TMI Blog2016 (6) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... s (2.15 lacs -1.90 lacs) can be regarded as toward the same. The explanation of the withdrawals being the source of the deposit would thus not hold for ₹ 2.50 lacs deposited in bank account on 30.7.2004. The explanation offered (qua this deposit) is not valid; rather, cannot be under the circumstances regarded as an explanation at all. The penalty in respect of the addition to this extent thus stands rightly levied, and is accordingly confirmed. For second block of withdrawals i.e., beginning August 18, 2004, up to 09.11.2004 the acceptability or otherwise – in whole or in part, of the assessee’s explanation thus hinges critically on this fact and the concomitant expenditure incurred thereat. It may well be that the assessee spent the surplus (Rs.2.50 lacs) or similar amount on the said treatment, depositing the balance (Rs.14 lacs) in end-December, 2004, upon full recovery, so that there was no imminent need for cash. If the operation, which is stated to be for the same problem, costs ₹ 1.02 lacs a year later, the same would cost the assessee – who is even otherwise covered by insurance, a similar amount – with we observing the assessee to have funds – despite the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for its deposit back, it was submitted that as he had recovered from illness, the money was deposited back in December, 2004. With regard to the withdrawals for personal/house-hold purposes, the same were stated to be in the range of ₹ 40,000/- to ₹ 50,000/- p.m., including the expenditure for general treatment and medicines. The said explanation did not find favour with the Revenue. The disease for which the assessee had been operated upon in December, 2005, i.e., BIL Varicose Veins , was, as per the diagnosis, a year old, and not since 1998, as stated by the assessee. The medical treatment, which was estimated to cost ₹ 1.02 lacs by the (Jaslok) Hospital, was covered by a cash-less insurance policy. As the assessee, however, failed to produce the medical bills which were settled directly by the insurance company, there was a distinct possibility of the expenditure incurred being in excess of the stated amount of ₹ 1.02 lacs. There was, in any case, no need for the assessee to maintain such a huge cash balance (Rs.17.95 lacs/PB pg.2) and, further, continue to withdraw the same during the year. Also, the assessee has not maintained any cashbook, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties that the withdrawals of ₹ 10 lacs and ₹ 6.65 lacs by the assessee had been utilized for undisclosed purposes and were not available for re-depositing the same in December, 2004. For the same reasons we also find reasonable the decision of lower authorities in rejecting the claim of the assessee that he was having opening cash balance of ₹ 3,75,000/- on 01/04/2004 out of which deposits of ₹ 2,50,000/- have been made on 30/07/2004. In case the assessee was having opening cash balance of ₹ 3,75,000/-, there were no reasons for making regular cash withdrawals in subsequent months which is clear from the details at Page 2 of the order. However, the deposits of ₹ 15,000/- on 12/12/2004 considering the smallness of the amount is easily explained from the monthly withdrawals in the preceding months. We therefore accept the source of deposit of ₹ 15,000/-, but confirm the additions made on account of deposits of ₹ 2,25,000/- (*), ₹ 9,00,000/- and ₹ 5,00,000/- on different dates. Accordingly we confirm the additions of ₹ 15,60,000/- (@). [(*) ₹ 2,50,000/- (@) ₹ 16,50,000/-] 2.2 Penalty proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operate to invalidate otherwise valid proceedings or exercise of power the assessee being called upon to explain the source of the impugned cash deposits. Rather, in our clear view, the mention of section 68, which is superfluous, even if regarded as a commission, is saved by the provision of section 292B of the Act. 3.2 The basis for the levy and confirmation of penalty by the Revenue is that no plausible explanation for cash retention (for 4 months, i.e., from mid August to end December, 2004) and, in turn, for the cash deposit/s in the assessee s bank account, admittedly by the assessee himself, has been furnished by him, much less substantiated, with the addition being since confirmed by the tribunal, the final fact finding body. No improvement in his case, i.e., on facts, stands made by the assessee, whose explanation for cash retention (of withdrawals), the stated source of cash deposit/s (in the bank), continues to be the same in the penalty proceedings, i.e., as in the quantum proceedings. 3.3 We begin by examining the date-wise profile of the cash withdrawals and deposits during the year, which is as under: Date Withdrawals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 3.35 lacs after 31.12.2004, the last date of cash deposit. The explanation as to the withdrawal being the source of deposit/s would be valid only for the withdrawals made prior to the date/s of deposit/s, so that withdrawals, as a possible source of deposits, is valid only for ₹ 21.65 lacs (Rs.25 lacs - ₹ 3.35 lacs). Further, the assessee, though does not maintain any day-to-day cash-book, claims an opening cash balance (as on 1.4.2004) at ₹ 3.75 lacs (PB pgs. 1 3), which did not find acceptance by the Revenue. We agree that in the absence of details as to cash withdrawals and deposits during the immediately preceding year, the claim as to the opening balance cannot be verified or opined upon. In fact, the cash utilized for personal/household purposes would also have to be factored there-into. Why, we wonder the assessee could not furnish, similarly, the said details for the immediately preceding year as well. Continuing further, the cash utilized for personal/household purposes for the months of April to July 2004 is admittedly at ₹ 1.90 lacs (PB pgs. 1 2), which we accept in-as-much as the AO has not made any addition on account of low or inadequate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 14 lacs) out of these withdrawals. Further, the cash withdrawals continue unabated, in sums ranging from ₹ 20,000/- to ₹ 45,000/-, at regular intervals of time upto 09.11.2004, adding to ₹ 2.85 lacs, underlining clearly that the earlier cash withdrawal of ₹ 16.65 lacs (on August 18 19, 2004) was for a specific purpose/s. Or is it that amount to this extent (Rs.2.50 lacs) stands expended, so that balance ₹ 14 lacs was deposited on 30/31.12.2004? In fact, withdrawal of cash in such huge amounts is a tedious and cumbersome affair, besides entailing risk. The assessee is a businessman, who well understands the opportunity cost of funds. His interest income from the partnership for the relevant year is at a meager ₹ 3,000/- (refer pg. 4 of the assessment order), so that funds of the firm stand, as it appears, diverted, resulting in either loss of business or met by incurring borrowing (at a cost). Continuing further, even if such huge expenditure is contemplated, of which there is no evidence why we wonder the same could not be adequately substantiated or in fact even met through the banking channel, viz. bankers cheque or demand draft, bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded as consumed. Of-course, we do not intend to, or make, when we state so, an absolute statement, but only one having regard to the entirety of the facts and circumstances of the case. As afore-stated, there are mitigating factors, viz. the retention period; no possible source of income being indicated, etc., which have prevailed with us in making the said statement in the present case. Why, the assessee states of the medical emergency, for which cash was withdrawn, having subsided, leading to its deposit in the account an explanation, though not substantiated, has not been controverted. 3.5 So, however, the tribunal, while deciding the quantum proceedings, has found that the assessee was treated for the same disease in August, 2004, the details of expenditure on which have not been furnished by him. This is a very important and relevant fact. The same is not disputed; why, would have rather originated from the assessee himself and, further, has been taken into account by the tribunal in deciding the assessee s case on quantum. The same in fact stands corroborated by documents furnished in respect of the assessee s operation (for Varicose Veins) in December, 2005, which state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of withdrawal (in-as-much as the same could not be without any purpose), assumes a different complexion upon considering that the assessee had, as noted and considered by the tribunal, undergone a medical treatment in August 2004, whereat the cash was, in the main, withdrawn, with this being in fact the assessee s explanation toward the reason for such heavy cash withdrawals. The acceptability or otherwise in whole or in part, of the assessee s explanation thus hinges critically on this fact and the concomitant expenditure incurred thereat. It may well be that the assessee spent the surplus (Rs.2.50 lacs) or similar amount on the said treatment, depositing the balance (Rs.14 lacs) in end-December, 2004, upon full recovery, so that there was no imminent need for cash. If the operation, which is stated to be for the same problem, costs ₹ 1.02 lacs a year later, the same would cost the assessee who is even otherwise covered by insurance, a similar amount with we observing the assessee to have funds despite the deposits, cash at ₹ 2.50 lacs for the purpose. The question, however, is: Why does not the assessee state so, revealing the truth of the matter? ..... X X X X Extracts X X X X X X X X Extracts X X X X
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