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2022 (11) TMI 779 - AT - Income Tax


Issues:
1. Addition of cash deposit during demonetization period.

Analysis:
The appeal was filed against the order by the National Faceless Appeal Centre concerning the assessment year 2017-18. The main grievance of the assessee was the addition of Rs. 7,65,000/- out of the total addition of Rs. 11,90,179/-. The Assessing Officer accepted the opening cash in hand but added the remaining amount under section 69A r.w.s 115BBE of the Act. The assessee explained that cash deposits were from cash withdrawals during the financial year. The CIT(A) disregarded the Assessing Officer's findings and estimated the availability of cash, confirming the addition of Rs. 7.65 lakhs. The ITAT, after examining the documentary evidence, found no merit in the addition and directed the Assessing Officer to delete the amount.

The ITAT noted that the cashbook and cash flow statement supported the explanation provided by the assessee regarding the source of cash deposits. The Assessing Officer had verified and accepted the opening cash balance, raising questions about the CIT(A)'s estimation. The ITAT emphasized that if the cash flow statement, based on the cashbook entries, was not challenged by the authorities, the source of cash deposits could not be rejected. Referring to a High Court decision, the ITAT concluded that there was no merit in sustaining the addition and directed the Assessing Officer to delete the amount.

In conclusion, the ITAT partially allowed the appeal, directing the deletion of the addition of Rs. 7,65,000/-. The judgment highlighted the importance of documentary evidence, the veracity of cashbook entries, and the necessity for authorities to provide valid reasons for rejecting explanations provided by the assessee.

 

 

 

 

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