2018 (10) TMI 863 - AT - Income Tax

Addition u/s 69A - unexplained cash balance - Held that - We find the assessee, during the course of assessment proceedings, has shown opening cash balance of ₹ 13,48,852/- and the same has not been disputed by the Assessing Officer. We further find that the Assessing Officer has not considered the sale proceeds of the two properties which were deposited in the bank account as argued by the assessee. Further, the rectification application filed by the assessee u/s 154 is still pending. It is also an admitted fact that the assessee has given opening cash balance of ₹ 12,57,796/- as against ₹ 13,48,852/- given at the time of assessment proceedings. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one final opportunity to the assessee to substantiate his case - Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
Addition of unexplained money u/s 69A of the Income Tax Act, 1961.

Analysis:
The appeal involved a challenge against an order related to the assessment year 2014-15 concerning the addition of ?53,40,510 under section 69A of the Income Tax Act. The assessee, engaged in wholesale trading of footwear, explained the cash deposits in savings accounts as transfers between accounts and funds from property sales. However, the Assessing Officer was unconvinced and made the addition based on discrepancies in cash balances and lack of evidence linking withdrawals and deposits. The ld. CIT(A) upheld the addition, emphasizing the absence of a clear link between cash movements and sources of deposits. Citing precedents, the ld. CIT(A) affirmed the addition under section 69A. In response, the assessee contended that the opening cash balance was not disputed, and sale proceeds were accepted, questioning the basis of the addition. The Tribunal noted discrepancies in opening cash balances and pending rectification applications, directing the Assessing Officer to reevaluate the case, considering all aspects and allowing the assessee to substantiate claims.

In conclusion, the Tribunal allowed the appeal for statistical purposes, instructing a reevaluation by the Assessing Officer to consider the opening cash balance, sale proceeds, and pending rectification application. The decision aimed to ensure a fair assessment based on substantiated evidence and adherence to legal procedures.