Additional unjustifiable monetary deposits that are unrelated to the source of the cash deposit

Fact and issue of the case

This appeal has been filed against the order of CIT(A)-31, New Delhi dated 06.07.2022 for A.Y. 2017-18. 2. The grounds raised by the revenue in ITA No. 2438/Del/2022 are as under:- 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring the fact that the assessee company only submitted that the company was a construction contractor and needs cash in hand for making payment for wages etc. The assessee did not produce any documentary evidences of any payment t being made for wages etc.

Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring the fact that the assessee throughout during assessment proceedings even before appellate proceedings only submitted figures/data’s in order to establish the source of such cash deposits made by the assessee during assessment proceedings but no documentary evidences relating to the purposes of such cash in hand i.e. expenses such as wages etc was filed by the assessee, done in FY 2016-17, i f any, relating to the AY 2017-18 or in any of the earlier AY/AYs.`

Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring Section 68 of the Income-tax Act, 1961 which clearly speaks that the primarily burden of proof lies on the assessee in order to prove the genuineness o f the transactions which the assessee failed to do so.

Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring the Provision of Section 103 of the Evidence Act which clearly states that the burden of proof is on the person who wishes the court to believe in the existence of a particular fact. In this scenario, Burden of proof will never be shifted to the Revenue, it lies on the assessee who is required to prove a fact. When we come within the ambit of Section 68 of the Income-tax Act, 1961, one and the most important limbs i.e. documentary evidences will always come into role automatically w.r.t any such claims made by the assessee during the assessment proceedings.

Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring the impounded documents seized from the registered address of M/s Omaxe Limited as Annexure A-4 (Page No. 87 to 91 and 97-100) which brought into light the fact that the company M/s Atulah Contractors Construction (P) Ltd. was having Cash-in-hand as on 08.11.2016 was 1378181 (as per page nos. 87 to 91) while the same as on 08.11.2016 as per page no. 97-100 was 1298219

Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring that there is no pattern of such huge cash deposits in the year previous to the relevant previous year.`

Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring that the assessee only submitted that the impounded documents containing cash balance available at site offices maintained at the corporate headquarter for various exigencies but again the assessee did not produce any documentary evidences in order to establish its claim. It is not acceptable that such a going on concern i.e. company/flagship company does not maintain or keep record o f such details of cash along with its purposes for each of the company sites separately.

Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring and did not discuss on the Cash in hand as per impounded documents in its whole order rather involved himself only in the commensuration of the data of the assessee for both the FYs.

Whether the order of the CIT(A) is perverse, erroneous and is not tenable on facts and in law.

The ld. Senior DR submitted that the ld. CIT(A) has erred on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring the fact that the assessee company only submitted that the company was a construction contractor and needs cash in hand for making payment for wages etc. The assessee did not produce any documentary evidences of any payment being made for wages etc. it was also submitted that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring the fact that the assessee throughout during assessment proceedings even before appellate proceedings only submitted figures/data’s in order to establish the source of such cash deposits made by the assessee during assessment proceedings but no documentary evidences relating to the purposes of such cash in hand i.e. expenses such as wages etc was filed by the assessee, done in FY 2016-17, if any, relating to the AY 2017-18 or in any of the earlier assessment years and has grossly erred in ignoring the provision of sec 68 of the Act which clearly provides that the primary burden of proof lies on the assessee in order to prove genuineness of transaction which the assessee failed to discharge.

The ld. Senior DR vehemently pointed out that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring the Provision of Section 103 of the Evidence Act which clearly states that the burden of proof is on the person who wishes the court to believe in the existence of a particular fact. In this scenario, Burden of proof will never be shifted to the Revenue, it lies on the assessee who is required to prove a fact. When we come within the ambit of Section 68 of the Income-tax Act, 1961, one and the most important limbs i.e. documentary evidences will always come into role automatically w.r.t any such claims made by the assessee during the assessment proceedings. Harping on the factual mistakes committed by the ld. CIT(A) the ld. CIT(DR) submitted that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring the impounded documents seized from the registered address of M/s Omaxe Limited as Annexure A-4 (Page No. 87 to 91 and 97-100) which brought into light the fact that the company M/s Atulah Contractors Construction (P) Ltd. was having Cash-in-hand as on 08.11.2016 was 1378181 (as per page nos. 87 to 91) while the same as on 08.11.2016 as per page no. 97-100 was 1298219.

The Senior DR also drawing our attention towards assessment as well as first appellate order submitted that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law & on facts, ignoring that the assessee only submitted that the impounded documents containing cash balance available at site offices maintained at the corporate headquarter for various exigencies but again the assessee did not produce any documentary evidences in order to establish its claim. It is not acceptable that such a going on concern i.e. company/flagship company does not maintain or keep record of such details of cash along with its purposes for each of the company sites separately and there was no pattern of such huge cash deposit in the preceding assessment year. The Senior DR also submitted that the ld. CIT(A) has ignored and did not discussed the issue of cash in hand as per impounded documents in its whole order rather only considered the data supplied by the assessee for granting relief to the assessee. Therefore impugned first appellate order may kindly be set aside by restoring that of the Assessing Officer.

Observation of the court

On careful consideration of allegation of the Assessing Officer and findings recorded by the ld. CIT(A) while granting relief to the assessee we note that the ld. CIT(A) first of all compared pattern of cash deposits and withdrawals by the assessee by considering comparative chart for both the years along with supporting books and bank statement. The ld. CIT(A), thereafter observed that the appellant usually maintain high cash balance which is evident from the opening cash balance as on 01.04.2016 of Rs. 1,70,45,310/- which is also shown in the audit report and income tax return for AY 2016-17 filed on 01.10.2016 before declaring of demonetization order. The ld. CIT(A) further noted that maintaining high cash balance is a subject matter of business prudence of assessee which cannot be disputed by the Assessing Officer. The ld. CIT(A) also evaluated the patterns of cash withdrawals from bank account and noted that during FY 2015-16 cash withdrawals were Rs. 5,84,79,000/- and during FY 2016-17 it was Rs. 5,20,46,260/- and cash deposited during FY 2015-16 was Rs. 1,20,00,000 and during F.Y. 2016-17 cash deposit was Rs. 2,40,12,000/-. Therefore above comparison and figures clearly show that the assessee was consistently maintaining huge cash balance as per his business prudence and there was huge cash withdrawals which are much higher than the amounts of cash deposited by the assessee to its bank account during pre & post demonetization period and we are unable to see any discrepancy defect or perversity therein. It is pertinent to mention that the ld. Senior DR did not dispute above noted factual position noted by the ld. CIT(A) before granting relief to the assessee.

We further observe that the ld. CIT(A) after considering the cash withdrawals from the banks as per bank statements and cash book noted that the same cannot be manipulated in any manner. In view of above, we are in agreement with the conclusion drawn by the ld. CIT(A) that the appellant has duly given the site cash books as well as main cash book showing cash balance of Rs. 2,45,41,259/- and the cash deposited to its bank account was created due to huge opening cash balance of Rs. 1,70,45,310/- as on 01.04.2016, as per audited books and return of income filed by the assessee before demonetization declaration, and amount of cash withdrawals from 01.04.2016 to till demonetization period amounting to Rs. 5,20,46,260/- which was higher during immediately preceding FY 2015-16 amounting to Rs. 5,84,79,000/-. Keeping in view above noted factual position which has not been controverted by the Assessing Officer or by the ld. Senior DR we are inclined to agree with the conclusion drawn by the ld. CIT(A) that the assessee has successfully demonstrated source of cash deposit of Rs. 2,40,00,000/- to its bank account during demonetization period and hence not addition is called for. We are unable to see any ambiguity perversity or any valid reason to interfere with the findings arrived by the ld. CIT(A) and thus we uphold the same. Accordingly, grounds of revenue are dismissed.

In the result, the appeal of revenue is dismissed.

Order pronounced in the open court on 18.08.2023.