DCIT Vs Nivaya Resources Pvt. Ltd. (ITAT Delhi)
Cash Deposits During Demonetisation Explained by Opening Imprest Balance: ITAT Delhi Rejects Section 68 Addition
The Delhi Bench of the ITAT dismissed the Revenue’s appeal and partly allowed the assessee’s cross-objection in a case involving cash deposits made during the demonetisation period. The Assessing Officer had treated cash deposits of ₹2.12 crore as unexplained under section 68, alleging that the assessee failed to justify the source and also rejected the books under section 145(3).
The Tribunal upheld the CIT(A)’s finding that the assessee had satisfactorily explained the cash deposits as arising from opening cash and imprest balances which were duly reflected in the books of account and had already been accepted in scrutiny assessment for the immediately preceding year. Mere suspicion about the manner of holding or classification of cash could not justify rejection of books or addition under section 68, particularly in the absence of any evidence showing that the cash was utilised elsewhere. The ITAT reiterated that additions cannot be made on surmises and conjectures, especially when audited books, cash flow statements, affidavits, and prior year acceptance support the assessee’s explanation.
On the issue of section 14A, the Tribunal upheld restriction of disallowance to the extent of exempt income and further directed the AO to compute disallowance under Rule 8D(2)(iii) by considering only income-yielding investments, following the Special Bench decision in Vireet Investment (P) Ltd. Accordingly, the Revenue’s appeal was dismissed and the assessee’s cross-objection was partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
DCIT Vs Nivaya Resources Pvt. Ltd. (ITAT Delhi)
This appeal is filed by the revenue and cross objection by the assessee against the order of the Ld.Commissioner of Income Tax (Appeals)/ NFAC, Delhi vide order dated 31.12.2023 for the A.Y. 2017-18.
