2023 (10) TMI 696 - AT - Income Tax

Addition u/s. 69A - cash deposits in the bank accounts as unexplained income - gap of one year in cash deposits - assessee produced and explained the cash deposits by producing books of accounts, the same were rejected by the Assessing Officer on the sole ground that the assessee has not filed original Return of Income u/s. 139(1) of the Act and regular Return were filed only from the AY 2015-16 onwards. HELD THAT - It is well settled principle of law that addition u/s. 69A of the Act cannot be made in respect of those assets/moneys/entries which are recorded in the assessee s books of accounts. See SMT. TEENA BETHALA 2019 (9) TMI 3 - ITAT BANGALORE held where the entries are recorded in the assessee's books of account, addition made u/s 69A of the Act is bad in law. In the case of ACIT vs Baldev Raj Charla 2008 (12) TMI 241 - ITAT DELHI-C also held that merely because there was a time gap between withdrawal of cash and cash deposits explanation of the assessee could not be rejected and addition on account of cash deposit could not be made particularly when there was no finding recorded by the assessing officer or the Commissioner that apart from depositing this cash into bank as explained by the assessee, there was any other purposes it is used by the assessee of these amounts. In view of above facts, the ground number 1 of the appeal of the assessee is allowed.

Summary

Issues involved:
The appeal challenges the appellate order passed by the Commissioner of Income Tax (Appeals) regarding a reassessment order under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 for the Assessment Year 2012-13.

Summary:
1. The assessee, a proprietor of a business, had cash deposits in bank accounts, leading to a reassessment. The Assessing Officer added the cash deposits as unexplained income under section 69A of the Act, despite the assessee's explanations and submissions.

2. The Commissioner (Appeals) upheld the addition, stating that the explanation provided by the assessee was not acceptable due to a gap in timing between the sale of land and the cash deposits. The entire cash deposit was deemed unexplained.

3. The assessee appealed, challenging the legality of the addition under section 69A and the demand imposed. The counsel for the assessee submitted relevant documents and case laws to support their arguments.

4. The Tribunal considered the submissions and case laws cited. It noted that the cash deposits were recorded in the assessee's books of accounts and that the Assessing Officer failed to prove the unexplained nature of the deposits. Relying on precedents, the Tribunal held that the addition under section 69A was unjustified and deleted the additions made by the Assessing Officer.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, highlighting the importance of entries recorded in the books of accounts and the lack of evidence supporting the unexplained nature of the cash deposits. The additions made by the Assessing Officer were deemed unlawful, and the appeal was allowed in favor of the assessee.