TMI Blog2018 (2) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned AO as well as the CIT(A) have erred on facts as well as in law in sustaining the addition of ₹ 26,55,000/- even though the same is supported by cash flow statement and Balance sheet of which the Hon ble Delhi High Court has taken the cognizance. 2. The learned AO as well as the CIT(A) have proceeded on surmises and have not taken into consideration pragmatic view of the matter. It is therefore prayed that addition made may kindly be deleted. 3. The only grievance of the assessee in this appeal relates to the sustenance of addition of ₹ 26,55,000/- made by the AO on account of cash deposited in bank account. 4. Facts of the case in brief are that the assessee filed the return of income on 17.09.2011 declaring an income of ₹ 22,62,889/- which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) on the returned income. Later on, the case was selected for scrutiny. The AO during the course of assessment proceedings noticed that the assessee was not having any regular source of income and had earned income from short term capital gain on sale of immovable properties. He further observed that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his cash book and the deposits were made out of the said fund. It was further stated that the assessee had earned income from short term capital gain on sale of immovable properties. The AO again asked the assessee to furnish the source of cash reflected in cash book as opening balance and also to furnish tax audit report of any of the previous year, justifying the cash in cash book. In response, the assessee furnished the cash books for the assessment years 2008-09 to 2011-12 and also furnished final account of the proprietorship of the firm namely, M/s Trade India for the period from 01.04.2008 to 31.03.2010. The cash position of the assessee emerged as under: Sr. No. AY Cash in hand Total Cash in hand Individual capacity Prop. Firm 1 2008-09 (as on 3 1.03.2008) 46,03,075/- 797842/- ₹ 54,00,917/- 2 2009-10 (as on 3 1.03.2009) 53,48,524/- 1397198/- ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk Account No. 00697 d) Copy of ICICI Bank Account No. 00698 e) Copy of OBC Bank Account. f) Copy of HDFC Bank Account. g) In regard to ground of appeal, the only point involved is addition of ₹ 26,55,000/- deposited in the Bank, as detailed in the Assessment Order. Sources for this cash are clear from cash flow statement which is already attached as stated in para 3 supra. In support of this copy of Cash book for this year is also attached. h) It is settled law and as per accountancy principles where the deposits are as per cash flow statement, the same should be accepted. For this reliance is placed on Hon'ble Delhi High Court judgment reported at 291 ITR 36. i) It is, therefore, prayed that the above addition made by the Learned A.O. may kindly be deleted. 8. It was further submitted that the assessee was not having any business during the year under consideration as no order for work was received by him. It was stated that the assessee was preparing balance sheet on regular basis but the same was not filed with the return of income and that the cash deposits had been made out of the brought forward cash in hand which was refle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the conduct of the assessee was not coherent with the manner in which a prudent man will behave in similar circumstances. Therefore, by applying the test of human probabilities, it was difficult to accept that a person having six bank accounts, huge cash in hand for a long period and when he decided to deposit the same in the bank, did so in various installments on various dates in amounts ranging from ₹ 10,000/- to ₹ 5,00,000/-. The ld. CIT(A) also observed that the assessee claimed to have huge amounts of cash available with him at all times, still seen to withdraw meager amounts of cash through ATMs from his different bank accounts. In such a situation, evaluation of the evidence and decision making could be done based on the surrounding circumstances and by applying the test of human probabilities. The ld. CIT(A) confirmed the addition made by the AO by observing in paras 4.2.6 to 4.2.10 as under: 4.2.6 In the present case, the circumstances enumerated above relating to the regular use of various bank accounts by the appellant clearly establish that the appellant does not have any reason to keep large amounts of cash in hand. Moreover, the frequent cash wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y from ₹ 3 to ₹ 55 in a short term. The assessee lost its case before the Tribunal. Confirming the order of the Tribunal, the P H High Court held that the burden of proving that income is subject to tax is on the revenue but on the facts, to show that the transaction is genuine, burden is primarily on the assessee. As per the Court, the AO is to apply the test of human probabilities for deciding genuineness or otherwise of a particular transaction. Mere leading of the evidence that the transaction was genuine, cannot be conclusive. Any such evidence is required to be assessed by the AO in a reasonable way. Genuineness of the transaction can be rejected even if the assessee leads evidence which is not trust-worthy, even if the department does not lead any evidence on such an issue. 4.2.9 In addition to the 'reasonableness' factor as quoted by the P H High Court in the supra, there is also the 'rationale thinking' factor which helps in applying this test of human probabilities. In the present case, all the surrounding circumstances discussed in detail above lead me to believe that the appellant has failed to prove satisfactorily the sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * Charandas Haridas Another Vs CIT 39 ITR 202 (SC) * ACIT Vs Baldev Raj Charla Ors.n 121 TTJ 366 (Del.) * Mansuklal Ratanlal Jain (Chopra) Vs UOI 300 ITR 98 (MP) 13. It was further submitted that even the ld. CIT(A) failed to appreciate that once total cash deposited in the bank account aggregated to ₹ 41,75,900/- out of which, ₹ 15,20,900/- as per following details were treated as explained and accepted: Sr. No. Bank account Amount (Rs.) 1. OBC Bank 8,22,400 2. ICICI 3,73,000 3. ICICI 3,25,500 14. It was stated that the assessee had been regularly withdrawing cash and depositing cash year after year which claim had never been found to be otherwise and thus attribute to the contrary in the present year was apparently untenable. The reliance was placed on the following case laws: * Union of India Vs British India Corporation 268 ITR 481 (SC) * CIT Vs Jayantkumar Motichand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only on this basis that the assessee has not filed the Wealth Tax Returns, but nothing was brought on record to substantiate that the opening cash in hand available with the assessee as on 01.04.2010 was utilized elsewhere and not in depositing in the bank accounts. Moreover, the AO accepted deposits of ₹ 15,20,900/- out of the same cash in hand but doubted the deposits of ₹ 26,55,000/- without bringing any cogent material on record to substantiate that the opening cash in hand available with the assessee was used elsewhere and not utilized for depositing such amounts of ₹ 26,55,000/- in the bank account. 18. On a similar issue, the Hon ble Jurisdictional High Court in the case of CIT Vs Kulwant Rai (supra) held as under: 16. This cash flow statement furnished by the assessee was rejected by the Assessing Officer which is on the basis of suspicion that the assessee must have spent the amount for some other purposes. The orders of the Assessing Officer as well as the Commissioner of Income-tax are completely silent as to for what purpose the earlier withdrawals would have been spent. As per the cash book maintained by the assessee, a sum of ₹ 10,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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