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2022 (11) TMI 779 - AT - Income TaxAddition u/s 69A r.w.s 115BBE - return of income was selected for scrutiny assessment for scrutiny of cash deposit during demonetization period - HELD THAT - Cashbook clearly shows the opening balance as on 01.04.2016 which has been duly verified and accepted by the AO. Cash flow statement exhibited at page 4 of the Paper Book clearly explains the cash deposit in the impugned bank account. Exhibit 13 is the statement of affairs as on 31.03.2017. We fail to understand as to when availability of opening cash in hand amounting to Rs. 8,34,821/- has been verified and accepted by the AO, then, why the ld. CIT(A) estimated the same at Rs.1 lakh. Further, when cash withdrawals have been duly reflected in the cash book, vis a vis, bank statement for the FY under consideration, why the same was not accepted by the CIT(A) when no defect has been pointed out in cash books, cash flow statement and statement of affairs filed by the assessee? In our considered opinion, once cash flow statement is not controverted by the Assessing Officer as well as the ld. CIT A , when it was specifically submitted that the same is based on the entries made in the cashbook, then the source of cash deposit in the bank account cannot be discarded by the authorities below. See case of Omni 2016 (8) TMI 962 - DELHI HIGH COURT We do not find any merit in the addition sustained by the ld. CIT-A - Appeal of assessee allowed.
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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