2024 (6) TMI 1123 - AT - Income Tax

Unexplained cash deposited in bank u/s 69 - During the demonetization period all cash In hand in denomination of Rs. 500 and Rs. 100 deposited in bank - as per DR assessee has not given the details as to fees received/elective income/loan as well as the buildthon fund and study tour fund including the cash book from the bank from 01-04-2016 to 08-11-2016 and the date of cash deposits in bank from 01-04-2016 to 08- 11-2016 - HELD THAT - It is pertinent to note that the books of accounts of the assessee trust were never rejected at any point of time by the Assessing Officer. Besides this the evidences produced by the assessee before the Assessing Officer as well as before the CIT(A) clearly shows that the assessee has received fees from students related to the event as well as study tour including the buildthon event fund. The assessee has given the cash bills from bank from 01-04-2016 to 08-11-2016. Hence the assessee has given the expenses for the said period. Thus the assessee has given all the details as to how the assessee has that much cash in hand during the demonetization period. This was never doubted by the Revenue. In fact the bank statements clearly show including the details given of the students from which the fees and the money has been received. The bank slip cannot be crucial evidence to reject the other direct evidence produced by the assessee before the AO. AO as well as the CIT(A) was not right in making the addition of cash deposits in bank account during the demonetization period by invoking section 69A as the assessee has fully explained the cash deposits and thus the same cannot be treated as unexplained money. Thus the appeal of the assessee is allowed.

Summary

Issues:
- Appeal against order passed by National Faceless Appeal Centre for assessment year 2017-18.
- Addition of cash deposited in bank as unexplained money under section 69A of the Act.
- Invocation of section 115BBE of the Act for transactions occurred prior to its insertion.
- Liberty to add, amend, alter, or modify grounds of appeal before final appeal.

Analysis:
1. The appeal was filed against the order by National Faceless Appeal Centre for the assessment year 2017-18. The grounds of appeal included contentions that the order passed by the CIT(A) was against law, equity, and justice, and the addition of cash deposited in the bank as unexplained money was erroneous under section 69A of the Act. The appellant also sought liberty to modify grounds of appeal before the final appeal.

2. The assessee, a public trust engaged in educational activities, filed its return showing income from various sources. The Assessing Officer made an addition of cash deposited in the bank under section 69A as unexplained money. The CIT(A) upheld this addition, leading to the appeal.

3. The appellant argued that the cash deposited during the demonetization period was properly recorded in the books of accounts and was not unexplained money. The Assessing Officer's refusal to accept the explanation was contested, citing that the transactions were duly recorded in audit books. The appellant relied on legal precedent to support their case.

4. The Revenue contended that the appellant failed to fully disclose cash deposits and did not provide necessary details regarding various funds and income sources. The invocation of section 69A was justified based on lack of disclosure and evidence.

5. Upon review, it was found that the delay in filing the appeal was condoned, and the books of accounts were never rejected by the Assessing Officer. The evidence presented by the assessee demonstrated proper recording of transactions and cash deposits during the demonetization period. The bank statements and other evidence supported the explanation provided by the assessee.

6. The Tribunal observed that the Assessing Officer and the CIT(A) erred in making the addition of cash deposits as unexplained money under section 69A. The appellant had adequately explained the cash deposits, and the evidence presented was sufficient to support their case. Therefore, the appeal of the assessee was allowed, and the addition was set aside.

7. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the cash deposits were not unexplained money, as the appellant had provided detailed explanations and evidence to support the legitimacy of the transactions.