The Income Tax Appellate Tribunal ( ITAT ), Visakhapatnam in a recent matter directed the Assessing Officer (AO) to delete additions made under Section 69A read with Section 115BBE of the Income Tax Act, 1961 in light of discovery that cash deposits in the Assessee’s bank accounts have been obtained through sale proceeds.
The Assessee, Ashoka Enterprises, a distributor of consumer products filed its return of income for the Assessment Year 2017-18 on 31.10.2017, disclosing a total income of Rs.18,45,310/-.
The Assessee’s returns were speculated to be inaccurate and Notice was issued calling for additional information. During scrutiny proceedings, the AO observed that the Assessee maintains three bank accounts with HDFC Bank holding cash deposits of Rs.7,99,698/-.
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Upon the Assessee’s abstinence from explaining the source of the cash deposits to the Assessing Officer, the same were deemed as ‘Unexplained Money’ under Section 69A read with Section 115 of the Income Tax Act, 1961, leading to an Assessment Order under Section 143(3) of the Income Tax Act, 1961.
The Assessment Order was challenged before the Joint Commissioner of Income Tax (Appeals) (JCIT(A)), but was dismissed by the JCIT(A) while upholding the additions made by the Assessing Officer.
The Present Appeal has been lodged by the Appellant citing grounds that the JCIT(A) had erred in categorizing the Assessee’s cash deposit of Rs.7,99,698/- made during the demonetization period in India as ‘unexplained income’ under Section 69A of the Income Tax Act, 1961, totaling the Assessee’s income at Rs.26,45,010/-.
Further averments were made that the CIT(A) failed to consider that the disputed cash deposits had been obtained via sale proceeds of the Assessee and does not warrant classification under Section 69A of the Income Tax Act, 1961, with the same being duly reflected in the books of accounts of the Assessee.
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The submissions of the Assessee were reinforced by the production of material evidence including the cash book ledgers of the Assessee for the concerned period.
The Income Tax Appellate Tribunal, Visakhapatnam presided over solely by Duvvuru RL Reddy, Judicial Member took note of the facts and material including cash book ledger placed on record and observed that the cash deposits made by the Assessee align with the submitted cash book ledger.
In light of the findings made, ITAT directed the AO to delete additions made under Section 69A read with Section 115BBE of the Income Tax Act, 1961 while observing that the Revenue Authorities had accepted the total turnover claimed by the Assessee, but failed to take cognizance of the turnover during the demonetization period, which has been reflected by means of the disputed cash deposits.
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