Tribunal rules in favor of assessee, directs deletion of cash deposit addition during demonetization.

The Tribunal allowed the assessee's appeal, ruling in favor of the assessee, and directed the deletion of the Rs.5,50,000/- addition made on account of cash deposits during the demonetization period. The Tribunal considered the assessee's consistent filing of income tax returns with substantial income over the years as evidence supporting the cash deposits during the specified period.

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Issues involved:
Confirmation of addition of Rs.5,50,000/- on account of deposit of cash in two Bank Accounts during the demonetization period.

Analysis:

1. Delay in filing appeal:
The Registry pointed out a delay of 101 days in filing the appeal. However, the Tribunal considered the impact of the COVID-19 period on the limitation period, as directed by the Hon'ble Supreme Court. The Tribunal excluded the COVID period and condoned the delay, admitting the appeal for adjudication.

2. Addition of cash deposit during demonetization:
The primary issue in the appeal was the confirmation of an addition of Rs.5,50,000/- on account of cash deposits in the assessee's bank accounts during the demonetization period. The Assessing Officer had made this addition under section 69A of the Income-tax Act, 1961. The assessee had deposited Rs.6,50,000/- in two bank accounts, out of which Rs.1,00,000/- was accepted by the Assessing Officer. The appeal challenged the remaining addition.

3. Assessee's arguments and evidence:
During the proceedings, the assessee's representative, Shri R. Chowdhury, presented a paper book containing relevant documents, including acknowledgment of income tax returns filed by the assessee for multiple assessment years. The representative highlighted the regular filing of returns with substantial income amounts. A Cash Flow Statement for the period 01.04.2013 to 31.03.2017 was also presented to demonstrate the availability of cash in hand during the demonetization period.

4. Tribunal's decision:
After considering the contentions and evidence presented, the Tribunal noted that the assessee had consistently filed income tax returns with substantial income over the years. The Tribunal found the deposit of Rs.6,50,000/- during demonetization to be adequately substantiated by the assessee's income records. The Tribunal disagreed with the Assessing Officer's adhoc approach of assuming cash in hand on the demonetization date and directed the deletion of the Rs.5,50,000/- addition. Consequently, the Tribunal allowed the assessee's appeal, ruling in favor of the assessee.

5. Conclusion:
The Tribunal pronounced the order in favor of the assessee on 12th December, 2022, directing the Assessing Officer to delete the addition of Rs.5,50,000/- made on account of cash deposits during the demonetization period. The Tribunal's decision was based on the assessee's consistent filing of income tax returns with substantial income, which supported the cash deposits made during the specified period.

This comprehensive analysis covers the issues involved in the legal judgment, detailing the arguments presented, evidence considered, and the Tribunal's decision in favor of the assessee.

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