INDIRA DEVI,CHENNAI vs. ITO, NCW-4(1), CHENNAI

The ld. AR Shri Hitesh, C.A. submits that the assessee has deposited the said amount in her bank account which is reflected in her cash book, and the same has been accounted for while filing return of income for the AY 2017-18 and the addition made by the Assessing Officer is, in factum, a double addition, which is against the principles and postulates of taxation. He further submits that the assessee is engaged in a wide variety of activities such as selling of handicrafts, homemade products, and small-scale money lending activities. He drew our attention to para 3 of page 13 of the impugned order and submits that the addition of ₹.3,01,203/- made by the Assessing Officer has been deleted by the ld. CIT(A) on the basis that the cash balance as on the midnight of 08.11.2016 was ₹.4,53,149.60 as per the cash books of the assessee, thereby, the ld. CIT(A) accepted the contents and figures specified in assessee’s cash book. The ld. AR further submits that as the closing balance of cash in hand as on 08.11.2016 has been computed by the assessee by taking into consideration the transactions entered into prior to 08.11.2016, which is recorded in the cash book furnished before the Ld. CIT(A), the transactions are deemed to have been accepted by the Department, and hence addition cannot be made in the hands of the assessee on the basis of any alleged discrepancies in the cash book. When the closing balance of cash in hand, as on 08.11.2016, has been accepted by the Department, the transactions preceding the same cannot be disputed by the Department, without any basis. He further argued that the Department has partially accepted the records of the cash book and has artificially distinguished between the deposits made during pre- demonetization period and post-demonetization period. The addition made by the Assessing Officer is liable to be deleted, as differential treatment of same category of transactions based merely on selective scrutiny of the transactions entered into the cash book is not a valid ground for addition.

The ld. DR Ms. V. Supraja, Addl. CIT supported the order of the ld. CIT(A).

We have heard both the parties and perused the material on record. During the course of assessment proceedings, the Assessing Officer examined the cash book furnished by the assessee on 19.11.2019 and found excess cash deposits upto 23.09.2016 to an extent of ₹.5,81,810.40, which is extracted at page 2 of the assessment order. It is noted that the Assessing Officer in para 4 of the assessment order discussed the opening cash balance as on 01.09.2016 and made addition to an extent of ₹.5,81,810/- on account of excess cash from 09.09.2016. Before us, the ld. AR argued that there was no excess cash deposit made by the assessee and satisfactorily explained the source of deposits before the ld. CIT(A). On perusal of para 3 of page 13 of the impugned order, we note that after verifying assessee’s cash booking and noting that the cash balance as on the midnight of 08.11.2016 is ₹.4,53,149.60, which has not been disputed by the Assessing Officer, the ld. CIT(A) deleted the addition of ₹.3,01,203/-. When the closing balance as on 08.11.2016 is accepted by the ld. CIT(A), it is clear that the transactions entered into prior to 08.11.2016 have been accepted by the Department. As the assessee has computed the closing balance of cash in hand as on 08.11.2016 by taking into consideration the transactions entered into prior to 08.11.2016, which is recorded in the cash book and furnished before the ld. CIT(A) and the ld. CIT(A) has accepted the cash book, the preceding transactions cannot be disputed by the Department without any basis. Under the above facts and circumstances of the case, the addition of ₹.5,81,810.40 made by the Assessing Officer and confirmed by the ld. CIT(A) stands deleted.

In the result, the appeal filed by the assessee is allowed. Order pronounced on 18th August, 2025 at Chennai.