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Facts
The assessee filed its return of income for AY 2017-18. Subsequently, the case was reopened under Section 148 due to cash deposits of Rs. 5,00,000 during the demonetization period. The Assessing Officer added this amount as unexplained income under Section 69A, and also initiated penalty proceedings.
Held
The Tribunal found that the assessee had a sufficient cash balance of Rs. 11,30,655 at the beginning of the financial year 2016-17, which was duly disclosed. Therefore, the addition of Rs. 5,00,000 made by the Assessing Officer was without any basis.
Key Issues
Whether the cash deposit of Rs. 5,00,000 during the demonetization period was unexplained and thus liable for addition to income.
Sections Cited
69A, 115BBE, 271AAC, 143(1), 148, 142(1), 143(2), 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: Shri Sonjoy Sarma & Shri Rakesh Mishra
Assessment Year: 2017-18 Link Tracom Pvt. Ltd...………………………………………...….……….Appellant 3 Block B Room No.5, C R Avenue 1st Floor, Kolkata- 700072. [PAN: AABCL5404H] vs. ITO, Ward-1(4), Kolkata.………….....................……........……...…..…..Respondent Appearances by: Shri Sujit Basu & Rajeev Mukherjee, Advocates, appeared on behalf of the assessee. Smt. Archana Gupta, Addl. CIT, Sr. DR, appeared on behalf of the Revenue. Date of concluding the hearing : May 14, 2025 Date of pronouncing the order : May 21, 2025 ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal of the assessee for the assessment year 2017-18 is directed against the order dated 02.01.2025 passed by the ld. Commissioner of Income-tax, Appeals, Addl/JCIT(A)-3, Bengaluru [hereinafter referred to as ‘the ‘ld. CIT(A)’].
Brief facts of the case are that the assessee is filed its return of income on 20.12.2017 electronically for the assessment year 2017-18 by declaring total income of Rs.13,66,139/-. The return was duly processed u/s 143(1) of the Act. Subsequently, the case of the assessee was reopened u/s 148 of the Act with reasons that the assessee deposited cash amounting to Rs.5,00,000/- during the demonetization period commencing from 09.11.2016 to 31.12.2016. In compliance to the same, the assessee filed its return of income declaring total income of Rs.13,66,140/-. Thereafter, statutory notices u/s 142(1) and 143(2) of the Act were issued to the assessee and the assessee complied to the Assessment Year: 2017-18 Link Tracom Pvt. Ltd notices and submitted requisite details. During the assessment proceedings, the Assessing Officer raised a query regarding the cash deposits of Rs.5,00,000/- made during the demonetization period and issued a show-cause notice as to why the amount should not be treated as unexplained u/s 69A of the Act taxed thereupon u/s 115BBE of the Act. Despite the reply from the assessee, the Assessing Officer was not convinced and made the addition of Rs.5,00,000/- in the hands of the assessee and also initiated penalty proceedings u/s 271AAC of the Act separately.
Aggrieved by the above order, the assessee preferred an appeal before the ld. CIT(A) and the assessee submitted the following supporting documents in order to substantiate its claim before the ld. CIT(A):
i. computation of total income for A.Y 2017-18; ii. audited statement of accounts of the assessee for the year ended 31.03.2017; iii. audited statement of accounts of M/s Builders Steel Centre as at 31.03.2017, in which the assessee was one of the partners; iv. audited statement of accounts of M/s Avanti Spinners as at 31.03.2017, in which the assessee was one of the partners.
3.1 During the proceedings before the ld. CIT(A), the assessee stated that the audited financial statement for the assessment year 2016-17 clearly shows that the assessee has a cash-in-hand of Rs.11,30,655/- and sufficient cash balance to make deposits during demonetization period. The assessee repeatedly argued before the ld. CIT(A) that the assessee had sufficient cash-in-hand during the said period and alleged amount of Rs.5,00,000/- was deposited out of said amount and disclosed source of fund, therefore, no addition u/s 69 is warranted in the case of Assessment Year: 2017-18 Link Tracom Pvt. Ltd the assessee. However, the ld. CIT(A) without considering the arguments made by the assessee and without appreciating the evidences submitted by the assessee simply upheld the order of the Assessing Officer by dismissing the appeal of the assessee.
Dissatisfied with the above order, the assessee preferred appeal before this Tribunal raising various grounds. However, the primary contention of the ld. AR is that the authorities below has arbitrarily added the alleged sum of Rs.5,00,000/- in the hands of the assessee when the assessee had well within the disclosed and audited cash balance and the authorities below without appreciating the same, made the addition in the hands of the assessee is against the law. Therefore, present addition needs to be deleted. Before us, the ld. AR submitted a detailed paper-book running from pages 1 to 134 comprising the following details:
i. return filing acknowledgement ii. Return form in ITR 6 showing cash in hand of Rs.11,30,655/- as at 31.03.2016 at page 6 iii. audited statement of accounts of the assessee for the year ended 31.03.2016 showing cash in hand for Rs.11,30,655/- at page 55 as on 31.03.2016 iv. return filing acknowledgement for assessment year 2017-18 v. computation of total income for A.Y 2017-18; vi. audited statement of accounts of the assessee for the year ended 31.03.2017; vii. audited statement of accounts of M/s Builders Steel Centre as at 31.03.2017, in which the assessee was one of the partners; viii. audited statement of accounts of M/s Avanti Spinners as at 31.03.2017, in which the assessee was one of the partners. 3 Assessment Year: 2017-18 Link Tracom Pvt. Ltd 5.1 The ld. AR stated that financial statement for the assessment year 2016-17, the assessee had a cash balance of Rs.11,30,655/- as on 31.03.2016 which is duly reflected at page 55 of the paper-book, the extract of the same is as under:
5.2 The ld. AR stated that deposits of Rs.5,00,000/- was made out of above disclosed and accounted cash balance available with the assessee during the financial year. He therefore stated that the Assessing Officer arbitrarily added the deposits without appreciating that the source of the fund was already in record and no contrary evidence was given on the available cash-in-hand. The ld. AR also brought to our notice by showing form in ITR-6 at page 6 of the paper-book where it clearly reflected that 4 5.3 The ld. AR, therefore, prayed that the alleged addition made by the Assessing Officer and sustained by the ld. CIT(A) is without any basis and liable to be deleted as the assessee has sufficient balance of Rs.11,30,655/- in the opening balance on 01.04.2017 and the assessee deposited Rs.5,00,000/- out of the said funds as was available being the opening cash balance during the financial year 2016-17.
On the other hand, the ld. DR supported the orders of the authorities below.
We, after hearing the rival submissions and perusing the materials available on record, find that in the present case, the assessee has sufficient cash balance of Rs.11,30,655/- at the very beginning of the financial year 2016-17, therefore, the alleged addition of Rs.5,00,000/- made by the Assessing Officer u/s 69 is without any basis and reasoning. We accordingly delete the addition of Rs.5,00,000/- as the 5 Assessment Year: 2017-18 Link Tracom Pvt. Ltd assessee has duly disclosed the cash balance to make the alleged deposit during the demonetization period.
In terms of the above, the appeal of the assessee is allowed.
Kolkata, the 21st May, 2025.