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TMI Blog2024 (5) TMI 1409X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961. 3. The Assessing Officer has failed to appreciate the fact that the cash deposits were of the amounts withdrawn by the Appellant from the bank account at an earlier date and incomes reflected in books of accounts and offered to tax. Such amounts were re-deposited due to the policy of demonetization. 4. The learned Assessing Officer has failed to appreciate that the money deposited has been recorded in the books of the Appellant and the source of such deposit was duly explained and accordingly, has erred in invoking section 69A of the Act. 5. On facts and circumstances of the case and law applicable, the addition under section 69A is bad in law and is liable to be quashed in entirety. Interest u/s. 234B and 234D 6. On facts and circumstances of the case and law applicable, consequential levy of interest under sections 234B and 234C on the tax liability on adjustment under appeal, is incorrect. The learned AO has erred in levying additional interest under sections 234B and 234C of the Act amounting to Rs. 6,08,814 and the appellant denies its liability to pay such interest." 2. Ground No.1 is too general in nature, which does not require any adjudication. 3. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the cash deposited during demonetization period. The assessee has not been able to produce any evidence with respect to rental deposits and rent having been received in cash. However, ld. CIT(A) placed reliance on the judgement of Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More reported in 82 ITR 540 and also relied on the judgement in the case of Sumati Dayal Vs. CIT reported in 214 ITR 801 by observing that the conduct of the assessee and the material on record, an inference could be reasonably drawn that the assessee's explanation as source of cash deposit during the demonetization period is a part of cash withdrawal is afterthought and an attempt to explain the source of cash deposit during demonetization and the assessee only deposited unexplained cash to bank account due to demonetization. Against this, assessee is in appeal before us. 3.3 The ld. A.R. submitted that assessee has been earning rental income from house property and consistently and continuously keeping huge amount of cash in hand so as to meet the unforeseen maintenance cost to be incurred by the assessee and this has been evidenced by the opening cash balance on hand of Rs. 33,07,869/- as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri Krishnamurthy Narayana Murthy Vs. ITO in ITA No.2559/Bang/2019 dated 27.4.2020, wherein held as follows: "6. I have heard the rival submissions and perused the material on record. In this case, the Assessing Officer found that the assessee has deposited a sum of Rs. 1,06,19,947 in the saving bank account with ICICI Bank. The assessee was able to give explanation to the source of an amount of Rs. 86,27,558, however, the assessee has not led any evidence before the A.O. with regard to the balance amount of Rs. 19,92,389. Before me, the learned AR submitted that proper opportunity has not been granted to the assessee to explain the source of deposit with the bank. Further, it was submitted that the A.O. has not agreed with the opening balance of cash available to deposit in the bank and the earlier withdrawals to redeposit in the saving bank account. The assessee filed day to day cash in hand position before me and submitted that earlier withdrawals were available with the assessee to deposit that amount and due credit to be given to such earlier withdrawals as available to deposit with bank account. According to the learned DR, the earlier withdrawals made by the assessee shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awals from the bank account might have been used to pay the on money for purchase of that property. Even otherwise, he submitted that the earlier withdrawals have been made to meet particular expenditure and not for redepositing with the bank account. The assessee's main plea is that the assessee had withdrawn huge amount from the said bank account on various dates and kept the said amount idle with the assessee and redeposited the same into the bank account. To this effect, the assessee has furnished the statement showing withdrawals and cash in hands on various dates. While completing the assessment, the Assessing Officer give credit to only Rs. 10 lakh and the balance amount, he disbelieved and treated the said amount of Rs. 17,45,300 as unexplained income of the assessee. The Assessing Officer has not accepted the contention of the assessee, since the assessee has not filed any fund flow position of the assessee. However, the Assessing Officer did not doubted withdrawals of cash on various dates. The Assessing Officer has also no evidence to prove that the assessee has made withdrawals on various dates for any other purposes. There is also no evidence that the assessee has used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. However, the fact is that the assessee has withdrawn cash of Rs. 50 lakhs on 31/12/2013. There is no evidence brought on record to show that these withdrawals have been used by the assessee or deposited by the assessee in any other Bank. It cannot be said that these withdrawals made from the Bank account were used for household expenses or any other investment. In such circumstances, it cannot be disputed that the withdrawals have been used for redeposit into the Bank account of the assessee. In other words, the Assessing Officer has not disputed the existence of Bank accounts and withdrawal from the same. The earlier withdrawal of Rs. 50 lakhs from the Bank account on 31/12/2013 or withdrawal from various Bank accounts on different dates is not disputed. The assessee might have kept the cash withdrawals with him and redeposited into various Bank accounts on a later date. It is quite possible that the assessee might have withdrawn the cash for some purpose but the same remains to be utilized for one reason or the other and the cash continues to be remained with him. Sometimes it may also happen that the cash withdrawals from Bank accounts continues to remain as cash balance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the bank account is preceded by withdrawal of money from the very same bank account, then the source of funds is prima facie demonstrated or explained by the Assessee. The Honourable Karnataka High Court in the case of S.R. Ventakaratnam Vs CIT, Karnataka-I & Others 127 ITR 807 has held that once the Assessee discloses the source as having come from the withdrawals made on a given date from a given bank, it was not open to the revenue to examine as to what the Assessee did with that money and cannot chose to disbelieve the plea of the Assessee merely on the surmise that it would not be probable for the Assessee to keep the money unutilized. The decision of the Hon'ble Karnataka High Court supports the plea of the assessee. It is seen that the cash deposits in the bank account are preceded by withdrawal from the very same bank account. I am of the view that the ratio laid down in the aforesaid judgment will apply to the facts of the present case. If the revenue wants to disbelieve the plea of the Assessee then it must show that the previous withdrawal of cash would not have been available with the Assessee on the date of deposit of cash in the bank account. The AO and CIT(A) hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to get due credit towards opening cash balance of Rs. 18,96,800/- on earlier occasion withdrawal from account of Rs. 89,42,200/- which works out to Rs. 1,08,39,600/- i.e. more than the amount deposited into bank account of Rs. 1,07,95,803/- and deleted the addition. 4.5 Further, the Coordinate Bench of Bangalore (SMC) in the case of Shri Kamal Kothari in ITA No.741/Bang/2023 dated 23.11.2023 wherein held as under: 7. I have heard the rival submissions and perused the material on record. Assessee is residing in Channapatna, a small down. The reason stated for withdrawal of huge cash was to purchase agricultural land near Channapatna and since the purchase did not materialize, cash withdrawn was redeposited during the demonetization period. The reason for withdrawal and redeposit of cash in learned AR's written submissions are reproduced below for ready reference: "11. The appellant is in Channapatna. a small town. The appellant was interested in buying of agricultural lands in and near Channapatna. The agricultural land are owned by agriculturist who are rural based. Moreover, in villages, banking facilities are not available. To buy lands one needs to visit the location o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation. This statement of the AO is without any evidence and is merely based on conjectures and surmises. A bold allegation without any proof cannot be basis for any allegation. There is nothing in law which prohibits holding of cash in hand. The various reasons of the AO for making the addition under section 69A of the Act are extracted supra (refer para 3 above). However, the AO has failed to consider the following facts: a) That immediately after demonetisation period there was heavy rush in banks, the matter was not fully clear and bankers were refusing to accept huge cash as deposits due the fact that they had to cater to general public first. b) The amount received from Sri. Rabulal Kothari was not a loan but the receipt of amount given to him earlier. The party had returned the money and the same was deposited in bank account. c) The assessee had maintained regular cash books and books of accounts has not been rejected. d) There is no bar on withdrawing cash even if there is sufficient cash balance available. e) The assessee with a view to acquire a property was trying to locate property on the village side and the villagers who would have to give a valuable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICICI 16901006061 08.09.2012 2,00,000 -- SBI 10447408042 10.10.2012 8,00,000 -- ICICI 16901509902 03.11.2012 -- 20,00,000 The CIT(A) accepted only a sum of Rs. 10.70 lakh as available to the assessee to redeposit into the bank account and for the balance amount of Rs. 10.10 lakh, he confirmed the addition. It was the plea of the assessee that the assessee has withdrawn the money for the admission of his son in a medical college, for which the assessee has also produced evidence like copies of admission letter, demand draft etc. before the CIT(A). Thus, it was explained by the assessee that the amount was withdrawn for the admission of his son in a medical college. Since the admission was not materialized, the assessee has redeposited the amount to the bank. These facts were not disputed by the department. However, according to the CIT(A), the withdrawals were made in June 2012 and the assessee has deposited the same into the bank account in November 2012. There was a longtime gap ranging from June to November, the CIT(A) has given relief only to the extent of Rs. 10.70 lakh. However, the department has no material to show that the earlier withdrawals made by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not accepted the contention of the assessee that he has kept the cash idly in his hands on the reason that he has not filed the wealth tax return showing the cash in hand. The Assessing Officer has not doubted the withdrawal of cash. However, the fact is that the assessee has withdrawn cash of Rs. 50 lakhs on 31/12/2013. There is no evidence brought on record to show that these withdrawals have been used by the assessee or deposited by the assessee in any other Bank. It cannot be said that these withdrawals made from the Bank account were used for household expenses or any other investment. In such circumstances, it cannot be disputed that the withdrawals have been used for redeposit into the Bank account of the assessee. In other words, the Assessing Officer has not disputed the existence of Bank accounts and withdrawal from the same. The earlier withdrawal of Rs. 50 lakhs from the Bank account on 31/12/2013 or withdrawal from various Bank accounts on different dates is not disputed. The assessee might have kept the cash withdrawals with him and redeposited into various Bank accounts on a later date. It is quite possible that the assessee might have withdrawn the cash for some ..... X X X X Extracts X X X X X X X X Extracts X X X X
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