IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC-2’, NEW DELHI

BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER

ITA No. 811/Del/2015
AY: 2011-12

Gordhan (Appellant) vs ITO (Respondent)
Date of Order: 19-10-2015

ORDER

This is an appeal filed by the Assessee against the order dt. 11.12.2014 of Ld.CIT(A), Gurgaon for Assessment Year 2011-12.

2. The facts in brief are brought out by the Assessing Officer in his order 10.2.2014 vide para no. 2& 3 which are extracted below for ready reference.

1. The assessee is a regular employee in Haryana Police Department as Assistant Sub Inspector. During the financial year 2010-11, for the assessment year 2010-11, he filed his return of income declaring total income of Rs. 1,91,560/- on 31.7.2011. The case was processed u/s. 143(1) on 31.10.2011 as N.A.

2. After that the case was selected in CASS scrutiny. The AO is to examine the source of cash deposits of Rs. 53,00,000/- in saving bank account as per AIR information. Necessary notice u/s. 143(2) was issued on 8.8.2012 which was duly served upon the assessee. Further a questionnaire notice u/s. 143(2) was issued on 2.12.2013 fixed for 13.12.2013. In response to the notice, Shri Rakesh Thakkar, Advocate submitted his Power of Attorney as Authorised Representative on behalf of the assessee. The case was fixed time and again. The Ld. AR submitted the requisite information which was test checked and placed on record.

3. The AO considered the explanation of the assessee and rejected some explanations and assessed the total income at Rs. 9,91,562/-, after making the addition of Rs. 8 lacs u/s. 68 of the I.T. Act, 1961.

4. On appeal the Ld. CIT(A) has upheld the order of the AO.

5. Aggrieved, the assessee is in appeal before me on the following grounds:-

“1. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in not deleting the unlawful addition of Rs. 8 lacs made on basis of conjectures and surmises being cash deposited into bank account from earlier available cash withdrawals which is not established to be utilised for any other purpose/ investment.

2. That on the facts and in the circumstance of the case and in law, Ld. CIT(A) erred in not deleting the unlawful addition of Rs. 8 lacs ignoring cited precedents which squarely supported assessee’s case on similar facts.

3. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the addition of Rs. 8 lacs made by AO on account of cash re-deposited from available cash duly substantitated on the basis of self presumed reasoning. That the appellant craves leave to add, to, amend, modify, rescind, supplement or alter any of the grounds stated herein above, either before at the time of hearing of this appeal.”

7. Ld. Counsel of the Assessee, Shri Kapil Goel submitted that the assessee

had withdrawn Rs. 8 lacs on 21.4.2010 from the Bank and re-deposited the same on 29.9.2010. He submitted that the addition is made only on the ground of presumption, that the period of 5 months, from the date of withdrawal and the date of deposits, is not explained. Further, he argued that the AO on surmises and conjectures, held that, cash would not have been kept with assessee or his wife for a period of 5 months, when they are having the bank accounts. He submitted that the First Appellate Authority has wrongly held that the explanation of the assessee is not justified. He pointed out that the assessee maintained the cash book and the copy of the same was filed before the AO as well as ld. CIT(A). He argued that the books of accounts have not been rejected and in such circumstances the additions made on presumption and inference, cannot be sustained. He relied upon the decision of the Tribunal, ‘E’, Bench, New Delhi in ITA No. 3644/Del/2008 vide order dated 18.3.2015 in the case of DCIT vs. Sri Nikhil Nanda (AY 2009-10) for the proposition that no addition can be made u/s. 68 of the Act, merely, because there was a time gab between the cash withdrawal and cash re-deposit in the Bank, unless there is a finding given by the AO, that the amount in question was actually used somewhere else. He also relied upon the decision of the ITAT, Delhi Benches in the case of Moongipa Investment Ltd. Vs. ITO in ITA No. 2605/Del/2007.

8. Ld. DR, Smt. Rakhi Vimal on the other hand submitted that the AO, as well as the ld. CIT(A) considered the cash book of the assessee. She submitted that the case law relied by the assessee cannot be applied to the facts of the case, for the reasons that the assesee has not explained the purpose of withdrawal and the gap of 5 months between the withdrawal and the re-deposits. She pointed out that the Ld. CIT(A) at page no. 6 vide para no. 3.2 recorded that there is a particular pattern of re-depositing the amount of withdrawn as early as possible, after the date of such withdrawal by the assessee. She relied upon the orders of the AO as well as Ld. CIT(A).

9. After hearing rival contentions and perusing the documents on record and the orders of the authorities below, I hold as follows.

10. The sole ground on which the additions has been made u/s. 68 of the I.T. Act, is that, there is a gap of 5 months between the withdrawal of the cash from the Bank account and re-deposit of the same in the Bank account. An addition made, solely on this ground cannot be sustained. In this regard, I draw support from the decision of the ITAT, Delhi in the case of AICT vs. Baldev Raj Charla 121 TTJ (Del) 366 wherein it has been held as under:-

“We have heard the rival submissions and perused the material available on record and have gone through the orders of the authorities below. We find that this explanation of the assessee was found correct that against these five deposits on dated 14 ^th June, 1996, Rs. 31,000; 21st July, 1997, Rs. 1,27,000, 19th Sept., 1997, Rs. 22,000; 4th October, 1997, Rs. 26,000 and on 7 ^th November, 1997, Rs. 52,000/- there were sufficient cash withdrawals from AWI and from SBL Mayapuri, but this addition has been confirmed by Ld. CIT(A) on the basis that there is time gap between the assessee’s withdrawals from his own partnership M/s AWI or from his own bank. There is finding recorded by the Ld. AO or by the Ld. CIT(A) that apart from depositing these cash into bank as explained by the assessee, there was any other user by the assessee of these amounts and in the absence of that, simply because there was a time gap, the explanation of the assesee cannot be rejected and hence the addition confirmed by the Ld. CIT(A) is not correct. We, therefore, delete the same. This ground of the assessee is allowed.”

10. The aforesaid decision has been followed by the Tribunal in the case of ACIT vs. Nikhil Nanda (Supra).

11. Applying the proposition as laid down by the Tribunal to the facts of the case, I have to hold that no addition can be made u/s. 68 of the I.T. Act on the sole reason that there is a time gap of 5 months between the date of withdrawal from bank account of the cash in question and the redeposit of the same in the Bank Account, unless the AO demonstrates that the amount in question has been used by the assessee for any other purpose. In my view the addition is made on inferences and presumptions, which is bad in law. Hence, the addition in question is deleted and the Appeal of the assessee is allowed.

12. In the result, the Appeal filed by the assessee stands allowed.

Order pronounced in the Open Court on 19th October, 2015.

Sd/-

(J.SUDHAKAR REDDY)
ACCOUNTANT MEMBER