2024 (2) TMI 1110 - AT - Income Tax

Unexplained money - proof of source cash deposited in bank account - proof of cash on hand - HELD THAT - From CIT(A)'s order it is clear that the assessee s claim regarding cash in hand was rejected but without giving any reason for the same. If the assessee s contention is that it had turnover exceeding the limit u/s 44AD, the learned CIT(A) ought to have taken action in accordance with law. However, he merely sustained the addition made by the AO. Therefore, the claim of the assessee regarding business transaction in cash is not adverted by the lower authorities by giving a clear finding. Therefore assessee having cash in hand cannot be rejected. The impugned addition is hereby deleted. Grounds raised by the assessee are allowed.

Summary

Issues: Appeal against addition of unexplained money u/s 44AD for assessment year 2016-17.

Issue 1: Addition of unexplained money
The appeal challenged the addition of Rs. 571,276 as unexplained money despite being explained as cash-in-hand from business profits declared u/s 44AD. The CIT(A) upheld the addition, stating the appellant failed to prove the cash in hand as of 31.03.2016. The appellant's claim of turnover exceeding the 44AD limit was not considered, leading to the deletion of the impugned addition by ITAT Delhi.

Issue 2: Absence of Assessee Representation
No representation was made on behalf of the assessee during the proceedings, despite seeking adjournments on prior occasions. The appeal was decided based on available records due to the assessee's conduct.

Issue 3: CIT(A)'s Decision
The CIT(A) rejected the appellant's claim of cash in hand without providing a clear reason. The failure to consider the appellant's turnover exceeding the 44AD limit was noted by ITAT Delhi, leading to the deletion of the addition.

Conclusion:
The ITAT Delhi allowed the appeal, deleting the addition of unexplained money based on the failure to consider the appellant's turnover exceeding the 44AD limit. The conduct of the assessee, lack of representation, and the CIT(A)'s decision were crucial factors in the judgment.