TMI Blog2022 (8) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... in the bank. Merely because assessee did not explain the reasons for withdrawal and why not deposited full cash available in the cash book is not the proper reasons for the Assessing Officer to make addition. It is for the Assessing Officer to bring on record any contrary evidence that assessee has misused the funds available on the record. What is relevant is the source for the funds deposited in the bank account and assessee has proved that it has sufficient unutilised funds in the books. The availability of funds in the cash book supports the cash deposits in the bank. Therefore, Assessing Officer cannot go beyond the mandate unless he has contrary evidence. Therefore, we do not like to alter the findings of the Ld.CIT(A) and it is not proper for Assessing Officer to apply preponderance of probity in this case. In our view, the case law relied by the Ld. DR are not relevant for the present case. Therefore, the grounds raised by the revenue are dismissed. - ITA NO. 1517/MUM/2021 - - - Dated:- 21-7-2022 - Shri S. Rifaur Rahman, Hon'ble Accountant Member And Shri Sandeep Singh Karhail, Hon'ble Judicial Member For the Assessee : Shri Siddharth Kothari For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed the cash deposits made by the assessee in the bank. 5. Aggrieved assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A) assessee filed detailed submissions and Ld.CIT(A) after considering the detailed submissions of the assessee allowed the ground raised by the assessee with the observation that Assessing Officer made the addition on inference and presumptions, there is no material to hold that the money was not available with the assessee, and he observed as under: - 4.3 I have very carefully considered the matter. There is a deposit of a sum of Rs. 1,01,20,000/- in the bank account of the appellant with Dombivali Nagari Sahakari Bank after demonetization. A sum of Rs. 1,20,000/- was deposited on 23.11.2016 and a further sum of Rs. 1,00,00,000/- was deposited on 13.12.2016. The appellant had opening cash of Rs.20,98,301/- as on 01.04.2016. A sum of Rs. 200,00,000/- was withdrawn from the Dombivali Nagari Sahakari Bank through cheques on 30.04.2016. A further sum of Rs. 1,14,00,000/- was withdrawn through cheque on 23.08.2016. Thus, according to the appellant before demonetization, assessee had cash available of Rs. 3,34,98,301/-. The e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, there was any other purpose it was used for. Thus addition made on inferences and presumptions is bad in law and legally unsustainable. In fact there is no material to hold that this money was not available with the assessee. Such presumption also cannot form the basis for rejection of books. No specific defects have been pointed out in the accounts as maintained, there is no failure to produce records, nor any lacuna established in the method of accounting followed. Thus when no discrepancies have been pointed out in the books of account, rejection of the books of account u/s 145 of the Act is not as per law. As per section 68 of the Act, a sum credited in the books can be brought to tax when assesee has no explanation about nature and source or where such explanation is not satisfactory in the opinion of the Assessing Officer. As held by the Hon'ble Supreme Court in CIT vs Orissa Corporation Ltd 159 ITR 78, assesee has to prove identity, capacity and genuineness of the transaction done failing which the credit would be brought to tax as deemed income of the concerned year. In the instant case, the appellant has owned up the credit and thus identity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est of preponderance of human probability. iii) The importance of providing a valid explanation regarding the reasons for cash withdrawals from bank and holding huge amount of cash in hand becomes very relevant, when the findings of Hon'ble Supreme Court of India in the case of Sreelekha Banerjee v. CIT [1963] 49 ITR 112 (SC) reproduced in the decision of Jurisdictional Hon'ble High Court of Bombay in Narendra G Goradia v. CIT [1998] 234 ITR 571 is considered. The relevant findings are as under: (Page 107 of Assessee's Paperbook) ....In cases of high denomination notes, where the business and the state of accounts and dealings of the assessee justify a reasonable inference that he might have for convenience kept the whole or part of a particular sum in high denomination notes, the assessee prima facie discharges his initial burden when he proves the balance and that it might reasonably have been kept in high denomination notes... Keeping in mind the above findings, it is inferred that in the present case, the assessee has failed to provide reasons/explanation to justify that the high denomination notes of Rs. 500/1000 were kept in hand for business conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve that assessee had sufficient funds more than the amount deposited in the bank. Merely because assessee did not explain the reasons for withdrawal and why not deposited full cash available in the cash book is not the proper reasons for the Assessing Officer to make addition. It is for the Assessing Officer to bring on record any contrary evidence that assessee has misused the funds available on the record. What is relevant is the source for the funds deposited in the bank account and assessee has proved that it has sufficient unutilised funds in the books. The availability of funds in the cash book supports the cash deposits in the bank. Therefore, Assessing Officer cannot go beyond the mandate unless he has contrary evidence. Therefore, we do not like to alter the findings of the Ld.CIT(A) and it is not proper for Assessing Officer to apply preponderance of probity in this case. In our view, the case law relied by the Ld. DR are not relevant for the present case. Therefore, the grounds raised by the revenue are dismissed. 10. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open court on 21st July, 2022 - - TaxTMI - TMITax - Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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