Case Law Details
Balu Vignesh Vs ACIT (ITAT Chennai)
In the case of Balu Vignesh Vs ACIT, the Income Tax Appellate Tribunal (ITAT) Chennai addressed an appeal for the Assessment Year 2017-18 concerning a cash deposit of Rs. 53.23 lakh made by the assessee during the demonetization period. The Assessing Officer (AO) had added this amount under Section 69A of the Income Tax Act, claiming it as unexplained money, as the deposits were made after November 15, 2016, and the assessee failed to explain the source during the assessment proceedings. The Commissioner of Income Tax (Appeals) upheld this addition, as the petitioner did not provide supporting documents during the appellate process. In response, the assessee appealed to the ITAT.
The assessee, engaged in the textile business with a significant turnover, submitted that it had a sufficient cash balance as of November 8, 2016, to cover the impugned deposits. The AO accepted part of the cash source but rejected deposits made after November 15, 2016, on the grounds that they should have been deposited within a “reasonable period.” However, the ITAT found that the cash balance of Rs. 133.73 lakh as of November 8, 2016, was adequately documented in the assessee’s cash book and was audited under Section 44AB. The ITAT ruled that no law mandates depositing the entire amount within a specific time frame and concluded that the rejection of part of the cash deposits was arbitrary. As a result, the ITAT deleted the Rs. 53.23 lakh addition and directed the AO to re-compute the assessee’s income accordingly.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 28-03-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 30-12-2019.
2. In the assessment order, Ld. AO has made addition of Rs.53.23 Lacs as unexplained money u/s. 69A r.w.s 115BBE which represents cash deposits by the assessee during demonetization period from 09-11- 2016 to 30-12-2016. The Ld. CIT(A) confirmed the impugned addition by observing that the assessee failed to furnish supporting documents during appellate proceedings. Aggrieved, the assessee is in further appeal before us.
3. The Ld. AR has submitted that the assessee has huge turnover and it had sufficient cash balance as on 08-11-2016 to make the impugned deposits. The copy of cash book for the month of November, 2016 has also been placed on record to substantiate the same. The Ld. Sr. DR supported the orders of lower authorities. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.
4. From assessment order, it is clear that the assessee is engaged in textile business under proprietary concern namely Shri Krishna Silks. The assessee has shown turnover of Rs.25.77 Crores and its books of accounts are duly audited u/s 44AB. The assessee deposited cash of Rs.133.73 Lacs in 3 bank accounts during demonetization period which are tabulated in para 3 of the assessment order. As per cash book, cash balance as on 08-11-2016 was Rs.169.57 Lacs which was stated to be the source of these deposits. The Ld. AO accepted the source of cash of Rs.80.50 Lacs which was deposited up-to 15-11-2016 but rejected the source of cash deposits for Rs.53.23 Lacs which was deposited from 1611-2016 onwards on the ground that the assessee should have deposited entire amount within a reasonable period of time. Therefore, the amount of Rs.53.23 Lacs was added u/s 69A r.w.s.115BBE. The Ld. CIT(A) upheld the same against which the assessee is in further appeal before us.
5. The undisputed fact that emerges is that the assessee is holding cash balance of Rs.133.73 Lacs as on 08-11-2016 which is duly evidenced by its cash book. The books of the assessee have duly been audited u/s 44AB and no defect has been observed in the same. The assessee is engaged in trading activity and achieved turnover of Rs.24.77 Crores. The Ld. AO, in an arbitrary manner, accepted part of the source and rejected the other part whereas all the deposits has same source. The only reasoning is that the assessee should have deposited entire cash within a reasonable period of time which is not mandated by any law. Therefore, we delete the impugned addition and direct Ld. AO to re-compute the income of the assessee.
6. The appeal stand allowed.
Order pronounced on 5th November, 2024
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