MEERAN MOHIDEEN,CHENNAI vs. ITO NON CORPORATE WARD 5(5), CHENNAI

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ITA 2423/CHNY/2018Status: DisposedITAT Chennai04 September 2019AY 2015-164 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had provided sufficient evidence for past savings and that the addition made by the Assessing Officer was not justified. The claim of savings could not be faulted.

What were the facts?

The assessee, an indenting agent, deposited a large sum during demonetization. The Assessing Officer questioned the opening balance of the assessee's capital, claiming a portion of it as unexplained cash credit.

What were the issues?

Whether the opening balance of capital claimed as past savings can be treated as unexplained cash credit under Section 68 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘ A’ BENCH : CHENNAI

Before: SHRI GEORGE MATHAN & SHRI S.JAYARAMAN

आदेश / O R D E R

PER GEORGE MATHAN, JUDICIAL MEMBER

1.

This is an appeal filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-5, Chennai in ITA No.256/C.I.T(A)-5/2017-18 dated 25.07.2018 for the assessment year 2015-16.

2.

Shri D.Anand represented on behalf of the Assessee and Shri AR.V.Sreenivasan represented on behalf of the Revenue.

3.

It was submitted by ld.AR that assessee is an individual, who is doing the business of indenting agent for import of paper. It was a submission that in the course of demonetization period, the assessee had made a cash deposit of Rs.3,37,40,770/- in his current account.

The sources for the deposits were verified with the documents furnished such as Bills of entry, bank statement with a detailed nature of his business. It was submitted that the evidences produced were accepted and no unaccounted income was found in the hands of assessee. It was further submitted that however, the Assessing Officer had questioned the opening balance of the capital in the assessee”s hand, which had been claimed by the assessee to be out of his past savings being opening balance, which was shown as Rs.25,12,359/-.

Under the scheme of PMGKY-2016, the assessee had disclosed an amount of Rs.20,00,000/- and paid the tax thereon. For the balance of Rs.5,12,369/-, the assessee had shown adequate source , as per the Assessing Officer for the assessment years 2013-14 and 2014-15, totaling to Rs.3,16,390/-. The Assessing Officer did not accept the assessee’s claim in respect of balance of Rs.1,95,969/-, which had been claimed by the assessee as past savings. It was submitted that evidences had been produced explaining his past saving, but the same had been treated as unexplained cash credit u/s.68 of the Act and added to the total income for impugned assessment year without giving any reason. It was a prayer that addition of Rs.1,95,969/- added as unexplained cash credit be deleted in the interest of justice.

4.

In reply, the ld.DR vehemently supported the orders of the Assessing Officer and the ld.CIT(A).

5.

We have considered the rival submissions and perused the material available on record. A perusal of the facts and balance sheet clearly shows that the assessee has been able to explain the sums credited in his bank account, which is also accepted by the Assessing Officer. Only in regard to the opening balance of a amount of Rs.1,95,969/- is being challenged by the Assessing Officer as unexplained cash credit, out of an amount of Rs.25,12,359/-. It is an accepted fact that the assessee has made profits in the earlier years and the balance sheet, profit and loss account as produced by the assessee clearly shows savings. The assessee’s bank account came to be questioned only on account of cash deposit of Rs.3,37,40,770/- in his bank current account during the demonetization drive. No fault in the accounts of the assessee has been pointed out. This being so, we are of the view that the claim of assessee for having savings of Rs.1,95,969/- cannot be faulted and consequently, the addition as made by the Assessing Officer and confirmed by the ld.CIT(A) stands deleted.

6.

In the result, the appeal of the assessee is allowed.

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