2025 (7) TMI 1235 - AT - Income Tax

Addition u/s 69A - unexplained cash deposits found in the bank account of the assessee - revenue alleged that the assessee could not prove the details of the sources of cash deposited in the bank account - HELD THAT - It was brought to our notice that the assessee is in the business of namkeen and other small products on a retail as well as whole basis and the assessee had produced bank statement reflecting the cash deposits from 01.04.2016 to 31.03.2017. There have been cash deposits in the bank account throughout the year which reflects the regular business of the assessee. The cash deposits have been transferred to suppliers/dealers of namkeen and other products at regular intervals as evident from the bank statement. Since the cash deposits are out of the regular trading business of namkeen and other products we hold no addition is called for on account of unexplained money. Assessee appeal allowed.

Summary

The Appellate Tribunal (ITAT Ahmedabad), per Dr. B.R.R. Kumar, Vice-President, allowed the assessee's appeal against the CIT(A)'s order for AY 2017-18. The key issue was the addition of Rs. 31,02,330 under Section 69A of the Income Tax Act as unexplained cash deposits. The revenue contended that the assessee failed to explain the source of cash deposits in the bank account. However, the Tribunal noted that the assessee is engaged in the retail and wholesale business of namkeen and related products, and the bank statements showed regular cash deposits and payments to suppliers consistent with the business operations. The Tribunal concluded that these deposits were "out of the regular trading business" and thus "no addition is called for on account of unexplained money." The Tribunal also addressed the applicability of Section 115BBE, holding that the special tax rate under this provision was not applicable for AY 2017-18. Consequently, the appeal was allowed, overturning the addition.