SANGEETA JAIN,KALAHANDI vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, BHUBANESWAR, BHUBANESWAR

It was submitted by the ld. AR that there was search on the premises of the assessee on 27.07.2022 and in the course of search, it was noticed that the books of account showed cash availability at 55,07,242/-. It was the submission that the physical cash found in 2 the course of survey was only Rs.68,500/-. It was the submission that in the course of survey, the assessee had submitted that the accountant of the assessee was not available and therefore, the books of account were not updated. It was the submission that subsequently, the updated books were produced before the Assessing Officer and the same was duly tallied with the physical cash balance found at the time of survey. It was the submission that no error in the said entries in the cash book has been substantiated by the Assessing Officer. It was the submission that the Assessing Officer only on the ground that the cash found in the course of survey had not tallied with the cash availability in the books of account has made the disallowance of the difference unexplained expenditure of the assessee u/s 69C of the Act. It was the submission that the expenditure cannot be considered as unexplained expenditure in so far as the cash was available and it is not unexplained expenditure. It was the further submission that the reason for the variation was also informed to the Assessing Officer and the survey team and the updated cash book was also produced before the Assessing Officer and no error in the cash book has been pointed out by the Assessing Officer. It was prayed that the addition as made by the Assessing Officer may be deleted.

In reply, the Sr. DR has submitted that the assessee has not been able to explain the difference between the physical cash found in the course of survey and cash as available in the books of account. It was the submission that if the same is not considered to be true as unexplained cash credit, the Tribunal should correct and confirm the addition as non-available of expenditure u/s 37(1) of the Act.

We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the assessee has explained the difference between the cash as per cash book and the physical cash found at the time of survey. The assessee has admittedly produced the updated cash book before the Assessing Officer. Admittedly, the Assessing Officer has not pointed out any error in such updated cash book. It must also be mentioned that the provisions of section 69C talks of unexplained expenditure. The unexplained expenditure comes out of unexplained cash whose source is not disclosed. Admittedly, this cash balance of the assessee is sitting in the books and this expenditure if at all cannot be considered as unexplained expenditure. On both these facts, the addition as made by the Assessing Officer and confirmed by the ld. CIT(A) stands deleted.

In the result, the appeal of the assessee is allowed.