2025 (6) TMI 943

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....1 (the Act). 2. Brief facts of the case are that assessee is a private limited company and is a NBFC duly registered with RBI. The return of income was filed on 30.10.2017 declaring total income at Rs. 20,21,550/-. The assessment was taken up for complete scrutiny by way of issue of notice u/s 143(2) of the Act. The reason for scrutiny were 1. High value receipt of cash from third parties in response data and 2. Large value cash deposit during the demonetization period reported. The assessee has deposited total cash in SBN of Rs. 2,06,50,000/- on two bank accounts (Rs. 1,03,44,000/- in City Union ank A/c No. 512120020000876 and Rs. 1,03,06,000/- in City Union Bank in A/c No. 102109000067620). During the course of assessment proceedings v....

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....10,00,000/- on 2.11.2016 and Rs. 2,99,000/- on 7.11.2016 which clearly established that assessee was having only two days receipts of instalments on 08.11.2016 when demonetization was announced, thus deposit of cash in SBN of Rs. 2,06,50,000/- is not justifiable. Regarding the contention of the assessee that it has large cash balance available, ld. Sr. DR drew our attention to the fact that assessee is a NBFC and as per the RBI guideline, it can disburse the loan through banking channel only thus there is no requirement to keep such a large cash balance. At the most some cash could be held for day to day expenditure. 5. Ld. Sr. DR further submitted that assessee has made deposit on various dates during the demonetization which is quite s....

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....etails of each person from whom the cash instalment received was mentioned, such as their name, addresses, vehicle no, amount received etc. Ld. AR thus submitted that assessee has duly discharged the burden casted upon it of establishing the source of the cash deposits which was duly appreciated by ld. CIT(A) while deleting the addition made on this account. Accordingly, ld.AR prayed for the confirmation of the order of the ld. CIT(A). 7. We have heard the rival submissions and perused the materials available on record. In the instant case, the books of accounts of the assessee are subject to audit and from the perusal of the financial statements, we find that neither the auditor has pointed out any deficiency in the maintenance of the b....

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....der two circumstances, i.e. (i) Appellant does not offer any explanation about nature and source of such credit; or (ii) Explanation offered by Appellant is not upto the satisfaction of Ld. AO. 9. In other words, whenever Appellant provides explanation, before rejecting the same, the AO has to record his dissatisfaction as to why the explanation furnished by Appellant is not acceptable. As is evident that assessee not only offered explanation regarding nature and source of such deposits, but also substantiated the same by filing every precise detail of the loanees such as their name, address, vehicle number, amount received etc. Ld. CIT(A) after considering all the details, deleted the additions made by the AO. Before u....