Rakesh Kumar Sharma Vs ITO (ITAT Agra)
Cash Re-deposit from Prior Withdrawals Accepted; ₹1 Crore Addition u/s 68 Deleted and Adhoc Disallowances Reduced – ITAT Agra
The Agra Bench of the ITAT partly allowed the appeal of a contractor for AY 2017-18 and granted major relief by deleting the addition of ₹1 crore made under section 68 on account of cash deposits during the demonetisation period, while substantially reducing ad-hoc disallowances.
The assessee had deposited ₹1 crore on 10.11.2016. The Assessing Officer treated it as unexplained under section 68 and applied section 115BBE, alleging non-production of cash book. The Tribunal noted from the bank statement (page 7) that the assessee had withdrawn ₹1.20 crore on 28.10.2016, just before demonetisation, and the redeposit was fully traceable to prior withdrawals. Since the source stood clearly explained, the ITAT deleted the entire ₹1 crore addition, rendering section 115BBE inapplicable.
On the issue of alleged unaccounted turnover of ₹47.35 lakh, the Tribunal accepted the assessee’s explanation that the difference mainly represented FDR maturity credits (page 8) and other non-business entries, and held that such credits cannot be treated as business receipts. The estimated addition of ₹3.78 lakh @ 8% was accordingly deleted.
Regarding ad-hoc disallowances:
