IN THE INCOME TAX APPELLATE TRIBUNAL
"J" Bench, Mumbai
Before Shri D. Manmohan, Vice President
and Shri Sanjay Arora, Accountant Member
ITA No. 4174 & 4175/Mum/2012
(Assessment Years: 2007-08 & 2008-09)
Shri Janzeb Amirkamal Khan Income Tax Officer/ACIT-13(3)(2)
A Block, 1st Floor, Ayesha Room No. 428, Aayakar Bhavan
Vs.
Manzil, 136/38 Saida Marg M.K. Road, Mumbai 400020
Mumbai 400009
PAN - AEQPK0486C
Appellant Respondent
Appellant by: None
Respondent by: Shri Vivek A. Perampurna
Date of Hearing: 20.10.2014
Date of Pronouncement: 20.10.2014
ORDER
Per D. Manmohan, V.P.
These appeals by the assessee are directed against the orders passed by
the CIT(A)-24, Mumbai and they pertain to assessment years 2007-08 and
2008-09.
2. Additions made by the AO and confirmed by the CIT(A) under section
69A of the Act were challenged before us by the assessee on the ground that
the AO has not given sufficient opportunity of being heard and in fact there
was no mention in the letters that the NRI brother has given cash to the
assessee and despite explaining the source of deposits it was not
appreciated in the correct perspective.
3. Though notices were sent to the assessee from time to time by
Registered post, none appeared on behalf of the assessee. We, therefore,
proceed to dispose of these appeals exparte, qua assessee.
4. We have heard the learned D.R., who relied upon the orders passed by
Tax Authorities. We have also carefully gone through the record.
2 ITA No. 4174/Mum/2012
Shri Janzeb Amirkamal Khan
5. As can be seen from the impugned orders, the Tax Authorities have
noticed cash deposits in the HDFC Bank Account, Crawford Market Branch,
Mumbai and when asked about the nature and source of acquisition of the
cash it was stated that he was maintaining two separate accounts, one in
ICICI Bank and the other in HDFC Bank, and he had taken unsecured loans
which were utilised exclusively for development of new business. The
amount available in HDFC Bank was withdrawn from time to time and
advanced to other parties and upon repayment the same was redeposited.
The AO as well as the CIT(A) rejected the contention of the assessee. In fact,
the learned CIT(A) called for remand report from the AO, based on the
detailed submission made by the assessee, and exhaustively dealt with the
issue in para 3 of his order in coming to the conclusion that the Tax
Authorities are not required to put on blinkers while considering statement
of the assessee and the material placed before them; they are entitled to look
into the surrounding circumstances to find out the reality of the recitals
made. He had also applied the ratio of the decision of the Apex Court in the
case of Smt. Sumati Dayal 214 ITR 801 while concluding that the assessee
merely made vague submissions without specifically bringing any material
on record to rebut the discrepancies as noticed by the AO as well as the
CIT(A). The learned CIT(A) thus sustained the orders passed by the AO.
6. Though an appeal was preferred challenging the orders passed by the
learned CIT(A) no material, whatsoever, was placed before us to contradict
the findings of the CIT(A). Though separate orders were passed for each
assessment year, the corollary of events being same, for the sake of ready
reference we extract para 3.3.1 to 3.3.5 of the order passed by the learned
CIT(A) for AY 2007-08, which is self-explanatory and highlights that
assessee's explanation is vague: -
"3.3.1 I have considered the facts of the case and the submissions
made by the assessee. During the appellate proceedings, the Ld. AR
has furnished a date wise summary of the cash withdrawn and cash
deposited in the HDFC Bank account in question which is enclosed as
Annexure-"A" with this appellate order. From the said Annexure-A, it
is seen that the total cash withdrawn during the period 01/04/2006 to
29/03/2007 (the entire financial year) is Rs, 8,56,600/- whereas the
3 ITA No. 4174/Mum/2012
Shri Janzeb Amirkamal Khan
total cash deposited in the bank accounts is Rs. 15,39,000/-. The
assessee has shown opening cash balance of Rs. 19,11,020/- as on
01/04/2006. From the pattern of withdrawals and deposits as per the
said Annexure-"A", it is further noted that the assessee has made
withdrawals of smaller amounts on various dates on which he should
have had huge cash in hand already as per the details shown by the
assessee himself. Similarly on various dates, he has made only small
deposits of cash in bank a/c though on the said dates he was
supposed to have huge cash balance with him. Such abnormal pattern
of withdrawals and deposit of cash suggests that there was not
enough cash balance lying physically with the assessee. It is well
settled principle that one would withdraw from bank only when the
cash already lying with him is not sufficient to meet his needs on that
day or conversely a person would not deposit only a small amount of
the cash-in-hand available with him in the bank a/c leaving large
amounts as cash in hand even though the same was not required to be
used. This can be better understood by analyzing some of the entries
in specific as sample. For eg., as per the Annexure-"A", as on
01/4/2006, the assessee claims to have cash in hand of Rs.
19,11,020/-. Still he kept on withdrawing small amounts mostly in the
range of Rs. 3,000/- to Rs. 5,000/- during the period 01/04/2006 to
16/04/2006. This defies any logic since the amounts withdrawn and
accumulated as cash-in-hand was not spent for any purpose. If the
assessee had such huge amounts as cash-in-hand, it is not
understandable as to why he would withdraw such small amounts
when they were not required for any purpose. On 16/04/2006 the
assessee had cash-in-hand of Rs. 19,90,020/-. Out of this, he
deposited Rs. 1,00,000/- on 24/04/2006 and again deposited Rs.
50,000/- each twice on 25/04/2006. It is not understandable as to
why, the assessee would deposit small amounts in the bank account
in stages and on different dates. On 27/04/2006, the assessee had
cash-in-hand of Rs. 17,90,020/-, but he still withdrew a small amount
of Rs. 3,000/- on 27/04/2006. Again an amount of Rs. 2,000/- was
withdrawn on the same date and an amount of Rs. 4,000/- was
withdrawn on 01/05/2006. Thereafter, amounts of Rs. 50,000/- was
deposited on 03/05/2006 and two amounts of Rs. 1,00,000/- and Rs.
50,000/- each were deposited separately on the same date on
04/05/2006. If he actually had the opening cash in hand of such huge
amounts, then it was not prudent on the part of anyone to withdraw
further cash of small amounts. The assessee could have utilized the
cash in hand itself without resorting to withdrawals from the bank
accounts in cash. If the assessee had utilized these amounts for giving
loans to his friends and relatives as claimed by him, there was no
necessity to withdraw the cash from the bank for this purpose since
more than sufficient cash was already available with him in hand as
claimed by him. The claim of the assessee that he had given temporary
loans to his friends and relatives and these loans, on being repaid,
were redeposited in the bank account is not tenable and is merely a
self serving statement and the confirmations filed by the assessee are
4 ITA No. 4174/Mum/2012
Shri Janzeb Amirkamal Khan
merely self serving documents when seen in the context of the facts
and circumstances of the case. The confirmations filed by the assessee
from the so called friends and relatives are standard confirmations
which read as follows :-
"TO WHOMSOEVER IT MA Y CONCERN
I have taken temporary loan of Rs. 10,000/- to Rs. 15,000/-
frequently from Shri Janzeb Amir Kamal Khan. I have repaid
these loans promptly to Mr. Janzeb Amir Kamal Khan. At
present there is no amount due to him.
I am not income taxpayer."
From the above, it is evident that the so called friends and relatives
have given a general statement that they have taken temporary loan of
Rs. 10,000/- to 15,000/- frequently from the assessee. When the loans
were taken and what was the amount of loan taken on each occasion
has neither been stated by the assessee nor by the so called recipients
of the alleged loan. The findings of the Assessing Officer in respect of
these persons is, in my opinion, justified since these confirmations or
statements made by the so called loan recipients are only an attempt
by the assessee to somehow try and explain the source of the cash
deposited in the bank account which had not been disclosed to the
Income Tax Department.
3.3.2 There is also abnormality with respect to the deposit of cash on
various dates which is evident from the statement filed by the
assessee in Annexure-"A". Some of the entries have already been
discussed hereinabove. It is very abnormal that a person would
deposit cash of only such small amount of Rs. 50,000/- or Rs.
1,00,000/- or Rs. 13,000/- when he had cash in hand of more than
Rs. 12 to 14 lacs which was not being used.
3,3.3 The assessee, as per the cash summary, is carrying huge cash
in hand for almost the entire year. There is no justification of holding
such huge cash in hand for entire year when no expenditure/
investment has been actually made out of the cash available with him.
This is moreso when the assessee claims to be a businessman and
has at least two bank accounts. No prudent businessman would keep
such huge cash with him when he has the facility of bank accounts,
especially when the cash was not required for any purpose. The
appellant has given only a general explanation that the cash was
withdrawn for various purposes in connection with the development of
a new business and the same were redeposited in these accounts on
non fulfillment for the purposes for which the cash was withdrawn.
The assessee has adduced no evidence for the same as to which
transactions were sought to be entered into but did not materialize.
This claim of the assessee is not tenable because it is surprising that
during the full year the assessee has not spent a single rupee for the
said purposes. No such evidence was furnished even at the time of the
assessment proceedings, a few years after the cash deposits. Further,
5 ITA No. 4174/Mum/2012
Shri Janzeb Amirkamal Khan
there is no correlation in amounts of deposits with any of the
withdrawals made. Mere withdrawals made on earlier dates does not
prove the physical availability of cash in hand unless the assessee is
able to justify that such cash withdrawn was available with him and
not spent any where for other purposes. Under such circumstances, it
is amply clear that the appellant was not in physical possession of the
cash with him which has been withdrawn by him on earlier dates. In
view of the aforesaid reasons, the contention of the assessee that it
had cash-in-hand of Rs. 19,11,020/- as on 01/04/2006 and that the
cash was deposited out of the cash-in-hand available with him, or that
loans given to friends and relatives when repaid were deposited in the
bank account or that the withdrawals made from the bank account for
development of new business was redeposited in the bank accounts
cannot be accepted. The contention of the assessee defies any logic. It
is an admitted fact that the bank account was not disclosed in the
return of income.
3.3.4 In the case of Ashok Mahindru & Sons (HUF) 173 Taxman 178
(Del), it has been held that if there is enough material to raise a strong
suspicion regarding nature of transaction, the authorities can reject the
documents and require the assessee to show that the transaction is
above board. There can be no meters to judge truth. The same has to
be culminated out of the surrounding circumstances and have to be
inferred. There may not be clinching evidences but if at various places
the circumstances are doubtful, the natural corollary is that such
transaction was only paper transaction and cannot accord
acceptability of such make belief transactions. In the case of Smt
Vasantibai N. Shah 213 ITR 805(Bom), the Hon'ble High Court
observed that the Income Tax Officer is entitled to take into
consideration the totality of the facts and circumstances of the case
and to draw his own inference on the basis thereof. Circumstantial
evidence in such cases is not impermissible. In cases like this, it is
only the circumstantial evidence which will be available. No direct
evidence can be expected In the case of Durga Prasad More 82 ITR
540(SC), the Hon'ble Supreme Court has observed that the taxing
authorities are not required to put on blinkers while looking at the
documents produced before them. They are entitled to look into the
surrounding circumstances to find out the reality of the recitals made.
The proceedings under the Income Tax Act are civil proceedings and
the liability therefore can be fastened on the basis of circumstantial
evidence also, as held in the case Smt Sumati Dayal 214 ITR 801(SC).
In case of J S Parker 94 ITR 616 (Bom) it has been held that "the tax
liability under the Income tax Act is of civil nature. To fasten a tax
payer with such a liability, it is not necessary that the evidence should
be in the nature of "beyond doubt" as is required to fix a criminal
liability. Tax liability can be fastened on the basis of preponderance of
probabilities".
3.3.5 The assessee has made only vague submissions without
specifically bringing any material to rebut the discrepancies as noted
6 ITA No. 4174/Mum/2012
Shri Janzeb Amirkamal Khan
above. Hence, the source of cash of Rs. 15,39,000/- deposited in the
bank account maintained with HDFC Bank on various dates is held to
be unexplained. The addition made by AO is, therefore, upheld as the
income of the assessee for the financial year relevant to the A.Y. 2007-
08. Since, the assessee is found to be the owner of the money
deposited in the bank accounts in question during the F.Y. 2006-07
relevant to the A.Y 2007-08, the amount of cash deposited in the bank
account is deemed to be the income of the assessee u/s 69A of the I.T.
Act, 1961. Hence, this ground of appeal filed by the assessee is
dismissed."
7. Since no material was placed before us to contradict the findings of
the learned CIT(A), we are of the view that the learned CIT(A) was justified in
holding that the assessee did not prove the cash deposits in the bank
account and correctly brought to tax the amount deposited under section
69A of the Act. We, therefore, affirm the orders passed by the learned CIT(A).
8. In the result, the appeals filed by the assessee are dismissed.
Order pronounced in the open court on 20th October, 2014.
Sd/- Sd/-
(Sanjay Arora) (D. Manmohan)
Accountant Member Vice President
Mumbai, Dated: 20th October, 2014
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) 24, Mumbai
4. The CIT 13, Mumbai City
5. The DR, "J" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
n.p.
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