TMI Blog2017 (9) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... the said issue. In our considered view, the first appellate authority has passed a well-reasoned order and we do not find any reason to take a different view. However, since it is not in dispute that the out of 33 Parties 17 Parties have confirmed the gifts having been given to the assessee, we are of the view that these gifts should be treated as genuine and they should not be treated as unexplained cash credits u/s 68 of the Act. Accordingly, we direct the Assessing Officer to delete the addition to the extent of the gifts received from these 17 parties as listed out in the assessment order and pass orders accordingly. - Decided partly in favour of assessee. - ITA NO.5712/MUM/2014 - - - Dated:- 11-7-2017 - SHRI B . R . BASKARAN, ACCOUNTANT MEMBER AND SHRI C . N . PRASAD, JUDICIAL MEMBER For The Appellant : Shri Vinod Kumar Bindal For The Respondent : Shri B . S . Bist ORDER PER C . N . PRASAD ( JM ) 1. This appeal is filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-18, Mumbai dated 12.06.2014 for the Assessment Year 2010-11. 2. The only issue in the appeal of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Impex Private Limited and deriving income from salary. The Learned Counsel for the assessee submits that assessee has received gifts from the various parties and these gifts were deposited in the bank accounts and cash was withdrawn from bank accounts and redeposited in the bank accounts. Therefore, he submits that the source for depositing the cash into bank is the gifts received by the assessee on his 25th wedding anniversary and also the cash withdrawal from the bank account. The Learned Counsel vehemently argued that source for the deposits were explained and therefore there is no justification in treating the cash deposits as unexplained income of the assessee u/s 68 of the Act. He reiterated submissions made before the lower Authorities. 5. The Ld.DR vehemently supported the orders of the Ld.CIT(A). He further submitted that the assessee claims to have received gifts from 33 parties out of which only 17 parties confirmed. The Ld.DR submits that there is no necessity for withdrawal by the assessee from his account since sufficient cash balances is already available with him. Further assessee s wife is earning income from tuitions ₹ 10,000/- per month to supplement t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the assessee to explain the cash transaction and also details of domestic / personal expenses . Since Shri Vijay R . Sharma was produced before the AO he was drawn attention to the Cash Book Annexure I . The AO has given opportunity to the assessee to explain the huge withdrawal of cash and huge cash deposits in these bank accounts . With regard to drawings of Rs . 10 . 000 /- , the assessee was requested to produce details of domestic / personal expenses and also asked to explain the low withdrawals for personal use Regarding gift received the assessee was asked to submit complete names, addresses, PAN and other details with confirmation of donors . As per the AIR information received by the AO the assessee has made total cash deposit in this bank account amounting to Rs . 28,35,400 /-. In reply to this show cause notice the AR of the appellant has submitted which was not satisfactory to prove the source of cash deposit in these bank accounts and so documentary evidence was submitted to substantiate the claim . Finally the AO has given show cause notice to the assessee as to why the cash deposit and bank account may not be treated as unexplained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tates that particular cash has to be kept by a person and the amount cannot be withdrawn from the bank account when the assessee is having cash with it . It is purely the decision of the assessee as to when to withdraw the amount from the bank and in which quantity . No person can decide the same in the whole assessment order, the thrust of the assessing officer was that no person can withdraw the amount when he was having cash in hand and therefore, whatever cash was deposited in the bank account was considered as unexplained cash credit . The assessee arranged loans through cheques from various persons to start new business but which could not be commenced . The amounts were withdrawn for the purpose to acquire a small outlet on rent, stocks and other infrastructural utilities . Since the same could not materialize these amounts were deposited in the bank accounts, Later on the amount was returned to the persons from whom the loans were taken The details of the amounts taken as loan and partly returned back to various persons are enclosed as Annexure - 2 . All such loans were taken and returned through bank . The assessing officer accepted the said fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash and deposited in bank account as explained stating that it is likely to happen anywhere and not at all possible in Indian Society . On any family occasion, where all the relatives are present and gifts were given / exchanged, it is more likely that only the head of each family or only one member of such family would give away gift and not both the husband and wife in the family . The theory of marriage anniversary itself appears to be cooked up in view of the fact that the assessee did not show any expenditure - either in cash or by cheque - whatsoever incurred on hosting of the event in February 2010 . Thus, the list of relatives provided by the assessee to substantiate the receipt of gift is unreliable and hence rejected . In reply to the same, it is submitted that the assessing officer did not consider the correct facts . He ignored a very vital point that the financial condition of the assessee family was very bad and the marriage of the assessee was on the verge of divorce . It was submitted before the assessing officer that due to this reason only the gifts were given by the relatives and the marriage anniversary was arranged by the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gifts on marriage anniversary which was not done . Merely on his assumptions, he made additions in the hand of assessee . The assessing officer has mentioned that the amount withdrawn from bank were utilized / incurred for meeting unrecorded out of book various expenditure towards domestic / personal and social obligations, which is totally vague finding . There is no support to the said averment . The assessing officer could not point out anything which could prove that the amount withdrawn was utilized for any other purpose . While considering the addition, the telescoping is necessary . in the case of the assessee, the cash withdrawn is deposited in the other bank account Nothing has been brought on record what expenditure the assessee made out of books, what social obligations he had fulfilled from the cash withdrawn from the bank . Under these circumstances, when the financial position of the assessee was bad and the marriage was not going well, what social obligations would a person fulfill . Without appreciating all the circumstances, the assessing officer merely on assumption has stated that the assessee had utilized the cash withdrawals from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the donors of gifts . In response to the show cause notice the AR of the appellant has failed to submit complete explanation regarding the cash deposits in bank account and also failed to submit complete confirmations regarding the gift received from relatives . The AO has mentioned that the assessee has submitted confirmation in respect of 7 parties in which PAN was mentioned in 9 cases out of which 6 PAN were valid and others were invalid PAN numbers . No confirmation was submitted for the other parties . No evidence were submitted . Therefore, the AO has treated the entire cash of Rs . 28,35,400 /- deposited in these bank accounts as unexplained cash credit u / s . 68 and added back to the taxable income of the assessee . On the other hand the AR of the appellant has submitted that whatever cash deposit was made in the bank account was out of cash withdrawals from other bank accounts of the assessee . It was only circulation of money from one bank to other . The AO has rejected the claim of the assessee that it was not possible for a person to keep cash in hand and withdraw amount from the bank account without showing any further use of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PAN were found correct and in others the PAN were wrongly mentioned and in 16 cases no confirmation filed . The AO has also observed that there was no function for marriage anniversary of the assessee but was claimed that during the marriage function of relatives when there was no receipt was celebrated the amount of Rs . 9 lakhs was collected . However, no documentary evidence was submitted to prove the occasion of gift and source of donors with any confirmation . As per the provisions of section 68 of the I . T . Act the onus is always on the assessee to proved the source of cash deposit in its bank account / books of accounts . However, in the present case the AR of the appellant has failed to submit cogent explanation and documentary evidence to prove the source of cash deposits in these 3 bank accounts . To strengthen the view of the AO reliance is placed on the following decisions : ( 1 ) Roshan D . Hatti . v C ( T 107 ITR 938 ( SC )... ( 2 ) CIT v, Biju Patnaik 160 ITR 674 ( SC ). ( 3 ) C . Kant Co . v . CIT 126 ITR 63 ( Cal .) ( 4 ) Malabar Agricultural Co . Ltd vs . CIT 229 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Ld. CIT(A) and the first appellate authority has rightly held that assessee has three bank accounts which were maintained at Canara Bank; State Bank of Saurashtra; and Oriental Bank of Commerce. During the year under consideration, assessee had made cash deposit of ₹ 28,35,400/- in all these three bank accounts combined together. The Ld. CIT(A) has also correctly appreciated that the Ld. AR of the assessee could not submit any satisfactory reply and evidence except by telling that the cash deposit was made out of cash withdrawals from the other bank accounts, however, no reconciliation as nexus was provided against the withdrawal and cash deposited in the other bank accounts. The Ld. CIT(A) has correctly taken into consideration that the assessee has also said to have received as a gift a sum of ₹ 9 lakhs from various relatives on his marriage anniversary. It was noticed by CIT(A) that the AO has asked the assessee to prove the genuineness of the gift vis- -vis credit worthiness of the donors by giving their PAN as well as bank statements and source of their income, which assessee has failed to produce and could not submit any satisfactory reply and eviden ..... 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