This order is passed by me. It is found from the Hon'ble H C's order that the following facts have not been appriciated/discussed in the order which is clearly mentioned in the order :
"the assessee had introduced interest bearing funds in his account by discounting of his cheques from P D Shroff. The transactions with P D Shroff were made between 25.06.2008 to 05.09.2008. It is observed from the Cash Book that there was opening cash balance of Rs.5,35,611/- as on 25.06.2008. Similarly, on other dates also, there was more than Rs.5,00,000/- cash balance in the Cash Book on day to day basis. If the assessee's Cash Book is believed to be correct, the assessee has not explained with any documentary evidence as to why the assessee had resorted to accept interest bearing finance from a Shroff during this period. The above clearly shows that the assessee has made cash withdrawals from the bank accounts for unexplained expenses/investments. Therefore, the cash balance appearing in the alleged Cash Book is artificial. In the above circumstances, the sources of cash deposits are not explained.
The withdrawals from the banks are made by the persons other than those employed with the assessee or those to whom the assessee has made apparent payments on account of dalali expenses. The assessee has failed to establish legitimate withdrawal of cash from the bank by different persons other than his employees or creditors for dalali expenses. The apparent reasons for such withdrawals by other persons is that the assessee has made payments to these persons with an intention best known to the assessee. The legitimate conclusion for such payments to other persons could be the unexplained expenditure/investment by the assessee the details of which are not disclosed by the assessee. The assessee's Cash Book is therefore not giving true picture of the assessee's affairs in view of the above factual position. Therefore, transactions of withdrawals from the bank and the same withdrawn money credited in the alleged Cash Book are not genuine and therefore not satisfactorily explained."
Regards,
R M Vasavada
DCIT Cir 2, Udaipur
On Thu, Dec 4, 2014 at 4:58 PM, Pavan Singla singlapavan@gmail.com [It_law_reported] <It_law_reported@yahoogroups.com> wrote:
IT : Whether, once source of cash deposit in bank account is explained, subsequent withdrawal is not required to be explained■■■[2014] 50 taxmann.com 419 (Gujarat)HIGH COURT OF GUJARATCommissioner of Income-tax-IIIv.Manoj Indravadan Chokshi*M.R. SHAH AND K.J. THAKER, JJ.TAX APPEAL NO. 821 OF 2014†AUGUST 11, 2014Section 68 of the Income-tax Act, 1961 - Cash credits (Bank deposits) - Assessment year 2009-10 - Whether once source of cash deposit in bank account is explained, subsequent withdrawal is not required to be explained - Held, yes - Assessee explained cash deposit in bank account by submitting names of persons from whom unsecured loans were taken - Whether merely because assessee withdrew cash instead of sufficient cash balance available with him and subsequently redeposited same in bank account for his own use, no addition could be made - Held, yes [Para 4] [In favour of assessee]FACTS
■ During assessment, it was found that the assessee had deposited huge amount of cash in his savings account. On demand, the assessee furnished the copies of the bank statements and cash book for the relevant period in support of his cash deposits in the bank accounts. ■ The Assessing Officer found that the assessee had withdrawn large sum of Rs. 39.70 lakh cash from his own bank account and again deposited the same in his bank accounts. Observing that the assessee withdrew the cash instead of sufficient cash balance available with him, the Assessing Officer added Rs. 39,70,500 as unexplained cash deposits. ■ On appeal by the assessee, the Commissioner (Appeals) partly allowed the same and restricted the addition to Rs. 7,95,160 on account of unaccounted income being peak/maximum cash balance available. ■ On further appeal, the Tribunal confirmed the order passed by the Commissioner (Appeals). ■ On further appeal by revenue: HELD
■ As such the assessee did explain the cash deposit in his bank account by submitting that he has taken the same as unsecured loan from other persons whose names were also given by him. ■ Thus, as such the assessee did explain his deposit of the aforesaid amount in his bank account. Thereafter, it was immaterial whether the assessee had withdrawn the said amount and applied subsequently for his own use by re-depositing the same in his bank account. As rightly observed by the Commissioner (Appeals), once the source of cash deposit in bank account is explained, subsequent withdrawal is not required to be explained. In the facts and circumstances of the case, Commissioner (Appeals) has not committed any error in restricting the addition to the extent of Rs. 7,95,160 on account of unaccounted income. ■ The restriction of addition by the Commissioner (Appeals) is confirmed by the Tribunal by observing that the Assessing Officer did not find any discrepancy between cash withdrawal from the bank and cash available in the cash book on a particular date. The assessee had not claimed any expenditure on account of interest payment. The appellant had filed the confirmation of the persons from whom loans were taken Sic.-taleen. The assessee neither paid interest nor earned any income on account of interest on advance. This aspect has not been doubted by the Assessing Officer. There is no limit in cash withdrawing the re-depositing in the bank account. The assessee has offered a plausible and satisfactory explanation before the Assessing Officer for each financial transaction. Assessing Officer had not brought on record any evidence which proves that cash withdrawal had been invested somewhere else and cash balance in the cash book is artificial. [Para 4] ■ In the facts and circumstances of the case, the view taken by the Tribunal as well as the Commissioner (Appeals) restricting the addition to the extent of Rs. 7,95,160 is to be agreed with. Under the circumstances, as there arises no substantial question of law, present tax appeal deserves to be dismissed. K.M. Parikh, Adv. for the Appellant.ORDERM.R. Shah, J. - Feeling aggrieved and dissatisfied with the impugned judgment and order dated 27.09.2013 passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as "Tribunal") in ITA No.674/Ahd/2013 for Assessment Year 2009-10, the Revenue has preferred the present tax appeal for deciding the following proposed questions of law."2(1) Whether on the facts and circumstances of the case and in law, the ITAT was justified in upholding the self-contradictory order of the CIT(A), who while upholding the addition of unexplained cash deposits in the assessee's bank account, allowed the assessee relief on account of cash withdrawals thereby reducing the addition made by the Assessing Officer, even though the CIT(A) has himself held that the assessee has failed to explain the requirement of cash withdrawals satisfactorily?(2) Whether on the facts and circumstances of the case and in law, the ITAT was justified in upholding the decision of the CIT(A) that only the peak of unexplained cash deposits is liable for tax without appreciating that the assessee had failed to discharge its onus to prove the requirement of the cash withdrawals and their subsequent redeposit in the same bank account and, therefore, the peak theory, which pre-supposes that the same money was rotated in deposit and withdrawal had not been parked elsewhere, could not have been applied mechanically to the assessee's case?"2. That the assessee filed the return of income for AY 2009-10, declaring total income of Rs.6,09,518/-. The case was selected for scrutiny under CASS and notice under section 143(2) of the Income Tax Act, 1961 was issued by the Assessing Officer. During the assessment, it was found that the assessee deposited cash exceeding Rs.10 lacs in his savings account with Axis Bank Account No.55014. The assessee was, therefore, asked to furnish the copies of the bank statements along with the explanation on each of the credit entries and the assessee furnished the copies of the statements of the following bank accounts.
(i) Axis Bank account No.55014 (ii) Axis Bank a/c No.21231 (iii) BOB a/c No.09959 (iv) Central Bank a/c No.205898 (v) SBI a/c No.910141 The assessee also furnished a cash book for the relevant period in support of his cash deposits in the bank accounts. The AO found that the assessee withdrew large sum of cash from his bank accounts which w
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