2023 (2) TMI 111 - AT - Income Tax

Tribunal directs deletion of cash deposits, allows deduction under Chapter VI A

The Tribunal allowed the appeal, directing the Assessing Officer to delete the addition of cash deposits from unexplained sources during demonetization, ... Cash deposits into the bank account from unexplained sources being cash deposited into the bank account by the assesse during demonetisation period - HELD THAT:- We have gone through the contents of the agreement to sell and found that the assessee has received consideration on various dates by cheques as well as in cash which has been substantiated and testified with the said agreement to sell. Under these circumstances, we are not in a position to subscribe to the views of both the lower authorities as there is sufficient source of cash deposits into the bank accounts of the assessee.The authorities below has failed to make any further enquiries and bring on records any other materials to prove the source of cash deposits from any other source. Consequently, we set aside the order of the ld. CIT(A) and direct the AO to delete the addition - The ground no.3 is consequently allowed. Deduction under Chapter VIA by ld CIT(A) - HELD THAT:- After hearing the rival parties and perusing the materials on records we are of the view that the assessee is entitled to deduction under Chapter VIA of the Act but subject to verification by the AO. Accordingly the AO is directed to examine the issue and allow the deduction to the assessee. The ground no. 4 is also allowed in terms of our aforesaid direction. Appeal of the assessee is allowed. Issues:1. Confirmation of addition of cash deposits from unexplained sources during demonetization period.2. Non-allowance of deduction under Chapter VI A by the Assessing Officer.Analysis:Issue 1:The appeal challenged the addition of Rs. 23,17,541 as cash deposits from unexplained sources during demonetization. The Assessing Officer based the addition on cash deposits made into two bank accounts during the demonetization period. Despite multiple notices and opportunities, the assessee failed to provide satisfactory explanations. The ld. CIT(A) upheld the addition citing lack of convincing evidence from the assessee. However, during the appellate proceedings, it was revealed that the cash deposits were proceeds from the sale of a property, supported by relevant agreements. The Tribunal found that the lower authorities overlooked crucial evidence of the property sale agreement, which clearly demonstrated the legitimate source of the cash deposits. As a result, the Tribunal directed the Assessing Officer to delete the addition, thereby allowing the appeal on this ground.Issue 2:The second ground of appeal pertained to the non-allowance of deduction of Rs. 2,10,000 under Chapter VI A by the ld. CIT(A). After considering both parties' submissions and examining the records, the Tribunal concluded that the assessee was indeed entitled to the deduction under Chapter VI A, subject to verification by the Assessing Officer. Consequently, the Tribunal directed the AO to verify and allow the deduction of Rs. 2,10,000 to the assessee. Therefore, the appeal was allowed on this ground as well.In conclusion, the Tribunal ruled in favor of the assessee, setting aside the addition of cash deposits and directing the allowance of the deduction under Chapter VI A. The order was pronounced in Kolkata on 24th January 2023.