2022 (6) TMI 226 - AT - Income Tax

Unaccounted money - Unexplained cash deposits in bank account u/s 68 - HELD THAT - From the beginning, the assessee-appellant explanation given was that withdrawal was to pay for procurement of land but due to some reason, the deal was not finalize which cannot be denied by the AO merely on suspicion. Keeping in view all the facts and circumstances of the case and material available on record, we are of the considered view that disallowance made by the AO is not sustainable and, therefore, we set aside the impugned order passed by the Ld. CIT(A) and allow the ground raised by the assessee.

Summary

Issues:
Appeal against treating cash deposit as unaccounted money.

Analysis:
1. The assessee, a company running a nursing home, filed a return declaring a loss for A.Y. 2017-18. The AO observed cash deposits during demonetization and questioned a withdrawal of Rs. 30,00,000 in April 2016, suspecting unaccounted money.
2. The company claimed the withdrawal was for a land procurement project, but failed to provide details upon repeated requests. The AO treated the Rs. 30,00,000 deposited post-demonetization as unaccounted money under section 68 of the IT Act.
3. The assessee appealed, arguing the withdrawal was legitimate and citing a similar court decision. The revenue supported the AO's decision.
4. The Tribunal found the AO's treatment of the cash deposit as unaccounted money was not adequately justified. The explanation provided by the assessee regarding the land procurement project was considered reasonable.
5. Consequently, the Tribunal set aside the AO's order, allowing the appeal of the assessee against the treatment of the Rs. 30,00,000 cash deposit as unaccounted money.
6. The decision was pronounced on 25th May, 2022, in favor of the assessee.