Central-2 Bhopal (Appellant / Assessee) (Respondent/ Revenue) PAN: AEWPB 4635 C Assessee by Ms. Nisha Lahoti & Shri Vijay AR Revenue by Shri Ashish Porwal, Sr. DR Date of He aring 11.05.2023 Date of Pronouncement 25 .07.2023 O R D E R Per Vijay Pal Rao, JM: This appeal by the assessee is directed against the order dated 08.02.2022 of Commissioner of Income Tax (Appeals)-Bhopal for Assessment Year 2014-15. The assessee has raised following grounds of appeal: “1.That on facts and in the circumstances of case and in law the finding and the decisions of Learned CIT (A) in not accepting the availability of opening cash of Rs. 18,00,000 as on 01.04.2013 are wholly unjustified and unlawful and therefore be quashed and it be kindly held that the assessee had cash available Rs.1800000 on 1.04.2013. ITA No.67/Ind/2022 Smita Bhadauria Page 2 of 5 Page 2 of 5 2.That on facts and in the circumstances of case and in law the memorandum of cash flow statement as submitted be kindly accepted as true and the addition of Rs.2243100 be held as unjustified and therefore be deleted. 3.That on facts and in the circumstances of case and in law the learned CIT A is not justified in sustaining the addition of Rs. 2243100 and therefore the said unjustified and unlawful addition be kindly deleted.” 4. The assesse is a civil contractor and filed return of income on 13 th August 2014 declaring total income of Rs.4,42,280/-. During the course of scrutiny assessment the AO noted that the assesse has deposited cash of Rs.33,08,100/- in current account with Dena Bank. The AO asked the assessee to explain the source of these cash deposit. The assesse submitted cash flow statement showing cash deposit and withdrawal from the said bank and claimed that cash deposit are out of the cash withdrawal from the same bank. The AO did not accept these explanation of the assesse and made the addition of Rs.33,08,100/- being the entire deposit during the year under consideration in the current account. On appeal the Ld. CIT(A) confirmed the addition made by the AO partly to the extent of Rs.22,43,100/-. 4.1 Before the Tribunal the ld. AR of the assesse submitted that the cash deposit was fully explained by the assesse before the AO as the same were made out of the withdrawal made from the same bank. Further the AR has submitted that the assessee was having an opening cash balance of Rs.18 lac which is also supported by the fact of withdrawal of Rs.20,20,000/- from the bank account during the month of January 2013 which was available as on 1 st April 2013. She has also referred to the assessment order for A.Y.2013-14 placed at page no. 16 to 21 of the paper book and submitted that the addition made by the AO was deleted by the Ld. CIT(A) for A.Y. 2013-14 vide order dated 09.02.2017 placed at page ITA No.67/Ind/2022 Smita Bhadauria Page 3 of 5 Page 3 of 5 no.22 to 38 of the paper book. The addition for the assessment year 2013- 14 was made by the AO on account of unexplained investment in jewellery but the quantity was within the limit as prescribed in the CBDT instruction no. 1916 dated 11.05.1994 and therefore, the same was deleted by the Ld. CIT(A). Thus closing balance of cash as on 31.03.2013 would be available with the assesse as opening stock as on 1 st April 2013. The Ld. AR has also referred to the bank account statement and submitted that various withdrawals were made by the assesse during the year from the same bank account which was available for subsequent deposits. 5. The AO has also stated in the order that there was a deficient of cash of Rs.13, 23,100/- which is wholly unlawful, unjustified and contrary to the record as the AO has not considered opening balance of cash with assesse. Hence the Ld. AR has submitted addition made by the AO and sustained by the Ld. CIT(A) is not justified and same is liable to be deleted. 6. On the other hand, Ld. DR has submitted that all the receipts in the bank account are shown in cheques therefore, the source of cash deposit from the withdrawal cannot be accepted without considering business expenditure and house hold expenditure from the cash withdrawal. The assesse has not explained the reasons for keeping the cash for months after the withdrawal and then claiming said withdrawal as source of deposite. The ld. CIT(A) in para 3.2.2. has analyzed the claim of the assesse as source of deposit from the prior withdrawal and found that there is a big gap between the withdrawal and deposit therefore, the same cannot be accepted. He has relied upon the order of the authorities below. 7. We have considered rival submission as well as relevant material on record. The AO made the addition on account of unexplained cash deposit in the current account of the assesse with Dena Bank by considering credit side of the bank account. The AO has made addition of entire cash deposit during the year under consideration in the bank account. The ITA No.67/Ind/2022 Smita Bhadauria Page 4 of 5 Page 4 of 5 assesse produced the details of the opening cash balance of Rs.18 lac which is supported by the evidence of withdrawal of more than Rs.20 lac during the months of January 2013. The assessment for the preceding year along with six years block period completed pursuant to the search and seizure action u/s 132 of the Act. The only addition made by the AO in the assessment for the preceding year was on account of unexplained investment in Jewellery which was deleted by the Ld. CIT(A). Therefore, the closing cash balance available with the assessee was not doubted in the scrutiny assessment for A.Y.2013-14. The Ld. CIT(A) has rejected the claim of the opening cash balance on the ground that the assesse withdraw the cash in the month of May 2013 which shows that earlier withdrawal and opening balance was not available with the assessee in the month of May 2013. The reasoning given by the Ld. CIT(A) is contrary to the fact of the opening balance as on 01.04.2013 and based on the presumption that the said opening balance was not available. But there is no material or fact brought on record to show that the said opening balance was utilized by the assesse other than the deposit made in the bank account. Therefore, the rejection of the opening cash balance as source of deposit is based on presumption and without any tangible material or fact to show that the said opening cash balance was utilized for some other purpose hence the same is not justified. Accordingly, when the assesse has substantiated the claim of availability of the opening cash balance with supporting evidence of withdrawal then the denial of the explanation on the presumption and surmises is highly arbitrary and improper. 8. The balance deposit in the bank account was also explained by the assesse as prior withdrawal from the bank account. The Ld. CIT(A) rejected the claim on the ground that there is a gap between the withdrawal and deposit. However, in absence of any material to show the withdrawal was utilized by the assesse and was not available for subsequent deposit the addition is not justified by taking only one side of the bank account. The evidence in the shape of bank account of the ITA No.67/Ind/2022 Smita Bhadauria Page 5 of 5 Page 5 of 5 assesse clearly manifest that there were sufficient withdrawals prior to the deposit made in the bank account and therefore, in absence of any other material or fact on record to show the contrary the source explained by the assessee of remaining amount of Rs.15 lac from the withdrawal cannot be denied. Accordingly we set aside the impugned order of the Ld. CIT(A) and delete the addition made on this account. 9. In the result, appeal of assessee is allowed. Order in pronounced in Open Court on 25 / 07/2023. Sd/- sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore, 25.07.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore