Assessee wins appeal against wrongful Section 69A addition for cash deposits from incorrect bank account

ITAT Ahmedabad ruled in favor of the assessee in a case involving addition under section 69A for unexplained cash deposits. The Revenue authorities erroneously attributed cash deposits from a bank account that did not belong to the assessee. Despite the assessee clarifying the correct bank account details and explaining that deposits related to business turnover already returned under section 44AD, the AO and CIT(A) arbitrarily maintained the addition. The tribunal found the assessment order casual and lacking application of mind, noting the contradiction in accepting business income while simultaneously treating related cash deposits as unexplained income.

---

---

Issues Involved:
The judgment involves appeals filed by the assessee against orders passed by the ld.Commissioner of Income Tax(Appeal), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Years 2010-11 and 2011-12. The main issue revolves around the addition made to the income of the assessee under section 69A of the Income Tax Act, 1961.

Issue 1: Reopening of Assessment Proceedings

The appellant received a notice for reopening of assessment proceedings beyond the prescribed period based on cash deposits in the bank account. The appellant contended that the details for cash deposits were not directed to be submitted during the assessment proceedings. The CIT(A) confirmed the addition to the total income of the appellant without applying his own mind. The appellant challenged the CIT(A) order before the Hon'ble Bench.

Issue 2: Addition to Income under Section 69A

The AO treated unexplained cash deposits in the saving bank account of the assessee as income under section 69A of the Act. The appellant explained that the cash deposits were in different bank accounts and pertained to business turnover income disclosed under section 44AD. The CIT(A) upheld the addition made by the AO despite the correct bank account details provided by the appellant. The Hon'ble Bench found the orders of the Revenue authorities to be casual and arbitrary, as they ignored crucial facts and passed orders without proper consideration. The Bench allowed the appeal of the assessee, directing the deletion of the addition made to his income under section 69A of the Act.

Separate Judgment:
The Hon'ble Bench comprising Smt. Annapurna Gupta, Accountant Member, and Shri T.R. Senthil Kumar, Judicial Member, pronounced the order on 6th March 2024 at Ahmedabad.

---