The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals)[CIT(A)]’s decision to delete additions made under Section 68 of the Income Tax Act,1961 for the Assessment Year (AY) 2017-18, citing sufficient cash balance and lack of evidence for accommodation entries.
The Revenue-appellant filed an appeal for the AY 2017-18 against the CIT(A)’s decision on March 28, 2024, stemming from an Assessment Order dated December 30, 2019.
Genesis Computech Pvt. Ltd., the respondent-assessee, filed its return of income on August 10, 2017, declaring a total income of ₹760. The case was selected for limited scrutiny to examine issues related to expenses concerning exempt income and low income compared to high loans and investments. During the assessment, the Assessing Officer(AO) made an addition of ₹4,36,876, primarily related to unexplained cash deposits made during the demonetization period.
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The CIT(A) allowed the appeal, noting that the respondent-assessee had provided a cash book showing a consistent cash balance of over ₹8 lakhs. The CIT(A) found the AO’s conclusions regarding unexplained deposits to be speculative and lacking evidence.
The Departmental Representative(DR) argued that the CIT(A) had erred in deleting the addition, contending that the unexplained cash deposits were not adequately explained by the respondent-assessee and that the case fell under the exceptional clauses of the Central Board of Direct Taxes(CBDT) Circular.
The Authorized Representative(AR) asserted that the AO had exceeded the limited scrutiny scope and that sufficient documentation was provided to explain the cash deposits, leading to the CIT(A)’s justified deletion of the addition.
After thoroughly reviewing the arguments and the evidence presented, the ITAT determined that the Revenue’s appeal did not meet any exceptional criteria outlined in the CBDT Circular. The tribunal emphasized that the CIT(A) had appropriately identified that the AO’s additions were based on assumptions and conjecture, lacking concrete evidence to substantiate the claims of unexplained cash deposits.
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Additionally, the appellate tribunal noted that the tax effect in the present case was below the threshold specified by the CBDT’s Circular, further supporting the conclusion that the case did not fall under any exceptional category. Consequently, it upheld the CIT(A)’s decision to delete the addition under Section 68, affirming that the deletion was well-founded based on the evidence provided.
The two member bench comprising Sonjoy Sharma(Judicial Member) and Rakesh Mishra(Accountant Member)dismissed the Revenue’s appeal, affirming the CIT(A)’s order and confirming the deletion of the addition based on sufficient evidence provided by the assessee.
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