2024 (7) TMI 1482 - AT - Income Tax

Addition under Section 143(3) deleted after ITAT finds no actual difference between bank deposits and book accounts

The ITAT Kolkata set aside an addition of 21% made by the AO for alleged unexplained deposits based on differences between bank statement deposits and ... Addition for unexplained/unreconciled deposits - Estimated addition of 21% was made for alleged difference between the deposits appearing in the Bank statement, vis-à-vis the books of account - HELD THAT:- AO has grossly erred in simply matching the net decrease under the head “loans and advances” appearing in the balance sheet with the credits or receipts of Bank statement. Since there is no difference as alleged by AO in the assessment order framed after directions of the ld. PCIT, we are inclined to set aside the finding of ld. CIT(Appeals) and delete the addition (addition made by the ld. Assessing Officer in the order under section 143(3) of the Act, which was further added by the ld. Assessing Officer in the order framed under section 143(3) r.w.s. 263 of the Act). Thus effective grounds of appeal raised by the assessee are allowed. Issues:Appeal against addition for unexplained deposits.Analysis:The appeal was filed by the assessee against the addition of Rs. 23,25,802/- for unexplained deposits. Initially, an estimated addition of 21% was made by the Assessing Officer based on a difference between bank statement deposits and books of account. The CIT(A) overturned this decision, but a revisionary proceeding directed the Assessing Officer to make the total addition of the alleged difference. The subsequent order by the Assessing Officer was challenged by the assessee before the CIT(A), but due to nonappearance, the addition was sustained.The CIT(A) in the order dated 18.07.2019 examined the issue in detail and found that the Assessing Officer's addition lacked a solid basis. The assessee provided a reconciliation statement showing no difference between bank deposits and books of accounts. The CIT(A) noted that the Assessing Officer erred in matching the net decrease in loans and advances with bank statement credits without considering other transactions.Upon review, it was concluded that the Assessing Officer's alleged difference was unfounded, and the addition of Rs. 36,78,051/- was deleted. The grounds of appeal raised by the assessee were allowed, and the appeal was granted in favor of the assessee.In summary, the Tribunal found that the Assessing Officer's addition lacked proper basis as there was no actual difference between bank deposits and books of accounts. The CIT(A) decision was set aside, and the addition of Rs. 36,78,051/- was deleted, resulting in the appeal being allowed in favor of the assessee.