JCIT (OSD) Vs M B Exim Private Limited (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, dismissed the Revenue’s appeal and upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which restricted the addition under Section 69A of the Income-tax Act to the peak negative cash balance instead of the aggregate of all negative cash balances reflected in seized data.
For Assessment Year 2022-23, the assessee filed its return declaring total income of Rs. 34,94,390/-. Following a search and seizure operation conducted on 24 November 2022, the Assessing Officer (AO) made an addition of Rs. 1,14,09,260/- under Section 69A on account of unexplained cash. The AO relied on books of account seized during the search, which reflected negative cash balances on twelve occasions. According to the AO, these negative balances indicated that the assessee had introduced unaccounted cash to convert the negative balances into positive cash balances. The addition was computed by aggregating all such negative balances.
During appellate proceedings, the assessee contended that the negative balances were derived from unaudited dump data extracted from the Tally software and resulted from duplicate and incorrect entries. It submitted that the questioned cash originated from withdrawals from its bank account and that the audited financial statements did not contain any negative cash balance. Alternatively, the assessee argued that if any addition was warranted, it should be restricted to the peak negative cash balance.
