Rengasamy Asaithambi Vs ACIT (ITAT Chennai)
ITAT Chennai held that addition under section 69A of the Income Tax Act towards unexplained money not legally sustainable since nature and source of cash deposits duly explained. Accordingly, addition is liable to be deleted.
Facts- Assessee is a wholesale vegetable merchant. AO noted that the assessee had deposited cash of Rs.2,40,41,610/- in his bank accounts during demonetization period from 09.11.2016 to 31.12.2016. The assessee submitted that the cash deposits were made out of his trading in vegetable which included cash available in hand as on 08.11.2016; and that the cash balance available with the assessee on 08.11.2016 was to the tune of Rs.1,04,52,586/- and that out of the said amount, Specified Bank Notes (SBNs) were only to the tune of Rs.62,62,500/-. The AO noted the aforesaid facts and made the addition of Rs.40 lakhs u/s.69A of the Act
CIT(A) confirmed the addition. Being aggrieved, the present appeal is filed.
Conclusion- Held that the addition can’t be sustained for the simple reason that the AO has accepted the returned income to the tune of Rs.18,82,980/- and has accepted the audited books of accounts filed by the assessee. It is noted that the assessee has deposited Rs.62,62,500/- [SBNs] in the bank which deposit’s nature & source has been accepted by the AO presumably being trade receipts (purchase and sale of onion & potatoes in the whole sale market]. It is noted that the assessee had shown the cash balance in hand [as on 08.11.2016] to the tune of Rs.1,04,52,586/- and out of which Rs.62,62,500/- [SBNs] were accepted by the AO. But, when it came for the balance amount shown as cash balance [as on 08.11.2016] to the tune of Rs. 41 lakhs approx, he wondered ‘as to how’ the assessee would be having the valid currencies in the denomination of Rs.100/-, Rs.50/-, Rs.20/- & Rs.10/- etc., which sum of cash, according to him was improbable to be with an assessee who is having good turnover of more than 16 Crs and based only on suspicion and conjectures has made the addition which can’t be legally sustained.
