SHRI JASVIR SINGH,KURUKSHETRA vs. ITO-WARD-1, KURUKSHETRA

The present appeal has been filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals), Karnal [in short referred to as ‘CIT(A)’] dated 20-11-2019 u/s 250(6) of the Income Tax Act,1961 (hereinafter referred to as “Act”).

Jasvir Singh v. ITO, Kurukshetra 2 2. The solitary issue raised in the present appeal relates to addition made u/s 69 of the Act in the facts of the case that an advance made by the assessee by cheque to one Mr. Gurjan Singh of Rs.28,00,000/- remained unexplained.

We have heard both the parties. It is a fact on record that the amount was advanced through banking channels by cheque dated 12.03.2013. The reason for holding the advance as unexplained is that there was a cash deposit of equal amount in the bank account a day before the cheque for the advance was issued. The AO examined the day book and found that cash to the said extent was not there nor was there any entry reflecting cash deposited in the bank. In effect this cash deposit could not be explained by the assessee.

The contention of the Ld. Counsel for the assessee is that, the assessee carries on business, the bank account relates to its business and stands reflected in its financial statements, which facts are not disputed by the Revenue. That all entries in the said bank account accordingly stand entered in the books maintained by the assessee, which books are maintained on double entry system and have been duly audited also. Therefore there is no question of the cash entry not having been accounted for in the books of the assessee. That the said cash entry had been explained to be on account of sale receipts. Jasvir Singh v. ITO, Kurukshetra 3 That therefore both the advance and the cash deposited in the bank stand duly explained.

We agree with the Ld. Counsel that the advance admittedly is sourced from the cash deposited in the bank immediately before it has been given, but then at the same time the source of the cash deposited in bank remained unexplained, since undeniably the assessee was unable to substantiate its claim that the same related to receipts from sales made by it. No books of accounts were produced before the AO. The day book produced did not reflect the transaction. For the limited purpose therefore of examining the source of cash deposited in bank immediately before the making of the advance, we restore the issue back to the AO. It goes without saying that the matter be decided after giving due opportunity of hearing to the assessee.

Order pronounced in the Open Court on 25.08.2021.