SIDDHARTH NAVINCHANDRA SAVLA,MUMBAI vs. INCOME TAX OFFICER, WARD 20(3)(3), MUMBAI

Ground Nos. 1 to 3 raised by the assessee relates to challenging the order of the Ld. CIT(A) in confirming the assessment order passed by the AO, thereby making an addition of Rs. 6,75,000/- under Section 69A of the Income-tax Act. Therefore, I have decided to adjudicate these grounds through the present consolidated order.

I have heard the counsel for both the parties, perused the material placed on record, the judgments cited before me, and the orders passed by the Revenue Authorities. From the records, I notice that the case of the assessee was selected for scrutiny on account of the fact that the assessee had deposited cash during the demonetization period. Therefore, after providing an opportunity of being heard and seeking the explanation of the assessee with regard to the deposit of an amount of Rs. 6,75,000/- in cash during the demonetization period, an addition under Section 69A of the Act was made on account of deposit of unexplained money, which was upheld by the Ld. CIT(A).

In this regard, I notice that, in order to substantiate the source of the deposit of Rs. 6,75,000/-, the assessee has placed the following documents on record:

Apart from this, it is an undisputed fact that the assessee is carrying on the business of trading in textiles on a very small scale and earning household income in cash out of the said business, which is carried on from his residence. As per the assessee, he was having a cash balance of Rs. 7,06,472/- as on 31.03.2016, earned out of the income of earlier years, and thus had deposited Rs. 6,75,000/- in the bank account out of the cash balance held as on 31.03.2016. In support of this contention, the assessee enclosed copies of the returns of income filed since A.Y. 2003-04 onwards and also filed copies of the balance sheets, which have been discussed in detail in the above paragraphs of this order.

However, the said contention of the assessee was negated by the Revenue Authorities on the ground that, while filing the return of income for the year under consideration, the assessee had not disclosed, in Column No. 14, the bank account in which the cash was deposited during the period from 09.11.2016 to 30.12.2016 and had not filled the relevant column in the 4 return of income. Moreover, the AO was of the view that the cash in hand of the assessee as on 31.03.2015 was Rs. 32,999/- and that, all of a sudden, it increased to Rs. 7,06,472/- as on 31.03.2016. Therefore, according to the AO, the balance sheet reflecting miscellaneous advances was an afterthought and tailor-made.

After considering the facts in detail, I notice that it is an undisputed fact that the assessee was having cash in hand of Rs. 7,06,472/- as on 31.03.2016. This fact can also be verified from the returns of income regularly furnished by the assessee since A.Y. 2003-04, and the said fact has neither been denied nor controverted by the AO.

Now, the question arises that, once the assessee was already having cash in hand of Rs. 7,06,472/- as on 31.03.2016, which was sufficient for depositing Rs. 6,75,000/- in the bank, there was direct evidence that the source of the deposit of Rs. 6,75,000/- was the cash balance available in hand. Moreover, the AO has not established that the opening cash in hand available with the assessee was utilized or invested elsewhere by the assessee. In this regard, reliance is placed on the decisions in the case of Arihant Associates vs. ITO (A.Y. 2017-18) (Raipur Tribunal) and Bhartiben Chandulal Dosani vs. ITO (A.Y. 2017-18) (Mumbai Tribunal).

Therefore, considering the facts of the case and also taking into consideration the above-cited decisions, it becomes very clear that no addition under Section 69A can be made merely on the basis of suspicion. Furthermore, the assessee has established that the cash deposited was out of the cash in hand representing the income of the earlier years. Therefore, the addition on account of unexplained cash deposit is deleted. Accordingly, the grounds raised by the assessee stand allowed.

In the result, appeal filed by the Assessee stands allowed.