2021 (4) TMI 150 - AT - Income Tax

Unexplained cash deposits u/s.68 - HELD THAT - Addition under section 68 of the Act was made in the case of M/s Radhe Developers India Ltd. for the amount of cash deposited in bank of Kanjibhai Desai in the year under consideration. Though the same was deleted by the learned CIT(A), treated the same as explained cash credit which was subsequently confirmed by us 2021 (3) TMI 918 - ITAT AHMEDABAD in the appeal filed by the Revenue. Thus in such facts and circumstances we are of the considered view that the Revenue cannot treat similar transaction in different manner with respect to different assessee. Assessee has discharged its onus as provided under section 68 of the Act namely the identity, genuineness and creditworthiness of the parties. For the identity, the assessee has furnished the PAN/address/bank details/confirmation of M/s Radhe consultancy. Similarly, for the creditworthiness and genuineness of the transactions, the assessee filed cash book, bank book, bank statement and balance sheet and assessment orders of M/s Radhe Consultancy and group which is showing the amount given to assessee.

Summary

Issues involved:
- Appeal by Revenue against CIT(A) order on unexplained cash deposits under section 68 of IT Act
- Cross objection filed by Assessee against Revenue's appeal

Analysis:
- Revenue's Appeal:
- The Revenue challenged the CIT(A)'s decision to delete the addition of unexplained cash deposits under section 68 of the IT Act.
- The Revenue argued that the Assessee failed to substantiate the source of cash deposits in the bank account as not representing undisclosed income.
- The AO treated the cash deposits as unexplained cash credit, amounting to ?4,32,40,410, and added it to the Assessee's total income.
- The CIT(A) examined the facts and evidence provided by the Assessee, including fund movement details, confirmation from M/s Radhe Group, and various financial documents.
- The CIT(A) concluded that the Assessee had explained the source of cash deposits from funds received from M/s Radhe Group, supported by documentary evidence and statements from related parties.
- The CIT(A) noted that similar transactions were accepted in the assessment of M/s Radhe Consultancy for other years, indicating consistency in fund movements and explanations.
- The Revenue contended that the Assessee did not prove the source of cash deposits, while the Assessee maintained that the deposits were from funds received for assigned work.
- The ITAT upheld the CIT(A)'s decision, stating that the Assessee fulfilled the conditions under section 68 of the Act, and the Revenue's differing treatment of similar transactions was unwarranted.

- Cross Objection by Assessee:
- The Assessee raised a cross objection regarding the validity of the reassessment notice issued by the Assessing Officer.
- However, since the ITAT decided in favor of the Assessee on the Revenue's appeal, the issue raised in the cross objection became irrelevant.
- The Assessee, through their representative, decided not to press the issue raised in the cross objection if successful on the main appeal.
- Consequently, the ITAT dismissed the cross objection as infructuous, aligning with the decision made on the Revenue's appeal.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the addition of unexplained cash deposits in the Assessee's case. The Assessee successfully demonstrated the source of funds received from M/s Radhe Group, supported by documentary evidence and statements from related parties. The ITAT also noted the Revenue's inconsistent treatment of similar transactions involving different parties. The cross objection raised by the Assessee on the validity of the reassessment notice was dismissed as infructuous due to the favorable outcome on the main appeal.