The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) held that cash deposit on demonetization not to be taxed as unexplained income under Section 69A of the Income Tax Act, 1961 on explanation of source.
The Assessing Officer observed that on 01-11-2016 the assessee has shown accumulated cash on hand of Rs. 10,09,134/- thereby showing cash receipt of Rs. 22,04,000/- towards study tour expense of Rs. 18,30,000/- Building Event Fund on 01-11-2016.
According to the cash book, total cash on hand as on 01-11-2016 is of Rs. 51,33,134/-. Out of this cash balance on hand, the assessee has shown cash deposit into bank account held with Kotak Mahindra Bank totalling to Rs. 49,80,000/-. The Assessing Officer after taking cognizance of the assessee’s submission made addition of Rs. 49,80,000/- under Section 69A on account of unexplained money.
The assessee submitted that the transactions are duly recorded in audit books of accounts of the assessee and thus it cannot be treated as unexplained money under Section 69A of the Income Tax Act and that the invocation of Section 69A can be done only when assessee has recorded different transactions in books of accounts. Besides this, the Assessing Officer has not rejected the books of the assessee.
The D.R. submitted that no bank slip was attached during the submission of the evidence before the Assessing Officer as well as before the CIT(A). Thus, the assessee has not fully disclosed the cash deposits and thus it remains unexplained and therefore Section 69A of the Income Tax Act was properly invoked.
The Bench of Suchitra Kamble ( Judicial Member ) observed that “The evidences produced by the assessee before the Assessing Officer as well as before the CIT(A) clearly shows that the assessee has received fees from students related to the event as well as study tour including the buildthon event fund. The assessee has given the cash bills from bank from 01-04-2016 to 08-11-2016.”
“Hence, the assessee has given the expenses for the said period. Thus, the assessee has given all the details as to how the assessee has that much cash in hand during the demonetization period. This was never doubted by the Revenue. In fact, the bank statements clearly show including the details given of the students from which the fees and the money has been received” the Tribunal noted.
The Bench concluded by noting that the Assessing I Officer as well as the CIT(A) was not right in making the addition of cash deposits amounting to Rs. 49,80,000/- in bank account during the demonetization period by invoking Section 69A as the assessee has fully explained the cash deposits and thus the same cannot be treated as unexplained money.
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