2023 (6) TMI 279 - AT - Income Tax

Unexplained cash deposit to his bank account - HELD THAT - We are unable to see any logic or valid basis to deny said cash flow statement which is supported by the financial and books of accounts of earlier as well as present financial period under consideration. The basis taken by the ld. CIT(A) for upholding the part addition of Rs. 12,40,000/- is not sustainable and justified as when an authority is taking care of average withdrawals of Rs. 4.5 lakh per month then the withdrawal Rs. 38 lakh gets supports as the total withdrawals during eight months and ten days comes to 37.5 lakh which is near to the claimed amount. The assessee is also found to be fair enough in showing the sufficient drawings of Rs. 26,35,980/- and Rs. 2,46,122/- during the period from the 01.04.2016 to 30.12.2016 leaving cash balance of Rs. 5,18,559/- therefore there is no scope of any addition in the hands of assessee on account of cash deposit to his bank account. Accordingly, grounds of assessee are allowed.

Summary

Issues involved:
The appeal challenges the order of CIT(A)-23, New Delhi dated 31.01.2022 for AY 2017-18 regarding the addition of INR 12,40,000 out of total addition of INR 21,40,000 made by the Assessing Officer under section 68 of the Act read with Section 115BBE on account of cash deposited by the assessee in his bank account.

Details of Judgment:

Issue 1: Addition of INR 12,40,000
The assessee contended that the CIT (Appeals) erred in upholding the addition of INR 12,40,000, out of the total addition, as unexplained cash deposited in the bank account. The counsel presented a detailed cash flow summary for the period, demonstrating the source of the deposited amount. The balance sheet of the preceding financial year also supported the cash balance brought forward. The Assessing Officer's denial of certain withdrawals without basis was highlighted. The Tribunal found the cash flow statement credible and supported by financial records. The average withdrawals per month aligned with the claimed amount, and the drawings and cash balance were adequately explained. Consequently, the Tribunal allowed the grounds of the assessee and directed the deletion of the entire addition.

Conclusion:
The Tribunal allowed the appeal of the assessee, directing the Assessing Officer to delete the entire addition. The order was pronounced in the open court on 31.05.2023.