The Kolkata Bench, of the Income Tax Appellate Tribunal ( ITAT ), held that the addition of unexplained cash u/s 69 of the Income Tax Act, 1961 is not sustainable when the genuineness of transaction was proved.
Sh. S.K. Tulsiyan, Adv. & Smt. Puja Somani appeared on behalf of the Assessee and Sh. Biswanath Das appeared on behalf of the Revenue.
The assessee engaged in the business of trading/investment in shares and securities. E-return of income filed declaring NIL income. The Assessing Officer noticed that the assessee operated three bank accounts for its business and a sum of Rs. 94,50,000/- was deposited on 16.11.2016 in the account held in Union Bank of India.
The assessee stated that the cash of Rs. 1,02,75,000/- was withdrawn from Tamilnad Mercantile Bank during the pre-demonetization period and the same explains the cash deposit in Union Bank of India. The AO found that the information of the denomination of the currency received by the assessee on withdrawal from Tamilnad Mercantile Bank matched with the cash currency deposited in the Union Bank of India and the same did not match with the currency notes deposited on 16.11.2016. The AO made an addition u/s 68 of the Act for unexplained cash credit at Rs. 94,50,000/- and assessed the income at Rs. 94,50,000/-. The CIT(A) confirmed the view taken by the AO.
The assessee submitted that he had submitted the proof of the source of cash deposits in the bank during the demonetization period which was the cash withdrawals made by him from his bank account during the pre-demonetization and stated that all cash withdrawals and cash deposits and duly entered in the audited accounts of the assessee.
It was also contended by the assessee that enquiries conducted by the AO were not shared with the assessee during the assessment and the AO failed to allow an opportunity for the assessee to examine the material gathered.
It was observed that the assessee had regularly maintained books of account including the cash and all relevant details. The assessee showed the source of cash deposit of Rs. 94,50,000/- which was the cash withdrawn of Rs. 1,02,75,000/- on various dates during the year itself which were before the announcement of the demonetization scheme on 08.11.2016. The Tribunal didn’t find any doubt about the genuineness of the transaction of cash deposit of Rs. 94,50,000/- in the bank account on 16.11.2016.
The Coram consists of Sri Manish Borad, accountant member & Sri Sonjoy Sarma, judicial member has observed that the assessee had successfully shown the source of the cash deposit and ordered to delete the addition u/s 68 of the Act. The appeal filed by the assessee was allowed.
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