2024 (1) TMI 1025 - AT - Income Tax

Additions against Cash deposit as unexplained - deposits during the demonetization period - HELD THAT - Appellant had deposited cash in bank account during the demonetization period. As also an admitted fact that the assessee company has been engaged in sale of bikes or two wheelers, which are normally being sold in cash. CIT(A) give relief of Rs. 9,78,514/- out of the 19,78,514/- treated as unexplained cash by the Assessing Officer. There was no rational to accept Rs. 9.78 lakhs and treat Rs. 10 lakhs as unexplained. Revenue has already treated an amount of Rs. 29,01,486/- as explained which was from the business of the assessee. Since it is proved that the assessee even the business of sale to two whellers and dealing in cash keeping the entire facts and circumstances, the amounts deposited in the bank account, monthly sales, we hereby delete the addition. Appeal in assessee allowed.

Summary

Issues Involved:
The appeal against the order of Ld. NFAC/CIT(A), Delhi dated 13.02.2023 regarding unexplained cash deposit during demonetization period.

Details of the Judgment:

Issue 1: Unexplained Cash Deposit
The appellant had deposited cash of Rs. 48,80,000/- in the bank account during demonetization. The ld. CIT(A) confirmed Rs. 10 lakh as unexplained cash deposit based on monthly cash sales not commensurate with the deposited amount. The appellant failed to provide necessary reconciliation documents to substantiate its claim, leading to an estimated unexplained cash deposit of Rs. 10,00,000/-. The appellant received a relief of Rs. 9,78,514/-.

Issue 2: Appeal Hearing
Both parties' arguments were heard, and the Revenue acknowledged the cash deposit during demonetization. The appellant, engaged in the sale of bikes in cash, had a portion of the unexplained cash treated as explained by the Revenue. Considering the business nature, monthly sales, and circumstances, the addition of Rs. 10 lakhs as unexplained was deleted, resulting in the appeal being allowed.

Conclusion:
The appeal was allowed, and the addition of Rs. 10 lakhs as unexplained cash deposit during demonetization was deleted based on the business operations and circumstances presented during the hearing.