ITAT Delhi rules for assessee: Depreciation, cash deposit, and household withdrawal issues resolved.

The ITAT Delhi ruled in favor of the assessee on all three issues. The Tribunal directed the assessing officer to delete the disallowance of depreciation on the car purchased for business purposes, the addition of cash deposited in the savings bank account supported by evidence of a car sale, and the addition of low household withdrawal due to lack of unaccounted expenses.

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Issues involved:
1. Disallowance of depreciation on a car purchased by the assessee.
2. Addition of cash deposited in the savings bank account.
3. Addition of low household withdrawal of the assessee.

Issue 1: Disallowance of depreciation on the car purchased by the assessee:
The appeal concerns the disallowance of depreciation amounting to INR 65,522 on a car purchased by the assessee for INR 4,36,816 in his personal name. The assessing officer disallowed the depreciation, alleging personal use based on the payment from the personal account. However, the Tribunal found that as the assessee, an individual trader, naturally purchased the car in his name, depreciation should be allowed as it was used for business purposes. The absence of car-related expenses in the profit and loss account does not negate its business use. The Tribunal directed the officer to delete the disallowance, emphasizing that ownership and business use justify the depreciation claim.

Issue 2: Addition of cash deposited in the savings bank account:
The second issue involves the addition of INR 90,000 deposited in the appellant's savings bank account, attributed to the sale of an old car. The appellant provided evidence of two cash receipts of INR 45,000 each for the car sale, but the CIT(A) did not consider it due to a procedural lapse. The Tribunal disagreed, stating that the evidence warranted deletion of the addition. The failure to follow a procedural rule did not justify upholding the addition, leading the Tribunal to direct the assessing officer to delete the amount from the assessment.

Issue 3: Addition of low household withdrawal of the assessee:
Regarding the low household withdrawal addition of INR 50,000, the assessing officer questioned the minimal annual withdrawal of INR 1,90,000 by the assessee. Despite the family consisting of 4 members with independent children, the officer added INR 50,000 for alleged personal and household expenses. The Tribunal, after considering the family composition and the assessee's explanation, found no basis for the addition. Noting the absence of unaccounted expenditures, the Tribunal directed the officer to delete the INR 50,000 addition due to low household withdrawal. Consequently, the appeal was allowed in favor of the assessee.

In conclusion, the ITAT Delhi ruled in favor of the assessee on all three issues, directing the assessing officer to delete the disallowance of depreciation, the addition of cash deposited in the savings bank account, and the addition related to low household withdrawal. The Tribunal emphasized the business purpose of the car purchase, the evidential support for the cash deposit, and the lack of unaccounted expenses to justify its decisions.

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