ZULU TELE SERVICES PRIVATE LIMITED,CHANDIGARH vs. INCOME TAX OFFICER, WARD - 1(4), CHANDIGARH

The Assessee in this appeal is aggrieved by the action of the CIT(A) in confirming the addition made by the Assessing Officer (A.O.) of Rs. 30,23,500/-u/s 69A of the Income Tax Act, 1961 by 647-Chd-2023 Sher Singh, Yamunanagar 2 treating the cash deposit in the bank account during the demonetization as income from unexplained sources.

Ld. counsel for the Assessee has submitted that the Assessee had deposited the amount of Rs. 30,23,500/ - in its bank account during the demonetization period in the month of October, 2016. Ld. counsel for the Assessee has referred to the various documents in the Paper Book to show that the Assessee had sufficient cash in hand and the assessee had to deposit the aforesaid amount in the bank account on the relevant date as the government had announced the demonetization scheme. Regarding the sources of the cash deposits, the Ld. counsel has demonstrated that during the relevant financial year, the assessee had adopted the new line of business i.e. man power service Provider. It has also been explained that the assesssee was required to keep the sufficient cash in hand for the purposes of disbursal of wages/salary to labour/employees working with the Assesssee.

The turnover of the Assesee for the year under consideration was increased to Rs. 8,53,37,339/-. as compared to immediately preceding year A.Y. 2205-16 of Rs. 49,31,608/- The Assessee during the year earned gross profit of Rs. 75,33,921/- and net profit of Rs. 53,89,619. The Ld. counsel has demonstrated that the 647-Chd-2023 Sher Singh, Yamunanagar 3 assessee had sufficient cash in hand which was deposited by the Assessee because of the announcement of the demonetization scheme.

Ld. D.R. has not rebutted the aforesaid factual position.

In view of the above discussion, the impugned addition made/confirmed by the lower authorities is not sustainable and the same is ordered to be deleted.