No addition for cash deposit permissible if assessee has maintained regular cash book, all its account are audited & explained the cash deposits in the bank with cash book
Baburao K Pisal, Thane vs Department Of Income Tax on 22 December, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "B", MUMBAI
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND
SHRI AMIT SHUKLA, JUDICIAL MEMBER
ITA No. 6091/Mum/2012
Assessment Year: 2009-10
ITO Wd- 1(1) Shri Baburao K.
Thane B/09-10, Sharad
Vs. CHS, Dr. Moose
PAN:AFZPP 4865 J
Assessee by M.P. Makhija & S.M.
Revenue by : Shri Vivek Batra
Date of hearing : 09.12.2014
Date of Order : 22.12.2014
PER AMIT SHUKLA, JM:
The aforesaid appeal has been filed by the Revenue against order dated 25.06.2012, passed by the Ld.CIT-II, Thane, for the quantum of assessment passed u/s 143(3) for the A.Y. 2009-
- The only issue raised in the grounds of appeal is that, Ld.CIT(A) has erred in deleting the addition of Rs.16,60,000/- made on account of unexplained cash credit.
- The assessee is an individual having income from rent, share profit from partnership firm and income from other sources. The assessee officer received an information that assessee
has deposited cash of Rs.17,60,000/- in the bank account during the year as per following
Shri Baburao K. Pisal Assessment Year: 2009-10 S.No Date of Deposit Amount deposited
(Rs.) i 29.05.2008 5,00,000/-
ii 28.07.2008 1,00,000/-
iii 13.12.2009 5,00,000/-
iv 10.02.2009 4,35,000/-
v 30.03.2009 1,25,000/-
vi 31.03.2009 1,00,000/-
In response to the show cause notice, the assessee submitted bank summary of Bombay Mercantile Corporation Bank and India Overseas Bank and it was stated that assessee has to participate in an auction for some imported materials for which assessee was required to keep cash ready for auction purchase. The assessee has also taken loan from LIC which was withdrawn in cash after depositing the same in the bank.
Once the auction purchase was not successful, he has deposited the amount back in the bank account. The assessee's explanation and the submissions in this regard have been incorporated at pages 2 to 5 of the assessment order. The assessing officer after examining the assessee submissions and details accepted one deposit of Rs.1,00,000/- in the bank account, which was directly co-related with the cash withdrawal. However, for the remaining deposits of Rs.16,60,000/-, he disallowed the same after the analyzing bank account details.
- Before the Ld.CIT(A), the assessee submitted that the assessee has maintained regular cash book in which all the cash has been fully recorded and there was no negative cashbalance in the said cash book. All the cash which has been deposited in the bank account were available and reflected in the regular cash book. The specific cash deposits added by the n
AO was explained in the following manner:-
Shri Baburao K. Pisal Assessment Year: 2009-10 Date of cash Amount of cash Explanation deposited deposited 29.05.2008 5,00,000 Cash was deposited from the opening cash in hand balance as at the start of the financial year cash book for which has already been submitted.
13.01.2009 5,00,000 Amount was deposited out of cash 10.02.2009 4,35,000 withdrawn earlier on 01.09.2008 and 30.03.2009 1,25,000 02.09.2008 amounting to total of 31.03.2009 1,00,000 Rs.12,00,000/- which was withdrawn against loan sanctioned by Bank against LIC policies.
The Ld.CIT(A) after examining the cash summary filed before him, observed that all the cash deposits have been made from the cash book maintained by the assessee. Further in the audited balance sheet as on 31.03.2008 filed along with the return of income, cash in hand of Rs.8,53,529/- was shown, which was available with the assessee. The first cash deposit of Rs.5 lakhs made on 29.05.2008 was deposited out of cash available in the cash book on that date. Likewise Ld. CIT(A), for each and every deposits examined the availability of cash with the assessee as recorded in the cash book. The relevant finding of the Ld.CIT(A) for each and every cash deposit is reproduced hereunder:
"4.4 The first cash deposit in the Bombay Mercantile Co-operative Bank of Rs.5,00,000/-
was made on 29.05.2008, which has been deposited out of the cash available in the cash
book on that date. The opening credit balance in the cash book on 29.05.2008 is
Rs.8,18,682/- and out of this an amount of Rs.5,00,000/- is shown to have been deposited in
Shri Baburao K. Pisal Assessment Year: 2009-10 4.5 Next cash deposit is on 31/07/2008
amounting to Rs. 1,00,000/- in the Bombay Mercantile Co-operative Bank, which again has
been deposited out of the cash available in the cash book on that date, The opening credit
balance in the cash book on 31/07/2008 is Rs. 2,43,998/- and out of this an amount of Rs.
1,00,000/- is shown to have been deposited in the bank. The explanation for this amount has
been accepted by the A.O, 4.6 Similarly, the cash deposits of Rs. 5,00,000/- on 13/01/2009,
of Rs. 4,35,000/- on 27/02/2009 and of Rs. 1,25,000/- on 30/03/2009 and of Rs. 1,00,000/-
on 31/03/2009 are all out f the cash available in the cash book maintained by the appellant on
the respective dates and all the cash deposit entries are reflected in the cash book on these
4.7 Further, from the perusal of the bank statements of the bank accounts of the appellant mentioned above, it can be observed that there are sufficient cash withdrawals from these banks, the credit for which has to be given unless and until it is proved that this cash has been utilized for some other purpose. There is no provision in the LT. Act requiring that cash once withdrawn has to be redeposited immediately if not utilized. It is well within the right of the appellant to keep the cash withdrawn with him according to the day to day requirements of the business and the businessman cannot be forced to redeposit the same in the bank if not utilized, as long as the proper entries of this cash in the books of accounts have been made.
The time gap between the withdrawals and deposits is not of much relevance. 4.8. In order to establish the unexplained nature of cash deposits in the bank f account, the AO has to prove the same with some independent enquiries and by placing some evidence on record regarding its unexplained nature. In the instant case, the AO did not make any such inquiries or placed any evidence on record to prove that cash is unexplained. The' appellant on his part has submitted the cash summary for the entire period under consideration and also produced the cash book, which clearly reflects all these bank cash deposit entries in the cash book on respective dates. The appellant has discharged the burden cast upon him under the provisions of section 68 by producing the cash summary and the cash books before the AO. The burden thereafter shifted on the AO to disapprove these evidences produced which he has failed to
- The AO has not given any finding that the cash book was not before him. The source of the cash deposits is the cash book for the period, wherein sufficient Shri Baburao K. Pisal Assessment Year: 2009-10 cash is available in the cash book on the dates of deposit in the banks. The source of the cash is not in doubt. While making addition u/s. 68, the AO has to advert to each and every entry in question and to prove by pacing some evidence on record that the deposits in the bank are not from the known sources but from the undisclosed income of the appellant, the source of which is unexplained.' The AO has not confronted the appellant with any such material before proceeding to conclude that the source of the cash deposits is unexplained.
4.10 Once the source of these cash deposits is not in doubt, the same can be termed as unexplained. The AO has not discussed the availability of the cash in the cash book and proceeded simply to make the addition on the ground that the time gap between the cash withdrawn from the bank and redeposit was long. As outlined above, there is no provision in the I.T. Act requiring that cash withdrawn, if remains unutilized, has to be redeposited immediately. Businessman has to see his requirement of the availability of cash and its utilization according to the needs of the business. In the process, if a businessman has to keep some cash in hand for day to day requirements and deposit the same after some period, there appears to be no illegality about such redeposit of cash in the bank as long as the same is through books of accounts.
4.11 In view of the facts and circumstances and judicial pronouncements mentioned above, in my opinion, the action of the AO making an addition of Rs.16,60,000/- as unexplained cash credits, is not in order and hence the addition made is deleted." Thus the Ld.CIT(A) deleted the said addition in the aforesaid manner.
- After hearing both the parties and on perusal of the finding given in the impugned orders and the material placed on record before us, we find that the assessee has maintained regular cash book and all its account are audited. The Ld.CIT(A) has analyzed each and every deposits made by the assessee in the bank account from the withdrawals made by the assessee from the bank and the cash available in the cash book. The assessee has also shown sufficient cash in hand in Shri Baburao K. Pisal Assessment Year: 2009-10 the balance sheet of the earlier years and also the source of cash available with the assessee. Thus, the deposits made by the assessee has been properly explained by the assessee before the Ld.CIT(A) and without there being any contrary evidence or rebuttal by the department, we do not find any reason to deviate from such a the finding recorded by the Ld.CIT(A). Accordingly, the order of the Ld.CIT(A) is affirmed and ground raised by the Revenue is dismissed.
- In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 22nd day December, 2014.
(N.K. BILLAIYA) (AMIT
ACCOUNTANT MEMBER JUDICIAL
Mumbai, Dated: 22.12.2014
Copy to: The Appellant
The CIT, Concerned, Mumbai
The CIT(A) Concerned, Mumbai
The DR "B" Bench
Dy/Asstt. Registrar, ITAT