2023 (3) TMI 479 - AT - Income Tax

Addition u/s.68 - Unexplained cash deposits - HELD THAT:- The assessee had also received a sum from three parties through proper banking channels. If you consider reconciliation filed by the assessee, we find that there is no difference between closing balance of trade receivables shown in the balance sheet as on 31.03.2013. From the above, it is very clear that claim of cash receipt from trade receivables is backed with various evidences, including confirmations from the parties. Therefore, we are of the considered view that the AO is completely erred in rejecting arguments of the assessee in so far as cash receipt from trade receivables.

As regards advance received from M/s.Sri Baba Trading Co., AO is not in dispute with regard to the fact that the assessee has filed confirmation from the parties to substantiate its claim.

AO failed to understand the issue because, it is not necessary to match dates of cash receipts from party to date of cash deposit into bank account when the assessee has furnished cash books to explain the receipt of the cash from various parties and deposit of cash to bank account.

AO misunderstood the issue without considering cash book maintained by the assessee and come to the conclusion that cash received from M/s.Sri Baba Trading Co., cannot be source for cash deposits found in bank account maintained with M/s.KVB. Therefore, we are of the considered view that the AO is completely erred in rejecting source for cash deposits from M/s.Sri Baba Trading Co - we are of the considered view that the assessee is able to explain source for cash deposits found in bank account maintained with M/s.KVB. CIT(A) after considering relevant facts has rightly deleted the additions made by the AO towards cash deposits u/s.68 and thus, we are inclined to uphold the findings of Ld.CIT(A) and dismiss the appeal filed by the Revenue.