Tribunal Overturns Rs.27 Lakh Addition: AO's Unexplained Investment Claim During Demonetization Rejected.

The ITAT allowed the appeal filed by the assessee, deleting the addition of Rs.27,00,000 made by the AO under Section 69A of the Income Tax Act, 1961, which the CIT(A) had confirmed. The Tribunal found that the AO erred in treating the cash deposits during the demonetization period as unexplained investments, as the assessee had maintained proper cash books and regular accounts without any detected faults. The decision was pronounced in open court on 15th January 2024.

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Issues:
The issues involved in this case are:
1. Confirmation of assessed income by the Ld. CIT(A) against the returned income.
2. Addition of cash deposited during demonetization period treated as u/s 69A of the Income Tax Act.
3. Making additions based on assumptions and presumptions without considering the submissions of the appellant.
4. Compliance with the law and facts of the case.

Confirmation of Assessed Income:
The appeal was filed against the order of the Learned Commissioner of Income Tax (Appeals) confirming the assessed income of Rs.91,30,800 as opposed to the returned income of Rs.64,30,800 for Assessment Year 2017-18.

Addition of Cash Deposited During Demonetization:
The case involved the addition of Rs.27,00,000 on account of cash deposited during the demonetization period, treated as an addition u/s 69A of the Income Tax Act, 1961. The Assessee argued that the addition was made arbitrarily and mechanically without proper justification.

Additions Based on Assumptions and Presumptions:
The AO and CIT(A) were criticized for making additions based on assumptions and presumptions without adequately considering the submissions of the appellant. It was contended that the additions were not supported by concrete evidence or faults found in the books of accounts.

Compliance with Law and Facts:
The appellant claimed that the order of the Ld. CIT(A) was against the law and facts of the case. The appellant emphasized the proper maintenance of books of accounts and the submission of relevant documents to justify the cash deposits made during the demonetization period.

The Appellate Tribunal, after hearing both parties and reviewing the evidence, found that the AO had erred in treating the cash deposits as unexplained investments under u/s 69A of the Act. It was noted that the assessee had maintained proper cash books and regular books of accounts, and the AO had failed to find any fault in them before making the addition. Therefore, the Tribunal concluded that the addition made by the AO u/s 69A was not sustainable and proceeded to delete the said addition.

In conclusion, the appeal filed by the assessee was allowed, and the addition made by the AO u/s 69A of the Act, which was confirmed by the CIT(A), was deleted. The order was pronounced in open court on 15th January 2024.

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