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2015 (7) TMI 114 - ITAT JAIPUR

2015 (7) TMI 114 - ITAT JAIPUR - TMI - Unexplained deposits in bank account - appellant is a housewife - Held that:- Ld. Counsel for the assessee contends that ld. CIT(A) has given clear findings of facts and held that the opening cash of 2.75 lacs and withdrawal of ₹ 1 lac contributed towards construction were not considered, besides there was no justification in ignoring the cost of material of ₹ 1,32,176/- as indicated by ld. CIT(A). The factual discrepancies in AO’s working of An .....

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ignored on ipsi-dixit by manufacturing some lacunae in assessee’s reply. Therefore ld. CIT(A)’s clear finding of fact that the investment in construction of house was made in AY 2008-09 & 2009-10 is based on proper verification of facts on record and there is no reason to disturb such findings of facts. It is further contended that ground iv of the revenue has no meaning inasmuch as the merits of all the credit entries stand proved by the assessee which is manifest from the order of ld. CIT(A). .....

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ccount. This becomes more relevant in the peculiar background of assessee’s being a house maker, having no knowledge of construction, debit and credit entries in the bank and prolonged and terminal illness of the husband. None of which is questioned by lower authorities Therefore, if at all it is held that ₹ 8,01,050/- remained unexplained then assessee being a joint a/c holder cannot be saddled with entire addition. The same is to be treated equally half in the hands of husband and wife. .....

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T(A)-II, Jaipur for A.Y. 2009-10. Respective grounds of both the appeals are as under:- Ground of assessee s appeal 1. On the facts and in the circumstances of the case the learned CIT(Appeals) has factually and legally erred in confirming the addition made by the learned A.O. on account of unexplained deposits in bank account to the extent of ₹ 8,00,000/- without appreciating the fact that the appellant is a housewife, who has no regular source of income and other relevant facts of the ca .....

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. F.Y. 2008-09 and 2009-10 which was contrary to the assessee s written submission filed on 26/09/2011. (iii) Restricting the addition of ₹ 1,19,73,500/- to ₹ 8,01,050/- being the peak credit as on 29/11/2008 despite the fact that the peak theory is applicable only in cash deposits and not in cheques deposited. (iv) Restricting the addition made on account of unexplained credits even though the assessee could not prove (i) the identity of the creditor, (ii) the genuineness of the tra .....

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4, Jawahar Nagar, Jaipur. AO inquired about the cost of construction and sources thereof, in reply assessee filed a registered valuer report Dtd. 22-5-10 ₹ 37,80,196/-, which was for correcting some measurement mistakes was revised to ₹ 35,28,917/-. 2.1 Assessee filed a reply dated 26-09-11 stating that cost of construction of ₹ 39,07,176/- was incurred and explained the source thereof which is mentioned by AO at page 2 of his order. AO however held that assessee could explain .....

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whenever asked the construction. As evident from the Bank Statement, the OD funds were rotated depending on the construction exigencies and no fresh cash was introduced. A cash flow statement reconciled with Bank A/c was filed, demonstrating that credit entries were on account of redeposit of earlier. Assessee s representative co-related each and every debit and credit entry in the bank account and offered proper reconciliation with cash flow statement. During the time of assessment, Shri Suganc .....

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essee did maintain books of accounts for construction work which was explained on the basis of the withdrawals from bank a/c and valuation report. It was further informed that the said construction works continued for two years i.e. for the F.Y. 2008-09 & 2009-10 for which year-wise break-up was also given along-with details of the withdrawals made from bank accounts for the purpose. However ld. AO summarily rejected assessee s contentions and made addition for alleged undisclosed investment .....

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. 2.5 Aggrieved both the parties are before us. 2.6 Assessee s sole ground and revenue ground (iii) and (iv) raise common issue. 2.7 Ld. Counsel for the assessee contends that the surplus funds as worked out by the ld. AO as per Annexure B is replete with following flaws and discrepancies:- (i) In this chart no credit for the withdrawals of ₹ 6,36,000/- made in the names of family members had been given despite of the fact that affidavits of the family members were submitted certifying th .....

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ed these facts and explanation without assigning any reason and without brining any material on record contrary to the explanation of the appellant on the point. P.B. 38 & 41 to 46. (iii) If both the figures of ₹ 6 lacs and odd plus 14 lacs and odd are taken into account as explained by the appellant then the surplus funds would work out around ₹ 38 to 39 lacs which would be more than sufficient to take care of the total investment of ₹ 35,28,917/ as determined by the Appro .....

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undisclosed income of the assessee. However while retaining the part addition ld. CIT (A) ignored the fact that this peak credit balance resulted due to transfer credit entry of ₹ 25,00,000/- on 29.11.2008 as explained vide letter dated 22.11.2011 In fact, such credit balance did not result on account of any fresh credit entry but was due to re-payments of old advances made before availing the OD facilities. However, the learned CIT (A) did not appreciate this and without examining this fa .....

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from the bank statement from the overdraft facility availed by the husband of the appellant. It was evident from the bank statement (account no.4114) that there was only rotation of overdraft funds whereby the funds advanced on earlier dates were received back subsequently and there were no fresh deposits. 2.9 Ld. CIT (A) over-looked the vital fact that assessee was hardly operating the account and was mainly operated by her husband. Merely because the assessee was constructing the house it has .....

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ry of ₹ 8,01,050/- dated 29.11.2008 as undisclosed income without objectively rebutting the contentions. While doing so ld. CIT(A) failed to consider the credit entry of ₹ 25,00,000/- which would nullify the peak deficit. Reliance is placed on following judicial authorities: (i) CIT vs Smt.P.K. Noorjahan (1999) 155 CTR 509 holding therein as under: Income from undisclosed sources- Addition under s. 69- Discretion of AO-Intention of Parliament in enacting s. 69 was to confer a discret .....

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not be treated as income of assessee. (copy of relevant extract submitted herewith at P.B. No.62 & 63 - both sides). (ii) Following the above famous judgment of honorable Supreme Court, the jurisdictional Court of Rajasthan have also held the same view in the case of CIT vs Ranjeet Kumar Sethia (2005)198 CTR (Raj) 550 observing as under:Cash credit-Peak credit in the bank account can not be treated as undisclosed income of the assessee-Justified- Banking transactions in the regular course o .....

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ompany to the assessee is not sufficient to hold that the amount belonged to the assessee or that is constituted the income of the assessee…… (copy of relevant extract submitted herewith at P.B. No.66). (iv) The honorable ITAT, Jaipur Bench Jaipur have also expressed same view recently in the case of Smt. Anita Kaushal (ITANo.390/JP/2009) (copy of the judgement is submitted herewith at P.B. No.67 & 74) that the assessee being an ordinary lady and is not of much means who can de .....

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(v) Again, the honorable ITAT, Jaipur Bench, Jaipur have been consistently holding the view that all the bank transactions and deposits cannot be taken as undisclosed income of the assessee. The same can be taken as turn-over of the assessee and prevalent g.p. be applied and be taken as income of the assessee. Some cases are referred here-under for ready reference: (i)Shri Arvind Bakliwal, Madanganj, Kishangarh(287/JP/10) (ii)Shri Vineet Darda, Madanganj, Kishangarh (647/JP/2009) (iii) Shri Gaja .....

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ereas the AO held that only ₹ 18,33,300/- were available as per ann. B which resulted in addition of ₹ 20,73,876/-. In first appeal ld. CIT (A) on the basis of reconciliation of funds and written submissions held that the Annexure B working was not correct and deleted the addition by following observations: 3.1 I have duly considered the submission of the appellant. In this case, the A.O. noticed that the assessee had constructed a property at 2-Ga-24, Jawahar Nagar, Jaipur and inves .....

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in the said property as under: Cash withdrawn during the March, 2008 as per relevant extract from the bank account Rs.2,75,000 Cash withdrawn during the year from the said bank account Rs.30.5 lakhs Less: Deposits made in bank account Rs. 9.0 lakhs Rs.21,50,000 Funds withdrawn from joint account No.268387 of husband Shri Suganchnd Rs.13,50,000 Cheques issued directly for material and other expenses as per chart enclosed and relevant entries duly highlighted Rs. 1,32,176 Total Rs.39,07,176 The A .....

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8,300/- only. The AO further held that the opening cash available with the assessee was at ₹ 1,75,000/- only. The AO also held that the investment of ₹ 1,32,176/- in the purchase of material for construction was incorrect and it was in the nature of interest charged by the bank or insurance premium paid by the assessee. In the light of above facts, the AO held that the assessee had cash funds to the extent of ₹ 18,33,300/- (Rs.16,58,300/- plus ₹ 175,000/-) available with .....

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a joint bank account with her husband namely Sh Suganchand Rangwani (PAN ABIPR6504R) who availed overdraft facility from the Axis Bank. From this joint account, the husband of the appellant utilized the overdraft facility funds for various loan transactions and a part of amount was withdrawn/ utilized for construction of house at 2Ga-24, Jawahar Nagar, Jaipur. It was evident from the bank statement (account No.4114) that there was only rotation of overdraft funds whereby the funds advanced on ea .....

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lating the various debit or credit entries. Further the AO had also made separate addition of ₹ 1,19,73,500/- on account of entire credit entries through cheques in the hands of the appellant. As the books of accounts were not maintained by the assessee, the investment in the said house was declared on the basis of withdrawals made from the said bank account. Further the construction of the said house was carried out in FY 2008-09 and FY 2009-10. However, the AO had chosen to make the impu .....

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rawals made by the husband from the bank account No.268387 on various dates were given by the counsel of the appellant vide lettler dated 26-09-2011 to the AO. Further the opening cash on hand available with the appellant had her husband was of ₹ 2,75,000/- however the AO had not allowed credit for ₹ 1,00,000/- withdrawn in cash by the husband of the appellant in March, 2008. If there amounts are taken into consideration, it would exceed the addition of ₹ 20,3,876/- made by the .....

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is satisfied in the present case. Further such investments were not recorded in the books of account maintained by the assessee; this condition is not satisfied in the present case. Moreover, the assessee did not maintain any books of account and she had declared more withdrawals than the investment estimated by the registered valuer. Further such investments had been made in the financial year immediately preceding the assessment year in question: this condition is also not satisfied as the as .....

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account of unexplained investment. I therefore direct the AO to delete the addition of ₹ 20,73,876/- made by him. The ground appeal is allowed . 2.12 Ld. Counsel for the assessee contends that ld. CIT(A) has given clear findings of facts and held that the opening cash of 2.75 lacs and withdrawal of ₹ 1 lac contributed towards construction were not considered, besides there was no justification in ignoring the cost of material of ₹ 1,32,176/- as indicated by ld. CIT(A). The fac .....

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merging from record cannot be ignored on ipsi-dixit by manufacturing some lacunae in assessee s reply. Therefore ld. CIT(A) s clear finding of fact that the investment in construction of house was made in AY 2008-09 & 2009-10 is based on proper verification of facts on record and there is no reason to disturb such findings of facts. It is further contended that ground iv of the revenue has no meaning inasmuch as the merits of all the credit entries stand proved by the assessee which is manif .....

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emerge from the record:- i. Assessee being a house hold leady, her husband being a cancer patient and critical during the period of assessment proceedings and ultimately expired is not in dispute. ii. The Axis bank OD bank a/c being jointly operated and mostly used for construction of house standing in assessee s name has not been doubted. iii. Cost of construction as per the approved valuers report is not under question. iv. No allegation of non cooperation or non compliance is made by AO. v. .....

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