Sister concern's cash deposits for demand drafts not assessable as unexplained money under section 69A

The ITAT Visakhapatnam upheld the CIT(A)'s deletion of addition under section 69A for unexplained cash deposits. The assessee's sister concern deposited cash to obtain demand drafts for Andhra Pradesh Beverages Corporation stock procurement due to banking limitations. The CIT(A) properly exercised powers under section 250(4) to admit additional evidence including affidavit confirming the deposits' purpose. The tribunal found these deposits were accommodation transactions for the sister concern, not the assessee's income, and dismissed the revenue's appeal.

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Issues:
The appeal filed by the Revenue against the order of the Ld. Commissioner of Income Tax under Section 143(3) of the Income Tax Act, 1961 for the AY 2017-18.

Issue 1: Admission of Additional Evidence
The Revenue contended that the Ld. CIT(A) erred in admitting new evidence without following the provisions of Rule 46A(2) and 46A(3) of the Income Tax Rules, 1962. The Ld. DR supported the Ld. AO's order, while the Ld. AR argued that the turnover difference already taxed cannot be treated as unexplained money. The Ld. AR also explained that the cash deposits were used for a Demand Draft by a sister concern. The Tribunal found that the Ld. CIT(A) had the power under Section 250(4) of the Act to make further inquiries, and thus dismissed the Revenue's grounds.

Issue 2: Treatment of Cash Deposits
Regarding the treatment of cash deposits, the Ld. AO added Rs. 32,74,580 under Section 69A of the Act, and Rs. 55,43,977 was treated as unexplained income. The Ld. CIT(A) deleted these additions, stating that once turnover is treated as income, it cannot be considered unexplained. The Tribunal observed that the cash deposits were made by a sister concern for a Demand Draft, as confirmed by an affidavit. The Tribunal held that these deposits were not the assessee's income but were used to facilitate the sister concern's business, thus dismissing the Revenue's appeal.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s decision to delete the additions made by the Ld. AO. The Tribunal found that the cash deposits in question were not the income of the assessee but were utilized to assist a sister concern in obtaining a Demand Draft. The Tribunal also highlighted the powers of the Ld. CIT(A) under Section 250(4) of the Act to conduct further inquiries. The Cross Objection filed by the assessee was dismissed as not pressed, and the appeal of the Revenue was ultimately dismissed.

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