Case Law Details
Kaliannan Ganesan Vs ITO (ITAT Chennai)
It transpired that the assessee made cash deposits of Rs.13.30 Lacs post demonetization as tabulated assessment order. Accordingly, the assessee was directed to substantiate the source of the same. The assessee is stated to be engaged in poultry farm business and trading of eggs.
AO held that there was significant increase in the monthly cash balance as on 01.11.2016 as compared to the earlier month during this year. The increase in such cash balance was claimed to be mainly from cash sales / recovery from debtors. Finally, partly accepting the claim, the amount of Rs.3.15 Lacs as deposited by the assessee on 14.11.2016 & 16.11.2016 was added u/s. 69A r.w.s. 115BBE of the Act and the assessment was framed.
CIT(A) held that mere production of cash book would not mean that the source has been explained. The onus lies on the assessee to prove the source and since he failed to prove the same, the additions were justified.
ITAT find that the assessee’s financial statements have duly been audited u/s 44AB. The assessee has reflected turnover of Rs.431.11 Lacs. In the year-end Balance Sheet, the assessee has reflected cash balance of Rs.11.07 Lacs. The bank accounts have duly been disclosed in the Balance Sheet. The assessee produced cash book for this year wherein the cash balance as on 08.11.2016 was shown to be Rs.14.56 Lacs which was sufficient enough to cover the deposit Rs.13.30 Lacs. No defects have been pointed out in the books of accounts. Therefore, the additions are based merely on presumptions and therefore, not sustainable in law.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of the order of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 23.06.2021 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 15.11.2019. In this appeal, the sole grievance of the assessee is confirmation of addition of Rs.3.15 Lacs u/s 69A.
2. The Ld. AR assailed the additions on the ground that the cash balance was represented by audited books of account. The assessee had sufficient cash balance to deposit the same into his bank account. The Ld. Sr. DR controverted the arguments of Ld. AR and justified the additions as sustained in the impugned order. Having heard rival submissions, my adjudication would be as under.
Assessment Proceedings
3.1 The assessee was assessed u/s. 143(3) to examine the cash deposits made by the assessee. It transpired that the assessee made cash deposits of Rs.13.30 Lacs post demonetization as tabulated in page-4 of the assessment order. Accordingly, the assessee was directed to substantiate the source of the same. The assessee is stated to be engaged in poultry farm business and trading of eggs.
3.2 The assessee furnished cash book for this year along with bank statements. The cash balance as on 08.11.2016 was reflected as Rs.14,56,542/- which was claimed to be a source of deposit of SBN notes into the bank account during demonetization period.
3.3 The Ld. AO held that there was significant increase in the monthly cash balance as on 01.11.2016 as compared to the earlier month during this year. The increase in such cash balance was claimed to be mainly from cash sales / recovery from debtors. Finally, partly accepting the claim, the amount of Rs.3.15 Lacs as deposited by the assessee on 14.11.2016 & 16.11.2016 was added u/s. 69A r.w.s. 115BBE of the Act and the assessment was framed.
Appellate Proceedings
4. The Ld. CIT(A) held that mere production of cash book would not mean that the source has been explained. The onus lies on the assessee to prove the source and since he failed to prove the same, the additions were justified. Aggrieved, the assessee is in further appeal before me.
My findings and Adjudication
5. Upon perusal of documents on record, I find that the assessee’s financial statements have duly been audited u/s 44AB. The assessee has reflected turnover of Rs.431.11 Lacs. In the year-end Balance Sheet, the assessee has reflected cash balance of Rs.11.07 Lacs. The bank accounts have duly been disclosed in the Balance Sheet. The assessee produced cash book for this year wherein the cash balance as on 08.11.2016 was shown to be Rs.14.56 Lacs which was sufficient enough to cover the deposit Rs.13.30 Lacs. No defects have been pointed out in the books of accounts. Therefore, the additions are based merely on presumptions and therefore, not sustainable in law. I order so.
6. The appeal stand allowed.
Order pronounced on 12th September, 2022.
