Inderpal Singh Chawla Vs ITO (ITAT Raipur)
The Income Tax Appellate Tribunal (ITAT), Raipur, heard the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), dated 24.05.2024, arising from the assessment order passed under Section 143(3) of the Income-tax Act, 1961 for Assessment Year 2017-18. The primary dispute concerned the confirmation of an addition of Rs.62,00,000 under Section 69A as unexplained money.
The assessee, engaged in the business of plying and hiring of trucks and declaring income under Section 44AE, had deposited Rs.62 lakh in three bank accounts during the demonetisation period between 09.11.2016 and 31.12.2016. During assessment proceedings, he explained that these deposits were sourced from cash withdrawals aggregating Rs.98.80 lakh made during September 2016. The Assessing Officer rejected the explanation and issued a show cause notice requiring the assessee to explain the purpose of the withdrawals and produce confirmations of the persons who had made the withdrawals. The assessee replied that the withdrawals had been made for business purposes through his staff members.
The Assessing Officer rejected the explanation on several grounds. He observed that the assessee’s business receipts and expenses did not justify cash withdrawals of Rs.98.80 lakh during September 2016. He considered it improbable that a person would retain such a large amount of cash for over two months instead of depositing it in a bank and earning interest. He also observed that if the assessee had cash in hand on 08.11.2016, the entire amount would have been deposited at once rather than in multiple instalments during the demonetisation period. The Assessing Officer further noted that the deposits were made in savings bank accounts instead of a current account, that the assessee had filed his return belatedly, and that there was a discrepancy between the closing cash in hand disclosed in the written submissions and the return of income. Holding that the nature and source of the cash deposits remained unexplained, the Assessing Officer treated the entire amount of Rs.62 lakh as unexplained money under Section 69A.
