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2017 (8) TMI 925 - AT - Income TaxUnexplained cash deposits - source of complete cash deposit - Held that - All the details were filed before the AO, which clearly show that the assessee had sufficient cash-in-hand generated out of her trading business, which was further deposited in the bank account. CIT(A) has upheld the impugned addition made by the AO by completely disregarding the submissions and explanations of the assessee, and by further alleging that the documentary evidences submitted by the assessee are sham and have been created just to prove the source of cash deposit. We further observe that Ld. CIT(A) has sustained the addition by completely deviating from the issue under consideration and by indulging into mere surmises and conjectures. The allegation of the Ld. CIT(A) that if the business of the assessee would have been genuine, there would have been some purchase or sale transactions through banking channels as well is completely misplaced, so much so that the business income of the assessee has been duly accepted by the AO as well which is evident from the fact that the addition has been made to the returned income of the assessee. Since the assessee has duly explained the source of complete cash deposit made during the year, the addition made by the AO and sustained by the Ld. CIT(A) is bad in law and liable to be deleted. Therefore, we delete the addition in dispute and allow the ground raised by the assessee.
Issues Involved:
1. Addition of ?10.00 lacs under Section 69A of the Income Tax Act, 1961. 2. Examination of materials and records by the CIT(A). 3. Application of Section 69A provisions by the Assessing Officer (AO). Detailed Analysis: 1. Addition of ?10.00 lacs under Section 69A of the Income Tax Act, 1961: The primary issue in this case is the addition of ?10.00 lacs made by the AO under Section 69A of the Income Tax Act, 1961, which pertains to unexplained money. The assessee deposited ?19.00 lacs in cash in her bank accounts, of which ?9.00 lacs was explained as proceeds from the sale of property and accepted by the AO. However, the remaining ?10.00 lacs was added to the income of the assessee as unexplained cash deposits. The CIT(A) upheld this addition, stating that the explanations and documentary evidence provided by the assessee were sham and created merely to explain the source of the cash deposits. 2. Examination of materials and records by the CIT(A): The assessee argued that the CIT(A) did not thoroughly examine the complete materials and records available before him regarding sales, purchases, cash transactions, and bank transactions. The CIT(A) was accused of making factually incorrect observations, such as the non-identifiability of the buyer of SARIA, which rendered the order erroneous and illegal. The assessee contended that the CIT(A) failed to appreciate the detailed records and evidence provided, including cash flow statements, purchase bills, and confirmations from various parties. 3. Application of Section 69A provisions by the Assessing Officer (AO): The assessee maintained that the AO erroneously invoked Section 69A, as the transactions of ?10.00 lacs were duly recorded in the books of accounts, which were examined by the AO. The AO had accepted the records and books of account, acknowledging the income declared from business or profession. The allegation that the genuineness of the cash remained unexplained was deemed factually incorrect by the assessee. Moreover, the CIT(A) was criticized for not examining the additions in light of the available materials and failing to record findings on the application of Section 69A. Tribunal's Findings: The Tribunal reviewed the case, including the orders passed by the revenue authorities and the detailed submissions by the assessee. The Tribunal noted that the assessee had filed her return of income, declared income from various sources, and provided detailed explanations for the cash deposits. The assessee submitted comprehensive evidence, including cash flow statements, purchase bills, and confirmations from parties, to substantiate the source of the ?10.00 lacs deposit. The Tribunal found that the AO, in his remand report, acknowledged the submission of some invoices but still added ?10.00 lacs due to incomplete details. However, the Tribunal observed that the assessee had sufficient cash generated from her trading business, which was deposited in the bank account. The Tribunal criticized the CIT(A) for disregarding the submissions and explanations and for making allegations without substantial evidence. Conclusion: The Tribunal concluded that the assessee had duly explained the source of the cash deposits, and the addition made by the AO and upheld by the CIT(A) was not justified. The Tribunal deleted the addition of ?10.00 lacs and allowed the appeal filed by the assessee. Order: The appeal filed by the assessee is allowed, and the addition of ?10.00 lacs is deleted. The order was pronounced in the open court on 22/08/2017.
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