The Income Tax Appellate Tribunal, Chandigarh Bench has held that addition of part of cash deposit to total Income on surmises and conjectures and upholds the deletion of addition u/s 69A.
Thegroup cases of M/s Roop Square Group of Companies to which the assessee, M/s Roop Fashion belongs were searched under section 132(1). The AO during the course of assessment proceedings noticed that the assessee had deposited demonetized currency in its bank account amounting to Rs. 2,47,50,000/-.
As the assesseefailed to submit any satisfactory reply with regard to cash deposited the AO worked out the average sale and estimated the sales of the assessee at Rs. 1,50,00,000/-. The AO opined that the assessee had deposited excess cash of Rs. 97,50,000/- (Rs. 2,47,50,000 – Rs. 1,50,00,000) from undisclosed sources during the demonetization periodinvoked the provision of section 69A. on appeal the CIT (A) deleted the addition. Aggrieved department filed appeal before ITAT.
The counsel for the assesseesubmitted that the assessee filed the return of income on the basis of audited books of account which had been accepted by the AO while passing the order under section 143(3) of the Act and no defect had been pointed out in day-to-day maintenance of such books of accounts neither any evidence of purchases or sales outside the books of accounts had been found.
The Tribunal observed that the AO accepted the cash deposited in the bank by the assessee during the demonetization period was out of the cash sales and the realization from the trade debtors duly shown in the book of accounts. The assessee had deposited Rs. 2,47,50,000/- during the demonetization period in the bank account, the AO accepted Rs. 1,50,00,000/- as cash sale on estimated basis but no basis or method was adopted for that estimation, the AO considered the aforesaid estimated sales only on the basis of surmises and conjectures which is not tenable in the eyes of law.
The Coram of Mr. N.K.Saini, VPandMr. Sudhanshu Srivastava, JM has held that “the addition of Rs. 97,50,000/- made by the AO on the basis of surmises and conjectures was rightly deleted by the CIT(A). We do not see any valid ground to interfere with the detailed and logical findings given by the CIT(A) in the impugned order”.
AdvocateMr. Sudhir Sehgal appeared on behalf of assessee and Mr. Sarabjeet Singh appeared on behalf of revenue.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
