Tribunal grants assessee opportunity to prove cash availability and allows conveyance allowance exemption claim

The Tribunal allowed the assessee to demonstrate the availability of opening cash through proper documentation, remanding the matter to the AO for re-examination. The AO was directed to consider the cash flow statement and peak cash balance, granting a reasonable opportunity to the assessee. In a separate issue, the Tribunal set aside the disallowance of exemption claimed for conveyance allowance, instructing the AO to re-evaluate the claim based on additional evidence provided by the assessee. All appeals were disposed of accordingly, with the order pronounced on 09/02/2023.

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Issues Involved:
1. Addition of Rs. 2,11,505/- on account of peak cash shortage.
2. Disallowance of exemption claimed under section 10(14)(i) in respect of conveyance allowance.

Detailed Analysis:

1. Addition of Rs. 2,11,505/- on Account of Peak Cash Shortage:
Facts and Background:
A search operation under section 132 of the Income Tax Act was conducted at the premises of the Aggarwal group, leading to the issuance of a notice under section 153A to the assessee. The assessee filed a return declaring a total income of Rs. 2,34,570/-. The Assessing Officer (AO) made an addition of Rs. 2,88,000/- as unexplained money under section 69A, based on discrepancies in cash deposits and the absence of documentary evidence supporting the availability of cash.

CIT(A) Findings:
The CIT(A) rejected the claim of cash gifts received/taken among family members and directed the assessee to file a revised cash flow statement, ignoring such gifts and taking the opening cash balance as NIL. The revised statement showed a negative peak cash balance of Rs. 2,11,505/-, which was conceded by the assessee's representative during appellate proceedings. Consequently, the CIT(A) confirmed the addition of Rs. 2,11,505/- and deleted the remaining addition.

Tribunal's Decision:
The Tribunal noted that the assessee, being a regular taxpayer, should be allowed to demonstrate the availability of opening cash in hand through appropriate documentation. It emphasized that only real income should be taxed and remanded the matter back to the AO to examine the quantum and availability of opening cash-in-hand. The AO was directed to consider the same for drawing the cash flow statement and determining the peak cash balance, providing reasonable opportunity to the assessee. Thus, ground nos. 1 and 2 were allowed for statistical purposes, while ground no. 3 was dismissed as infructuous due to lack of arguments.

2. Disallowance of Exemption Claimed Under Section 10(14)(i) in Respect of Conveyance Allowance:
Facts and Background:
In ITA Nos. 326/Chd/2022, the AO disallowed the exemption claimed under section 10(14)(i) for conveyance allowance amounting to Rs. 7,00,000/-, due to the absence of evidence showing actual expenses incurred for the performance of duties as a Director.

CIT(A) Findings:
The CIT(A) upheld the AO's decision, noting that the assessee failed to provide evidence of actual expenses incurred. The claim was not supported by any withdrawal or detailed documentation of duties performed, such as dates, places visited, activities carried out, or persons contacted.

Tribunal's Decision:
During the hearing, the assessee's representative requested another opportunity to present documents supporting the claim of expenditure. The Tribunal set aside the matter to the AO to re-examine the claim afresh, considering the submissions and documentation provided by the assessee. The AO was directed to decide the matter as per law after providing a reasonable opportunity to the assessee. Hence, ground no. 01 of the assessee's appeal was allowed for statistical purposes.

Conclusion:
The Tribunal consolidated the appeals and applied its findings and directions from ITA No. 321/Chd/2022 and ITA No. 326/Chd/2022 to the other appeals, noting that the issues were identical except for differences in amounts involved. All appeals were disposed of in light of the directions provided.

Order Pronouncement:
The order was pronounced in the open Court on 09/02/2023.

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