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2023 (5) TMI 738 - AT - Income TaxAddition u/s 69A - unexplained money - cash deposit made by the assessee during the demonetization period - AO rejected the books of account u/s 145(3) and viewed that assessee has nothing to offer regarding cash deposit during the demonetization period - HELD THAT - Both the authorities below accepted the fact that the amount received by assessee are nothing but sale proceeds in the course of business of the assessee. The addition has made only on the basis that after demonetization, the demonetization note could not have been accepted as valid tender. Since the sales proceeds for which cash was received are added u/s 69A of the Act which would amount to double taxation once as sale and another against as unexplained cash credit which is violate principles of taxation. As relying on Senco Alankar case 2022 (8) TMI 79 - ITAT KOLKATA hold that there is no reason to interfere with the factual findings given by the ld. CIT(A) in deleting the addition - Decided in favour of assessee.
Issues Involved:
1. Justification of deletion of addition made by the Assessing Officer (AO) regarding cash deposits during the demonetization period. 2. Compliance with notices and submission of books of accounts by the assessee. 3. Validity of the rejection of books of accounts under section 145(3) of the Income Tax Act. 4. Applicability of section 69A of the Income Tax Act to the cash deposits. Summary: Issue 1: Justification of deletion of addition by AO The revenue challenged the deletion of Rs. 1,65,17,000/- added by the AO as unexplained money under section 69A of the Income Tax Act, 1961, for cash deposits made during the demonetization period (09.11.2016 to 30.12.2016). The AO had rejected the books of accounts under section 145(3) due to non-compliance by the assessee. The assessee argued that the cash deposits were from cash sales and were duly accounted for in the books of accounts, which were audited without irregularities. The CIT(A) accepted the assessee's explanation and allowed the appeal, stating that the deposits were explained and the AO's rejection of the books was not justified. Issue 2: Compliance with notices and submission of books of accounts The AO alleged that the assessee did not comply with notices and failed to submit the books of accounts. However, the CIT(A) found that the books were submitted electronically on multiple occasions, and the AO did not point out any defects in the books or details. The CIT(A) noted that the sales were part of the trading account on which tax was paid, and the purchases were accepted by the AO. Issue 3: Validity of rejection of books of accounts under section 145(3) The CIT(A) observed that the AO's rejection of the books under section 145(3) was not sustainable as the books were properly maintained and audited. The AO did not demonstrate that the accounts were incorrect or incomplete, nor did he follow the method of accounting or accounting standards. The CIT(A) held that the rejection of books was not justified. Issue 4: Applicability of section 69A to the cash deposits The CIT(A) found that section 69A was not applicable as the cash deposits were recorded in the books of accounts. The CIT(A) referred to various judicial decisions supporting the view that sales recorded in the books cannot be treated as unexplained money under section 69A. The Tribunal upheld the CIT(A)'s order, stating that the addition under section 69A would result in double taxation, as the sales proceeds were already taxed. The Tribunal also noted that the AO's assumptions were based on conjectures and surmises without any evidence. Conclusion: The Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision to delete the addition of Rs. 1,65,17,000/- made by the AO. The Tribunal found no reason to interfere with the CIT(A)'s factual findings and held that the addition under section 69A was not justified. The order was pronounced on 16.05.2023.
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