ITAT deletes addition u/s 69A for cash deposited during demonetization out of Opening Bal, withdrawal

The issue in this appeal of the assessee in regard to the order of CIT(A) in confirming the addition of Rs. 11,72,614/-.

In this case, the assessee is engaged in the business of goldsmith. In the assessment order, the Assessing Officer noted that there is a cash deposit during the demonetization period in the assessee’s bank account amounting to Rs.11,12,500/-. The assessee was asked to explain the sources thereof. The assessee stated that during the year assessee has withdrawn cash of Rs.7,00,000/- from HDFC Bank on 23.9.2016 and cash generated out of business and opening balance of cash Rs. 9,48,532/- were deposited. However, the Assessing Officer was not satisfied. The AO in its order contented that for the year under consideration, the assessee had shown business income u/s. 44AD.

However, has not furnished any supporting evidence in support of the business carried out by him for the year under consideration, which clearly implies that no business was carried out. Further, the assessee’s contention regarding cash in hand of Rs.948532/- as of 1.4.2016, it is noticed that for AY 2016-17, cash in hand is not reflected in the return of income. Moreover, the assessee has shown in the computation of income for AY 2016-17, only income from other sources and income from house property, but has not shown income from the business. Thus, opening cash in hand of Rs.948532/- as of 1.4.2016 cannot be justified. Moreover, the onus to prove the genuineness of the source of the deposits is upon the assessee which he failed to discharge completely. Since the source of the above cash deposits has remained unexplained for want of supporting documentary evidence, an amount of Rs 11,12,500/- is treated as unexplained and brought to tax u/s 69Aof the Income-tax Act, 1961. Penalty proceeding u/s 271AAC of the Income-tax Act. 1961 is initiated separately.

Against the above order, the assessee is in appeal before learned CIT(A). Learned CIT(A) confirmed the Assessing Officer’s action. Against the above order, the assessee is in appeal before the ITAT.

ITAT observed that the assessee’s plea of deposit out of opening balance, cash withdrawal, and during the year business has been rejected. However, no cogent reason has been given by the authority below to reject the assessee’s plea. Just because deposits are in a particular period, all other submissions cannot be rejected without giving proper reasons. Hence, in the interest of justice ITAT deemed appropriate to remit this issue to the file of the Assessing Officer. The Assessing Officer shall consider the issue afresh and pass cogent and speaking order.