The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the mere entry in the books of account could not be a ground to delete the addition when the sources were not explained.
Assessee , Bindal Papers Mills Ltd which was engaged in the manufacturing and trading of the paper and the paper board had filed the return of income and revised return of income declaring ‘NIL’ u/s 139(1) of the Income Tax Act 1961. Under the scrutiny assessment proceedings initiated against the assessee, assessing officer (AO) passed an order making an addition of Rs. 1 crore which was seized from Pankaj Goel, who was the employer of the assessee as unaccounted cash of the assessee company. Accordingly, the said cash was treated as unexplained money and added to the Assessee’s total income u/s 69A of the Act and disallowed Rs. 6,23,081/- u/s 14A of the Income Tax Act 1961 and computed the total income of the assessee at Rs. 1,06,23,081/- . The addition was deleted by the Commissioner of Income Tax (Appeals)(CIT(A)).
V.K. Agarwal, on behalf of the revenue contented that the Commissioner of Income Tax (Appeals)(CIT(A)) has erred in deleting the addition of Rs. 1 crore on account of unexplained money u/s 69A erroneously thinking the amount had recorded in the cash books of the account and the addition u/s 69A of the Act can only be made when the assessee was found to be possession of money bullion jewellery etc. not recorded in his books of accounts. He further contended that the assessee had not much supporting evidence and the addition could not be so deleted.
Kanav Bali, on behalf of the assessee contended that the amount had been reflected in the cash book of the assessee and had withdrawn the cash from the bank for purchase of wheat. He Further submitted that; the transaction was duly explained and recorded in the books of accounts and addition u/s 69A could not be made.
The Delhi Bench of B R R Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member) held that the mere reflection of the unexplained cash in the books of accounts in the absence of any supportive documents, could not be a ground for deletion of the addition. The bench set aside the deletion of addition by the Commissioner of Income Tax (Appeals)(CIT(A)) and allowed the appeal.
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