ITAT Delhi Upholds CIT(A) Order: Deletes Rs. 1.41 Cr Addition on Cash Deposits During Demonetisation:

ITAT Delhi Upholds CIT(A) Order: Deletes Rs. 1.41 Cr Addition on Cash Deposits During Demonetisation The Income Tax Appellate Tribunal (ITAT) Delhi has ruled in favour of the assessee and rejected the claims of the income tax department about the large cash deposits made by the assessee during demonetisation. In the appeal filed by the revenue, it submitted that the assessee had cash deposits of Rs 1,50,36,500 in its bank account. Since the assessee did not give enough explanation regarding the source of cash deposits, the Assessing Officer (AO) passed an assessment order under section 143 (3), where the AO made an addition of Rs 1,41,36,733 as unexplained cash credits under section 68 of the Income Tax Act.

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The department also claimed that CIT(A) has made a mistake by not considering that the closing balance did not match the opening cash balance less cash deposited in the bank, plus cash withdrawals. On the other hand, the assessee submitted that the cash deposits were from the cash sales/recovery from debtors and cash balances. The assessee claimed that the AO did not analyse the books of the assessee or any documents and made the above addition. Further, it was stated that the assessee had already explained the source of cash deposits in the bank during the demonetisation period before the CIT(A), along with the Audited books of account, VAT & Excise returns, etc. The CIT(A) also analysed them and held that the assessee had submitted the required evidence.

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The ITAT Delhi observed that the AO did not mention any defect in the books of accounts and did not reject the books of account of the assessee. The ITAT upheld the decision of CIT(A) and deleted the addition of Rs 1,41,36,737 and rejected the appeal filed by the revenue.