IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `B' NEW DELHI
BEFORE SHRI G. D. AGRAWAL, HON'BLE VICE-PRESIDENT
AND
SHRI C. M. GARG, HON'BLE 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 against the order of the
CIT(A) dated 31.08.2012 in appeal No. 321 of 2011-12 for A.Y. 2009-10.
The Revenue has raised following grounds in this appeal:-
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/- being unexplained cash deposits in the Saving
Bank Ale with HDFC Bank U/S 69A of the I.T.Act, 1961,
ignoring the fact that the cash was allegedly withdrawn
form partnership firm which itself withdrew the cash
from its bank ale out of business OD account with
Corporation Bank where debit balance remained in the
range of 57 lac to 64 lac on whch heavy interest was
paid by the firm and thus the alleged withdrawals by the
partner did not relate to firm's business in any way.
2 I.T.A .No.-5660/Del/2012
2. Whether in the facts and circumstances of the case the Ld.
CIT(A) has erred in law in holding hat there was no
negative cash balance and that there is no law of land
mandating assessee to keep her balance in bank only but
ignoring that the capital ale of assessee in the firm
always remained in negative i.e. before alleged
withdrawals as well as during and after such
withdrawals that too out of withdrawals by firm made
from OD Bank ale showing heavy debit balance, which
was in stark contradiction of principle of test of the
human probabilities as laid down by the Hon'ble Apex
Court. Reliance 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 craves leave to add, modify and / or
delete any ground(s) of appeal. .
4. In the facts and circumstances of the case, the order of the
Commissioner of Income-tax(Appeals) may be set aside and
that of the A.O restored."
2. Briefly stated the facts giving rise to this appeal 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Officer (AO) noted that the assessee has withdrawn huge cash from bank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 the 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 rejected the explanation
and held that the assessee has cash deposit of Rs.24,38,000/- as unexplained
money and he assessee found to be the owner of the money and the assessee
has not offered any acceptable and cogent explanation 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
3 I.T.A .No.-5660/Del/2012
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 before CIT(A) which was
allowed by passing the impugned order. Now the aggrieved 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 reliance on the decision of the
Hon'ble Supreme Court in the case of Sumati Dayal Vs. 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 bank account out of
business overdraft account with corporation Bank where debit balance
remained between 57 lac to 64 lac on which heavy interest was paid by the
firm and thus alleged withdrawals by partner assessee 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 assessee in the firm always
remained in negative before impugned withdrawals as well as during and
after such withdrawals and also the withdrawals made by the firm from
overdraft was increasing heavy debit balance resulting into heavy interest
4 I.T.A .No.-5660/Del/2012
liability on the firm which is not in accordance with behavior of a man of
ordinary prudence rather the above conduct of the assessee was in
contradiction of principles test of human probabilities. The D.R. also
contended that the AO made addition on justified reasoning which was
deleted by CIT(A) without and basis. Therefore, impugned order may be set
aside by restoring that of the AO.
5. Replying to the above the Ld. assessee's Representative (AR)
submitted that the AO merely acted on the basis that 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 assessee 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 the 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 partnership 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 the AO that the amounts
withdrawn from bank were utilized somewhere else for some irrelevant
5 I.T.A .No.-5660/Del/2012
purpose. The AR supported the impugned order and submitted 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 Act with following
conclusion:
"From the perusal of return and the various documents
submitted by the assessee during the course of assessment
proceedings, it is gathered the assessee has made huge cash
deposits in saving bank a/c bearing no.0285130002853 at
HDFC Bank, W.K. Road, Meerut. The cash flow statement
submitted by the assessee has many lacunae. From the said
cash flow statement, it is gathered that:
1. cash withdrawal of Rs.3,00,000/- made on 08/04/2008
was deposited on 13/5/2008 and the explanation offered by the
assessee is `cash deposited out of cash'. This explanation of the
assessee is illogical as it is impossible to believe that such a
huge amount of cash will be kept by the assessee for so long as
to deposit the same amount in the bank after unnecessarily
waiting for such a long duration. Similar explanation has been
offered by the assessee for cash of Rs.5,00,000/- withdrawn on
3/10/2008 and deposited on 4/3/09.
2. no reason has been offered by the assessee in respect 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/- made on
26/3/2009.
I, therefore, treat this above-mentioned cash deposit 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 owner of this
money and has not offered any explanation about the nature
and source of acquisition of this money and therefore, this
6 I.T.A .No.-5660/Del/2012
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) called remand report
from the AO on the submissions of the assessee and after considering the
submissions of the assessee, remand report of the AO, assessee's rejoinder
and assesee's additional submissions the CIT(A) deleted the addition with
following observations and findings:
I have considered the facts of the case, AR's submissions,
AO's remand report, AR's rejoinder and further submissions 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 has noted that
the explanation offered by the assessee appeared to be
impractical and illogical. The AR has placed on record the cash
flow statement both during the assessment proceedings as well
as the appellate proceedings. The cash flow statement duly
shows that the appellant withdrew cash from her SB A/c in the
HDFC bank and also withdrew capital balance from her
capital account her partnership firm. M/s. Shakti Traders,
Meerut. A copy of bank account also has been placed on
record. The cash flow statement shows that there are cash
withdrawal of .Rs.19 lakh from HDFC bank on different dates
and withdrawal of Rs.13 lakh from her capital account in her
partnership firm M/s. Shakti Traders on different dates. There is
no negative cash balance at any point of time. It is not the case
of the AO that the amounts withdrawn were utilized anywhere
else. The AR has also placed on record the audit report of M/s.
Shakti Traders along with the ledger account of the appellant.
In view of material placed on record, no adverse inference can
be drawn against the appellant for explanation that.cash
withdrawn from the bank and the capital account of her
partnership firm was deposited in bank. It is not mandatory
under any law of the land that n individual has to keep his/her
savings in the bank account only and not as cash in hand. The
AR's reliance on the following case laws also support his case:
7 I.T.A .No.-5660/Del/2012
i. ACIT vs. Baldev Raj Chalra, 121 (TTJ) 366 (Delhi) 2009;
ii. R. K. Dave vs. Income Tax Officer reported in 94 ITJ Jodhpur 19
(09.08.2004)
iii. Hemant Prabhakar vs. Dy. CIT 31 Tax World 198 (JP)
In the light of the totality of the facts, the addition made by the AO is
deleted."
8. In view of above we noted that the AO, in his remand report could not
bring out any fact that the cash withdrawn from Saving Bank Account and
partnership overdraft account was used for other purpose anywhere else
then, merely because there was a time gap between withdrawal 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 in the hands of the
assessee. The AO rejected the explanation of the assessee on hyper technical
basis which is not acceptable. On careful perusal of the decisions relied by
the Ld. D.R. we are of the view that the facts of the present case are clearly
distinguishable as in the present case the explanation 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 assessee created huge interest
liability on partnership firm does not enable revenue authorities to consider
the cash withdrawn and it deposit to same bank account after a substantial
gap of time, as unexplained income u/s 69 A of the Act. Hence, we reach to
8 I.T.A .No.-5660/Del/2012
a conclusion that the AO made addition without any legal and justified
reason which was rightly deleted by the CIT(A). Hence, both the grounds of
the assessee are being devoid of merits and dismissed.
9. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open Court on 05/09/2014.
Sd/- Sd/-
(G. D. AGRAWAL) (C. M. GARG)
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
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