The Lucknow Bench of Income Tax Appellate Tribunal(ITAT) upheld the decision of the Commissioner of Income Tax(Appeals)[CIT(A)] to delete an unexplained cash credit addition of ₹1.36 crore under Section 69A of the Income Tax Act,1961, finding the addition was based on mere suspicion and lacked substantial evidence, as the cash deposits were supported by inquiries and proper documentation.
The Revenue-appellant, filed a cross appeal against the order passed by CIT(A) dated 22/09/2020.In this case, Jai Singh,respondent-assessee,an assessment order dated 30/12/2019 under Section 143(3) of the Act. The Assessing Officer(AO) assessed his total income at ₹1,55,70,340, which included an addition of ₹1,41,78,000 as unexplained income under Section 69A for depositing specified bank notes (SBNs).
Out of this, ₹1,36,00,000 was linked to his travel agency business account, while ₹5,78,000 was deposited in his savings account. On appeal, the CIT(A) deleted the addition of ₹1,36,00,000 but upheld ₹5,78,000, partly allowing relief.
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The Revenue filed an appeal, after the deadline and sought condonation, citing the Covid-19 pandemic and the Supreme Court’s order extending limitation periods. With no objection from the assessee counsel, the delay was condoned, and the appeal was admitted.
The Senior Departmental Representative relied on the AO’s order, while the assessee’s representative defended the CIT(A)’s deletion of ₹1,36,00,000. She argued that the addition was unjustified and based on the fact that the deposits were in specified bank notes (SBNs).
She explained that cash payments were common in the travel business and were periodically deposited in smaller amounts. A list of customers was provided, and inquiries under Section 133(6) confirmed most payments were in cash. Despite this, the AO made a high-pitched addition, causing unnecessary litigation.
The two member bench comprising Subhash Malguria(Judicial Member) and Anadee Nath Misshra(Accountant Member) reviewed the submissions from both sides and examined the materials on record. The respondent operated as a commission agent for airlines, receiving payments from customers, often in cash, which were later deposited into the airlines’ accounts.
The AO conducted inquiries under Section 133(6) and received confirmations from most customers that payments were made in cash. These details, along with the assessee’s cash book and ledgers, were part of the accounts, which were not doubted or rejected under Section 145. The assessee also made payments to airlines through proper banking channels, as shown in the bank statements.
Read More:Unexplained Cash Deposits u/s 69A: ITAT upholds CIT(A)’s deletion of ₹2.27 Crore Addition
The appellate tribunal found that the AO failed to consider these facts and omitted the results of the inquiries in the assessment order. The addition of ₹1,36,00,000 was based on mere suspicion due to deposits in specified bank notes (SBNs), without substantial evidence. It upheld the CIT(A)’s order deleting the addition, concluding it was justified and reasonable given the facts and circumstances.
In short,the cross appeal filed by the revenue was dismissed.
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