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of <h1>ITAT Kolkata allows appeal, rejects unexplained money addition under Section 69A.</h1> <h3>Redha Tshering Bhutia Versus ITO, Ward-3 (1), Gangtok</h3> Redha Tshering Bhutia Versus ITO, Ward-3 (1), Gangtok - TMI Issues:Confirmation of addition of Rs. 20,10,000/- as unexplained money during demonetization period under Section 69A.Analysis:1. Confirmation of Addition under Section 69A: - The appeal was against the addition of Rs. 20,10,000/- by the Ld. CIT(A) under Section 69A of the Income Tax Act, treating cash deposits during demonetization as unexplained money. - The AO assessed the income based on ITS data and bank statements of ICICI Bank and Central Bank of India, noting deposits made during the demonetization period. - The Ld. CIT(A) dismissed the appeal, stating the assessee failed to substantiate the source of deposit.2. Exemption under Section 10(26AAA): - The assessee, a resident of Sikkim, claimed exemption under Section 10(26AAA) as a retail trader. - The assessee's turnover, income from interest and LPG subsidy were not disputed, with income calculated under presumptive basis u/s 44AD. - The assessee argued that cash deposits were from sales in the proprietary business, supported by business turnover and licenses obtained.3. Assessment and Decision: - The ITAT found the assessee to be a retail trader with legitimate income sources, exempt under Section 10(26AAA). - The assessee demonstrated that cash deposits were from business sales and debtors, proportionate to the business turnover. - Considering the evidence presented, the ITAT reversed the Ld. CIT(A)'s decision, directing the AO to delete the addition. 4. Conclusion: - The ITAT allowed the appeal, emphasizing the reasonable explanation provided by the assessee regarding the cash deposits. - The judgment highlighted the importance of assessing the proportionality of cash deposits to business turnover in determining the legitimacy of income sources. - The decision was in favor of the assessee, acknowledging compliance with tax regulations and legitimate business operations.This detailed analysis of the judgment outlines the issues, arguments, and the final decision rendered by the ITAT Kolkata regarding the addition of unexplained money during demonetization and the exemption claimed under Section 10(26AAA) by the assessee.
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