Nikhil Nanda, New Delhi vs Department Of Income Tax

Department by : Sh. P. DAM. Kanunjna, Sr. DR Assessee by : Sh. V.K. Aggarwal, A.R.

Date of Hearing : 09-03-2015 Date of Order : 18-03-2015 ORDER

PER H.S. SIDHU : JM The Revenue has filed the present appeal against the impugned order dated 22/3/2012 passed by the Ld. Commissioner of Income Tax (Appeals)-VIII, New Delhi for the asstt. year 2009-10 on the following grounds:-

"1. Whether in the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 74,95,500/- of cash deposits on the basis of assessee's version submitted for the first time during appellate proceedings?

2. Whether in the facts and circumstances of the case, the Ld. CIT(A) erred in admitting and

1 ITA NO. 3644/Del/2013

accepting the fresh submission of the assessee regarding the explanation of cash transactions without any verification himself and / or without providing the AO any opportunity to rebut as per the provision of Rule 46A?

3. That the order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law.

4. That the grounds of appeal are without prejudice to each other.

5. That the appellant craves leave to add, alter, amend or forgo any ground(s) of the appeal raised above at the time of hearing."

2. The facts narrated by the Revenue are not disputed by both the parties, hence, need not to repeat the same here for the sake of brevity.

3. Ld. DR relied upon the order passed by the AO and also reiterated the contentions raised in the grounds of appeal.

4. During the hearing, Ld. Counsel for the assessee stated that Ld. CIT(A) in the impugned order has deleted the additions in dispute by respectfully following the orders of the ITAT in the case of ACIT vs. Baldev Raj Charla, 121 TTJ (Del) 366 and Moongipa Investment Ltd. vs. ITO in ITA No. 2605/Del/2007, hence, he requested the order of the Ld. CIT(A) may be upheld. In support of his contention he also filed a Paper Book containing pages 1 to 33 having the copies of the written submissions dated 26.2.13 and 14.3.2013 filed before the CIT(A); ledger account of personal drawings; summary of drawings; details of cash deposits and

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withdrawals from the bank; copies of bank accounts; written submissions dated NIL filed before the CIT(A) and letter dated 23.8.2011 filed before the AO.

5. First we deal Ground no. 1 relating to deletion of addition of Rs.74,95,500/-. We have heard both the counsel and perused the relevant records available with us, especially the order passed by the Ld. CIT(A) and the aforesaid orders of the ITAT. We find that Ld. CIT(A) has followed the orders of the ITAT in the case of ACIT vs. Baldev Raj Charla, 121 TTJ (Del) 366 and Moongipa Investment Ltd. vs. ITO in ITA No. 2605/Del/2007 and deleted the addition in dispute. We find that the Ld. CIT(A) in the asstt. year in dispute i.e. 2009-10 has adjudicated the issue vide his order dated 22.3.2012 as under:-

I have considered the submissions of the

appellant, findings of the AO and the facts on record.

Perusal of the facts on record shows that AIR

information had been received by the AO that the

appellant had made cash deposit in the bank. To verify

the details of deposits in the Bank Account the AO

called for the bank accounts of the appellant. From the

statements of the bank deposits it was observed by the

AO that the appellant had made cash deposits of

Rs. 74,95,500/- in its bank accounts maintained with

Indian Bank and Centurion Bank on different dates. The

appellant had submitted that the deposits had been

made out of the cash withdrawals from its various bank

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accounts. The AO did not agree with the submissions of

the appellant, and has held that the cash deposits were

unexplained cash deposits and therefore were being

added to the appellant's income. The only reason

discussed by the AO in the assessment order is that

while the appellant had made major withdrawals in the

month of January, 2008, the deposits were made in the

month of June, 2008 and, upto March, 2008 and no

satisfactory reason could be given by the appellant as

to why such huge amount were kept at home. In view

of the above, the AO has held that the cash deposits

were unexplained. Perusal of the submissions of the

appellant show that the appellant had made cash

withdrawals of Rs. 51,00,000I- on 01.02.2008 and of Rs.

20,00,000/- of 15.03.2008. It is also observed that

against, the above withdrawals deposits were made in

the bank accounts as under:-

1. 24.06.2008 39,98,800/-

2. 26.06.2008 1,00,000/-

3. 27.06.2008 9,00,000/-

4. 02.07.2008 4.90,000/-

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ITA NO. 3644/Del/2013

5. 15.07.2008 3,00,000/-

Total 56,98,800/-

It is also observed that the appellant had made

withdrawals of Rs. 9.90 lacs on 25.11.2008, Rs. 5.3 lacs

on 26.11.2008, Rs. 6.50 lacs on 17.12.2008 & Rs. 2 lacs

on 01.01.2009 against which cash deposits had been

made in the banks as under:

1. 23.12.2008 7,96,500/-

2. 24.12.2008 3,00,000/-

3. 30.12.2008 10,000/-

4. 30.03.2009 6,00,000/-

Total 17,06,500/-

The above facts show that the appellant withdrew

Rs. 71,00,000/- from the bank account between

01.02.2008 & 15.03.2008 and deposited' and amount

of Rs. 56,98,800/- between 24.06.2008 and 15.07.2008.

It is also observed that the appellant withdrew a further

amount of Rs. 23,70,000/- between 25.11.2008 and

01.01.2009 and deposited cash in the bank accounts of

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Rs. 17,06,500/- between 23.12.2008 and 30.03.2009.

The above facts show that the appellant had

substantial cash withdrawals from its bank accounts

out of which the cash deposits had been made in the

bank account. The appellant has submitted that

withdrawals had been made in cash since it was

interested in purchasing immovable properties, but

since the deals did not materialize therefore, the

amount was re-deposited in his bank accounts by way

of cash. Perusal of the details filed by the appellant

show that the appellant had substantial withdrawals,

besides the above mentioned withdrawals of Rs.

94,70,000/-, which were utilized for household

expenses. The only contention of the AO is that there

was no justification for keeping the cash at home and

there was a time gap between the withdrawals and

deposits does not hold good in view of the decision of

the Hon'ble ITAT Delhi in the case of ACIT vs. Baldev

Raj Charla 121 TT] (Del) 366whrein 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.

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ITA NO. 3644/Del/2013

We find that this explanation of the assessee was

found correct that against these five deposits on dt.

14th June, 1996, Rs. 31,000; 21st July, 1997,

Rs. 1,27,000/-, 18th Sept., 1997, Rs. 22,000; 4th

Oct., 1997, Rs. 26,000 and on 7th Nov., 1997, Rs.

52,000 there were sufficient cash withdrawals from

AWl and from SBL Mayapuri, but this addition has

been confirmed by learned CIT(A) on the basis that

there is time gap between the assessee's

withdrawals from his own partnership Mls AWI or

from his own bank. There is finding recorded by the

learned AO or by learned 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 assessee cannot be rejected and hence the

addition confirmed by the learned CIT(A) is not

correct. We, therefore, delete the same. This ground

of the assessee is allowed."

Perusal of the above shows that the Hon'ble IT AT

has clearly held that simply because there was a time

gap between the cash withdrawal and cash deposits in

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bank the explanation of the assessee cannot be

rejected, unless there is a finding that the amount was

used somewhere else. In the instant case also it is

observed that there is no finding of by the AO that the

cash withdrawals had been used anywhere else by the

appellant. Moreover, the appellant has also submitted

details from which it can be observed that the appellant

had substantial withdrawing for its household

expenses.

The Hon'ble IT A T Delhi in the case of Moongipa

Investment Ltd. vs. ITO in ITA no. 260SIDe1l2007 after

placing reliance on the decision in the case of Baldev

Raj Charla has held that addition cannot be made or

sustained on the basis that there was time gap

between cash withdrawal from bank account and cash

deposits in bank account.

In view of the findings above that the appellant

had substantial cash withdrawals from which the cash

deposits had been made in the bank account and also

in view of the fact that the AO has not brought any

evidences on record to show that the money withdrawn

was used for any other purpose other than being re-

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ITA NO. 3644/Del/2013

deposited in the bank account, the addition made by

the AO cannot be sustained. Respectfully following the

decision of the Hon'ble ITAT Delhi in the case of Baldev

Raj Charla and Ors. discussed above and other judicial

decisions discussed above and the facts of the case

the addition made by the AO is deleted."

6. After going through the aforesaid order passed by the Ld.

CIT(A) on the issue in dispute as well as the judicial precedents of

ITAT relied by him, while deleting the addition in dispute, we are of

the considered view that the Ld. First Appellate Authority has

passed a well reasoned order by following the judicial precedents of

ITAT, as aforesaid. Therefore, we find no infirmity in the order of

the Ld. CIT(A) and therefore, no interfere is required on our part,

hence, we uphold the impugned order passed by the Ld. CIT(A) on

this issue and decide the issue against the Revenue.

7. With regard to ground no. 2 regarding the explanation of cash

transactions without any verification himself and / or without

providing the AO any opportunity to rebut as per the provisions of

Rule 46A is concerned. We find that with regard to issue of deletion

of addition of Rs. 74,95,500/- raised in Ground No. 1, as aforesaid, is

concerned, the Ld. CIT(A) has deleted the addition of Rs.74,95,500/-

made by the AO by following the ITAT orders in the case of ACIT vs.

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Baldev Raj Charla, 121 TTJ (Del) 366 and Moongipa Investment Ltd.

vs. ITO in ITA No. 2605/Del/2007, which we have already confirmed,

as aforesaid. Hence, the question of providing an opportunity to

rebut as per the provision of Rule 46A is concerned, does not arise

and as such is dismissed. Therefore, the ground no. 2 is dismissed.

8. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Open Court on 18/03/2015.

Sd/- Sd/-

[T.S. KAPOOR] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER

Date 18/03/2015 "SRBHATNAGAR" Copy forwarded to: - 1. Appellant - 2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order,

Assistant Registrar, ITAT, Delhi Benches

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