PCIT (Central) Vs Pancham Realcon Pvt. Ltd (Delhi High Court)
Delhi High Court held that addition of demonetization cash deposit under section 68 of the Income Tax Act towards unexplained cash credit rightly deleted by CIT(A) since source of deposit duly explained with documentary evidence. Accordingly, appeal of revenue dismissed.
Facts- During scrutiny assessment, AO found that the cash balance available on 08.11.2016 with the assessee company was ₹3,87,270/- where the assessee had deposited cash amounting to ₹2,80,00,000/-, post demonetization. The explanation offered by the assessee was not acceptable to AO who held that the assessee failed to furnish satisfactory explanation of the source of cash of ₹2,80,00,000/- deposited during the demonetization period and treated the same as unexplained cash credit u/s. 68 of the Act and added it to the income of the assessee.
CIT(A) deleted the impugned addition. ITAT dismissed the appeal of the department. Accordingly, being aggrieved, department has preferred the present appeal.
Conclusion- Held that the observation made by the AO is in a generalised manner that the cash is normally withdrawn for immediate expenses is not well founded. The time gap of a few months between cash withdrawal and cash deposit into the bank account, similar trend is observed in the preceding year also, thereby, establishing that such time gap was a normal feature of the assessee’s business. For example substantial cash withdrawal of ₹1,19,10,000/- was made in the month of August, 2015 and the same was not effectively deposited back into the bank accounts till the month of March, 2016 resulting in a high closing balance of ₹2,66,53,070/- as on 31.03.2016. The AO has ignored the main cashbook of the assessee and considered only the site cashbooks in arriving at the figure of cash balance as on 08.11.2016. Hence, we are of the view that no substantial questions of law arises for consideration in this appeal. Thus, the appeal is dismissed against the Revenue in favour of the assessee/respondent.
