Manual cash book reconciles with the books of accounts, income tax addition not sustainable: ITAT
Bijender Singh Lohia (ITAs No.1528 & 1529/Del/2022)
Facts of the Case:
- A search and seizure operation under section 132(1) of the Income Tax Act was conducted on 29/05/2018, targeting the assessee and a company called Lion Manpower Solutions Pvt. Limited, where the appellant was a director.
- No incriminating material was found from the search premises of the appellant during the operation.
- However, a manual cash book of Lion Manpower Solutions Pvt. Limited was found and seized during the search, containing entries of cash withdrawals and expenses of the company.
- Subsequent to the search, assessment proceedings under section 153A of the Act were initiated for the assessment years (AYs) 2015-16 and 2016-17 and additions were made based on manual cash book alleging that the expenses are unaccounted
ITAT Delhi held as below:
- The manual cash book found at the premises of the company, in which the appellant was a director, could not be considered incriminating material for the purpose of Section 153A of the Act.
- Since the cash inwards and outwards recorded in the manual cash book were from known sources and reconciled with the company’s books, the additions made by the AO were not justified.
- The appeal is therefore allowed.
The copy of the order is as under:
