2020 (11) TMI 412 - AT - Income Tax

Unexplained deposit in ICICI Bank account - presumption of the AO that the assessee did not have enough cash to deposit ₹ 4,00,000/- - HELD THAT - Cash receipts of ₹ 3,43,200/- has been reflected in the ledger account and in cash book, there was opening balance of ₹ 1,97,550/-. If these opening balance and cash receipts are taken into consideration, then, the assessee has sufficient funds in its hand to deposit cash of ₹ 4,00,000/- in two bank accounts. AO has disbelieved the cash book as daily balancing was not done without considering the cash book and ledger account .Since the assessee has shown cash receipts and opening balance in hand, assessee has duly proved the cash deposit of ₹ 4,00,000/- and, accordingly delete the same. Ground No.2 of the assessee is allowed. Draft from undisclosed bank accounts - AO made the addition on the ground that the assessee could not even show that the assessee has sufficient cash to make the drafts, which was confirmed by ld CIT(A) - HELD THAT - The mere fact that the bank accounts from where the DDs are purchases are not reflected in the balance sheet of the assessee is not a ground to disbelieve the drafts made by the assessee. On perusal of the cash book and ledger accounts of the assessee, observe that the assessee has sufficient balance in its accounts to purchase the drafts in favour of Orissa State Beverages Corporation Ltd. Hence, set aside the orders of lower authorities and delete the addition made u/s.69 - Decided in favour of assessee. Disallowance of expenses - on the ground that the assessee could not submit supporting bills and vouchers in support of the expenses, which was confirmed by ld CIT(A) - HELD THAT - The assessee could not furnish any satisfactory explanation and evidence as to why the supporting evidences were not filed before the lower authorities. Even before the Tribunal, no evidences were filed. Hence, the lower authorities have taken a justified decision to estimate the disallowance. Ground Nos.4 to 11 are dismissed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Addition of unexplained deposit in ICICI Bank account.
3. Addition of funds transferred through demand drafts.
4. Disallowance of expenses due to lack of supporting bills and vouchers.

Condonation of Delay in Filing the Appeal:
The appeal was filed 13 days beyond the stipulated time period, with the assessee citing illness as the reason for the delay. The ITAT, after considering the reasons stated in the petition, agreed that the assessee had a sufficient cause for the delay. Citing a judgment by the Hon'ble Allahabad High Court, the delay was condoned, and the appeal was admitted for hearing.

Addition of Unexplained Deposit in ICICI Bank Account:
The appeal contested the addition of ?4,00,000 as an unexplained deposit in an ICICI Bank account. The assessee argued that the cash receipts and opening balance in hand were sufficient to account for the deposit. The ITAT reviewed the ledger account and cash book, concluding that the assessee had proven the cash deposit, leading to the deletion of the addition.

Addition of Funds Transferred Through Demand Drafts:
The AO had added ?4,50,000 under section 69 of the Act, alleging that the assessee made drafts from undisclosed bank accounts without sufficient cash. However, the ITAT found that the drafts were made by staff members directly depositing cash in banks due to urgency. Upon reviewing the cash book and ledger accounts, the ITAT determined that the assessee had enough balance to purchase the drafts, leading to the deletion of the addition.

Disallowance of Expenses Due to Lack of Supporting Bills and Vouchers:
The AO had made estimated disallowances for expenses due to the absence of supporting bills and vouchers, a decision upheld by the CIT(A). The ITAT noted that the assessee failed to provide satisfactory explanations or evidence for the missing documents. Consequently, the ITAT agreed with the lower authorities' decision to estimate the disallowance, resulting in the dismissal of Ground Nos. 4 to 11.

In conclusion, the appeal was partly allowed, with the ITAT ruling in favor of the assessee regarding the unexplained deposit and funds transferred through demand drafts while upholding the disallowance of expenses due to lack of supporting documentation.