2025 (1) TMI 1797

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....of income for the assessment year 2017-18 by declaring total income of Rs. 15,87,600/-. The case of the assessee was selected for complete scrutiny for examination of cash deposits made during the period of demonetization. Accordingly, notices u/s 142(1) and 143(2) of the Act were issued and the assessee responded by submitting his ITR, computation of income, audit report, bank statements and other supporting documents through ITR portal. Upon reviewing the submissions, the Assessing Officer observed that the during the financial year 2016-17, cash balance in the cashbook consistently was average between 12-14 lakhs till 01.11.2016. The Assessing Officer observed that total cash deposits in bank account during demonetization period i.e. 08.....

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....s 50,24,000/-   Total Rs. 2,30,62,000/- Rs 1,13,96,000/- On perusal of cash book, it seems the assessee company manipulated its cash book, as evident from the fact that daily closing balance as per cashbook since 01.04.2016 till 01.11.2019 has been between 12-14 lakh on an average. But suddenly, just before the demonetization i.e. 02.11.2016 closing balance stated to increase substantially and interestingly no deposit was made to the bank till 08.11.2016. The receipt between 02.11.2016 and 08.11.2016 has been shown as 79,42,675/- and cash in hand as on 08.11.2016 was Rs. 82,30,422/-. The receipt between the said period is highly inconsistent when compared to cash receipt during the entire year. Further, the assesse....

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....he assessment proceedings, the books of account in particular the audit report along with bank statements, cash book and other documents were submitted to the A.O. However the A.O has not pointed out any discrepancy in the books of account. The appellant has shown the amount of disputed cash as trading receipts/repayment of advance which is recorded in the cash book and is not disputed by the A.O. Hence without rejecting the books of account the A.O has made the addition of the cash deposits which have been disclosed as receipts in the books. Hence there is merit in the contention of the appellant that the addition of the monies received cannot be done without rejecting the books namely the P&L account and the balance sheet. The exception t....

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....ts properly and did not find any discrepancies in the documents and even has not rejected the books of account. The contention of the ld. AR is that the Assessing Officer did not reject the books of account and had not found any discrepancy therein and the cash deposits were duly recorded/disclosed in the books of account as trade receipt/repayment of advance. He, therefore, stated that the action of the Assessing Officer treating the cash deposits as unexplained money, is not proper. In this respect, the ld. AR referred the decision of the Jurisdictional Patna High Court in the case of Laxmi Rice Mills vs CIT reported in 97 ITR 258 (Pat). He further stated the ld. CIT(A) has rightly allowed the appeal of the assessee and there is no infirm....