Ilyas Shekhani Avon Agency Vs ITO (ITAT Raipur)
ITAT Raipur held that addition towards unexplained cash deposits under section 69A of the Income Tax Act is liable to be set aside in as much as the source of cash deposits duly explained. Accordingly, appeal restored to AO with direction to re-adjudicate the issue.
Facts- The case of the assessee was selected for “limited scrutiny” for verifying the cash deposits made in his bank account during the subject year. AO observed that the assessee during the demonetization period had made cash deposits of Rs.10,10,000/- in demonetized currency (SBNs) in his bank account. As the assessee had failed to explain the source of the aforesaid cash deposits made in SBNs in his bank account, therefore, the A.O made an addition of the same by treating it as his unexplained money u/s. 69A of the Act.
CIT(A) upheld the addition. Being aggrieved, the present appeal is filed.
Conclusion- Held that the cash deposits in SBNs made by the assessee in his bank account were sourced out of cash sale proceeds generated during the pre-demonetization period, which, thereafter, were in the normal course of his business remitted/transferred to its aforementioned vendors. Apart from that, I find that the copy of the sale register [as was filed by the assessee before the CIT(Appeals)] reveals that the assessee had garnered cash sale receipts of Rs.14.73 lacs during the pre-demonetization period i.e. 01.10.2016 to 05.11.2016, which, thus, could safely explain the source of the cash deposits in SBNs of Rs.10.10 lacs made by him in his bank account during the demonetization period.
