The Chennai bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition of Rs. 29.82 lakh made under Section 69A of the Income Tax Act, 1961, and held that the cash deposits were duly accounted for in the assessee’s books of accounts, and the additions were based on mere suspicion rather than concrete evidence.
In this case, the assessee has appealed against the order of the Commissioner of Income Tax (Appeals) for the assessment year (AY) 2017-18 in which the CIT(A) upheld the addition of Rs. 29.82 made under Section 69 A of the Income Tax Act, 1961.
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The assessee, a Hindu Undivided Family (HUF) entity engaged in egg sales and a partner in M/s. R.V. Poultry Farm, had deposited Rs. 45.62 lakh during the demonetization period. The assessing officer (AO) had questioned the source of these deposits and partially accepted the assessee’s explanation, adding Rs. 19.82 lakh under Section 69A. Additionally, a cash deposit of Rs. 10 lakh in the account of M/s. R.V. Poultry Farm was also added to the assessee’s income under the same section.
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The assessee, who was aggrieved by the above order, appealed before the CIT(A), but there were no favourable results.
The ITAT noted that the assessee had maintained a cash balance of Rs. 57.89 lakh as of 8-11- 2016, which was used to make the bank deposits. The AO had rejected the explanation, noting that the time taken to deposit the cash which was 47 days from 13-11-2016, to 30-12-2016 which was against the “Human Probability Test.”
The ITAT observed that the assessee had maintained proper books of accounts and that the turnover of Rs. 21.39 crore and a net profit of Rs. 17.09 lakh were duly reflected in the books.
The ITAT observed that the additions were made without any defects being pointed out in the books of accounts. The cash deposits were supported by the assessee’s books, and the partial acceptance of the claim by the AO was unjustified and the ITAT deleted the addition of Rs. 19.82 lakh. Regarding the Rs. 10 lakh deposit in the account of M/s. R.V. Poultry Farm, the ITAT held that it could not be added to the assessee’s income as it was clearly in the bank account of the partnership firm. Thus, this addition was also deleted.
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The ITAT, comprising Manu Kumar Giri (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member), allowed the appeal filed by the assessee.
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