The Income Tax Appellate Tribunal “ B ” Bench, Ahmedabad

ITA  No.531/Ahd/2012
Income Tax Officer 9Appellant) vs M/s.Murlidhar Ice-cream & Sweet Parlour (Respondent)
Assessment Year: 2008-09
Date of Order:20-08-2015

Facts of the case:
The Income Tax Officer raised the following one of grounds of appeal:

“The Ld.Commissioner of Income tax (Appeals) is not justified in facts and in law in restricting the addition to the extent of Rs.3,30,150/- out of the total addition of Rs.24,75,200/- made by the Assessing Officer u/s.68 of the I.T.Act.”

In an scrutiny assessment u/s.143(3), the AO made addition of Rs.24,82,150/- for cash deposits in bank account by invoking the provisions of section 68 of the Act as unexplained credit. On appeal CIT(A) restricted the addition to the extent of Rs.3,30,150/- only.

CIT(A) held that:
A perusal of the bank account show that the bank account has been opened by the appellant on 25/10/2007 and the appellant has initially withdrawn cash from the account and subsequently started depositing the cash n the account again. The A.O. has not considered the fact of withdrawal of cash from the same account and has merely made the addition on the basis of entries of deposit of cash. The claim of the appellant that the cash has been deposited out of the earlier withdrawal is prima facie acceptable as A.O. has not pointed out any other fact which indicates the utilization of cash in some other manner. Therefore, the claim of the appellant regarding availability of cash out of earlier withdrawals will have to b accepted. The only utilization of the cash withdrawal by the appellant could have been for the purpose of furnishing the Ice Cream Parlour for which the OD facility was taken by the appellant. This aspect will be discussed later on. Following is the position of availability of cash withdrawn from the bank account by the appellant on various dates.

CASH ACCOUNT

……………………………………………………………………

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It is seen from the above chart that the appellant has withdrawn Rs.27,52,000/- from the bank account on various dates and has deposited Rs.24,82,150/-. It is however noted that on 15/03/2008, the appellant deposited more than what it had withdrawn and there was a negative cash on that day. The appellant again deposited Rs.1,45,000/- on 18/03/2008 which further increased the negative balance of cash. Therefore, the total cash deposited in the bank account in excess of what was withdrawn by the appellant comes to Rs.3,30,150/- tor which the appellant has no source to explain.

On appeal ITAT upheld the order of CIT(A) as under:

The finding of the ld.CIT(A) that there were transactions of cash deposit and withdrawal. This fact is not controverted by the Revenue by placing any contrary material on record. We are of the considered view where there are deposit and withdrawal entries into the bank account, it would be presumed that the amount withdrawn was available with the assessee for depositing the same. Therefore, it cannot be concluded that the entire deposits were from unexplained source. We do not see any reason to interfere with the finding of the ld.CIT(A), the same is hereby upheld. Thus, this ground of Revenue’s appeal is rejected.

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