Shri Vinod Kumar Goyal v. Commissioner Of Income Tax, Jaipur-Ii, Ncr Building, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 59/ 2008 Shri Vinod Kumar Goyal S/o M.D. Goyal, B-68, Saket Colony, Jaipur ----Petitioner Versus Commissioner of Income Tax, Jaipur-II, NCR Building, Jaipur ----Respondent _____________________________________________________ For Petitioner(s) : Mr. Gunjan Pathak with Mr. Sameer SharmaFor Respondent(s) : Mr. K.D. Mathur & Mr. Prateek Kedawat for Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Order 05/09/2017 1.By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal preferred by the department. 2.This Court while admitting the matter on 14/10/2008 hasframed the following substantial question of law:- “Whether on the facts and in the circumstances,of the case, the Tribunal was justified in law insustaining the addition on account ofunexplained cash deposits of Rs. 45,17,664/-and trading addition of Rs. 19,77,144/-, withoutapplying the principle of telescoping to cover upthe addition of cash deposits from the tradingaddition being a settled proposition of law andspecifically when the ground/contention wasraised before CIT(A) of as well as Tribunal.” vide order dated 9[th] April, 2010 the following question wasadded:- “Whether addition can be made by theAssessment Officer under section 68 holding thatcash withdrawal made on earlier dates cannot bethe source for deposits on future dates withouthaving material on record regarding earlierwithdrawal made from the banks were utilisedelsewhere?” 4.Counsel for the appellant contended that AO has seriouslycommitted an error in considering the assessment u/s 68 contraryto Division Bench judgment of this Court in case of Commissionerof Income Tax vs. G.K. Contractor reported in (2009) 19 DTR 305wherein it has been held as under:- “7. Admittedly, the said amount of Rs. 38,28,086was shown by the assessee in the books ofaccount as "market outstanding". According to theassessee, the payment was outstanding againstthe labour and goods supplied. It is true that onbeing asked, the assessee was not able to explainthese entries by producing the adequate proof tothe satisfaction of the assessing officer. However,in our considered opinion, even if the assesseehas failed to discharge his onus of proof inexplaining the cash credits shown in the books ofaccount as "market outstanding", the assessingofficer having estimated the higher profit rate ontotal contract receipts after rejection of the booksof account invoking the provisions of Section145(3), no separate additions can be made onaccount of unexplained cash credit under Section68 of the Act of 1961. We are in completeagreement with the view taken by theCommissioner (Appeals), confirmed by theTribunal. Thus, no substantial question of lawarises for consideration of this Court in thisappeal. 8. In the result, the appeal fails, it is herebydismissed. No order as to costs. 5.He further contended that in spite of the specific findings ofthe CIT(A) which reads as under:- 8. In the result, the appeal fails, it is herebydismissed. No order as to costs. 5.He further contended that in spite of the specific findings ofthe CIT(A) which reads as under:- “I have examined the assessment order andarguments of the AR carefully. The A.O just tooknote of all cash deposits in the two bank a/csand made the addition u/s 68. He had not takinginto consideration the cash withdrawal in thename of self from these two bank a/cs. He hadalso not took note of the fact that closingbalances of these two bank a/cs at the end ofthe F.Y are duly reflected in the audited balancesheet submitted by the appellant alongwith thereturn of income. The ld. A.O had not objectedto or made any adverse comments upon the ofreport u/s 44AB. Therefore, there is nojurisdiction in admitting part entries andrejecting part entries in the bank a/cs in whichall contract receipts were being credited. Furtherthe AO had not made out a case that theappellant had the income from other sourcewhich was deposited in the bank a/cs. Theassessment records folder shows that appellanthad provided a monthly cash flow statementwhich clearly shows that there was never anycash deposits over and above the sum cashwithdrawal, therefore, after examining the cashflow statement, Balance sheet, Statement ofbank a/cs, it is felt that the withdrawal of cashfrom the bank a/cs and deposits of cash in banka/cs remained normal practice in the appellantown case. Such deposits or withdrawal are dulyjustified on the basis of cash flow statement. Itwas not a case made out by the AO that certaincredits and deposits remained made unexplainedin the hands of certain parties or otherwise thennot in normal business transactions. Therefore, Ihave no hesitation in disapproving AO action ofmaking addition u/s 68. Thus the appellant paygetting a relief of Rs. 45,17,664/-.” 6.The Tribunal while considering the matter has gone onfactual matrix which is contrary to evidence on record and held asunder:- “We have perused the facts of the case. Theassessee was required to explain the cashdeposits exceeding Rs. 50,000/- in both the bankaccounts mentioned hereinbefore but no detailswere furnished by the assessee. The explanationof the assessee in this regard was that theassessee has to maintain heavy cash balancesand there was a huge withdrawals of Rs. 1.21crores from bank account NO. 1455 and Rs. 1.11 crores from other account and therefore, thereceipts in these bank accounts is out of thewithdrawals of the said bank accounts. Theexplanation of the asessee is not convincing, asrightly observed by the Assessing Officer that thehuge cash withdrawals are a source of cashdeposits without any evidence and no cogentreasoning has been given. The cash withdrawalsmade on earlier dates cannot be the source fordeposits on future dates. Moreover, the assesseehas not produced the cash flow date wise andtherefore, in such circumstances and facts of thecase when the cash flow datewise is not availableon record before any of the authorities below andbooks of account of the assessee have beenrejected and also in the absence of any materialon record in support of explanation of theassessee, we find justification in the findings ofthe Assessing Officer who has rightly treated thesaid deposits as Cash Credits which remainedunexplained and has rightly added to the incomeof the assessee u/e 68 of the Act. The ld. CIT(A)has ignored this aspect and therefore, he is notjustified in deleting the addition. Thus GroundNo. 2 of the Revenue is allowed.” 7.Therefore, he contended that in view of the decision ofDivision Bench the matter is required to be allowed. 8.Counsel for the respondent Mr. K.D. Mathur has taken us tofinding of the AO which reads as under:- 7.Therefore, he contended that in view of the decision ofDivision Bench the matter is required to be allowed. 8.Counsel for the respondent Mr. K.D. Mathur has taken us tofinding of the AO which reads as under:- “With regard to the source of cash depositsexceeding Rs. 50,000/- it is submitted thatheavy cash balance is generally maintainedlooking to the nature of the requirement of thebusiness and also due to the reasons formaintaining the cash balance and also becauseof the reason that the assessee required tomake labour payment ranging to Rs. 7-8 lacs.Payment to the labour are already made in cashand therefore, the assessee necessarily has tomaintain heavy cash balance. It may kindly benoted that there was huge withdrawals totalingto Rs. 1.21 crore from one account Bankaccount No. 1455 and Rs. 1.11 crore from othera/c and therefore major deposits of Rs. 14.60lacs and Rs. 30,57,664/- in these bank accountsout of such heavy receipts was not at allimpossible.” 9.He further contended that the cash flow statement was notproperly explained and the withdrawal of Rs. 1.21 crores frombank account and Rs. 1.11 crores from other account anddeposit has been shown only of 30 to 40 lacs but the receipt ofthis withdrawal was not explained, in that view of the matter, theTribunal has rightly reversed the view taken by the CIT(A). 10.We have heard counsel for both the sides and gonethrough the evidence on record. 11. The CIT(A) has specifically observed that the cash flowstatement was produced on record and taking into considerationthe same he has allowed the appeal. However, the Tribunal inpara 14 has observed contrary view and in view of thejurisdictional court judgment, regarding books of accounts of u/s68, he reversed the judgment of CIT(A). 12.In view of the above, the issue is required to be answeredin favour of the assessee against the department. 13.Hence, the appeal stands allowed. (INDERJEET SINGH)J. (K.S.JHAVERI)J. A.Sharma/73