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Facts
The appellant, a general merchant, did not file a return for AY 2017-18. The AO initiated proceedings due to cash deposits during demonetisation and made a best judgment assessment under Section 144, adding Rs. 3,50,000, which the CIT(A) confirmed. The appellant contended the deposits were from an opening cash balance of Rs. 9,68,192.
Held
The Tribunal observed that the AO had accepted the explanation for the initial cash deposit from the opening balance. Therefore, it found no reason to disbelieve the explanation for other cash deposits, directing the deletion of the addition of Rs. 2,15,000 made by the AO.
Key Issues
Whether the Assessing Officer was justified in making an addition for cash deposits made during the demonetisation period, when the appellant claimed the deposits originated from an existing opening cash balance which was partially accepted by the AO.
Sections Cited
142(1), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
Assessment Year: 2017-18 Shaiju Assanarakunju .......... Appellant Mukkavala, Kayamkulam, Kayamkulam 690502 [PAN: ABVPA6956F] vs. The Income Tax Officer, Ward-4, Alappuzha .......... Respondent Appellant by: Shri R. Krishnan, CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 26.05.2025 Date of Pronouncement: 23.06.2025 O R D E R This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-1, Vadodara [CIT(A)] dated 25.03.2025 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the appellant is an individual carrying on the business of General Merchants. No regular return of income for AY 2017-18 was filed by the appellant. However, based on the information that the appellant made cash deposit during demonetisation period, the AO issued notice u/s. 142(1) of the Income Tax Act, 1961 (the Act) calling upon the appellant to file return of income for AY 2017-18. The appellant was also issued a Shaiju Assanarakunju questionnaire calling for certain details. The appellant neither complied with the notice u/s. 142(1) nor furnished the details. In the circumstances, the AO proceeded with best judgement assessment u/s. 144 of the Act by making addition of Rs. 3,50,000/- being cash deposit made during demonetisation period, rejecting the contention of the appellant that the same was made out of the opening cash balance as on 08.11.2016 of Rs. 9,68,192/-.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
I heard the rival contentions and perused the material available on record. The only issue that arises for consideration is whether the AO is justified in making addition of Rs. 2,15,000/- being cash deposit made in specified bank notes during demonetisation period. It is the contention of the appellant that this cash deposit was made out of the opening balance as on 08.11.2016 of Rs. 9,68,192/-. The AO having accepted the deposit made on the first date, there is no reason for the AO not to believe the explanation in respect of other cash deposits also. Accordingly, I direct the AO to delete the addition.
In the result, the appeal filed by the assessee stands allowed.