No addition u/s 69A can be made for cash deposit in bank when the alleged bank accounts were duly recorded in the books of accounts of the assessee – ITAT
In a recent judgment, ITAT Agra quashed addition made under section 69A for cash deposit in the bank accounts as alleged bank accounts were duly recorded in the books of accounts of the assessee and, therefore, all the cash deposited therein were duly recorded in his books of accounts
ABCAUS Case Law Citation:
4587 (2025) (06) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by CIT(A), National Faceless Appeal Centre (NFAC) in confirming the addition under Section 69A of the Income Tax Act, 1961 (the Act) towards the cash deposited in bank accounts.
The solitary issue in the instant appeal was related to addition made to the income of the assessee on account of cash found deposited in his bank account source of which, remained unexplained. The addition was made u/s 69A of the Act and tax levied on the same at the special rate prescribed u/s 115BBE of the Act.
The solitary contention of the assessee was that the CIT(A)’s order confirming the addition was totally incorrect for the reason that the assessee had demonstrated that all the three bank accounts were duly recorded in the books of accounts of the assessee pertaining to the business conducted by him and, therefore, all the cash deposited therein were duly recorded in his books of accounts. Therefore, there was no case of the source of cash deposit being from unexplained sources.
The assessee contended that under the provisions of Section 69A of the Act t the necessary condition to be fulfilled for invoking Section 69A of the Act are that: i. The assessee should be found to be owner of an asset not recorded in his books of accounts; ii. No explanation is offered by the assessee of the source of acquiring such asset.
It was further pointed out that audited results of the assessee were there before both AO & CIT(A). The audited financial statement clearly reflected the impugned bank accounts of the assessee wherein cash was found to be deposited by the AO, which was added to the income of the assessee. In the financial statements. It was pointed out that all the bank accounts, Overdraft account and mortgage loan was reflected in the audited financial statements. It was pointed out that
Further pointing out at the the bank statements of the said bank accounts it was submitted that the closing balance reflected therein was reflected in the balance sheet of the assessee and it was these bank statements which showed cash deposited therein which was being picked up by the AO for making addition to the income of the assessee u/s 69A of the Act.
Itw as thus contended that it was clear from the records before the Revenue authorities that the bank accounts noted by the AO to have cash deposited therein were duly accounted for in the books of accounts of the assessee and, therefore, there was no case for invoking the provision u/s 69A of the Act.
The Tribunal expressed full agreement with the assessee that the Revenue authorities below had erred in invoking Section 69A of the Act of treating as income cash found deposited in the bank account of the assessee, which was duly accounted for in the books of the assessee.
The Tribunal held that the addition made under section 69A to the income of the assessee was not sustainable in law and directed deletion of the same.
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