Month wise receipt and income slightly more than last year cannot warrant the cash deposited into the bank account as unexplained cash
In a recent judgment, ITAT Jaipur has held that month wise receipt and income slightly more than last year cannot warrant the cash deposited into the bank account as unexplained cash.
ABCAUS Case Law Citation:
ABCAUS 4134 (2024) (07) ITAT
Important Case Laws relied upon:
Sreelekha Banerjee Vs. CIT [ 49 ITR 112 (SC) ]
In the instant case, the assessee had challenged the order passed by the CIT(A) in sustaining addition u/s 68 of unexplained money towards cash deposits in demonetized currency notes in bank account.
The assessee was a Gynecologist by profession and had also income from investment activity. The case of the assessee was selected manually for scrutiny as per instruction no. 4/2018 dated 20.08.2018 for cash deposit during the demonetization.
During the assessment proceeding the Assessing Officer (AO) noted that the assessee had deposited large amount of cash during the demonetization between 09.11.2016 to 30.12.2016 in the form of specified bank notes (SBNs). The AO asked the assessee to submit various details and comparison of cash deposits of preceding two years.
The assessee has furnished comparative chart of cash deposited in preceding two years. In support of the SBNs deposited in the bank account the assessee also filed the cash book. On perusal of cash book AO noted that the assessee had not mentioned any narration regarding the patients from whom consultation fees has been furnished. The assessee had also not explained the sudden spike in the cash deposits post demonetization.
The AO issued a show cause to the assessee and after considering the reply found that the assessee had not furnished the details of patients from whom the consultancy fees was received in cash. The spiked in cash receipts in November and December was not acceptable as the assessee was not in seasonal business. The assessee had not given any reason to justify such spike in cash deposit and there was no justification for sudden jump in practice.
Therefore, the AO did not believe the genuineness of the argument of the assessee and he made an addition u/s 68 of the Act.
Before the Tribunal the assessee explained that there was an opening cash balance available in her books. Further, there is an increase in the returned income as compared with last year. If both that aspect of the matter is considered and keeping in mind that the fact that the assessee was a doctor the deposit of cash was is nothing but out of the professional income and cash balance was duly supported by a cash book maintained.
The Tribunal observed that assessee also filed a patient register giving the details of the total fees charged, receipt per patient along with other details of patients like, date of consultation, name of the patient, registration number, age of patient and gender are given. The AO had not pointed out any defect in the details so submitted. In the show cause notice issued to the assessee only one day time was granted, and the assessee had filed all the required details.
The Tribunal observed that as per chart of monthly receipt for preceding financial year, the receipt from December to March had reduced trend previous year also. Thus, it was usual practice and not only on the reasons of the demonetization. Based on these set of facts there was no force on the contention so raised while confirming the addition by the CIT(A).
The Tribunal further noted that the assessee demonstrated that the she was regular in depositing the money in cash in her bank account even before the demonetization.
Further, the Tribunal observed that the provision of section 68 comes into play when an assessee maintains books of account and a sum is found credited in those books for any previous year. If the assessee fails to provide a satisfactory explanation for such cash credits, the provisions of this section are invoked. Essentially, it aims to address unexplained cash credits in an assessee’s financial records. Here AO had not rejected the books of account the income what is already reflected is considered as arising out of the professional income and the same again cannot be added as per provision of section 68 of the Act.
The Tribunal opined that the source of cash was duly explained and supported by the clear and cogent evidence placed on record. It had been held in a number of cases that it is trite law
that suspicion howsoever strong cannot take place of a legal proof.
The Tribunal noted that CIT(A) had relied on the decision of Hon’ble Supreme Court quoting the finding that “the department does not then proceed on no evidence, because the fact that there was receipt of money is itself evidence against the assessee.” In that same judgment the apex court also held that “The department cannot by merely rejecting unreasonably a good explanation, convert the good proof into no proof.”
The Tribunal held that money deposited was from the professional income which is supported in the entries passed in the books supported by the patient register containing all the required details. Both that records were placed on record and no defects was observed in those record so it would be far starching that merely the assessee had deposited the cash available with her in SBN is deposited in bank account cannot be considered as unexplained money.
The Tribunal also held that the cash deposited into the bank account of the assessee cannot be considered as unexplained considering the month wise receipt and income slightly more than last year cannot warrant the cash deposited into the bank account as unexplained cash which is proved as such and even taxed without rejecting the books of account.
Accordingly, the Tribunal directed deletion of the addition made by the AO and sustained by the CIT(A).
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