Assessee wins appeal as cash deposits and business expenses properly explained under sections 68 and 69C

ITAT Delhi allowed the assessee's appeal against additions made under sections 68 and 69C. The AO had added cash deposits as unexplained cash credit, doubting the business model. However, the assessee successfully demonstrated through cash book extracts and tabular form that all cash deposits were properly explained with adequate sources, showing no negative cash balance throughout the year. Regarding section 69C addition for unexplained business expenditure, ITAT found all expenses were properly recorded in regular books of accounts with identifiable sources, making section 69C inapplicable. Both additions were deleted.

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Issues Involved:
1. Delay in filing of appeals by the revenue.
2. Deletion of addition made on account of cash deposits as unexplained cash credit u/s 68 of the Income-tax Act, 1961.
3. Validity of assumption of jurisdiction u/s 147 of the Act.
4. Addition towards entire business expenses as unexplained expenditure u/s 69C of the Act.

Summary:

1. Delay in Filing of Appeals by the Revenue:

The Tribunal noted a delay of 1 day in filing the appeals by the revenue for both assessment years. Considering the reasons provided in the delay condonation petition, the delay was condoned, and the appeals were admitted for adjudication.

2. Deletion of Addition Made on Account of Cash Deposits as Unexplained Cash Credit u/s 68 of the Act:

The primary issue was whether the CIT(A) was justified in deleting the addition of Rs 2,69,97,300/- made by the AO as unexplained cash credit u/s 68. The assessee's business involved exchanging soiled and mutilated currency notes, a model accepted by the revenue in past assessments. The AO had disputed the business model and added the cash deposits as unexplained credits. However, the Tribunal found that the assessee had provided sufficient evidence, including cash books, showing no negative cash balance and explaining the cash deposits. The Tribunal referenced its decision in the assessee's case for AY 2011-12, where a similar addition was deleted, and held that the business model was genuine, and the cash deposits were properly explained. Thus, the addition u/s 68 was not sustainable, and the revenue's grounds were dismissed.

3. Validity of Assumption of Jurisdiction u/s 147 of the Act:

The assessee's cross objections challenged the validity of the jurisdiction assumed u/s 147. Since relief was granted on merits, the Tribunal deemed the cross objections as academic and dismissed them as infructuous.

4. Addition Towards Entire Business Expenses as Unexplained Expenditure u/s 69C of the Act:

For AY 2017-18, the AO had added Rs 17,31,062/- as unexplained expenditure u/s 69C. The Tribunal found that these expenses were recorded in the regular books of accounts, and thus, the sources were explained. The provisions of section 69C were not applicable, and the CIT(A) rightly deleted the addition. The revenue's grounds were dismissed.

Conclusion:

Both the appeals of the revenue were dismissed, and the cross objections of the assessee were dismissed as infructuous.

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