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July 29, 2022

Addition of Cash deposit not corroborated with business receipts or cash withdrawals justified under section 68

by CA Shivam Jaiswal in Income Tax

Addition of Cash deposit not corroborated with business receipts or cash withdrawals justified under section 68

Facts and Issues of the case

The assessee has not filed return of income and hence notice u/ s 148 of the Income Tax Act, 1961 has been issued owing to cash transactions exceeding Rs.10,00,000 /-. The AO held that the assessee has not given any details with regard to the cash deposits of Rs.10 ,00,000/-. Hence,  the  amount  has been added u/ s 68 of the Act. Further, the assessee had credits of Rs.2 .94 Cr. as per Form 26 AS and since the source of income is not established. The AO made addition of the amount reflected in the Form 26AS. On appeal, the CIT(A) confirmed the action of the AO in adding Rs.10,00 , 000/- u/s 68 as the assessee has failed to furnish any submission explaining the source of cash deposits.

Observations by the court

With regard to the cash deposits of Rs.10,00 ,000/-, the ld. AR has vehemently argued that since the amounts have been estimated, no other addition can be sustained. However, we find that the arguments of the ld. AR cannot be supported as the cash

deposits are  not corroborated with any receipts of the  business and any cash withdrawals proving the same. Hence, we unequivocally hold that the cash deposits  cannot  be  treated  as the integral part of the receipts reflected in Form 26AS. Ergo, the order of the CIT(A) is affirmed on the issue of addition u/ s 68 of the Act pertaining to cash credits.

Conclusion

The addition of cash deposits is justified under section 68 even if it is not corroborated with business receipts or cash withdrawals.

Sneh-Developers-Pvt.-Ltd-Vs-DCIT-ITAT-Delhi

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