ITAT overturns addition of cash deposits as undisclosed income under Income Tax Act

The Income Tax Appellate Tribunal (ITAT) set aside the addition of cash deposits as undisclosed income under section 68 of the Income Tax Act for the assessment year 2008-09. The ITAT directed the Assessing Officer to re-examine the details and confirmations provided by the appellant, noting that some transactions were through cheques and between different accounts. The appellant provided confirmations of loans to explain the sources of the deposits, leading the ITAT to allow the appeal for statistical purposes.

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Issues involved: Addition of cash deposits as undisclosed income u/s 68 of the Income Tax Act for the assessment year 2008-09.

Summary:
The appeal was against the order of the Commissioner of Income Tax(Appeals) confirming the addition of cash deposits made by the Income Tax Officer in computing the business income of the appellant. The assessee explained that the cash deposits were from withdrawals for business purposes, but the AO did not accept this explanation due to lack of disclosure of bank accounts. The AO treated the cash deposits as undisclosed income u/s 68 of the Income Tax Act. On appeal, the CIT(A) upheld the addition stating lack of correlation between cash deposits and withdrawals. The ITAT noted that some transactions were through cheques and between different accounts, and the assessee provided confirmations of loans to explain the sources of deposit. The ITAT set aside the issue for the AO to re-examine the details and confirmations provided by the assessee, allowing the appeal for statistical purposes.

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