Creative Engineering And Constructions Vs DCIT (ITAT Bangalore)
Cash Withdrawn Earlier Cannot Become ‘Unexplained Cash’ on Re-Deposit- Bangalore ITAT Deletes ₹27 Lakh Demonetisation Addition
The Bangalore ITAT deleted an addition of ₹27 lakh made u/s 68 in respect of cash deposits during the demonetisation period, holding that when the assessee had already established that the cash deposited originated from earlier withdrawals from the same bank account, the deposits could not be treated as unexplained merely on suspicion.
The assessee, a civil construction firm, had deposited ₹9 lakh each on 13.11.2016, 14.11.2016 and 15.11.2016 in its ICICI Bank account. The explanation furnished was that identical amounts had been withdrawn earlier on 05.10.2016, 06.10.2016 and 07.10.2016 for labour and site expenses, but remained unutilised and were therefore re-deposited into the same bank account. The assessee produced the cash book, bank statements and cash flow details to substantiate the source.
The AO disbelieved the explanation merely because the deposits were made in consecutive tranches of ₹9 lakh during demonetisation and treated the amounts as unexplained cash credits. The CIT(A) also confirmed the addition by observing that the labour expenses booked by the assessee were comparatively meagre and therefore the withdrawals lacked justification.
However, the ITAT found that the assessee’s cash book clearly reflected sufficient cash balance arising out of earlier withdrawals from the same account and there was no evidence brought by the AO to show that the withdrawn cash had already been spent elsewhere. The Tribunal observed that the AO merely disbelieved the books without disproving them through any contrary material. In the absence of evidence showing utilisation of the earlier withdrawals, the redeposit of the same cash could not be rejected. Accordingly, the addition u/s 68 was deleted in full.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
