Tribunal overturns AO's decision, rules in favor of nursing home company on cash deposit

The Tribunal set aside the AO's order treating a cash deposit as unaccounted money, ruling in favor of the company running a nursing home. The Tribunal found the company's explanation regarding the cash withdrawal for a land procurement project to be reasonable, overturning the AO's decision under section 68 of the IT Act. The appeal was allowed, and the cash deposit of Rs. 30,00,000 was not considered unaccounted money.

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Issues:
Appeal against treating cash deposit as unaccounted money.

Analysis:
1. The assessee, a company running a nursing home, filed a return declaring a loss for A.Y. 2017-18. The AO observed cash deposits during demonetization and questioned a withdrawal of Rs. 30,00,000 in April 2016, suspecting unaccounted money.
2. The company claimed the withdrawal was for a land procurement project, but failed to provide details upon repeated requests. The AO treated the Rs. 30,00,000 deposited post-demonetization as unaccounted money under section 68 of the IT Act.
3. The assessee appealed, arguing the withdrawal was legitimate and citing a similar court decision. The revenue supported the AO's decision.
4. The Tribunal found the AO's treatment of the cash deposit as unaccounted money was not adequately justified. The explanation provided by the assessee regarding the land procurement project was considered reasonable.
5. Consequently, the Tribunal set aside the AO's order, allowing the appeal of the assessee against the treatment of the Rs. 30,00,000 cash deposit as unaccounted money.
6. The decision was pronounced on 25th May, 2022, in favor of the assessee.

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