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Facts
The assessee appealed against the CIT(A)'s order which confirmed additions made by the AO. The appeal pertained to two issues: an addition of Rs. 34,52,000/- under section 69A for unexplained cash deposit, and an addition of Rs. 13,32,000/- due to a difference between turnover disclosed in the return and TDS statements.
Held
For the unexplained cash deposit, the Tribunal granted the assessee one more opportunity to explain the source and provide supporting documents, allowing the issue for statistical purposes. For the turnover difference, the Tribunal also provided the assessee with another opportunity to demonstrate if the amount was offered to tax in an earlier year to avoid double taxation, allowing this issue for statistical purposes.
Key Issues
Validity of addition for unexplained cash deposit and discrepancy in turnover disclosure.
Sections Cited
69A, 143(3), 144B, 194C, 250
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Income Tax Appellate Tribunal, B BENCH, CHENNAI
Before: SHRI GEORGE GEORGE KAND MS PADMAVATHY S
आदेश/ O R D E R
PER GEORGE GEORGE K, VICE PRESIDENT:
This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 05.08.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2023-24.
:- 2 -: 2. Two issues are raised in this appeal. i. Addition of Rs.34,52,000/- u/s.69A of the Act as unexplained cash deposit. ii. Addition of Rs.13,32,000/- on account of difference of turnover disclosed in the return of income and AS 26. We shall adjudicate the above two issues as under.
Addition of Rs.34,52,000/- u/s.69A of the Act (Ground No.5):- 3. Brief facts of the case in relation to the above issue is that during the course of assessment proceedings, the AO noted that assessee had made cash deposit of Rs.34,52,000/- in his bank account other than current account are time deposits. The AO directed the assessee to explain the source of cash deposits. The assessee’s primary contention was that withdrawal in cash amounting to Rs.32,71,000/- by itself makes the source of cash deposits. That apart, assessee submitted that he had taken cash loans from his wife, mother and other relatives. Further, it was stated that he used to withdraw cash from his bank account and give it to his employees as imprest. However, the explanation provided by the assessee was not accepted by the AO. The AO completed the assessment u/s.143(3) r.w.s. 144B of the Act vide :- 3 -: order dated 20.03.2025 by making the addition of Rs.34,52,000/- u/s.69A of the Act.
Aggrieved by the addition made u/s.69A of the Act, assessee raised this issue before the First Appellate Authority (FAA). It is stated before the FAA, assessee had furnished the detailed cash book and bank statements. The submissions raised before the AO was reiterated before the FAA. However, the FAA held that assessee has not submitted any documentary evidences in support of his explanation such as PAN number and confirmation of his wife, mother and relatives. Further, the FAA held that assessee has not submitted the cash book and books of accounts to prove that source of cash withdrawals corresponds to the source of cash deposits.
Aggrieved by the order of FAA confirming the addition of Rs.34,52,000/- assessee has raised this issue before the Tribunal. The Ld.AR submitted that the cash book and the bank account statement, clearly evidences that cash withdrawals were utilized for making the cash deposits and it was on proximate dates. Therefore, it was contended that no addition u/s.69A of :- 4 -: the Act is warranted. In support of his contention, the Ld.AR relied on the following judicial pronouncements i. Hon’ble Supreme Court in the case of CIT vs. Smt. P.K. Noorjahan reported in (1999) 237 ITR 570 (SC) ii. Hon’ble Delhi High Court in the case of CIT vs. Kulwant Rai reported in (2007) 291 ITR 36 (Del)
The Ld.DR on the other hand submitted that assessee has not furnished confirmation nor the details such as PAN, etc., of the mother, wife and relatives either before the AO or the FAA. It was further submitted that the FAA has categorically held that the cash book and books of account has not been furnished to prove that the source of cash withdrawals correspond to the source of cash deposits. Therefore, the Ld.DR contended that the addition of Rs.34,52,000/- u/s.69A of the Act needs to be confirmed.
We have heard rival submissions and perused the material on record. At page 8 of the impugned order of the FAA, it has clearly mentioned (in the written submission of the assessee) that detailed cash book and bank statements have been submitted. The assessee’s primary contention is that cash :- 5 -: withdrawals is the source for cash deposits. It is stated that cash withdrawals and the date of deposits are proximate and therefore, no addition is warranted u/s.69A of the Act. The FAA on the other hand has concluded that no evidence has been furnished with regard to the cash book etc., which has been strongly objected by the Ld.AR. In the interest of justice and equity, we are of the view that one more opportunity should be provided to the assessee to explain the source of cash deposit of Rs.34,52,000/-. The assessee is directed to furnish the details of cash withdrawals and the proximate dates of cash deposits to the AO. As regards the cash received from relatives, wife and mother, the assessee shall furnish the confirmations and also the source of said relatives. It is ordered accordingly.
In the result, this issue raised in Ground No.5 is allowed for statistical purposes.
Addition of Rs.13,32,000/- on account of difference between the turnover reported and what is shown in the TDS statements (Ground No.4)
Brief facts in relation to the above issue is that assessee had declared turnover of Rs.74,41,000/- in his return of income. In the TDS statement, the contractual receipts u/s.194C of the :- 6 -: Act amounted to Rs.87,73,000/-. Therefore, the assessee was directed to explain the difference of Rs.13,32,000/-, whether it has been offered to tax. The assessee submitted that he is following the mercantile system of accounting and has disclosed the said turnover in the earlier year whereas the deductor had followed the cash system of accounting and only on making the payment the deductor shown it in the TDS statement. The AO however held that assessee has failed to substantiate his claim by producing relevant details such as the PAN details of the deductor, etc. In absence of same, the AO held that difference of Rs.13,32,000/- is to be treated as income for the relevant assessment year. The FAA confirmed the view of the AO.
Before us, the Ld.AR reiterated the submissions made before the income-tax authorities.
The Ld.DR strongly supported the order of the AO and the FAA.
We have heard rival submissions and perused the material on record. The FAA has rejected the claim of the assessee for the reason that assessee has not provided the reconciliation :- 7 -: statement. It was held by the FAA that the assessee has not furnished details of the amounts which was already offered to tax in the earlier year and the corresponding taxes that are paid thereon for the relevant assessment year. We are of the view that assessee should be provided one more opportunity to explain whether the amount of Rs.13,32,000/- has been disclosed as income in the earlier assessment year. If the assessee has disclosed the same as the income of the earlier year, there shall be no addition of said sum in the current assessment year since addition would tantamount to double taxation. It is ordered accordingly. Accordingly, this issue raised in Ground No.4 is allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.