PRAMOD KUMAR (Accountant Member) and KUL BHARAT (Judicial Member)

Pritesh L. Shah, authorised representative, for the appellant.
D. V. Singh for the respondent.

ORDER

The order of the Bench was delivered by

1. Kul Bharat (Judicial Member).-This appeal by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals)-XI, Ahmedabad ("CIT(A)" in short) dated February 29, 2012, pertaining to the assessment year (AY) 2008-09. The assessee has raised the following ground of appeal :

1. The learned Commissioner of Income-tax (Appeals) erred in confirming the addition made by the Assessing Officer of Rs. 10,44,800 being amount of cash deposited to the bank considering the same as income from undisclosed sources which is requested to be quashed.

Your appellant prays for leave to add, to alter and/or to amend the above ground before the final hearing of the appeal.

2. Briefly stated the facts are that the case of the assessee was picked up for scrutiny assessment and the assessment under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") was framed vide order dated November 30, 2010, thereby the Assessing Officer (AO in short) made addition of Rs. 11,27,800 being the cash deposited in the savings bank account with the ICICI Bank Ltd., Bandra, Mumbai. The assessee submitted before the Assessing Officer that the deposits were out of the withdrawals from the same account. The explanation of the assessee was not accepted by the Assessing Officer on the ground that the case was withdrawn in the first week of July-2006, whereas the deposits were in the month of June-2007. Against the said assessment order, the assessee preferred an appeal before the learned Commissioner of Income-tax (Appeals), who after considering the submissions, reduced the addition to the extent of Rs. 10,44,800. Aggrieved by the order of the learned Commissioner of Income-tax (Appeals), the assessee is now in appeal before us.

3. Learned counsel for the assessee argued that the authorities below were not justified in making the addition. He submitted that the assessee has maintained cash book and bank passbook and the same were furnished before the Assessing Officer and the learned Commissioner of Income-tax (Appeals). He submitted that the bank statement for two years for the assessment years 2006-07 and 2007-08 were submitted. He submitted that the source of cash was, therefore, established. He submitted that the cash book reveals the clear positive balance out of which the cash has been deposited but the authorities below failed to appreciate the fact. He submitted that the learned Commissioner of Income-tax (Appeals) erred in following the ratio laid down by the hon'ble Supreme Court in thecase of Sumati Dayal v. CIT [1995] 214 ITR 801 (SC). He submitted that in the present case, there are direct evidences demonstrating that the assessee was having cash balance. He submitted that no law prohibits the assessee for keeping the cash. Learned counsel for the assessee placed reliance on the judgment(s) of the hon'ble Gujarat High Court rendered in the case of CIT v. Shailesh Rasiklal Mehta [2009] 176 Taxman 270 (Guj) and of CIT v. Manoj Indravadan Choksi reported at [2014] 50 taxmann.com 419 (Guj). Learned counsel for the assessee also placed reliance on the judgment of the hon'ble Delhi High Court rendered in the case of CIT v. Pesto Chem India Ltd. [1999] 240 ITR 672 (Delhi).

4. On the contrary, the senior Departmental representative supported the orders of the authorities below and submitted that the explanation as furnished by the assessee caused doubt as is evident from the fact that the cash was withdrawn on various dates (i.e., July 1, 2006, July 6, 2006 and June 26, 2007) during the years 2006 and 2007. However, the cash was deposited in the years 2007 and 2008.

5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgments relied upon by learned counsel for the assessee. There is no dispute with regard to the fact that the assessee had deposited the cash of Rs. 11,27,800 starting from June 7, 2007 to February 13, 2008. The cash withdrawn from the bank was of Rs. 4,20,000 on July 1, 2006, Rs. 4,90,000 on July 6, 2006, Rs. 83,000 on June 26, 2007, Rs. 51,000 on November 20, 2007, Rs. 1,28,000 on December 14, 2007 and Rs. 2,00,000 on January 7, 2008. However, the cash was deposited on June 7, 2007 of Rs. 2 lakhs, on June 8, 2007 of Rs. 2 lakhs, on June 11, 2007 of Rs. 1,50,000, on June 12, 2007 of Rs. 2 lakhs, on June 13, 2007 of Rs. 2,25,000. The total deposits till June 13, 2007 was of Rs. 9,75,000 and the amount withdrawn till July 6, 2006 was of Rs. 9,10,000 (Rs. 4,20,000 + 4,90,000). Rest of the deposits of the total addition were made on June 18, 2007, June 26, 2007 and February 13, 2008. However, withdrawal after July 6, 2006, the assessee had withdrawn on June 26, 2007 of Rs. 83,000, on November 20, 2007 of Rs. 51,000, on December 14, 2007 of Rs. 1,28,000 and on January 7, 2008 of Rs. 2,00,000. From January 7, 2008 to November 20, 2011 the assessee had withdrawn total amount of Rs. 3,79,000. However, cash was deposited in the bank account after June 13, 2007 of Rs. 1,52,800. So far as the amount of Rs. 83,000 is concerned, i.e., matching from withdrawals and deposits and rest of the amount, there is a gap between withdrawals and deposits of the amount. In respect of deposit made on February 13, 2008 is also within one month from the withdrawal of amount on January 7, 2008. In respect of other entries, the cash withdrawal is even before one year of deposit of the amount. The contention of the assessee is that the amount was kept as cash in hand. The authorities have doubted about the explanation furnished by the assessee. The authorities below have doubted the source of the cash deposits, however, the contention of learned counsel for the assessee is that he had withdrawn the amount from his bank account and there is no finding by the authorities below that the cash withdrawn by the assessee was utilised for any other purpose. In the absence of such finding, addition is not justified. We find merit in the contention of learned counsel for the assessee that there is no dispute that the amount which was withdrawn by the assessee on various dates during the year 2006 was available with him for making deposits. In the absence of finding that the amount which was previously withdrawn by the assessee had been utilised for any other purpose merely on the basis of conjecture that the amount might have been utilised for any other purpose and was not available with the assessee for making the deposits, we are unable to accept the reasoning of the authorities below. In our considered view, when the assessee has demonstrated that he had withdrawn cash from the bank and there is no finding by the authorities below that this cash available with the assessee was invested or utilised for any other purpose, in that event, it is not open to the authority to make the addition on the basis that the assessee failed to explain the source of deposits. Moreover, the authorities below have not disputed the fact that the assessee had withdrawn an amount of Rs. 9,10,000 before the deposits made on various dates during the financial year 2007-08. Therefore, the orders of the authorities below are set aside and the Assessing Officer is directed to delete the addition. Thus, the ground raised in the assessee's appeal is allowed.

6. In the result, the appeal of the assessee is allowed.