The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the provisions of Section 69A of the Income Tax Act cannot be applied to the cash deposits which have been duly recorded in the books of account.
The assessee is engaged in the business of gold bullion and gold jewellery on a wholesale and retail basis. The case of the assessee was subject to scrutiny assessment and notice under Section 143(2) of the Income Tax Act was issued.
During the course of assessment proceedings, the assessing officer pointed out that the assessee company had deposited substantial cash in a bank account during the demonetization period.
The Departmental Representative supported the order of the assessing officer and stated that the assessee has deposited cash in the bank account during the demonetization period which could not be explained.
The counsel contended that cash deposit out of sales/counter sales was of below Rs.2,00,000/- from one person/party for which details of address and PAN were not required to be maintained.
It was further submitted that the assessing officer has not rejected the books of account of the assessee and the assessee purchased gold subject to payment of custom duty and detail of gold purchased and sold along with closing stock were properly maintained in the books of account.
The Assessing Officer has neither disproved the genuineness of the purchase/availability of stock of jewellery corresponding to the sales nor the claim of the assessee that the source of cash deposit was made out of the cash sale effected during the year under consideration.
In the case of Essay Pay Pvt. Ltd. vs. ACIT, the High Court of Gujarat similarly Gujarat High Court has held that reopening of the assessment under Section 147 of the Income Tax Act was not valid when the assessee fully explained the source of a cash deposit in the bank account during the demonetization.
The Two-bench member comprising of Amarjit Singh (Accountant member) and Sandeep Singh Karhail (Judicial member) held that the Commissioner of Income Tax (Appeals) has correctly held that the provision of Section 69A of the Income Tax Act cannot be applied in respect of cash deposited which have been duly recorded in the books of account and had already been declared income in the return of income filed by the assessee.
Therefore, the grounds of appeal of the revenue was dismissed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
