No Income Tax Addition for Assessee Proving Source of Cash Deposits During Demonetization

DCIT Vs Bhanu Infrabuild Pvt Ltd (ITAT Delhi)

Introduction: The case of DCIT Vs Bhanu Infrabuild Pvt Ltd before the ITAT Delhi revolves around an income tax dispute for the assessment year 2017-18. The appeal challenges the order of CIT(A)-31, New Delhi, dated 06.07.2022.

1. Grounds Raised by the Revenue

• The revenue raised several key questions, including the assessment of impounded documents that revealed significant cash-in-hand for M/s Bhanu Infrabuild Private Limited as of 08.11.2016.
• They questioned the absence of a similar pattern of significant cash deposits in the previous year.
• The revenue challenged the credibility of the documents submitted by the assessee to establish the source of the cash deposits.
• They raised concerns about the CIT(A)’s approach in dealing with the cash in hand as per impounded documents.

2. Arguments by the Senior DR

• The Senior DR supported the assessment order and argued that the CIT(A) had erred in ignoring crucial facts against the assessee.
• The Senior DR emphasized that the impugned first appellate order should be set aside in favor of the Assessing Officer.

3. Response by the Assessee’s Counsel

• The counsel for the assessee defended their position by referring to the relevant part of the first appellate order.
• They highlighted that the CIT(A) had properly considered the Assessing Officer’s stance and the supporting documentary evidence provided by the assessee.
• The counsel argued that the source of cash deposits had been adequately explained, and the appeal by the revenue should be dismissed.

4. Analysis of the ITAT