2023 (7) TMI 377 - AT - Income Tax

Tribunal allows appeal, reduces unexplained cash deposit addition by considering retail sales savings.

Syed Nazaar Syed Fayaz Versus The Income Tax Officer, Ward 1 (4), Erode.

The Tribunal partly allowed the appeal filed by the assessee regarding the addition towards unexplained cash deposit during the demonetization period. The ... Cash deposit as unexplained income u/s 69 - During the course of rectification proceedings, the assessee has filed sales abstract for the period April, 2016 to March, 2017 - HELD THAT:- We are of the considered opinion that the assessee, being a retail seller of mobile phone could have savings out of drawings atleast to the extent of ₹. 2,00,000/-, in fact, the assessee has produced sales abstract for the period April, 2016 to March, 2017 before the authorities below. Accordingly, out of the addition we sustain the addition of ₹. 1,50,000/- as unexplained income.Appeal filed by the assessee is partly allowed Issues involved: Delay in filing appeal, Addition towards unexplained cash deposit during demonetization period.Delay in filing appeal: The appeal was delayed by 100 days, and a petition for condonation of delay was filed with detailed reasons. The delay was condoned as the assessee was prevented by sufficient cause, and the appeal was admitted for adjudication.Addition towards unexplained cash deposit during demonetization period: The assessee, engaged in retail sales of mobiles, filed a return of income for the assessment year 2017-18. The Assessing Officer made an addition towards unexplained cash deposit during demonetization period, which was upheld by the ld. CIT(A). The assessee appealed before the Tribunal, seeking deletion of the addition. The Tribunal observed that the assessee could not furnish the source for the cash deposit of &8377; 8,99,500. However, during rectification proceedings, it was shown that &8377; 1,54,000 was deposited in new currency, which was allowed. The balance deposit of &8377; 7,45,500 was disallowed. The cash deposit of &8377; 3,50,000 during demonetization period was also disallowed for lack of concrete evidence. The Tribunal held that the assessee, as a retail seller of mobile phones, could have savings out of drawings to the extent of &8377; 2,00,000. Thus, the Tribunal deleted the addition to the extent of &837; 2,00,000 and sustained the addition of &837; 1,50,000 as unexplained income.In conclusion, the appeal filed by the assessee was partly allowed by the Tribunal.