2024 (2) TMI 832 - AT - Income Tax

Unexplained money u/s. 69A - addition made in absence of any satisfactory explanation with respect to nature and source of cash deposit made during the demonetization period - AO rejected evidences and documents submitted by AO - HELD THAT - AO has not refuted or discredited these evidences and documents. AO does not mention why he is not accepting these evidences. On the contrary, the AO has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. It is true that the AO is not bound to accept as true any possible explanation which the assessee may put forth, the AO cannot also arbitrarily rejects the assessee's explanation. assessee has practically submitted all possible evidences in support his claim. When the evidence available with the assessee, which support the claim of the assessee, the AO was not right in suspecting the same on the basis of mere surmises and conjectures. (Om Prakash K Jain and Ors. 2009 (1) TMI 453 - BOMBAY HIGH COURT . AO has not discussed any of the evidences submitted by the assessee. No word as to why these documentary evidences furnished by assessee are not acceptable to the Assessing Officer. The Assessing Officer has not found any defect / irregularities in the documents and evidences submitted by the assessee. Therefore, based on the factual position narrated above, delete the addition made by the Assessing Officer. Appeal filed by the assessee is allowed.

Summary

Issues involved:
The appeal pertains to the assessment year 2017-18 and challenges the addition made under section 69 of the Income Tax Act, penalty proceedings under section 271AAC, and the application of sections 234A, 234B, and 234C of the Act.

Addition under Section 69 of the Income Tax Act:
The assessee, an Individual, deposited Rs. 7,00,000 during the demonetization period. The Assessing Officer treated this amount as unexplained income under section 69A of the Act. The assessee explained that the cash deposit was from the available cash balance. However, both the Assessing Officer and the CIT(A) rejected the explanation. The Tribunal noted that the assessee submitted various documents and evidence supporting the source of the cash deposit, including cash book, bank book, and bank statement. The Tribunal found that the Assessing Officer did not provide reasons for rejecting these evidences and, based on precedents, held that the addition should be deleted. The Tribunal also cited a similar case where the source of cash deposit was satisfactorily explained, leading to the deletion of the addition.

Penalty Proceedings under Section 271AAC:
The Assessing Officer initiated penalty proceedings under section 271AAC. The Tribunal did not delve into this issue separately in the judgment, indicating that the focus was primarily on the addition under section 69 of the Act.

Application of Sections 234A, 234B, and 234C:
The assessee contested the application of sections 234A, 234B, and 234C of the Income Tax Act, claiming that they were applied arbitrarily and based on assumptions. However, the Tribunal's judgment did not elaborate on this issue, suggesting that the primary concern was the addition under section 69 of the Act.

In conclusion, the Tribunal allowed the appeal filed by the assessee concerning the addition made under section 69 of the Income Tax Act for the assessment year 2017-18. The Tribunal found that the assessee had provided sufficient evidence to explain the source of the cash deposit during the demonetization period, leading to the deletion of the addition.