Appeal partially allowed by ITAT, reducing cash addition under section 69 during demonetization.

The ITAT partially allowed the appeal, reducing the addition of Rs.17,00,000/- made under section 69 during the demonetization period to Rs.13,50,000/-. The ITAT considered the source of cash deposits, finding the explanation partly acceptable based on withdrawals made by the assessee in 2014. Despite the implausibility of substantial withdrawals and redeposits after two years, the ITAT noted the lack of evidence of utilization or investment of the withdrawn amount. Analyzing balance sheets and available cash, the ITAT concluded the reduction in the addition.

---

---

Issues:
1. Sustainability of addition of Rs.17,00,000/- as undisclosed investment u/s.69 during demonetization period.
2. Application of sec. 115BBE by CIT(A).
3. Withdrawal of additional ground of appeal by the assessee.

Analysis:
1. The controversy in the appeal revolves around the addition of Rs.17 lac deposited during demonetization. The AO observed cash deposits in the assessee's bank account during the demonetization period. The assessee claimed the deposits were sourced from salary income and other sources. The AO questioned the basis of the amount in the balance sheet and asked for explanations. The assessee provided details of capital working and loans advanced in previous years. The AO added the entire amount u/s.69 as no satisfactory explanation was provided.

2. The assessee's appeal to the CIT(A) was unsuccessful. The assessee then appealed to the ITAT. The ITAT considered the source of the cash deposits. The assessee claimed the deposits were from earlier withdrawals. The ITAT found the explanation partly acceptable. It noted the withdrawals made by the assessee in 2014 and analyzed the cash in hand available. The ITAT concluded that a portion of the deposits could be sourced from the withdrawals, reducing the addition to Rs.13,50,000/-.

3. The ITAT observed that while it was implausible for the assessee to withdraw a substantial amount and redeposit it after two years, it also found no evidence of utilization or investment of the withdrawn amount. The ITAT analyzed the balance sheets submitted and found them unreliable. Considering the cash withdrawals and available cash in hand, the ITAT reduced the addition to Rs.13,50,000/-. The appeal was partly allowed based on these observations.

---