Cash deposit during demonetization: Addition deleted as Assessee has submitted cash book, cash flow statement and cash book, which shows that assessee has sufficient opening cash balance at the beginning of 01.04.2016
ITAT Surat has deleted the addition in respect of cash deposit during demonetisation. The case detail is as under:
HASMUKH KANJIBHAI TADHANI
THE ITO, WARD – 3 (3) (3) , SURAT
ITA No. 19/SRT/2023
Dated.- September 4, 2023
Let us have a short overview of the case:
Assessee has filed his return of income for assessment year (A.Y.) 2017-18, on 05.03.2018, declaring total income of Rs. 6,77,840/-.
The return of income was processed u/s 143(1) of the Income Tax Act. Later on, the case of the assessee was selected for scrutiny, under manual scrutiny criteria as per Para-1(vi) of Instructing No. 4/2018 dated 20.08.2018 of CBDT read with subsequent directions issued vide F.No..225/282/2018/ITA.II dated 19.9.2018. Therefore, notice u/s 143(2) of the Act was issued by the assessing officer, on 29.09.2018 and duly served upon the assessee.
As per the information available with the assessing officer, the assessee has maintained bank Account No.2700101110007725 with Bank of India and deposited total cash of Rs. 5,07,000/- in this bank account during the demonetization period. Therefore, the assessing officer issued notice to the assessee, u/s 142(1) of the Act, on 14.08.2019 and 21.09.2019, calling for certain details as per Annexure to the said notice.
In response to the above said notice, the assessee filed a written submission. As regards the source of cash deposited in bank accounts during the demonetization period, the assessee has stated that he had cash on hand, as well as withdrawn during the year, out of which cash currency of old 500 and 1000 were deposited in bank. To substantiate its claim the assessee filed a cash flow statement also before the assessing officer.
Another show cause notice was subsequently issued by assessing officer on 17.12.2019, wherein the assessee was requested to submit details of cash deposit made during demonetization period with source thereof.
ITAT held as under:
AO has not refuted or discredited the evidences and documents given by assessee.
AO has just brushed aside this evidence without even a word on why they are not acceptable.
It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises and guesswork.
Assessee has submitted cash book, cash flow statement and cash book, which shows that assessee has sufficient opening cash balance at the beginning of 01.04.2016. Apart from this, the assessee is a partner in M/s Shivam Polishing LLP and from the partnership firm, the assessee has received remuneration and profit – assessee has submitted the cash deposited during the demonetization and hence it is quite clear from the cash book, cash flow statement and cash withdrawal from the bank, that assessee has explained the source of cash deposit in bank account in a satisfactory manner – addition so made is deleted.
With this, the issue is decided in favour of assessee