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of <h1>ITAT Mumbai allows appeals for AY 2002-03: Addition of Rs.75,30,000 & cancellation of cheques overturned</h1> <h3>M/s. Global Softech Ltd. Versus Income-tax Officer,</h3> M/s. Global Softech Ltd. Versus Income-tax Officer, - TMI Issues involved:1. Addition of Rs.75,30,000/- in the Assessment Year 2002-03.2. Cancellation of cheques issued by the assessee amounting to Rs.12,45,000/- and non-encashment of two other cheques.Analysis:Issue 1: Addition of Rs.75,30,000/-The dispute in this matter revolves around the addition of Rs.75,30,000/- in the Assessment Year 2002-03. The assessee had shown a credit balance in the accounts of two parties but did not deposit the corresponding cheques in the bank, leading to a difference in bank balances as per the books and the bank statement. The Assessing Officer (A.O.) and the CIT(A) confirmed the addition under section 68 of the Income Tax Act. However, the ITAT Mumbai observed that the addition under section 68 is warranted when the genuineness of a sum credited in the books is not proven. In this case, the cheques were not encashed, and the entries were reversed in a later year. Confirmation from the parties indicated that they advised against depositing the cheques in the bank. The bank reconciliation statement also confirmed the non-deposit of cheques. Consequently, the ITAT ordered the deletion of the addition, as there was no actual inflow of funds to the assessee.Issue 2: Cancellation of ChequesThe second ground of appeal pertained to the cancellation of cheques issued by the assessee totaling Rs.12,45,000/- and non-encashment of two other cheques. Similar to the first issue, the ITAT found that the reasons for deleting the addition in the first ground applied here as well. The A.O. had made the addition based on the bank reconciliation statement indicating cheques issued but not encashed. However, since the cheques were stopped for encashment due to commercial reasons, no consequential entry was passed by the bank. The ITAT allowed this ground of appeal, leading to the deletion of the addition.Conclusion:In conclusion, the ITAT Mumbai allowed both appeals related to the Assessment Year 2002-03. The first appeal concerning the addition of Rs.75,30,000/- was allowed as there was no basis for the addition under section 68. The second appeal regarding the cancellation of cheques issued by the assessee was also allowed, as the reasons for deletion of the addition in the first ground applied to this issue as well. The ITAT's detailed analysis and interpretation of the facts led to the deletion of the additions made by the A.O. and the CIT(A).
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