CREATIVE ENGINEERING AND CONSTRUCTIONS ,UDUPI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, UDUPI

The Assessee is aggrieved and is in Appeal before us. The only dispute in this Appeal is addition of Rs. 27,00,000/- to the total income of the Assessee

The brief facts of the case show that Assessee is a partnership firm engaged in the business of civil construction etc., filed its return of income on 28.10.2017 at a total income of Rs. 1,08,09,310/-. The Assessee’s case was selected for scrutiny to examine the source of cash deposits during the demonetization period. The Assessee has deposited Rs. 9,00,000/- on 13.11.2016, 14.11.2016 and 15.11.2016. Thus, the total sum of Rs. 27,00,000/- was deposited in ICICI bank account of the Assessee. The Assessee was asked to explain the same. Assessee submitted the cash book for the year ended on 31.03.2018 and also submitted the monthly summary of cash deposits. Thus, the source of cash was explained by the Assessee.

The Ld. Assessing Officer found that deposit of Rs. 9,00,000/- on consecutive date is an unusual transaction. Regarding the sources of the fund, the Assessee explanation was that Assessee has withdrawn Rs. 9,00,000/- on 3 different occasions on 6.10.2016, 07.10.2016 and 14.10.2016. The same is shown in cash book as amount withdrawn from the bank and further on 13.11.2016 to 15.11.2016, the above amount was deposited in the same bank account. Assessee submitted that deposits are depicted in the bank account and withdrawals are also shown in the bank account and therefore the source of deposit into bank account is the source of withdrawal from the same bank account. The Ld. Assessing Officer further asked the query to the Assessee that why the above amounts was withdrawn. The Assessee explained that cash was withdrawn for payment of day to day labor and other petty expenses. The amount was withdrawn in cash as worksite of the Assessee and bank is 15kms away. The Ld. Assessing Officer disbelieved the explanation of the Assessee and held that Rs. 27,00,000/- deposited by the Assessee on 3 occasions in tranches of Rs. 9,00,000/- which is unexplained sum and therefore the addition was made u/s. 68 of the Act.

The Assessee approached the Ld. CIT(A) wherein the same explanation was given. The Assessee also produced the details produced before the Ld.

The Assessee is in Appeal before us. The Assessee has submitted a factual paper book containing 193 pages and further judicial precedents were also set before us in another paper book. The Assessee has also placed on record the written submission. The Assessee has also made an application for admission of various additional grounds of Appeal.

The Ld. Authorized Representative extensively read the written submission before us.

The Ld. Departmental Representative supported the orders of the Ld. lower authorities.

We have carefully considered the rival contention and perused the orders of the Ld. lower authorities. In the present case, the only issue involved is with respect to deposit of Rs. 27,00,000/- in the ICICI bank account of the Assessee on 13.11.2016, 14.11.2016 and 15.11.2016 in tranchesof Rs. 9 lakhs each. The Assessee has explained that on 05.10.2016, 06.10.2016 and 07.10.2016 on each of the day, Assessee has withdrawn Rs. 9,00,000/- in each of the tranchefrom the same account which was not spent by the Assessee has been re-deposited into the bank account. To support the contention of the Assessee it submitted the bank account as well as the cash book. We find that Assessee has disclosed the sources of the fund deposited in the bank account, asthe amount withdrawn from the same bank account which is available in the cash book of the Assessee. Thus, it is clear that the Assessee had enough cash in the cash book before depositing the same into the bank account on all the 3 occasions. The cash balance available in the cash book was also arising out of the withdrawal by the Assessee from same bank account. The Ld. Assessing Officer made addition without checking any evidence that the amount of cash withdrawn by the Assessee on earlier 3

In view of the above facts, we direct the Ld. Assessing Officer to delete the addition of Rs. 27,00,000/- holding that the source of cash deposit in the bank account is the withdrawal from the same bank account before few days. Accordingly, the addition u/s. 68 is unwarranted, hence deleted.

The orders of the Ld. lower authorities are reversed and Appeal of the Assessee is allowed.