ITAT partially allows appeal on unexplained cash deposits under section 69A, accepts real estate explanation

The ITAT Visakhapatnam partially allowed the assessee's appeal regarding unexplained cash deposits under section 69A. The tribunal accepted the explanation for Rs. 30 lakhs as sale consideration from real estate business, supported by a sale agreement and confirmation letter. However, it rejected the explanation for loan receipts where the assessee failed to justify why a loan availed on 26/9/2016 and withdrawn on 29/9/2016 was deposited only on 13/11/2016. The tribunal accepted explanations for petty cash deposits made during demonetization and old currency notes exchanged for new notes, considering the assessee's business nature.

---

---

Issues:
The case involves the appeal against the order of the Ld. Commissioner of Income Tax (Appeals) regarding unexplained cash deposits made by the assessee, invoking section 69A of the Income Tax Act, 1961 for the Assessment Year 2017-18.

Facts:
The assessee, an individual, filed his return of income for the AY 2017-18 declaring a total income under 'Short Term Capital Gains' and 'other sources'. The case was selected for Limited Scrutiny to examine cash deposits made during demonetization and agricultural income exemption claim. The Ld. AO treated a cash deposit of Rs. 25,40,000/- as unexplained, resulting in an assessed income of Rs. 30,68,089/-. The assessee appealed, arguing that the cash deposits were proceeds from the sale of real estate sites and supported by agreements and confirmation letters.

Arguments:
The Ld. Authorized Representative contended that the cash deposits were sale consideration for real estate transactions, with supporting documentation. The Ld. Departmental Representative argued that the source of cash deposits was not adequately explained, emphasizing the absence of the purchaser's signature on the sale agreement.

Judgment:
The Tribunal found that the assessee had adequately explained the source of Rs. 21,50,000/- as sale consideration from real estate transactions, directing deletion of this amount from the addition. However, the Tribunal sustained the addition of Rs. 2,60,000/- as unexplained, as the source of a loan withdrawn and redeposited was not satisfactorily explained. Cash deposits of Rs. 90,000/- and Rs. 40,000/- were deemed explained, considering the nature of the business and the purpose of the transactions. Consequently, the appeal was partly allowed, and the addition of Rs. 2,60,000/- was upheld as unexplained cash deposits.

Conclusion:
The Tribunal partially allowed the appeal, deleting the addition of Rs. 21,50,000/- while upholding the addition of Rs. 2,60,000/- as unexplained cash deposits, based on the explanations provided by the assessee and the nature of the transactions.

---