Om Sai Contractors Vs ITO (ITAT Surat)
ITAT Surat held that addition towards cash deposited during demonetization restricted to 10% of total deposit since assessee fully substantiated the cash deposit showing sufficient withdrawal. Accordingly, appeal partly allowed.
Facts- Assessee is a firm engaged in business of job work of paintings of buildings, leasing of plant & machineries and equipment on contract. The case was selected on the issue of cash deposits of Rs.40,00,000/- in its bank account during demonetization period. AO treated the cash deposit ofRs.40,00,000/- as unexplained and added u/s. 69A of the Act and taxed u/s. 115BBE of the Act, while passing the assessment order on 21.12.2019.
CIT(A) upheld the addition. Being aggrieved, the present appeal is filed.
Conclusion- Held that except doubting the cash availability, other expenses either capital or revenue is not doubted by Assessing Officer nor any adverse material is brought on record. Therefore, considering the overall facts and circumstances of the case, I am of the view that in order to avoid possibility of revenue leakage a token disallowance @ 10% of total deposit cash would be sufficient to avoid the possibility of revenue leakage. Since assessee is engaged in business activities and cash available with the assessee is out of business activities, therefore, it cannot be taxed at the higher rate prescribed under section 115BBE of the Act. The AO is directed to tax the same under normal rate of tax applicable on assessee, for the year under consideration. Thus, the ground of assessee is partly allowed.
