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Facts
The assessee's case was selected for scrutiny for AY 2017-18 due to large cash deposits of Rs. 17 lakhs during the demonetisation period. The assessee claimed the source of these deposits was her opening cash balance and rental income. The Assessing Officer (AO), and subsequently the Ld. Commissioner, added Rs. 15,45,800/- as unexplained money under section 69A of the Income Tax Act.
Held
The Tribunal found that although the Ld. Commissioner disregarded the assessee's balance sheet, the assessee had provided cash flow statements for previous assessment years establishing significant opening cash balances. The Tribunal concluded that there was no valid reason to sustain the addition made by the AO and affirmed by the Ld. Commissioner, and therefore, deleted the addition.
Key Issues
Whether cash deposits made during the demonetisation period are to be treated as unexplained money under Section 69A when the assessee claims the source is from opening cash balance and rental income.
Sections Cited
250, VIA, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SMT. RENU JAUHARI
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the assessee against the order dated 06.11.2023, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18.
In the instant case, the assessee had declared its total income of Rs.7,37,830/- by filing her return of income on 16.02.2018 after claiming deduction under chapter VIA of the Act. Subsequently, the case of the assessee was selected for limited scrutiny through CASS for the reasons of “large value cash deposits during demonetisation period as compared to return of income”.
2.1 Therefore, in order to verify the reasons of selection of case, the Assessee was show caused by issuing the statutory notices, in response to which, the Assessee filed her submission. On perusing the same and by calling for account opening form, bank account statement, KYC details of cash deposits made during the financial year 2016-17 specfically during demonetization period (09.11.2016 to 3.12.2016), from the concerned bank i.e. Dena Bank, the assessee was asked to furnish the source of cash deposits along with the documentary evidences, as it appears from the para No.6 of the assessment order.
2.2 The Assessee before the Assessing Officer (AO) in response to the show cause notice submitted the details qua source of cash deposits of Rs.17 lakhs and claimed that the same was out of her cash balance as on 01.04.2016 and rent received from 01.04.2016 to 05.11.2016.
2.3 However, the AO, with the details filed and claim made by the Assessee did not get impressed and therefore by treating the amount of Rs.4,28,000/- as cash deposits claimed by the assessee from the rental income for the period from 01.04.2016 to 08.11.2016 and Rs.1,54,200/- as cash deposited, as explained, ultimately treated the amount of Rs.15,45,800/- (Rs.17 lakhs – Rs.1,54,200/-) as un- explained money under section 69A of the Act and added the same in the income of the assessee.
The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner, who on the same reasoning as made by the AO, affirmed the aforesaid addition by dismissing the appeal of the assessee.
The Assessee being aggrieved is in appeal before us.
Heard the parties and perused the material available on record and given thoughtful considerations to the peculiar facts and circumstances of the case. We observe that though the Ld. Commissioner acknowledged the documents filed by the assessee in order to justify the cash deposit of Rs.17 lakhs during the demonetisation period by the Assessee, however, he Commissioner doubted the balance sheet, simply on the reason that the same is un- audited and self serving document and cannot be relied upon. Admittedly the Assessee before the authorities below by producing cash flow statement pertaining to A.Y. 2015-16 and 2016-17 established that as on 01.04.2014 and 01.04.2016 she had respectively Rs.11,33,883/- and Rs.16,49,859/- on account of opening cash balance, therefore in our considered view, there is no reason to sustain the addition made by the AO and affirmed by the Ld. Commission. Consequently, the addition under consideration is deleted.
In the result, the appeal filed by the assessee stands allowed. 6.
Order pronounced in the open court on 29.05.2024.