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Facts
The Assessing Officer (AO) added Rs. 7 Lacs deposited in the assessee's bank account to their income for want of a satisfactory explanation, despite the assessee claiming a sufficient opening cash balance. The CIT(A) confirmed this addition. The assessee appealed this decision.
Held
The Tribunal opined that there was no sound basis to confirm the full addition, as the assessee's balance sheet showed a sufficient opening cash balance. However, to prevent revenue leakage, the addition was restricted to Rs. 1 Lac, taxable at the normal rate of tax.
Key Issues
Whether the addition made by the AO for cash deposits in the bank account without satisfactory explanation is justified, and if so, to what extent.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, “SMC” BENCH, AGRA
Before: HON’BLE SHRI SATBEER SINGH GODARA, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year: 2017-18) Shri Ratan Behari Agarwal ACIT, 4(3)(1), बनाम/ Guriya Wala Pech, Etah. Vs. Hathras(UP). �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAWPA-1728-K (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Sh. Pankaj Gargh, Adv. – Ld. AR � थ�कीओरसे/Respondent by : Sh. Shailender Shrivastava – Ld. DR सुनवाईकीतारीख/Date of Hearing : 19-02-2025 घोषणाकीतारीख /Date of Pronouncement : 22.04.2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order passed by of learned Addl. / Joint Commissioner of Income Tax (Appeals), Coimbatore [CIT(A)] on 27-02-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 21-11-2019.
The Ld. AO noted that the assessee deposited cash of Rs.7 Lacs in its bank account during the month of August, 2017. The Ld. AO added the same to the income of the assessee for want of satisfactory explanation though the assessee maintained that it had accumulated opening cash balance of Rs.10.15 Lacs as on 01-04-2016. The assessee derived income from salary, house property, business income and income from other sources. The Ld. CIT(A) confirmed the addition on the ground that return of income of earlier year was not scrutinized. Aggrieved, the assessee is in further appeal before us.
We are of the opinion that there is no sound basis to confirm the impugned addition. The assessee furnished its Balance Sheet reflecting opening cash balance which was sufficient enough to cover impugned deposits. However, to plug any leakage of revenue, we restrict the impugned addition to the extent of Rs.1 Lacs which would be taxable at normal rate of tax in terms of decision of Hon’ble High Court of Madras (Madurai Bench) in S.M.I.L.E. Microfinance Ltd. vs. ACIT (WP (MD) No.2078 of 2020 dated 19-11-2024) holding that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date. Therefore, the addition so made would be subjected to normal rate of tax only. The Ld. AO is directed to re-compute the income of the assessee.
The appeal stand partly allowed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.