2025 (11) TMI 572

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....matter of an reassessment framed by Assessing Officer [AO] u/s. 147 r.w.s. 144B of the Income Tax Act, 1961 (in short "the Act") on 27.03.2022. 2. In the reassessment order, the AO has made an addition of Rs. 40,32,500/- as unexplained cash credit u/s. 68 r.w.s 115BBE of the Act which represents the incremental difference of cash deposit between Assessment year (A.Y.) 2016-17 and A.Y.2017-18. The Ld.CIT(A) confirmed the impugned addition by observing that the assessee failed to furnish supporting documents during appellate proceedings. Aggrieved, the assessee is in further appeal before us. 3. The Ld.AR has submitted that the assessee is engaged in the business of silk saree trading in Kancheepuram. Generally, in this line of business....

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....rds, our adjudication would be as under. From reassessment order, it is clear that the assessee is engaged in textile business especially silk saree trading. During the subject A.Y., the assessee has shown turnover of Rs. 1,66,79,636/- and its books of accounts are duly audited u/s 44AB of the Act. The assessee deposited cash in its bank account during the entire year including the demonetization period. As per Sales account (reproduced in ld.CIT(A) order page 6) 95% of the sales during the subject A.Y. was out of cash and the balance 5% was in credit card and banking channel. The ld.CIT(A) has also reproduced "Abstract of cash account" wherein cash balance is Rs. 1,63,40,303/-, out of this the assessee after incurring cash expense, the ass....

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....36/-. The AO, in an arbitrary manner, accepted part of the source and rejected the other part whereas all the deposits have same source. The only reasoning of the AO is that there is difference in the quantum of deposit between two AY's and therefore the absolute difference is sought to be added as unexplained. In our view, the absolute difference of cash deposit between two AYs cannot be added. Merely because there is an incremental difference cannot lead to a presumption that there is an unexplained money. In fact, and as observed by the AO, in the very next AY there is a decrease in the sales turnover and consequently, the cash deposit would also be less in comparison to the subject A.Y., will that mean that the Assessee has supressed sa....