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2024 (4) TMI 980 - AT - Income TaxAddition u/s 68 - unexplained cash deposit - as per assessee, he has duly explained the source of cash deposit as cash in hand as built up from cash withdrawals from the bank account of the assessee and also submitted evidences such as copy of cash book, copy of bank statements, copy of response filed on Income Tax Portal in response to cash transaction queries and information related to cash transaction, but the same has not considered/believed by the AO - CIT(A) deleted addition - HELD THAT - It is seen from the record that during the course of assessment proceedings, in order to explain the source of cash deposit as cash in hand the assessee produced evidences such as copy of cash books, copy of bank statement, copy of response filed on income tax portal in response to the cash transaction queries and information related to cash transaction in the format prescribed by the AO. Assessee has also explained the source as well as the reason of withdrawing cash along with the supporting evidence. Further in response to the show cause notice, the assessee has also explained that in the impounded documents contains cash balance as on 08.11.2016 of certain sites only and cash balance as on 08.11.2016 of New Imprest - Real Estate MCB, Imprest Bhogal Godown and Imprest Sandeep Mangla were not mentioned and in support of said contention the assessee submitted summary of all the cash books which shown the cash balance as on 08.11.2016. Also the books of the assessee are audited, AO has not pointed any defect in the cash book of the assessee nor he rejected its book of account and only on the basis of assumption that the cash withdrawal have been utilized without corroborating the same. CIT(A) has considered all the documents produced by the assessee and proceeded to delete the addition after countering each and every allegation made by the A.O. by appreciating material available on record. In the case of group companies involving identical issue arising out of same impounded documents and survey of same flagship company, the Co-ordinate Bench of the Tribunal decided the issue in the favor of the Assessee. CIT(A) has committed no error in deleting the additions made by the A.O. We find no merit in the Grounds of appeal of the Revenue, accordingly, we dismiss the Grounds of Appeal of the Revenue.
Issues Involved:
1. Burden of proof regarding the genuineness of transactions u/s 68 of the Income Tax Act, 1961. 2. Assessment of cash deposits during the demonetization period. 3. Evaluation of evidence and documents submitted by the assessee. 4. Comparison of financial years 2015-16 and 2016-17. 5. Implications of impounded documents and cash balances. 6. Relevance of cash withdrawals and deposits patterns. 7. Impact of flagship company's income surrender on the assessee. Summary: Issue 1: Burden of Proof u/s 68 The Revenue contended that the Ld. CIT(A) erred in law and on facts by ignoring Section 68 of the Income Tax Act, 1961, which places the primary burden of proof on the assessee to prove the genuineness of transactions. The assessee argued that they had duly explained the source of cash deposits as cash in hand built up from bank withdrawals and provided supporting evidence, which the Assessing Officer (A.O.) did not consider. Issue 2: Cash Deposits During Demonetization The Revenue argued that the Ld. CIT(A) ignored the unusual pattern of cash deposits during the demonetization period and the lack of documentary evidence regarding the source of accumulated cash as on 08.11.2016. The assessee explained that the cash deposits were from cash in hand as on 08.11.2016, which was built up by earlier bank withdrawals. Issue 3: Evaluation of Evidence The A.O. rejected the assessee's explanation and documents, adding Rs. 9,09,98,000/- to the income u/s 68. The Ld. CIT(A) provided detailed findings countering each allegation, noting that the A.O. did not establish that higher magnitude expenses were made in cash earlier and that the maintenance of high cash balances was supported by records. Issue 4: Financial Year Comparison The Revenue argued that there was no match of cash deposits with the corresponding period of the previous year. The Ld. CIT(A) held that substantial cash withdrawals and deposits were a regular feature of the assessee's business and that the trends were similar in both financial years. Issue 5: Impounded Documents and Cash Balances The Revenue claimed that the Ld. CIT(A) ignored impounded documents showing different cash balances. The Ld. CIT(A) noted that the A.O. considered only site cash books and ignored the main cash book, which was essential for accurate cash balance assessment. Issue 6: Cash Withdrawals and Deposits Patterns The Ld. CIT(A) found the A.O.'s allegation that cash books were manipulated to show nearby cash withdrawals as cash deposits to be untenable, as cash transactions were reflected in both bank statements and cash books. Issue 7: Flagship Company's Income Surrender The Revenue argued that the flagship company's surrender of unaccounted income should impact the assessee. The Ld. CIT(A) held that the surrender by the flagship company did not automatically translate into acceptance by the assessee and was based on different grounds. Conclusion: The Tribunal upheld the Ld. CIT(A)'s decision, finding no merit in the Revenue's grounds of appeal. The Tribunal noted that the Ld. CIT(A) had considered all documents and provided detailed findings countering the A.O.'s allegations. The appeal of the Department was dismissed. Order Pronounced: The appeal of the Department is dismissed. Order pronounced in the open court on 23rd April, 2024.
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