Trader Deposited Rs. 2.53 Lakh Cash from Earlier Bank Withdrawals; ITAT Deletes Income Tax Addition:

Trader Deposited Rs. 2.53 Lakh Cash from Earlier Bank Withdrawals; ITAT Deletes Income Tax Addition Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench has ruled in favour of taxpayer Ashwinkumar Gaurishanker Nayak for Assessment Year 2012-13. The case was about an addition of Rs. 2,53,000 made by the Income Tax Department on account of cash deposits in the bank account of the taxpayer.

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The Income Tax Officer (ITO) reopened the assessment after noting large share trading transactions of over Rs. 10,43,74,460. During the course of the reassessment proceedings the Officer noticed that the taxpayer had deposited cash of Rs. 2,53,000 in his Bank of Baroda account. As no satisfactory explanation was found to have been given, the amount was treated as unexplained money under section 69A of the Income Tax Act and added to the income of the taxpayer. The taxpayer challenged the addition before the CIT(A), but the appeal was dismissed. He then approached the ITAT Ahmedabad. Before the Tribunal, the taxpayer argued that the cash deposits were made out of cash withdrawn earlier from the same bank account during financial years 2009-10 and 2010-11. Detailed bank statements and a chart showing the withdrawals were submitted to support the claim.

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The Tribunal first accepted the taxpayer’s explanation as genuine and excused a delay of 186 days in filing the appeal. The Tribunal observed that on perusal of the records, the assessee had made substantial cash withdrawals in earlier years and appeared to have cash in hand sufficiently at the time of the deposits. The ITAT noted that the documentary evidence and explanations furnished by the assessee were not properly considered by the Assessing Officer and the CIT(A). The Tribunal held that "from the perusal of records, it appears that the assessee has substantially withdrawn and has cash in hand while depositing the same in A.Y. 2012-13. Thus, these documents/details were never taken on record by the AO and have not been considered at all despite being submitted before the AO as well as before the CIT(A)."

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Accordingly, the ITAT deleted the addition and allowed the taxpayer's appeal.