Ranbir Singh Sorout Vs ITO (ITAT Delhi)
Tribunal holds cash deposits of ₹1.25 crore matching turnover in books cannot be treated as unexplained income u/s 69. Revenue’s appeal dismissed. Tribunal finds books of accounts properly reconcile ₹1.25 crore cash deposits, rejecting Revenue’s claim of unexplained income. Tribunal rules deposits recorded in books of accounts cannot be treated as unaccounted income.
The case arose when AO received information regarding cash deposits of ₹1.25 crore in the savings bank account of the assessee, a wholesale cloth trader. Since Assessee had not filed his return of income, the AO reopened the assessment & brought the entire sum to tax as unexplained money u/s 69.
During the reassessment proceedings, Assessee furnished books of accounts & explained that the deposits represented business turnover duly recorded therein. AO, however, rejected the explanation & treated the deposits as unaccounted cash.
CIT(A) found that the books of accounts had been produced, & more importantly, they were never rejected by AO. CIT(A) observed that once the deposits stood reconciled with recorded turnover, the presumption of unexplained income u/s 69 had no basis. Accordingly, the entire addition of ₹1.25 crore was deleted.
When the Revenue carried the matter before the ITAT, it argued that Assessee’s failure to file a return originally cast doubt on the genuineness of the reconciliation. It was contended that the AO was justified in treating the deposits as unexplained.
