No Addition Permitted U/s 69A Once Taxpayer Properly Explains Source Of Cash Deposit: Vishakhapatnam ITAT

Finding that the assessee has properly explained the source of cash deposit, the Visakhapatnam ITAT directed the AO to delete the addition made u/s 69A of the Income Tax Act.

The Bench of Duvvuru Rl Reddy (Judicial Member) observed that “the assessee has mentioned about the receipts of sale consideration as per the sale of agreement in his books of accounts. As per the agreement of sale, the purchaser has paid the sale consideration of Rs. 30 lakhs to the assessee. But the contention of the Revenue is that the purchase agreement was not signed by the purchaser. On this aspect, on perusal of the Agreement of Sale, it is clear that the stamp paper is also in the name of the purchaser. Apart from the above, the assessee is engaged in the real estate business. Considering the above facts and circumstances of the case, it is apparent that the assessee has received sale consideration of Rs. 30 lakhs as per the agreement of sale and filed the confirmation letter saying that the purchaser has paid the sale consideration to the assessee.” (Para 5)

As per the brief facts of the case, the assessee is an individual filed his return of under 'Short Term Capital Gains' [STCG] and 'other sources'. During the course of assessment proceedings, the assessee was asked to explain the sources for cash deposits of Rs. 25,40,000/- made in ICICI Bank account of the assessee. In reply, the assessee submitted that he is engaged in purchase and sale of small sites (real estate). Further, the assessee submitted that the alleged cash deposit was made out of the cash balance of Rs. 27,39,364/-. In support of his claim the assessee also submitted cash book and confirmation letters. On perusal and verification of the submissions made by the assessee, the AO came to a conclusion that the assessee is not having appropriate source to deposit cash of Rs. 25,40,000/- in his bank account. Accordingly, the AO treated the cash deposit of Rs. 25,40,000/- as unexplained cash in the hands of the assessee and made addition by invoking the provisions of section 69A. The CIT(A) dismissed the appeal of the assessee without considering the assessee's submissions.

The Bench noted that the assessee has properly explained the source of cash deposit.

The Bench observed that the assessee has not properly explained as to why the loan was availed by the assessee and for what purpose he has withdrawn the amount and deposited the same after one and half months.

The Bench further observed that the assessee has deposited the old currency notes which are kept for petty expenses and obtained the new currency notes from the Bank.

Therefore, while considering the submission of the assessee, ITAT partly allowed the assessee's appeal.

Counsel for Appellant/ Assessee: GVN Hari

Counsel for Respondent/ Revenue: Dr. Aparna Villuri

Case Title: Konathala Nooku Naidu verses ITO

Case Number: I.T.A. No.269/Viz/2023

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