9911796707
TMI Blog2023 (10) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... facts in upholding the initiation of proceedings under section 147 of the Act, and, completion of assessment under section 147(143(3)) of the Act without appreciating that the same were without jurisdiction and hence, deserve to be quashed as such. 2.1 That the Ld. CIT(A) has failed to appreciate that there was no specific relevant, reliable and tangible material on record to form a "reason to believe" that income of the appellant had escaped assessment and in view thereof the proceedings initiated are illegal, untenable and therefore unsustainable. 2.2 That in the absence of any valid approval obtained under section 151 of the Act, initiation of proceedings u/s. 147 of the Act and assessment framed u/s. 147(143(3)) of the Act are invalid and deserve to be quashed as such. 3. The Ld. Counsel for the assessee pressing into service above noted legal grounds submitted that the Ld. CIT(A) has erred both in law and on facts in upholding the initiation of proceedings u/s. 147 of the Act and completion of assessment u/s. 147/143(3) of the Act without appreciating that the same were without jurisdiction and hence, deserve to be quashed as such. The Ld. Counsel for the assessee furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k account cannot be mechanically or automatically assumed the income of the appellant without any further verification and examination by the AO and therefore, the reason to believe as noted by the AO in the satisfaction note is nothing, but reason to suspect which obviously resulted into inevitable invalidation of reassessment proceedings. Therefore, initiation of reassessment proceedings and impugned reassessment order may kindly be quashed. 3.2 Replying to the above, Ld. Sr. DR drawing our attention towards para no. 4.1.5 to 4.1.8 of the First Appellate order and submitted that Ld. CIT(A) has adjudicated this issue by considering the totality of facts and circumstances of the case which are quite correct and justified. The Ld. Sr. DR further submitted that the case of the appellant was reopened u/s. 147 of the Act on the basis of reasons summarised by the Ld. CIT(A) in para 4.1.5 which are self speaking and therefore, the AO had valid reason to believe that an amount minimum to the extent of Rs. 82,96,000/- has escaped assessment for the assessment year 2013-14. The Ld. Sr. DR also pointed out that a survey operation u/s. 133A of the Act was conducted and during the survey in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the rejoinder to the above submissions, Ld. Counsel for the assessee submitted that it is a clear case of reasons to suspect and not reason to believe, therefore AO did not assume valid jurisdiction to initiate the reassessment proceedings particularly when the proceedings are based on surmises, conjectures and suspicion therefore, the same have to be held as without jurisdiction and hence, deserved to be quashed. 3.4 On careful consideration of the above submissions, first of all, we find it necessary and appropriate to reproduce the reasons recorded by the AO for initiation of the reassessment proceedings for AY 2013-14 as follows:- 3.5 From the First Appellate order's relevant paras, we note that Ld. CIT(A) has dismissed the legal grounds of assessee with the following observations and findings:- "4.1.5 The case of the appellant was reopened u/s 147 of Income Tax Act on the basis of the following summarized reasons to believe of escapement of income: 1. It is prima facie evident that Ms. Ruby Singh has failed to explain the genuineness of these transactions (cash deposits in the bank) and the sum of Rs. 2,96,000/- credited in cash in her bank account as unexplained ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant to form a reasonable belief that the income has escaped assessment. 4.1.8 In my considered opinion, the reasons recorded were based on tangible material and were logical and adequate to form reasons to believe that income has escaped assessment. Subsequently, these reasons have resulted in addition on these grounds in the assessment order. On the basis of discussion above, I am of the considered opinion that the jurisdiction u/s 147 of Income Tax Act has been correctly invoked in this case and accordingly, the Ground Nos 1, 13 & 14 of the appeal are dismissed." 3.6 On careful consideration of rival submissions as noted above, reasons recorded by the AO for initiation of reassessment proceedings and conclusion drawn by the Ld. CIT(A), at the very outset, we note that the AO initiated the reassessment proceedings u/s. 148 of the Act on the basis of reasons as precisely summarised below:- (i) The assessee failed to explain the genuineness of transaction of cash deposit to her bank account and the amount of Rs. 2,96,000/- deposited in cash to her bank account remained unexplained. (ii) The bank statement of assessee further revealed that amount of Rs. 25 lacs and Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the source of unsecured loan, for acquiring the immovable property, was sourced by the creditors from cash deposits to their bank accounts. 3.7 On careful consideration of the above noted factual matrix, we observe that the AO had recorded the detailed reasons for reopening of assessment wherein the relevant documentary evidences including the documentary evidence found during the course of survey operation and statements recorded during and post survey operations were in possession of AO which was sufficient material indicating the escapement of assessment by the assessee. The AO also carried out the necessary analysis and examination of the said material, correlating the same with the income tax returns filed by the assessee as well as the statement recorded during the course of investigations. Therefore, the AO had sufficient reasons to believe that income had escaped assessment and therefore, he rightly invoked the action u/s. 147 of the Act for initiation of reassessment proceedings and for issuance of notice u/s. 148 of the Act and thus, he assumed valid jurisdiction to frame the reassessment order u/s. 147/143(3) of the Act, after proper analysis and evaluation of facts b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o dismissed. 4. The Ground no. 3 to 4.1 are reproduced as under:- "3. That the Ld. CIT(A) has also erred both in law and on facts in sustaining an addition of Rs,. 75,00,000/- representing sums received from Sh. Singh as unsecured loan and erroneously held as unexplained cash credit under section 68 of the Act. 3.1 That the Ld. CIT(A) has failed to appreciate that the unsecured loan aggregating to Rs. 75 lacs had been received through banking channels from indentifiable party who had duly confirmed the same that loan had been advanced by them to the appellant and as such, addition so made is invalid and untenable. 3.2 That the ld. CIT(A) has failed to appreciate that assessee has led complete documentary evidence in support of the unsecured loans so as to discharge the onus under section 68 of the Act and therefore, the addition sustained on subjective and arbitrary assumptions is contrary to law and hence untenable. 3.3 That the ld. CIT(A) has failed to appreciate the relevant evidence placed on record and drawn factually incorrect and legally unsustainable inferences based on irrelevant and extraneous consideration and thus, addition made is wholly unwarranted and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R also pointed out that AO has issued summons u/s. 131 of the Act to Sh. Ummed Singh on 5.11.2020 with the directions of personal deposition along with documents mentioned in the notice, but no response was received from. Sh. Ummed Singh inspite of the reminder to the summons issued. Ld. Sr. DR further submitted that AO in order to ascertain the genuineness of transaction and source considered the copy of bank statements and return of income of Sh. Singh for the year under consideration and observed that there was huge cash deposit before transfer of funds to the assessee by way of issuing cheques to the assessee amounting to Rs. 75 lacs which were credited in the bank account of the assessee. Ld. Sr DR also submitted that the return of income clearly reveals that no substantial income has been declared by the creditor Sh. Ummed Singh during three previous assessment years from the year under consideration and therefore, the creditworthiness of unsecured loan creditors could not be established and hence, the AO was validly empowered and entitled to invoke the provisions of section 68 of the Act in treating the unsecured loan as unexplained credit in the hands of the assessee and ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng channel as unsecured loan back to the assessee. Ld. Counsel for the assessee further pointed out that unless such fact is established by way of plausible and sustainable adverse material against the assessee, no addition u/s. 68 or any other provisions of the Act can be made in the hands of the assessee. 4.5 On careful consideration of the above submissions, first of all, from the relevant part of the Ld. First Appellate order, we note that AO made addition u/s. 68 amounting to Rs. 75 lacs with the following observations and findings:- "3.1 On perusal of the bank A/c statement of the assessee, it has been found that an amount of Rs. 25 Lakh and Rs. 50 Lakh has been received on transfer from joint Alc of Dalpat Singh and Singh (linked PAN- APUPS2619J), A/c No. 30780100001515 with Bank of Baroda and joint account of Singh and Harsh Kanwar (linked PAN- APUPS2619J A/c No. 51101307304 with State Bank of Bikaner & Jaipur respectively. Further perusal of these account showed that these amounts were sourced from cash deposits in these accounts. 3.2 Further, a notice was issued to the assessee regarding the huge transaction with Dalpat Singh and Singh and assessee complied in respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oan and the same view has been reflected from the side of Sh. Singh (Loan Giver). Further, assessee has not been made repayment of the said loan or part repayment of the same as per the reply dated 17.01.2022 against show cause issued on 10.1.2022. In view of the above facts, it is evident that fund for 'acquisition of the said property have been mobilized by depositing cash in joint alc of Dalpat Singh and Singh and forwarding of the same to the assessee. The nature of transaction from Dalpat Singh and Singh and the business relation of the same with assessee have not been explained by the assessee. Also, Ms Ruby Singh failed to explain the source and creditworthiness of funds for purchasing the said immovable property transactions. Hence, a show cause was issued to the assessee in respect of unsecured loan. 3.6 Further, the assessee complied to the show cause notice and on perusal of the reply, it is seen that the same is not tenable and therefore, the issue of unsecured loan remains unverified. Also, the unsecured loan provider entity i.e. Singh did not appear against summon u/s 131 along with the documents as required, so the genuineness of the transaction as well as cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not found commensurate with huge cash deposits in his bank account. Further, in the absence of compliance of summons issued to Sh. Singh the cash deposits remained unverified. 4.3.11 The Assessing Officer argued that it is irrational that why an entity would provide such a huge loan without any legal agreement and without charging any interest. Further, these loans are still outstanding and have not been repaid yet. In the opinion of Assessing Officer the appellant failed to explain the source and creditworthiness of the funds used for purchasing the immovable property. Based on the facts mentioned above the Assessing Officer has found his opinion that the unsecured loan of Rs. 75,00,000/- is nothing but unaccounted cash of the appellant which was routed through bank account for camouflaging the fund as unsecured loan at ultimately accounted the same in her books of account. Accordingly he treated the unsecured loan of amount Rs. 75,00,000/- as assessee's own funds and edited accordingly in her income as unaccounted cash credit u/s 68 of Income Tax Act. 4.3.12 The appellant contended that the loan received from Sh. Singh should be considered as genuine as he had provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo accounts mentioned in the confirmation. In view of the discrepancies mentioned above the confirmation filed above cannot be considered as genuine and correct. 4.3.16 The bank statement Account No. 30780100001515 of Sh. Dalpat Singh in Bank of Baroda have been analysed and it has been observed that an amount of cash of Rs. 25,00,000/- as deposited on 09.05.2012 and two cheques amounting to Rs. 10,00,000/- and Rs. 15,00,000/- were issued to Ms. Ruby Singh on 16.05.2012. The balance in the bank account prior to the receipt of cash and subsequent to issuance of cheque was Rs. 2,86,040/- only. Therefore, Sh. Dalpat Singh and/or Sh. Singh and/or their HUFs were not in the capacity to extend such a loan unless the cash of Rs. 25,00,000/- was deposited. The source of this cash remains unknown as Sh. Singh did not attend the proceedings under 131 of Income Tax Act before the Assessing Officer. 4.3.17 The bank statement of Sh. Singh in the bank account No. 51101307304 of State Bank of Bikaner & Jaipur have been analysed and it has been observed that prior to 08.05.2012 the balance in the bank account was Rs. 1,65,992/-. On 08.05.2012 there were cash deposits of Rs. 9,50,000/-, Rs. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement was prepared for this loan. v. There are several inconsistencies in the confirmation filed by Sh. Singh and the confirmation cannot be treated as correct. vi. All these loans were issued out of the amount of cash deposited in the bank accounts of Sh. Singh and others immediately prior to the issuance of cheques for loans. vii. Sh. Singh did not comply to the summons issued by the Assessing Officer and therefore, the source of cash deposit in their bank accounts remains unexplained. 4.3.21 During the course of appellate proceedings, the appellant submitted the following: "As already stated, the appellant was maintaining books of accounts of proprietorship firm Ms Moonage Films for which the balance sheet was prepared and filed along with the return of income was 139(1) of the Income Tax Act (Copy of income tax return, balance sheet and computation of income is enclosed for your kind perusal) wherein the current account of OBC Bank was part of the books of accounts and balance sheet. The assessee also maintained a savings bank account with Standard Chartered bank for which no books of accounts were maintained. The loan of Rs. 75,00,000/- was received in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the loan of Rs. 75,00,000/- was received in the saving bank account with the Standard Chartered Bank for which no books of account were maintained. The appellant conveyed that the loan of Rs. 75,00,000/- was personal in nature and was not part of books of accounts and hence is not covered u/s 68 of the Income Tax Act. On perusal of grounds of appeal it is noted that this issue was not included in any of the grounds submitted by the appellant in the appeal and therefore is not required to be adjudicated. However, it is noted that the assessment was made u/s 147 of Income Tax Act and a notice u/s 148 was issued to the appellant for filing of return of income. In response to the notice u/s 148 the appellant filed return of income a copy of which was made available during the course of appellate proceedings. 4.3.23 On perusal of the return of income it is noted that the Part A-BS heading mentions "Balance sheet as on 31S day of March 2013 OF THE PROPRITORY BUISNESS OR PROFESSION (fill items below in case where regular books of accounts are maintained, otherwise fill item 6)". Following salient points were noted on perusal of this part: 1. Fixed assets a. Gross : Block &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppropriate to accept that entries in Standard Chartered Bank are not recorded in the books of accounts of the appellant. 4.3.25 This is a case where the regular books of accounts are being maintained by the appellant. On the basis of the observations above it is proved that the appellant is maintained regular books of accounts and all her bank accounts, assets have been included in those books of accounts and the same have found manifestation in fixed assets, balance with bank etc. Therefore, the appellant's contention that the loan was not part of books of account and hence not covered u/s 68 of the Income Tax Act is incorrect and devoid of any merit. As pointed out earlier this was not a ground of appeal taken by the appellant, which is required to be adjudicated and argument also fails on merits. The return of income duly verified by the appellant and filed in response to notice u/s 148 is the very basis of assessment and that highlights that the appellant is maintaining regular books of accounts and which contains the loan transaction and all the bank accounts of the appellant. Accordingly, the argument of the appellant that the loan was not a part of books of account an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsecured loan and cash deposit to the bank account of the assessee. The AO asked the assessee to explain the source of unsecured loan received from Sh. Singh and assessee filed the copies of her bank account, copy of bank statement of joint account held by Sh. Ummed Singh and Sh. Dalpat Singh and copy of income tax returns of Creditor, Sh. Ummed Singh. The AO made the addition u/s. 68 of the Act by observing that the assessee could not establish the creditworthiness of creditors and genuineness of transaction as there was huge cash deposit to the bank account of creditor Sh. Ummed Singh immediately before transmission of amount / issuance of cheque in favour of the assessee, therefore, the source of unsecured loan was cash deposit to the bank account of the loan creditor and the AO recorded a final finding that the unsecured loan of Rs. 75 lacs was nothing but unaccounted cash of the assessee which was routed through banking account for camouflaging the funds as unsecured loan and ultimately accounted the same in her bank account. After observing as above, the AO concluded that unsecured loan of Rs. 75 lacs is assessee's own funds and accordingly added the same to the income of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the source of the said cash remains unknown and unexplained as Sh. Ummed Singh did not attend the proceedings in response to notice u/s. 131 of the Act before the AO. The Ld. CIT(A) further observed that the bank statement of Sh. Umed Singh No. XXXXX7304 in the Bank of Bikaner and Jaipur reveals that prior to 08.05.2012 balance in the bank was Rs. 1,65,992/- on 08.05.2012 there was cash deposits of Rs. 50 lacs in 06 installments and unsecured loan amounting to Rs. 50 lacs was given to assessee through cheque from 14.05.2012 to 16.05.2012. The Ld. CIT(A) also observed from the bank statement of the said bank account of Sh. Ummed Singh that the balance in the bank accounts subsequent to the issuance of cheques in favour of the assessee was again reduced to Rs. 1,65,992/-. In view of this factual finding, Ld. CIT(A) rightly concluded that the source of cash remains unexplained and unknown as Sh. Ummed Singh did not attend the proceedings u/s. 131 of the Act before the AO. Ld. CIT(A) also noted that there was no unsecured loan agreement between the assessee and Sh. Ummed Singh and the loan was given without charging any interest. The Ld. Counsel for the assessee on being specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of creditor, copy of income tax return and confirmation issued by Sh. Ummed Singh along with the copy of assessee's bank account in which unsecured loan was received. But merely filing said documentary evidence is not sufficient to discharge the onus as per mandate of section 68 of the Act particularly when there was factum of cash deposit to the bank account of creditors immediately before issuance of cheques to the assessee as unsecured loan. The Ld. CIT(A) has noted a detailed and categorical finding destroying the factual correctness of confirmation issued by Sh. Ummed Singh and his capacity to extend the unsecured loan amounting to Rs. 75 lacs to the assessee. In view of above observations, we hold that the other hand, the AO and Ld. CIT(A) recorded categorical finding that the assessee failed to explain and prove the creditworthiness of loan creditor and genuineness of transaction of unsecured loan received by her for purchase of immovable property. Therefore, we reach to a logical conclusion that AO was quite correct and justified in treating the unsecured loan as unexplained cash credit in the hands of the assessee while invoking the provisions of section 68 of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the beginning of financial period on 1.4.2012 and the cash in hand noted by the AO in the reason amounting to Rs. 2,56,942/- was cash in hand at the end of year on 31.3.2012, thus the same was shown as closing cash in hand in the return for AY 2013-14. The assessee herself has shown closing cash balance of Rs. 2,56,942/- in the cash in hand factual tabulation reproduced by the AO in the assessment at page 6 top para. Therefore, explanation of assessee towards source of cash deposit was rightly dismissed by the AO being factually incorrect and thus untenable. 5.3 The Sr. DR further submitted that there were cash deposits in the Standard Chartered Bank of assessee during month of April, May and July, 2012 totalling to Rs. 2,05,000/-. Ld. Sr. DR further submitted that the AO issued show cause notice to the assessee and in compliance to the same, assessee filed the documentary evidence, but the same was not found to be plausible and sustainable by the AO as per the issues raised in the show cause notice and thus the source of cash deposit was remained unverified and thus unexplained. The Ld. Sr. DR further submitted that the assessee has furnished inaccurate particulars in the subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above submission, it can be seen from the ROI of A.Y. 2012-13 that the opening cash in hand with assessee was NIL for the A.Y. 2013-14. The assessee has submitted two different cash book for personal account and for the proprietorship. The same cannot be relied as there cannot be two separate cash book for the year. iii) Further, on perusal of Bank a/c statement, reply dated 26.11.2021 and Month wise cash flow, it is observed that assessee paid Rs. 18,900/- in cash on 1.4.2012 and Rs. 2,10,000/- on 16.4.2012 as part payment for purchase of immovable property. Moreover, assessee had the total cash in hand upto July was Rs. 50,000/-(opening cash in hand Rs. NIL/- and cash withdrawal of Rs. 50,000/-) whereas the total cash paid by the assessee upto July was Rs. 2,28,900. How can assessee deposit Rs. 2,05,000/- upto July whereas assessee has made more expanse in cash than available? The excerpt of reply dated 26.11.2021 is reproduced below: Therefore, it is clear that assessee had excess cash which was out of books and same was deposited in Standard Chartered Bank (52910029713). 4.3. The assessee has failed to submit the justification for the cash deposit and source of cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Appellate order, we note that Ld. CIT(A) upheld the said addition with the following factual findings and conclusions :- "4.4.6 During the assessment proceedings, the Assessing Officer noted that the appellant has deposited cash of amount of Rs. 2,96,000/- in Standard Chartered Bank. The appellant explained that the cash deposit was from the opening cash in hand as on 01.04.2012 belonging to M/s Moonage account (Rs. 40,322/-) and to Ruby Singh's personal account (Rs. 5,30,202/-). The Assessing Officer found that the appellant had declared cash in hand at Nil as on 31.03.2012 as per her return of income of AY 2012-13. The closing cash in hand for AY 2012-13 would be the opening cash in hand for FY 2012-13. The assessee failed to submit the justification for the cash deposit and the source of cash during the year. From the cash book submitted by the appellant it cannot be concluded as to how the appellant has incurred a personal and other house hold expenses. The Assessing Officer therefore, considered the bank withdrawals and deposits upto July 2012 and made an addition of cash deposit of amount Rs. 2,05,000/- as unaccounted cash credit u/s 68 of Income Tax Act. 4.4.7 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank account during the year. 5. On perusal of the details of expenditure it is noted that an amount of Rs. 18,900/- was paid in cash for a stamp duty on 01.04.2012 and a payment to seller in cash was made of an amount of Rs. 2,10,000/- on 16.04.2012. Therefore, if at all the contention of the appellant of opening personal cash is considered even then most of such cash have been exhausted in making these payments. 6. There is no justification of making monthly deposits every month in bank even out of the personal cash in hand, if any. 7. From the accounts submitted by the appellant it cannot be concluded as to how the appellant has incurred a personal and other house hold expenses during the year. 4.4.8 In view of the above, I am of the considered opinion that the source of cash deposited in the bank account upto the month of July 2012amounting to Rs. 2,05,000/- remains unexplained and there is no reason to interfere with the order of the Assessing Officer. Accordingly, the addition of cash deposit of amount of Rs. 2,05,000/- made to the total income of the appellant at unexplained cash credit u/s 68 of Income Tax Act is upheld. Accordingly, Ground Nos. 9 to 12 of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on proprietorship concern a/c should be different and then the accounting adopted by the assessee was not in accordance with AS-1 which requires true and fair disclosure. The AO rightly took opening cash in hand on 1.4.2012 as NIL which is in confirmatory with the return of income for AY 2012-13. Therefore, the cash in hand shown by the assessee, in the statement of affairs submitted before the AO, of Rs. 40,322/- of personal account and Rs. 5,30,202/- was rightly disbelieved by the AO. The AO has made addition of Rs. 2,05,000/- picking up the cash deposit to the bank account of assessee in July, 2012 by observing that the assessee paid Rs. 18,900/- in cash on 1.3.2012 and Rs. 2,10,000/- on 16.4.2012 as part payment for purchase of immovable property and upto July, 2012 the assessee had availability of Rs. 50,000/- only out of withdrawal from the bank account whereas the total cash paid by assessee for purchase of property was Rs. 2,28,900 (Rs. 2,10,000 + Rs. 18,900) and then how assessee could have deposited Rs. 2,05,000/- upto to July, 2012 particularly when the assessee has made more expenses in cash than available with her. On logical evaluation of Cash Flow Statement of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said notice u/s. 148, therefore, our conclusion drawn for assessment year 2013-14 (supra) would apply mutatis mutandis to the identical and similar grounds no. 2 to 2.2 of assessee in other 06 appeals. Consequently, grounds no. 2 to 2.2 of the assessee in other 06 appeals for AY 2014-15 to 2019-20 are also dismissed. Ground no. 3 and 3.1 of assessee for AY 2014-15 to 2017-18 7. Ground no. 3 and 3.1 of assessee in other four appeals pertaining to AY 2014-15 to 2017-18. In the beginning of hearing, the Ld. Representatives of both the sides, agreed and thus submitted that except quantum of additions, the facts and circumstances, in all the said four appeals, on the issue of cash deposit to the bank account of the assessee. Therefore, our above conclusion drawn for assessment year 2013-14 for Ground no. 4 and 4.1 would apply mutatis mutandis to the ground no. 3 and 3.1 of the assessee in other 06 appeals. Accordingly, addition made by the AO u/s. 68 of the Act on account of cash deposit to the bank account of the assessee in the appeals for AYrs 2014-15 to 2017-18 are also confirmed. Accordingly, the ground no. 3 to 3.1 of the assessee in said four appeals from assessment years 2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat salary received from M/s Arihant Associates during the year was declared in the return of income as salary income. He further stated that assessee took employment, with M/s Arihant Associates and its Partner Shri Chetan Shukla, as Public Relation Officer (PRO) and the job profile was to introduce the professionals of New Delhi, in the field of sale and purchase of old commercial vehicles, to M/s Arihant Associates and its partners. The Ld. Counsel for the assessee also submitted that assessee has been well connected in the business of social circles, of New Delhi, therefore, she was taking salary of Rs. 12 lacs. She was paid Rs. 10,00,800/- in FY 2017-18; Rs. 10,80,000/- in Financial year 2018-19 pertaining to assessment year 2018-19 and 2019-20. The Ld. Counsel for the assessee also submitted that in the statements recorded by Investigation Wing, Shri Chetan Shukla partner of M/s Arihant Associates clearly stated that employee-employer relationship was existing between the assessee and M/s Arihant Associates and the assessee introduced certain professionals of New Delhi in the field of sale and purchase of old commercial vehicles to the said firm, therefore, assessee provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the assessee had only declared Rs. 10,00,800/- as salary income in her income tax return for AY 2018- 19, whereas there was credit of Rs. 11,40,000/- to her bank account. Therefore, the AO was quite correct and justified in making further addition of remaining amount of Rs. 1,39,200/- in the hands of the assessee as unexplained credit u/s. 68 r.w.s. 115BBE of the Act. He further submitted that from the assessee had only The ld. Sr. DR supported the final conclusion of the AO and lastly submitted that the AO also rightly noted that since the assessee herself has offered amount of Rs. 10,00,800/- for taxation as salary income at the normal tax rate, but being not satisfied with the explanation of assessee, the AO concluded that the said unexplained amount was to be taxed at higher rate u/s. 115BBE of the Act. 8.3 Placing rejoinder to the above, Ld. Counsel for the assessee submitted that though the assessee was not having any expertise in line of business undertaken by the said firm M/s Arihant Associates, but assessee was not expecting to procure purchase and sale of old commercial vehicles, but the duty given by the said firm to the assessee was to introduce M/s Arihant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 1,39,200 Ay 2019-20 10,09,800 12,20,000 2,19,200 4.3 It can be clearly seen from the above tables, that M/s Arihant Associates has claimed Rs. 4,19,860/- as compensation to employees (In its financials) during the year under consideration whereas claiming to have paid Rs. 12,20,000/- as salary to Ms. Ruby Singh. Moreover, there exist no employer-employee relationship between both the parties. Ms. Ruby Singh's line of business is totally unrelated with line of business of M/s Arihant Associates. From the above discussion, it is concluded that all these were mere bogus entries on the following account. i) M/s Arihant Associates transferred Rs. 32,60,000/- to Ms. Ruby Singh whereas Ms. Ruby Singh claims that Rs. 20,80,000 has been transferred to her as salary. ii) M/s Arihant Associates is based at Lucknow and Ms. Ruby Singh is based at Delhi. iii) M/s Arihant Associates and Ms. Ruby Singh are not in similar line of business. Ms. Ruby Singh is in business of film productions whereas M/s Arihant Associates deals in second hand mother vehicles. iv) There is no employer-employee agreement between M/s Arihant Associates and Ms. Ruby Singh. v) Payments made to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has considered this amount as out of pocket expenses which cannot be considered as correct in view of the lack of existence of employer employee relationship between M/s Arihant Associates and the appellant. Accordingly, I am of the considered opinion that the amount of Rs. 1,39,200/- cannot be out of pocket expenses against the employment and are in the nature of unexplained cash credits. The Assessing Officer has correctly added the same as unexplained cash credit us 68 r.w.s. 115BBE and I do not find any justification to interfere with the order of the Assessing Officer. The addition of Rs. 1,39,200/- as unexplained cash credit u/s 68 r.w.s 115BBE of the Income Tax Act made by the Assessing Officer is therefore correct and the same is upheld. Accordingly, Ground Nos. 6 to 6.5 of appeal are dismissed." 8.6 On careful consideration of the above submissions, basis taken by the AO for making the addition and observations of the Ld. CIT(A) in confirming the addition, we note that the AO has rightly made the addition in the hands of the assessee doubting the genuineness of the transaction of salary received from M/s Arihant Associates as the said firm was in the line of purchase a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold the same. Accordingly, the grounds no. 3, 3.1 and 4 of the assessee are dismissed. Ground no. 3, 3.1 and 4 of assessee for AY 2019-20 8.7 Since except amount in dispute, the facts and circumstances of assessment year 2019-20 are identical and similar to the facts and circumstances of AY 2018-19 on the issue of alleged unexplained salary received by the assessee and unexplained cash deposits to her bank account. Therefore, our conclusion recorded for AY 2018-19 in the earlier part of this order (supra), would apply mutatis mutandis to the ground no. 3. 3.1 and 4 of assessee for assessment year 2019-20. Consequently, we uphold the conclusion of the AO for AY 2019-20 wherein he made addition of Rs. 1,40,000/- to the income of the assessee u/s. 68 of the Act and ordered to change higher rate u/s. 115BBE of the Act on the total amount of Rs. 12,20,000/-. Accordingly, the ground no. 3, 3.1 and 4 of the assessee for AY 2019-20 are also dismissed by upholding conclusion drawn by the AO and upheld by the Ld. CIT(A) in taxing the salary income at higher tax rate u/s. 115BBE of the Act. Ground no. 5 & 6 of assessee for AY 2018-19 9. Apropos Ground no. 5 & 6 for AY 2018-19. Ld. Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iating the mandatory requirement of section 68 of the Act, therefore, the addition may kindly be directed to be deleted. 9.2 Replying to the above, Sr. DR drawing our attention towards the orders of the authorities below particularly para no. 3.8 of the assessment order submitted that the assessee has furnished inaccurate particulars in the income tax returns as the cash in hand shown in the statement are different from the cash in hand shown in the income tax returns. Ld. Sr. DR submitted that assessee is a sole proprietor of M/s Moonage Films, therefore, how can be there two cash in hand for single PAN No. The Ld. Sr. DR vehemently pointed out that since the assessee has failed to reconcile the opening cash in hand vis-à-vis their income tax returns of assessee and assessee has not submitted any agreement and confirmation from the tenant from whom cash rent was received, therefore, explanation of assessee was rightly dismissed by the AO before making the addition. The Ld. Sr. DR finally submitted that AO and Ld. CIT(A) was quite correct and justified in holding that cash deposit of Rs. 12.40 lacs was unaccounted cash available with the assessee earned during the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ode. iii) Assessee failed to furnish why cash withdrawals were continuously made from April, 2017 to March 2018 and why the purpose has not been realised. In absence of documentary evidences regarding the purpose of cash withdrawal, it is construed and firmly believed that cash withdrawal has been utilised and the cash deposit was not the part of cash withdrawal. Also, assessee received rent about of Rs. 45000/- in the year under consideration for the rent agreement carried out in FY 2016-17 but mode of received was ambiguous. Further, assessee failed to furnish the rent agreement carried out in FY 2017-18 but she claimed the rent received in cash in the year under consideration. Curiously, the attempt of assessee to make the cash deposit genuine in disguise of rent is not acceptable in absence of documentary evidence and the cash deposit is considered as unexplained and out of books. iv) The assessee has failed to explain the source of the cash deposit in the bank account. The personal cash ledger of the assessee cannot be relied due to discrepancies in the amounts. The same is also not disclosed in the return of income of the assessee. Further, financials of Ms. Ruby Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the relevant financial year. The explanation and justification submitted by the appellant was examined and verified by the Ld. CIT(A) on the touch stone of observations made by the AO in the assessment order. Ld. CIT(A) after appreciating and evaluating the explanation and stand of assesee recorded a categorical finding that the explanation submitted by the appellant was not found to be acceptable as in the month of June, 2017, the appellant deposited amount of Rs. 8 lacs whereas the prior withdrawal from the bank were only Rs. 6,36,800/-. He also observed that the withdrawals from the current bank account were being made for certain purpose of business and not for only to be re-deposited in the bank. It was further observed by the Ld. CIT(A) that the withdrawal have been made in the current account or saving account almost every month and were allegedly redeposited subsequently in the months of June, 2017 and November, 2017, but he found himself unable to understand as to why the appellant has been making withdrawal from the bank accounts almost every month and depositing the cash in bank accounts after sometime. 9.8 The Ld. CIT(A) after deeply evaluating the facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee from the orders of the authorities below, we are unable to see any such addition neither from the assessment order nor from the first appellate order. Therefore, the said alternative ground of the assessee is baseless being not discernible from the orders of the authorities below. It is also relevant to mention that the provision of section 115BBE of the Act charging the higher rate of tax is applicable from AY 2017-18 onwards, and the appeal in hand is pertaining to assessment year 2018-19, wherein addition u/s. 68 of the Act has been made to the income of the assessee, therefore, the authorities below are eligible to invoke the said provision as per mandate and facts & circumstances of the issue. Therefore, ground no. 6 of assessee being misconceived and based on non-existing facts is also dismissed. Ground no. 5 & 6 of assessee for AY 2019-20 10. Apropos Ground no. 5 and 6 in assessee's appeal for assessment year 2019-20. Ld. Counsel for the assessee submitted that Ld. CIT(A) has erred in law and on facts in upholding the addition of Rs. 20 lacs on account of alleged unexplained cash credit u/s. 68 of the Act read with section 115BBE of the Act. Ld. Counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee disbelieving the explanation of the assessee i.e. impugned cash deposits in the bank account of the assessee which was accrued to the assessee out of opening cash in hand in the concern M/s Moonage Films as well as personal cash in hand available with the assessee, cash rental income and withdrawal from the bank, therefore, the authorities below have kept aside the said sustainable and glaring explanation supported by the documentary evidence such as bank statement, cash flow statement etc., therefore, the orders of the authorities below may kindly be set aside and AO may kindly be directed to delete the addition in toto. 10.3 On careful consideration of the above submissions, first of all, from the relevant part of the first appellate order, we note that the action of the AO was triggered when he found that the assessee was running a sole proprietorship concern namely M/s Moonage Films and found that the assessee was maintaining 'four' bank accounts. The AO from the bank statement of assessee and her firm noted that during the financial year 2018-19 pertaining to present assessment year 2019-20, assessee had deposited total cash of Rs. 20 lacs in the said four banks accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawals were continuously made from April to August. In absence of documentary evidences regarding the purpose of cash withdrawals, it is construed and firmly believed that cash withdrawal has been utilized and the case deposit was not the part of cash withdrawal. Also, assessee also failed to furnish the details of month wise rental income received in cash. vi) Assessee has made cash deposit of Rs. 12,40,000/- from November, 2018 to February, 2019 whereas the cash withdrawal was only Rs. 40,000/- and no source of cash income has been seen of assessee for the same period. From the cash book submitted by the assessee, it cannot be concluded as how assessee has incurred her personal and other household expenses and also the same does not endorse the cash withdrawal and deposit pattern. 10.3.1 After evaluation of explanation and documentary evidence of the assesse, the AO drawn conclusions that assessee has furnished inaccurate particulars in her income tax return as cash in hand shown in the statement was found different from the cash in hand shown in the income tax return. The AO also noted that assessee and her proprietorship concern M/s Monnage Films are one and hence, there c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 12793103 3. Current assets, Loans & Advances a. Current assets iii. Cash and Bank balances A. Cash in hand 68698 B. Balance with banks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument of the appellant that the cash and other deposits in saving account in Standard Chartered Bank and other bank accounts was not a part of books of account and hence not covered us 68 of Income Tax Act is devoid of merit and therefore rejected. 4.2.10 The month-wise cash flow statement depicting cash deposited and withdrawal from the bank as submitted by the appellant during the course of appellate proceedings is as under: 4.2.11 The Assessing Officer made the addition of an amount of Rs. 20,00,000/- as unaccounted cash of the appellant which was not disclosed as income. The cash deposits amounting to Rs. 20,00,000/- were added to the income of the appellant as unaccounted cash credits u/s 68 of the Income Tax Act. The appellant tried to justify the source of this cash as the personal cash in hand of the appellant at the beginning of the year and the rental receipts in cash during the year and the cash withdrawals from the bank. The justification submitted by the appellant does not appear to be acceptable in view of the following arguments: 1. The opening cash in hand figure of personal account of Ms. Ruby Singh is not supported by any documentary evidence. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cash withdrawals made from the bank accounts of the appellant. It is observed that during the year, the appellant deposited an amount of Rs. 18,91,000/-, whereas the withdrawal from banks were only Rs. 9,63,000/-. Therefore, prima face the deposits cannot be explained by cash withdrawals. Further, the withdrawals from the current bank account are being made for certain purpose of been made in the current account or saving accounts almost every month and were re-deposited in September, November, December, January and February. It has not understood as to why the appellant has been making withdrawals from the bank accounts almost every month and depositing the cash in bank accounts after sometime. As a prudent businessmen, it is expected that withdrawals could be made after exhausting the existing cash in hand and therefore, the cash withdrew over the months cannot be said to be available for re-depositing in the bank. The withdrawals of Rs.1,00,000 in April 2018, Rs.2,08,000/- in May, Rs.1,05,000/- in May, Rs.3,50,000/- in July and Rs. 1,10,000/- in August are being made for certain utilisation for business purposes and not for accumulating the same for re-deposition in the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit u/s 68 r.w.s 115BBE of Income Tax Act is hereby confirmed. However, there is a discrepancy in the figure of addition of cash deposit (Rs. 20,00,000/-) and the details of cash deposit (Rs. 18,91,000/-) submitted during the assessment and appellate proceedings. The Assessing Officer can carry out necessary verification and the amount of addition may be corrected, if required after verification from records. Accordingly, Ground Nos. 2, 3, 4 & 5 of appeal are dismissed. 10.4 On careful consideration of the rival submissions, action of the AO and conclusions recorded by the Ld. CIT(A) while upholding the addition, we note that Ld. CIT(A) firstly considered the allegations and the basis taken by the AO for making the addition and thereafter reproduced the monthwise cash flow statement showing cash deposit and withdrawal from the bank accounts of the assessee which was submitted by the assessee before the AO during the course of appellate proceedings. Thereafter, the Ld. CIT(A) noted that the opening cash in hand of personal account of Ms. Ruby Singh was not supported by the documentary evidence and if there was any cash in hand the same was exhausted or spent in the property and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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