Cash Deposit during Demonetization: ITAT deletes Addition since Proprietor maintained Business Cash in hand [Read Order]

Cash Deposit - Demonetization - ITAT - ITAT Chennai - Cash in Hand - Taxscan

The Income Tax Appellate Tribunal (ITAT), Chennai bench has deleted an addition under section 68 of the Income Tax Act, 1961 against a Proprietor towards cash deposit during demonetization period by considering the fact that the same was kept as cash in hand in his business capacity.

A division bench of the Tribunal comprising Shri Mahavir Singh, Vice President and Shri Manoj Kumar Aggarwal, Accountant Member was considering an appeal by an individual, Shri Krishnapandian Balaji.

The assessee explained that explained from the statement of income, the number of properties rented out and the rent received by cheque and received in cash. The ld.counsel explained before us from the Paper-book that in the computation of income enclosed, there are many types of income earned by assessee i.e., rental income from various properties out of which some rent is received in cash and part rent is received in cheque. Further, there is profit and gains of business i.e., commission and agency business where the assessee has declared profit of Rs.5,27,325/-.

The Tribunal noted that the addition made by AO as well as CIT(A) that the closing cash as on 31.03.2006 is ‘nil’ as per ITR, the counsel explained that in ITR the assessee is declaring business cash in hand and not the cash in hand kept in individual capacity and earned out of rental income.

“He explained that the assessee is maintaining personal accounts in his individual capacity and business account in his proprietorship capacity for business purposes in which, the cash in hand is ‘nil’. When these facts were confronted to ld. Senior DR, she could not reply anything about the cash balance available in the cash book and the rental income earned by the assessee month-wise and tenant-wise and rent earned in cash. The complete paper-book was confronted to ld. Senior DR but she could not controvert the above fact situation,” the Tribunal said.

Concluding the appeal in favour of the assessee, the Tribunal observed that “After going through the facts in entirety, we noted that the source of cash is rental income from where the assessee has generated cash to the tune of Rs.36.73 lakhs which was deposited in the bank accounts as mentioned above. Hence, we treat the cash as explained and allow the appeal of the assessee on this issue.”

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