Keeping cash in bank not in hand not mandatory under any law. Cash deposited in bank from withdrawals made long back accepted – ITAT

Keeping cash in bank not in hand not mandatory under any law. Cash deposited in bank from withdrawals made long back accepted  as the AO was not able to show that the cash so withdrawn was spent elsewhere – ITAT

ABCAUS Case Law Citation:
990 2016 (08) ITAT
Assessment Year: 2011-12
Date/Month of Judgment/Order: August, 2016

Brief Facts of the Case:
The source of income of the assessee was agriculture income and income from other sources. As per AIR information, a sum of Rs.50,00,000/- was cash deposited in the saving bank account of the assessee in different dates during August, September and November, 2016.

The assessee was asked to furnish the source of these cash deposits and in response, the assessee submitted that the source of cash deposit was out of cash in hand amounting to Rs. 1,31,11,293/- in the balance sheet on 31.03.2010 The assessee submitted that she had received advance against sale of agricultural land in 2005 and 2008 It was also submitted that no sale of agricultural land had taken placed due to disputes and thus the cash was re-deposited by the assessee in her bank account.

However, since the assessee was not doing any business, the AO held that the question of maintenance of cash book did not arise in the case of the assessee. The AO further observed that the assessee made deposit in the bank only when she was ready to give some advance to a person. The AO held that the claim of cash lying at the residence was not reliable, when she maintained various bank accounts and could earn handsome interest income. Accordingly he made addition of Rs. 50 lakhs.

On appeal by the assessee, the CIT(A) deleted the addition. Aggrieved with the order of the CIT(A), the Revenue was in appeal before the Tribunal.

Contentions of the Revenue:
The Revenue contended that the CIT(A) erred in giving the credit of cash withdrawn from the bank a long period back and kept by the assessee with her, on which, dispute had arisen.

The assessee, had also not disclosed the purpose of withdrawal of cash from bank and usage thereof.

The CIT(A) erred in accepting that the assessee maintains personal books of account and draws personal balance sheet, whereas the assessee is not filing her wealth-tax returns regularly.

Observations made by the Tribunal:
The ITAT observed that as per CIT(A) order, the explanation of the assessee was that the cash was withdrawn by her for land deal which did not materialize and she deposited the cash withdrawn from the same bank account back in the bank after a gap of nearly 17 to 18 months. The AO had led no evidence to show that the cash withdrawn by her had been spent and was not available for re-deposit.

The Tribunal on the basis of records observed that the fact that the assessee maintained personal books of account and drawn her personal balance sheet, though taken by the A.O. to be false, got substantiated by the fact that the the assessee was filing her return of income regularly from assessment year 1995-96. She had filed her personal balance sheets from assessment years 1995- 96 to 1996-97. Thereafter, however, she had started filing her returns of income on-line. Though after assessment year 2006-07, no balance sheet was filed, the books of account and balance sheets of the assessee were duly prepared and placed in the Income tax file.

The Tribunal observed that the AO, without bringing anything on record to contradict the categorical stand taken by the assessee, which was duly supported by documentary evidence, held that the stand of the assessee of having maintained her personal cash book and balance-sheet, was a concocted story.

The Tribunal rejected the reason of the AO i.e., no prudent person would keep such heavy cash as cash in hand for 17 to 18 months. for not accepting this deposit,  terming it a flimsy reason, According to ITAT, Such observation of the AO got annulled by the balance sheets placed on record by the assessee over the years, every year.

The Tribunal observed that the basis of the Wealth Tax returns filed by the assessee was the very same balance sheets and for Wealth tax purposes, it was the same AO, who had accepted the assessee’s cash in hand, which was according to her balance sheet. The amount was, in fact, assessed as the assessee’s wealth. Therefore, the department cannot maintain two diverse standards, i.e., one for Wealth tax purposes, and another diametrically opposite stand for Income tax purposes.

Regarding the contention of the Revenue that since the assessee had not disclosed the purpose of withdrawal of cash from bank and usage thereof, she can not get the benefit of such cash withdrawn from the bank, a long period back, the Tribunal observed that there is no legal basis for such stand taken by the department. There is no law warranting any such requirement for the assessee to make such a disclosure. The Tribunal quoated the decision of the Delhi Bench of the Tribunal in the case of ‘Mrs. Deepali Sehgal’,that it is not mandatory under any law that an individual has to keep his/her savings in the bank account only and not as cash in hand. Also in ‘Shiv Charan Dass vs. CIT’, 126 ITR 263 (P&H), it was held by the High Court that the onus is on the Department to show that the explanation of the assessee should not be accepted.