MAUJI JEWELS PRIVATE LIMITED,NEW DELHI vs. ITO WARD - 16(3), NEW DELHI

This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] – 6, Delhi dated 10.07.2019 pertaining to assessment year 2016-17.

The solitary grievance of the assessee relates to the addition of Rs. 7 lakhs made on account of unexplained cash deposit in the bank account.

Briefly stated, the facts of the case are that during the course of scrutiny assessment proceedings, the assessee was asked to explain the cash deposit of Rs.7 lakhs in the HDFC Bank Account Tri Nagar Branch New Delhi.

In its reply, the assessee stated that the said cash has been deposited out of the withdrawals made earlier. Necessary details were filed and explained from the bank statement.

The reply of the assessee did not find any favour with the Assessing Officer who was of the opinion that the cash deposits made on 30.3.2016 have no co-relation with the earlier deposits made 3 to 6 months back. The Assessing Officer further observed that this is the first year of the company and no business transactions have taken place during the year. The Assessing Officer, accordingly, made addition of Rs.7 lakhs u/s 68 of the Act r.w.s 115JB of the Act.

The assessee carried the matter before the ld.CIT(A) but without any success.

Before me, the learned counsel for the assessee drew my attention to the bank statement and pointed out that Rs.3 lakhs was deposited being loan from the Director Shri Mahesh Verma and Rs.4 lakhs were deposited out of advances received from the customers.

The ld counsel for the assessee pointed out that these amounts are duly reflected in the balance sheet of the assessee. It is the say of the ld. counsel for the assessee that out of the said deposits, the assessee withdrew a sum of Rs. 7 lakhs which was subsequently deposited as amount could not be used for the purpose for which it was withdrawn.

Per contra, the ld. DR strongly supported the findings of the assessing officer.

I have carefully perused the orders of the authorities below and have also gone through the bank statement, which is placed at PDF page 75 of the paper book vis a vis balance sheet of the assessee.

Since during the year under consideration the assessee has not done any business nor there is any evidence on the record to show that cash withdrawn by the assessee has been utilised for some other purpose. I am of the considered view that the assessee has successfully explained the source of cash deposit. Accordingly, I direct the Assessing Officer to delete the addition of Rs.7 lakhs.

In the result the appeal of the assessee is allowed.