Neo Iturkaa Enterprises Vs Vs ACIT (ITAT Mumbai)
Summary: The Mumbai ITAT deleted an addition of ₹90 lakh made under Section 69A for cash deposited during demonetisation, holding that perceived improbability of retaining a substantial cash balance could not override contemporaneous books and banking records without contrary evidence. The assessee, a construction contractor providing labour services, regularly withdrew cash for payment of wages to site labourers. During October 2016, it withdrew approximately ₹8.40 crore, of which ₹93 lakh remained as cash-in-hand. Following demonetisation, ₹90 lakh was deposited into the bank account. The AO and CIT(A) rejected the explanation principally because they considered retention of such substantial cash commercially implausible. The Tribunal found that the cash book recorded the withdrawals, utilisation, closing balance and subsequent deposit, while the Revenue had identified no specific defect in the books, diversion of withdrawn cash, fictitious withdrawal or independent source of undisclosed cash. It held that commercial prudence in retaining cash was not decisive where its availability and movement were supported by contemporaneous records. Since the Revenue produced no positive material establishing a different source for the deposit, the assessee had satisfactorily explained its nature and source. The ₹90 lakh addition under Section 69A was accordingly deleted and the assessee’s appeal was allowed.
