Addition for cash deposit deleted as cash withdrawals, redeposit made during same year

Addition for cash deposit deleted as cash withdrawals, redeposit took place during the year itself, there was no question of making addition

ABCAUS Case Law Citation:
ABCAUS 2978 (2019) (05) ITAT

The appeal by the assessee was directed against the order passed by the CIT(A) against the confirmation of addition of cash deposit on bank account.

The Assessing Officer (AO) reopened the assessment on the ground that the assessee deposited huge amount in his bank account and also made withdrawals as against that, the returned income was very low.

The assessee remained unrepresented before the AO. He, therefore, made an addition towards unexplained cash deposits in bank account.

The CIT(A) sustained the addition though give part relief by accepting the assessee’s explanation that the remaining amount represented his income from contracts on which the assessee had offered income under the presumptive scheme of taxation.

Aggrieved by such an addition, the assessee had approached the Tribunal.

The Tribunal observed that the assessee was a contractor who had received Rs. 39 lakhs approx after deduction of tax by cheque. He also received advance of Rs.10.00 lakh. The assessee was not maintaining any books of account and thus offered income u/s 44AD of the Income tax Act, 1961 (the Act).

It was noted that the assessee had withdrew the amount of contact income. As the advance of Rs.10.00 lakh received was to be returned since the assessee could not carry out the work in that respect, the assessee re-deposited Rs. 10.00 lakh cash in his bank account and thereafter, issued a cheque of equal amount towards refund.

The Tribunal noted that admittedly, a sum of Rs. 40 lakhs approx was withdrawn. As the assessee carried out the work only for a sum of Rs. 30 lakh, the excess amount of Rs. 10.00 lakh which was initially given as advance to the assessee was withdrawn by the assessee but redeposited in the same bank account for issuing a cheque towards refund.

The Tribunal opined that since, the transactions of receipt of amount, cash withdrawals, redeposit of cash and refund had taken place during the year itself, there could not be any question of making addition in respect of cash deposit.

Accordingly, the Tribunal deleted the addition of Rs. 10.00 lakh sustained by the CIT(A).

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