The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax(Appeals)[CIT(A)]’s decision to delete the ₹2.27 crore addition made by the Assessing Officer ( AO ) under Section 69A of Income Tax Act,1961 concerning unexplained cash deposits.
The Revenue-appellant appealed against the order of CIT(A) dated 06.08.2024 under section 250 of the Act. In this case,Chiranjeet Kundu,respondent-assessee,was assessed by the AO on 27.11.2019, who noted large cash deposits in bank accounts during the demonetization period. Since the assessee did not provide the required books of accounts, the AO could not verify these deposits and added Rs. 2,27,98,730 under section 69A of the Act.
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The assessee, aggrieved by the AO’s action, appealed to the CIT(A). The CIT(A) compared cash deposits over a similar 3-year period (09.11.2015 to 31.12.2017) and found the amounts to be consistent. He concluded that the cash deposits were not unusual. The CIT(A) also noted that the receipts were declared as business income in the return and, therefore, removed the addition.
The Revenue dissatisfied with the decision of the CIT(A) appealed before the tribunal raising several grounds.
The two member bench comprising Sanjay Garg ( Judicial Member ) and Sanjay Awasthi ( Accountant Member ) reviewed the documents and heard the submissions, finding that the assessee had explained the source of the cash deposits as cash sales, though the required books of accounts and vouchers were not produced at the time. The assessee requested more time to provide the documents.
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The AO did not reject the assessee’s explanation or reported income but failed to conduct further inquiries, such as obtaining bank statements or verifying the nature of the business. As a distributor for companies like Bharti Airtel and Link Telecom, the assessee made substantial cash sales, which were allowed during the demonetization period.
The appellate tribunal observed that the cash deposits during the period were consistent with previous years and that once the source of the deposits was explained, no addition under Section 69A should have been made. Since the income from these deposits had already been disclosed in the return, the tribunal upheld the CIT(A)’s decision to delete the addition of Rs.2.27 crore made by the AO under Section 69A.
In short,the appeal filed by the revenue was deleted.
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