The Two member bench of Bangalore Income Tax Appellate Tribunal (ITAT) addition under Section 69A of the Income Tax Act , 1961 cannot be made in respect of monies which are recorded in the assessee’s bank statements.
The Assessee, Sudarshan Purushothama is a partner in the firm M/s. SRK OFFICE-X and was getting interest on capital and remuneration from the said partnership firm and not having any other business of his own filed his return of income for the A.Y. 2017-18 on 29.01.2018 declaring a total income of Rs. 5,17,030/-. Thereafter his case was selected for scrutiny.
During the course of assessment proceeding, the assessee was asked to produce the nature of business, statement of income, financial statements, copy of bank account statement, cash book and details of cash deposit from 01.04.2016 to 31.03.2017 with sources and cash deposited during demonetisation period.
After examining the assessee submission the Assessing Officer made addition of the entire cash deposit of Rs.11,79,000/- made during the demonetisation period as unexplained money u/s. 69A of the Income Tax Act even though the same is shown in the cash book summary drawn showing the flow of transaction.
Aggrieved by the order the assessee filed an appeal before the CIT(A) who dismissed the appeal. Hence the assessee filed another appeal before the tribunal.
During the adjudication V. Srinivasan, the counsel for assessee submitted that addition of Rs.11,79,000/- as unexplained money under Section 69A of the Income Tax Act in respect of cash deposit made in the bank accounts of the appellant is not justified as it was from out of the opening cash balance and subsequent withdrawals from bank and therefore could not be regarded as unexplained money.
Ganesh R Ghale, Counsel for Revenue, supported the order of lower authorities .
It was observed that in the present case, the assessee has deposited money amounting to Rs.11,79,000/- in his bank account during the demonetisation period. The assessee has submitted before the authorities below that the source of cash deposited are withdrawals from the bank.
Further observed that the bank statements with HDFC Bank and Kotak Mahindra Bank, assessee had total credits of Rs. 10,66,377/- and total debit of Rs.10,65,240/- during the year with HDFC Bank.
After reviewing the facts, the ITAT bench of Beena Pillai (Judicial Member) and Laxmi Prasad Sahu (Accountant Member) held that the addition under Section 69A of the Income Tax Act cannot be made in respect of monies which are recorded in the assessee’s bank statements.
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