Cash Book Transactions cannot be Doubted when Opening Balance of Cash stood Explained and Accepted: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench has held that the cash book transactions cannot be doubted when the opening balance of cash stood explained and accepted.

The appellant, KalubhaiRanchhodbhaifiled an appeal before ITAT against the CIT (A) order confirming the addition made to the income on account of unexplained cash deposited in the bank amounting to Rs. 6,34,000/- alleging that the assessee could not substantiate with evidence that the opening balance was genuinely available with him and also because regular cash was withdrawn from the bank account though he had cash in hand at that particular time.

The opening balance of cash in the impugned year was Rs. 9,06,927/- which was explained to include 4,03,585/- out of the agricultural income of the previous year and 2,78,391/- out of cash withdrawn from the bank in the preceding year out of personal loan/car loan. The revenue authorities have not disputed the opening balance of Rs. 4,03,585/- out of the agricultural income of the preceding year. As for the balance of Rs. 2,78,391/- the Revenue hasdoubted the same for the reason that it was purportedly explained as withdrawn from a car loan taken while the fact of the matter was that the assessee had purchased a car so it could not possibly relate to the said withdrawal having been used for redeposited.

The Tribunal observed that the AO does not doubt the opening balance aboutthe agricultural income of the previous year and concerning cash withdrawal, the appellant made it clear that the withdrawal is made from his personal loan account and not from his car loan account. The Tribunal further observed that when the opening balance of cash in hand stood explained and accepted, then the transactions in the cash book of the assessee having not been doubted,the cash reflected as deposited in the bank account of the assessee stands explained.

The Coram of Ms. Annapurna Gupta, Accountant Member,and Mr.  TR Senthil Kumar, Judicial Member has held that “we hold that the impugned addition of Rs. 6,34,000/- on account of cash deposited in the bank account of the assessee remaining unexplained, has been made without any basis at all, while the assessee had duly substantiated the said deposits from his cash book. We, therefore, direct the deletion of the addition made of cash deposits of Rs. 6,34,000/-“.

Mr. Hardik Vora andMr. Alpesh Parmar appeared for the appellant and the respondent respectively.

To Read the full text of the Order CLICK HERE

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