DCIT Vs Vaibhav Ginning & Spinning Mill Private Limited (ITAT Rajkot)
ITAT Deletes Section 69A Addition Because Demonetization Cash Deposits Matched Audited Cash Book; Demonetization Cash Deposits Cannot Be Taxed as Unexplained When Business Pattern Is Consistent; Section 69A Addition Unsustainable Because AO Accepted Books but Questioned Cash Balance Without Evidence; Cash Withdrawals and Redeposits Cannot Be Treated as Unexplained Without Proof of Diversion.
The Income Tax Appellate Tribunal (ITAT), Rajkot, dismissed the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals) deleting an addition of Rs.9.75 crore made under Section 69A read with Section 115BBE in relation to cash deposits during the demonetization period.
The assessee company was engaged in the business of manufacturing cotton bales from raw cotton through ginning and manufacturing cotton yarn through spinning. It had filed its return of income declaring total income of Rs.3.44 crore along with an audit report. The case was selected for complete scrutiny under the Computer Aided Scrutiny Selection system, including scrutiny on account of large cash deposits during demonetization and undisclosed income reported on the ITBA AIMS Portal.
During assessment proceedings, the Assessing Officer noticed that the assessee had deposited cash of Rs.12.29 crore in its State Bank of India account during the demonetization period. The assessee was asked to explain the source of the cash deposits. According to the Assessing Officer, the assessee initially did not provide adequate explanation and only submitted a cash book shortly before completion of assessment.
