Samir Mahesh Shah Vs DCIT (ITAT Ahmedabad)
ITAT Deletes ₹10.98 Lakh Addition Because Nil Cash Disclosure in Earlier ITR Alone Was Insufficient; Opening Cash Balance Cannot Be Treated as Unexplained Because Earlier ITR Showed Nil Cash: ITAT; Section 69A Addition Deleted Because Revenue Relied on Presumptions Instead of Evidence; ITAT Removes Cash Addition Because Financial Capacity Supported Opening Cash Balance; ₹10.98 Lakh Cash Addition Quashed Because Earlier Return Format Did Not Require Balance Sheet Disclosure
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, allowed the assessee’s appeal and deleted the addition of ₹10,98,810 made under Section 69A of the Income-tax Act, holding that the opening cash balance could not be treated as unexplained merely because the preceding year’s income tax return reflected a nil cash balance.
The assessee had filed the return of income for Assessment Year 2020-21, which was selected for scrutiny. During assessment, the Assessing Officer (AO) noticed that the balance sheet reflected an opening cash-in-hand of ₹10,98,810 as on 1 April 2016, whereas the return of income for Assessment Year 2016-17 disclosed a nil cash balance. The AO sought an explanation for this discrepancy.
The assessee explained that in earlier years there was no requirement to furnish balance sheet details because the income comprised salary, house property, capital gains, and other sources. He further stated that in Assessment Year 2016-17, Futures & Options transactions were treated as business income, but the closing cash balance was shown as nil due to the return format. In the relevant assessment year, tax audit became applicable, requiring complete books of account and a balance sheet to be disclosed. The assessee also submitted that the cash represented accumulated bank withdrawals from income already offered to tax and was retained for household and emergency purposes.
