Addition towards unexplained cash credit deleted as AO failed to conduct independent inquiry

Rajesh Singh A. Rajput Vs ITO (ITAT Ahmedabad)

ITAT Ahmedabad deleted the addition towards unexplained cash credit as AO failed to conduct independent inquiry and addition was made merely for the reason that there was minor difference in amount of cash deposited vis-à-vis amount of demand draft and amount of invoice.

Facts- The assessee is an individual and deriving income from salary. The assessee in the return filed u/s. 139 of the Act declared income at Rs. 1.76 lakh only which was subsequently selected for scrutiny under CASS. The AO during the assessment proceeding noticed that the saving bank account of the assessee held with Axis bank has been credited by an amount aggregating to Rs. 52,39,433/- only in the form of cash and cheque deposits. The assessee was asked to furnish the nature and sources of credit in bank account, but assessee failed to make any reply. Thus, the AO in absence of the reply from the assessee treated the entire deposit of Rs. 52,39,433/- as unexplained cash credit and added the same to the total income of the assessee.

CIT(A) confirmed the addition made by AO. Being aggrieved, the present appeal is filed.

Conclusion- The AO and the CIT(A) rejected the claim of the assessee without making any independent inquiry or bringing contrary material merely for the reason that there were minor differences in amount of cash deposited viz-a-viz amount of demand draft and the amount of invoices. Thus, held that the approach of the revenue for rejecting the explanation of the assessee merely for minor difference in the invoice amount and demand draft viz-a-viz cash deposit is not justified.

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