S. Balaji Mech-Tech Private Ltd. Vs ITO (ITAT Delhi)
ITAT Delhi held that provisions of section 68 or 69A of the Income Tax Act for cash deposit during demonetization period unjustified since source of cash deposits duly explained. Hence, addition liable to be deleted.
Facts- The assessee filed its return of income declaring an income of Rs.9,88,387/- on 29.10.2017. The case was selected for scrutiny under CASS for the reason ‘abnormal increase in cash deposit during the demonetization period as compared to pre-demonetization period and higher turnover reported in service-tax return as compared to ITR. AO made addition of Rs.1,62,46,533/- on account of unexplained cash deposits u/s 68 of the Act during demonetization period after allowing credit of opening cash balance of Rs.10,01,164/- as on 01.04.2016 and Rs.5,303/- being average cash deposit in bank from 01.04.2016 to 31.1 0.2016.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the assessee had deposited the cash out of cash sales recorded during the period Oct, Nov and Dec’2016. The reasons recorded by the AO to reject the reasons for such cash deposits are out of cash sales by observing that the cash is nothing but undisclosed funds of the assessee and it has manipulated the cash sales to make such cash deposits. From the records we observe that the AO neither rejected the book results or method of account adopted by the assessee. The AO or CIT(A) has not found any discrepancies in the method of accounting, margin declared by the assessee which are in consonance with the previous periods. Since the AO did not have any material against the assessee but made the addition merely on the basis his perception that the same is only out of assessee’s undisclosed income.
