ITAT upholds CIT(A)'s decision on revenue appeal, rejects addition for cash in hand.

The Revenue's appeal challenging the restriction of addition on account of opening cash in hand was rejected by the ITAT, upholding the CIT(A)'s decision to restrict the addition. The addition on account of earned money from the sale of agricultural land was deleted as it did not qualify as a capital asset under the Act. Similarly, the addition on account of earned money from the sale of a flat was deleted as the payments were confirmed to have been made as per the agreement. The Assessee's Cross Objection was dismissed as time-barred. Both the Revenue's appeal and the Assessee's Cross Objection were rejected by the ITAT in a judgment delivered on 22/01/2018.

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Issues involved:
- Restriction of addition on account of opening cash in hand
- Deletion of addition on account of earned money from sale of agricultural land
- Deletion of addition on account of earned money from sale of flat
- Cross Objection by the Assessee

Analysis:

Restriction of addition on account of opening cash in hand:
The Revenue's appeal challenged the restriction of the addition on account of opening cash in hand. The AO had made an addition of Rs. 12,28,700, but the CIT(A) restricted it to Rs. 8,19,700. The ITAT noted that the correct cash statement showed that the assessee never had less than Rs. 8,19,700 in hand. Therefore, the CIT(A)'s decision was upheld, and the appeal by the Revenue was rejected.

Deletion of addition on account of earned money from sale of agricultural land:
The AO had made an addition of Rs. 55,21,687 on account of earned money from the sale of agricultural land. However, the ITAT found that since the earnest money was received for agricultural land situated beyond 8 KMS of any municipality, it did not qualify as a capital asset under the Act. The CIT(A) rightly deleted the entire addition, as the AO did not challenge the capacity of the parties involved in giving the earnest money. Thus, the appeal by the Revenue on this issue was rejected.

Deletion of addition on account of earned money from sale of flat:
Regarding the addition of Rs. 29,55,000 on account of earned money from the sale of a flat, the ITAT found that the buyers had indeed made payments to the assessee as per the agreement. One of the buyers confirmed the payments and also stated that the amount was returned upon cancellation of the agreement. The AO failed to prove that the money was channeled through a third party. Therefore, the CIT(A)'s decision to delete the addition was upheld, and the Revenue's appeal on this issue was rejected.

Assessee's Cross Objection:
The Assessee's Cross Objection was withdrawn during the hearing, and it was noted to be time-barred. The ITAT dismissed the Cross Objection as not sustainable in the eyes of the law.

In conclusion, both the appeal filed by the Revenue and the Cross Objection filed by the Assessee were dismissed by the ITAT in this judgment delivered on 22/01/2018.

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