[2021] 131 taxmann.com 308 (Surat-Trib.)/[2021] 87 ITR(T) 707 (Surat-Trib.

)/[2021]
191 ITD 672 (Surat-Trib.)[08-03-2021]

INCOME TAX : Where assessee explained source of cash credit in her bank account
by filing material evidence, addition could not be made holding same as unexplained
cash credit

■■■

[2021] 131 taxmann.com 308 (Surat-Trib.)

IN THE ITAT SURAT BENCH
Smt. Renukaben Umedsinh Parmar
v.
Income-tax Officer, Ward-3, Navsari*
PAWAN SINGH, JUDICIAL MEMBER
AND DR. ARUN LAL SAINI, ACCOUNTANT MEMBER
IT APPEAL NO. 2493 (AHD.) OF 2015
[ASSESSMENT YEAR 2011-12]
MARCH 8, 2021

Section 68 of the Income-tax Act, 1961 - Cash credit (Bank deposits) - Assessment year
2011-12 - Huge amount of cash was deposited in assessee's bank account maintained jointly
with her husband - She claimed that amount from this account had gone to her son for his
study in Australia - Cash flow statement for relevant year, copies of Income Tax Return,
computation of her income for assessment years 2006-07 to 2011-12 and for her husband for
assessment years 2005-06 to 2011-12 were filed - Assessee placed sufficient evidence that
her husband was having agricultural income, income from house property and income from
salary - Assessee also filed copies of ownership of land holdings of about fifty bigha of land
- No adverse evidence was acquired by Assessing Officer except assuming and presuming
deposit in bank account as unexplained income - Whether it would be appropriate to restore
appeal to Assessing Officer to consider plea of assessee to grant her benefit of peak credit
and grant appropriate relief - Held, yes [Para 12] [In favour of assessee]
FACTS

■ The Assessee was an individual and salaried person. She filed her return of income declaring taxable
income of Rs. 3,22,940. The case was selected for scrutiny during the assessment year, on persual of bank
statements that the assessee had deposited huge cash and earned interest on deposits. Besides the cash
deposits, the assessee also earned credit of disbursement credit, transfer credit, sugar credit and LIC
transfer credit.
■ The assessee explained that the income was from salary, agricultural income, and income from house
property. It was further submitted that the money was remitted to their son for pursuing study in Australia.
She further explained that the account was a joint account and the income earned/received by her husband
was also deposited in this account.
■ The Assessing Officer made addition after allowing only a part of agricultural income of the assessee's
husband.
■ On appeal, the Commissioner (Appeals) affirmed the order of the Assessing Officer.
■ On the assessee's appeal to the Tribunal:
HELD

■ The Assessing Officer made addition by taking his view that assessee is a Government employee and was
maintaining bank account and that a person who is maintaining bank account will not keep such huge cash
in hand which is abnormal. The Commissioner (Appeals) concurred with the finding of Assessing Officer
without giving any specific reasoning.
■ The assessee has filed sufficient documentary which includes the cash flow statement for relevant
previous year, copies of Income-tax Return, computation of her and her husband from assessment year
2006-07 to assessment year 2011-12 and assessment year 2005-06 to assessment year 2011-12
respectively. The assessee has placed on record sufficient evidences that assessee's husband was having
agricultural income, income from house property and income from salary. No finding was given by the
lower authorities on such documentary evidence. However, the agricultural income and salary income of
assessee's husband is not disputed by the revenue. Admittedly, the bank account in Bank of Baroda,
wherein the impugned cash deposit is in dispute is joint account of assessee and her husband. The Lower
Authorities has not made any investigation whether her husband is maintaining any other or separate bank
account. The cash flow statement was not examined by the lower authorities. The Assessing Officer
during the assessment made enquiries under section 133(6), and certain replies were received in response
thereto. Admittedly the copies of reply were not provided to the assessee. The assessee has placed on
record the details of income of assessee from assessment year 2005-06 to assessment year 2010-11 as well
as her husband from assessment year 2005-06 to assessment year 2010-11, showing the household
withdrawal. No finding was given on such documentary evidence. No adverse evidence was acquired by
the Assessing Officer except assuming and presuming the deposit in the bank account has unexplained
cash credit. The assessee has admitted the ownership of the credit and that amounts from the account have
gone to her son for his study in Australia. The lower authorities were of the view that the assessee has not
explained the sources. The assessee has also filed the copies of ownership of land holdings of about fifty
bigha of land. Considering the entire facts and circumstances of the case, was for granting benefit of peak
credit to the assessee, as no adverse material is brought on record except taking view that keeping of such
cash at home is abnormal. Therefore, it would be appropriate to restore the appeal to the file of the
Assessing Officer to consider the plea of assessee to grant her the benefit of peak credit and grant
appropriate relief to the assessee. [Para 12]
CASES REFERRED TO

Durga Kamal Rice Mills v. CIT [2003] 130 Taxman 553/[2004] 265 ITR 25 (Cal.) (para 9).
Tarun Ghia, AR for the Appellant. Smt. Anupama Singla, Sr. DR for the Respondent.
ORDER

Pawan Singh, Judicial Member. - This appeal by Assessee is directed against the order of ld. Commissioner
of Income-tax (Appeals)-Valsad, Valsad dated 01-6-2015 for assessment year (AY) 2011-12. The assessee has
raised following grounds of appeal:
"1. On facts and circumstances of the case and in law, Ld.Assessing Officer has erred in considering cash
deposits as unexplained investments u/s. 69. Ld. CIT (Appeals) has also erred in confirming the same.
2. On facts and circumstances of the case and in law, Ld. Assessing Officer has erred in adding Rs. 592/-
of bank interest under the head income from other sources, Ld. CIT (Appeals) has also erred in
confirming the same.
3. Appellant craves leave to amend, alter or delete any of the above grounds of appeal."
2. Brief facts of the case are that the assessee is an individual and salaried person, filed her Return of Income
for the assessment year 2011-12 on 18-8-2011 declaring taxable income of Rs. 3,22,940/-. The case was
selected for scrutiny. During the assessment, on perusal of bank statements, the Assessing Officer noted that
assessee had cash deposit in her bank account of Rs. 34,38,050/- and earned interest on bank deposit of Rs.
592/-. Besides the cash deposit, the assessee has had a credit of disbursement credit of Rs. 7,50,000/-, transfer
credit of Rs. 3,25,000/-, Gandevi Sugar Credit Rs. 31,486/- and LIC Transfer Credit Rs. 30,236/-. In another
bank account the assessee has cash credit of Rs. 2,09,000/-and clearing credit of Rs. 3,00,000/-. As the
assessee is a salaried person and there was huge credit and cash deposit in her bank account, the Assessing
Officer was of the view that such huge cash deposit is abnormal. The assessing officer issued show cause
notice to explain credit entry and the source of withdrawals in the bank account. The contents of show cause
notice is reproduced by the Assessing Officer in para 4 of the assessment order. The assessee filed her reply
dated 17-10-2013. The contents of reply is extracted in para 4.1 of the assessment order. In reply, the assessee
stated that she is a teacher in project office cum taluk development office, Chikhli a joint venture of
Government of Gujarat. She worked for 30 years as a teacher. Her husband namely Mr. Virendrasinh Parmah
is also a teacher. The assessee is having two sons, namely (i) Amit Virendrasinh Parmar and (ii) Hiren
Virenshih Parmar aged about 28 and 30 years respectively. Her elder son namely Hiren Virensinh Parmar
went to Australia for education. Total cost of education/study in Australia was $26130. Copies of immigration
documents were also furnished. The assessee further explained that to meet the expenditure, the assessee and
her husband made deposited requisite amount in the Bank of Baroda, Rankuva Branch in Savings Account
No. 024070100000597. The account has been in the joint name of assessee and her husband. The amount
deposited in the bank was remitted to their son for pursuing study in Australia. The assessee also furnished
Form-16 of her salary income, with details of amount received from Gandevi Sugar towards Sugar Cane, Jain
Trading Co. Royal Gor Farm, Harshad Mango the etc. The assessee further explained that she and her
husband were in employment as a teacher for last 30 years and were able to bear the cost of foreign education
of their son. The assessee further stated that the amount deposited in the account is not a individual account,
but a joint account. The income received/earned by her husband was also deposited in the same account. The
assessee also stated that she is residing in area of Kukery in a very interior area where total population was
less than five thousand. In initial years, there was no facility of banking. Thus, they were keeping the savings
in the form of cash only so; earlier savings from the saving income as well as agricultural income were in the
form of cash and were deposited to meet the requirements of education on their son. The assessee explained
that provision of section 69A is not applicable. Entire amount is recorded in the books. Section 69A deals
with unexplained money of which assessee is found to be the owner. The explanation/reply furnished by
assessee was not accepted by the Assessing Officer. The Assessing Officer in para 4.2 of the assessment order
recorded that in order to verify the genuineness of agricultural produce, the inquiries were caused. And on
verification, it was found that agricultural income is not genuine.
3. The Assessing Officer further issued a show cause notice dated 16-12-2013, contents of which is extracted
in para 4.3 of the assessment order. In the show cause notice, the assessing officer noted that notice under
section 133(6) of the Act was issued to Jain Trading Company, Harshad Mango Product P Ltd, Royal Gol
Farm and to Shri Swastik Food Product. In response to the notice under section 133(6), Shri Ishwarlal Hiralal
Shah, proprietor of Jain Kirana Store, appeared before the Assessing Officer and stated that he has no business
in the name of Jain Trading Company. The bill of Jain Trading Company was confronted to him and that he
stated that the bills were not issued by him. For Harshad Mango Products, it was reported that no transaction
as carried out with the assessee, however raw materials were purchased from Shri Virendrasinh Paramar
(husband of the assessee) and payments were made in financial year 2007-08. From Harshad Mango Products,
it was replied that payments were made through Demand Draft and not cash. No reply was received from
Royal Gor Farm and Shri Swastik Food Products. The Assessing Officer further noted that agricultural
income declared by Shri Viremndrasinh Parmar for A.Y. 2011-12 is Rs. 3,45,750/-. However, a certificate of
sugarcane was only of Rs. 1,02,014/-. The Assessing Officer further noted that husband of assessee shown
agricultural income of Rs. 1,25,760/- for A.Y. 2007-08, Rs. 1,74,380/- for A.Y. 2008-09, Rs. 2,65,000/- for
A.Y. 2009-10. And that no proof of agricultural income has been furnished. The assessing officer further took
his view that assessee is a Government Employee and was maintaining bank account and that a person who is
maintaining bank account will not keep such a huge cash in hand. Therefore, the contention of assessee that
there is banking facility is not available in Kukeri is not correct. The bank facility at Renkuva is available,
which is 3 km away. On the aforesaid observation, the assessing officer treated Rs. 34,01,300/- as
unaccounted cash deposit by holding that there were cash deposits of Rs. 34,38,050/- and interest of Rs. 592/-.
There is another deposit of Rs. 5,09,000/- in another bank account no. 2709. The Assessing Officer allowed
the agricultural income of assessee's husband as declared by him in his Return of Income of Rs. 3,45,750/-
and also granted further credit of Rs. 2,00,000/- and thereby remaining amount of Rs. 34,01,300/- and interest
income not shown in the computation of income was headed under the income from other source.
4. Aggrieved by the additions in the assessment, the assessee filed appeal before the ld.CIT(A). Before the
ld.CIT(A), the assessee also tried to explain that son of the assessee sent abroad for studies. For his travel and
study expenses, cash was deposited in the bank; the bank account was in the name of assessee and her
husband. Major part of the cash was generated out of the agricultural income of the husband and the same
cash relates to accommodate savings. The assessee is a teacher; the husband of the assessee is also having
agricultural income. The agricultural income is assessed under section 143(3) of the Act. The Assessing
Officer wrongly treated the credit in the bank account in first name of bank account which is of assessee and
treated it her cash and asked to prove the source. The assessee produced agricultural bill which were in the
name of husband to support the cash. The Assessing Officer on the basis of third party statement treated those
bills as bogus. The replies of those third parties were not provided to the assessee. The husband of the
assessee has shown agricultural income which has been assessed in his name. The bill do not pertain to the
income of the assessee, which was treated as bogus bill, thus, bills were in the name of assessee's husband.
The assessee furnished cash flow statement of past years and also tried to explain that major income from of
agriculture in the past accumulating in cash and the agricultural income belongs to her husband. The assessee
also furnished year wise income of herself and of her husband. The assessee furnished the opening cash
balance with other as on 1-4-2010, with details of income of assessee from assessment year 2005-06 to 2011-
12 consisting of income from salary, agricultural income, income from house property was also furnished.
The assessee also furnished Form-7/12 and 8A [agricultural ownership document] of her husband to prove the
genuineness of agricultural income. The ld.CIT(A) after considering the assessment order, submissions of the
assessee and the documents evidence furnished by the assessee held that assessee is a teacher and her source
of income is salary. Husband of assessee is also teacher from last 28 years. The ld.CIT(A) compiled the details
of three bank accounts in the following manner :
(i) Bank of Baroda, Rankuva Branch a/c No. 02470100000597
Cash deposits Rs.34,38,500/-
Rs. 7,50,000/-
Rs. 3,25,000/-
Rs. 31,086/-
Rs. 30,236/-
Rs. 385/-
(ii) Bank of Baroda, Rankuva Branch a/c No. 0247010002709
Cash deposit Rs.2,09,000/-
Rs.3,00,000/-
(iii) Bank of Baroda, Khergam Branch a/c No. 02440100008304

5. The ld.CIT(A) further noted that it was explained before him that the deposits were made out of past saving
income, agricultural income was also deposited in these accounts. The Id. CIT(A) noted that during the
assessment a number opportunities was given to the assessee to explain the deposits. The assessee was not
able to explain with the evidence that past saving as well as saving accruing from agricultural income was the
deposit into the bank account or the evidence of the agricultural income allowing cash at home as the assessee
was maintaining banking accounts where salary was deposited. The ld.CIT(A) concluded that he is convinced
that assessee is not been able to prove the source of cash and upheld the action of assessing officer. On the
issue of interest income the ld CIT(A) upheld the action of assessing officer by taking view that no submission
is made by the assessee on this ground. Aggrieved further, the assessee was filed present appeal before this
Tribunal.
6. We have heard the submission of learned Authorised Representative (AR) of the assessee and the learned
Departmental Representative (DR) for the Revenue and gone through the orders of authorities below
carefully. We have also gone through the following documentary evidences filed by the assessee.

➢ Copy of documents with regard to immigration of son of assessee,

➢ Copy of bills of agriculture produce consisting receipt of Shahkari Khand Udyog Mandal Ltd, Jain
Trading Company, Royal Gol Farm, Harshad Mango Product Pvt Ltd and Swastik Food Product,
➢ Extract of withdrawal from Chikhali Taluka teachers Cooperative Credit Society Ltd,
➢ Copy of cash flow statement for previous year 2010-11,
➢ Copy of details of saving bank account in Bank Of Baroda No. 597 and personal bank account Nos.
551 & 597 & 2709,
 ➢ Copy of return of income with computation of income of assessee and her husband from AYs 2006-
07 to 2011-12.
7. In compliance of direction of the bench the assessee also furnished the details of her income from AYs-
2005-06 to 2010-11, income of her husband from AY 2005-06, details of income of her husband from
agriculture and house property, copy of form No. 6, 7/12 and 8A of agriculture holding of her husband.
8. Ground No. 1 relates to addition under section 69A of Rs. 34,01,300/-. The ld. AR of the assessee submits
that assessee as well as her husband both are employed as a teacher from last three decades. The assessee was
having joint account with her husband. The amount deposited in the bank account includes the income earned
by her husband. Husband of the assessee is also having agricultural income which was also deposited in the
joint account with the assessee. The assessee explained before the lower authorities that cash deposits
including her and her husband savings of last so many years. The assessee furnished the bills of agricultural
income in the name of her husband. The assessee furnished the bills of agricultural income in the name of her
husband. The assessee's son had gone abroad for his higher study and thus, the assessee maintained sufficient
credit in her joint account to meet the requirements of immigration. The assessee also explained before the
lower authorities that banking facilities were not available in the vicinity where the assessee is residing, thus,
kept in the form of cash. In order to verify the evidences furnished by the assessee, the assessing officer called
certain information under section 133(6), from the parties who issued the bills of agriculture produce. The
assessing officer received certain incriminating reply, the Assessing Officer took his view that bills are not
genuine. The replies furnished by those third parties were not provided to the assessee, thus, the assessing
officer has violated the principle of natural justice. The assessing officer wrongly rejected the explanation
about the agriculture income. There was no doubt on the agricultural income of the assessee's husband which
was accepted by the Revenue from last so many years. Out of the total deposit the assessing officer considered
the income of assessee's husband of Rs. 3,47,750/- and further Rs. 2,00,000/- as a past saving. The learned AR
for the assessee further submits that the assessee and her husband were having no other liability except to
meet out the expenses of education for her two sons. The assessee furnished cash flow statement for F.Y.
2010-11 and details of all bank accounts. The income tax return of assessee from A.Y. 2006-07 to A.Y. 2011-
12 along with the Return of Income of her husband along with computation of income for A.Y. 2008-06 to
2011-12 was also furnished. The ld.CIT(A) has not given any independent finding and concurred with action
of the Assessing Officer.
9. In support of his submission the Authorised Representative relied upon the decision of Hon'ble Calcutta
High Court in Durga Kamal Rice Mills v. CIT [2003] 130 Taxman 553/[2004] 265 ITR 25. The ld. AR for the
assessee prayed for deleting entire addition.
10. In the alternative submission, the ld. AR of the assessee submits that benefit of telescoping/peak credit
may be given to the assessee.
11. On the other hand, the ld. DR for the Revenue supported the order of Lower Authorities. The ld. DR for
the revenue further submits that during the assessment, the assessing officer while going through the bank
account found that assessee had huge cash deposit and the same was transferred from other accounts through
Demand Draft. The assessee has to prove the source of withdrawal, the assessee failed to prove the source of
cash deposite. The assessing officer in para 4.9 of the assessment order has clearly held that the assessee has
not proved the destination of withdrawal given to her son. The assessee has not produced any conclusive
proof of cash deposit. The Assessing Officer also held that benefit of telescoping is not available in case of
assessee. The financial statement clearly shows the modus operandi unaccounted income of the assessee. The
onus was on the assessee to explain the cash entries. The assessee failed to explain the source of credit in her
account. The Assessing Officer has already given set off of income declared by assessee's husband. The ld.
DR for the revenue prayed for dismissal of grounds of appeal.
12. We have considered the rival submission of both the parties and have gone through the orders of
authorities below. We have also deliberated on the documentary evidences and case law relied by ld. AR for
the assessee. The assessing officer made addition by taking his view that assessee is a Government Employee
and was maintaining bank account and that a person who is maintaining bank account will not keep such huge
cash in hand which is abnormal. The ld.CIT(A) concurred with the finding of assessing officer without giving
any specific reasoning. We have noted that assessee has filed sufficient documentary which includes the cash
flow statement for relevant previous year, copies of Income-tax Return, computation of her and her husband
from A.Y. 2006-07 to A.Y. 2011-12 and A.Y. 2005-06 to A.Y. 2011-12 respectively. We have noted that the
assessee has placed on record sufficient evidences that assessee's husband was having agricultural income,
income from house property and income from salary. No finding was given by the lower authorities of such
documentary evidence. We have noted that agricultural income and salary income of assessee's husband is not
disputed by the Revenue. Admittedly, the bank account no. 597 in Bank of Baroda, wherein the impugned
cash deposit is in dispute is joint account of assessee and her husband. The Lower Authorities has not made
any investigation whether her husband is maintaining any other or separate bank account. The cash flow
statement was not examined by the lower authorities. The assessing officer during the assessment made
enquiries under section 133(6) of the Act, and certain replies were received in response thereto. Admittedly
the copies of reply were not provided to the assessee. The assessee has placed on record the details of income
of assessee from A.Y. 2005-06 to A.Y. 2010-11 as well as her husband from A.Y. 2005-06 to A.Y. 2010-11,
showing the house hold withdrawal [page 22-23 of the paper book]. No finding was given on such
documentary evidence. No adverse evidence was acquired by the Assessing Officer except assuming and
presuming the deposit in the bank account has unexplained cash credit. The assessee has admitted the
ownership of the credit and that outgoes have gone to her son for his study in Australia. The lower authorities
were of the view that the assessee has not explained the sources. Before us, the assessee has also filed the
copies of ownership of land holdings of about fifty bigha of land. Considering the entire facts and
circumstances of the case, we are of the view, it is a fit case for granting benefit of peak credit to the assessee,
as no adverse material is brought on record except taking view that keeping of such cash at home is abnormal.
Therefore, we deem it appropriate to restore the appeal to the file of assessing officer to consider the plea of
assessee to grant her the benefit of peak credit and grant appropriate relief to the assessee.
13. In the result, Ground No. 1 of the appeal is allowed for statistical purposes.
14. Ground No. 2 relates to addition on account of interest income of Rs. 592/- under the head 'income from
other sources'. We have noted that no submission was made by ld. AR of the assessee on this ground of
appeal. Therefore, this ground of appeal is treated as not pressed and dismissed as such.
15. In the result, appeal of the assessee is partly allowed.
SB

*In favour of assessee.