Rahul Cold Storage Vs ITO (ITAT Raipur)
ITAT Raipur held that addition u/s 68 as unexplained cash credit unsustainable as AO has not rejected the books of accounts. Accordingly, it can be concluded that by accepting the books of accounts AO has also accepted the cash deposits to have been sourced out of duly disclosed source.
Facts- During the course of assessment proceedings, it was observed by AO that the assessee deposited Rs. 38.55 Lacs during the demonetization and Rs. 8 Lacs. Assessee submitted that the same was made out of cash in hand that wat at the relevant point of time available at its business receipts. In support, assessee submitted monthly cash book and bank statements.
AO rejecting the submissions of the assessee, held the entire amount of Rs. 46.55 as its unexplained cash deposit u/s 68 of the Act. CIT(A) confirmed the addition. Accordingly, being aggrieved, the present appeal is filed.
Conclusion- If the assessee’s claim that the cash deposits in question were made out of its duly disclosed cold storage rent receipts was not to be accepted, then, the A.O was obligated to have rejected the books of account of the assessee, for the reason, that by not doing so he had on the one hand held the cash deposits to have been sourced out of an unexplained source, while for at the same time by accepting its books of account had accepted its claim that the cash deposits in duly accounted bank accounts were sourced out of the duly disclosed source of the assessee firm.
Held that A.O by not rejecting the said books of account had clearly accepted that the cash deposited by the assessee firm during the year under consideration in the said bank accounts was out of its disclosed sources.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 12.05.2022, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 16.12.2019 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal:
“1. On the facts & circumstances of the case and in law, ld. CIT(A) has erred in sustaining the addition of Rs.46,55,000/-u/s.68 of the Act on account of unexplained cash deposit into bank.
2. The appellant craves leave, to add, urge, alter, modify or withdraw any ground/s before or at the time of hearing.”
2. Succinctly stated, the assessee firm which is engaged in the business of running a cold storage had filed its return of income for A.Y.2017-18 on 27.01.2018, declaring an income of Rs. Nil. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act.
3. During the course of assessment proceedings, it was observed by the A.O that the assessee had during the demonetization period deposited an amount of Rs. 38.55 lac and Rs.8 lac in old demonetized currency notes of Rs.500/- and Rs.1000/-, respectively, in its bank accounts with Axis Bank and Bank of Baroda. The details of the cash deposits made by the assessee during the demonetization period are as under:
