2024 (4) TMI 496 - AT - Income Tax

Unexplained cash credit u/s 68 - onus to prove source of cash - Addition made on account of cash deposit made in the bank account - HELD THAT - AO had only doubted the business model of the assessee and had resorted to make addition towards cash deposits as not properly explained by the assessee with sources. Hence arithmetically the assessee is bound to explain the sources of cash deposits in the bank account. The ld. AR before us placed on record the extract of the cash book already forming part of the records and submitted the availability of cash balance in tabular form The entire cash deposits made in the bank account stood properly explained. We have also gone through the cash book for the whole year which are already forming part of the records and there is absolutely no negative cash balance on any given day in the year. Hence the entire cash deposits made in the bank account stood properly explained by the assessee. In our considered opinion given the business model of the assessee the nature and source of credit within the meaning of section 68 of the Act stood properly explained in the instant case and accordingly no addition could be made as unexplained cash credit u/s 68 of the Act. Accordingly the grounds raised by the revenue are dismissed. Addition u/s 69C - Unexplained business Expenditure - HELD THAT - We find that the entire business expenses had already been accounted in the regular books of accounts of the assessee and hence the sources for incurrence of the same are drawn from the books of accounts regularly maintained by the assessee. It is not the case of the ld. AO that the said expenditure had been met by the assessee out of its books. Hence in our considered opinion the provisions of section 69C of the Act per se cannot be made applicable in the instant case and hence the addition made by the ld. AO in this regard had been rightly deleted by the ld. CIT(A). Assessee appeal allowed.

Issues Involved:
1. Delay in filing of appeals by the revenue.
2. Deletion of addition made on account of cash deposits as unexplained cash credit u/s 68 of the Income-tax Act, 1961.
3. Validity of assumption of jurisdiction u/s 147 of the Act.
4. Addition towards entire business expenses as unexplained expenditure u/s 69C of the Act.

Summary:

1. Delay in Filing of Appeals by the Revenue:

The Tribunal noted a delay of 1 day in filing the appeals by the revenue for both assessment years. Considering the reasons provided in the delay condonation petition, the delay was condoned, and the appeals were admitted for adjudication.

2. Deletion of Addition Made on Account of Cash Deposits as Unexplained Cash Credit u/s 68 of the Act:

The primary issue was whether the CIT(A) was justified in deleting the addition of Rs 2,69,97,300/- made by the AO as unexplained cash credit u/s 68. The assessee's business involved exchanging soiled and mutilated currency notes, a model accepted by the revenue in past assessments. The AO had disputed the business model and added the cash deposits as unexplained credits. However, the Tribunal found that the assessee had provided sufficient evidence, including cash books, showing no negative cash balance and explaining the cash deposits. The Tribunal referenced its decision in the assessee's case for AY 2011-12, where a similar addition was deleted, and held that the business model was genuine, and the cash deposits were properly explained. Thus, the addition u/s 68 was not sustainable, and the revenue's grounds were dismissed.

3. Validity of Assumption of Jurisdiction u/s 147 of the Act:

The assessee's cross objections challenged the validity of the jurisdiction assumed u/s 147. Since relief was granted on merits, the Tribunal deemed the cross objections as academic and dismissed them as infructuous.

4. Addition Towards Entire Business Expenses as Unexplained Expenditure u/s 69C of the Act:

For AY 2017-18, the AO had added Rs 17,31,062/- as unexplained expenditure u/s 69C. The Tribunal found that these expenses were recorded in the regular books of accounts, and thus, the sources were explained. The provisions of section 69C were not applicable, and the CIT(A) rightly deleted the addition. The revenue's grounds were dismissed.

Conclusion:

Both the appeals of the revenue were dismissed, and the cross objections of the assessee were dismissed as infructuous.

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