DECCAN CONSTRUCTION CO. ,MADURAI V. ACOT. MCC-2, MADURAI

ITA 41/CHNY/2025

AI Insights

The case involves Deccan Construction Company, which appealed against the order of the Learned Commissioner of Income Tax (CIT(A)), Delhi, concerning the assessment year 2017-18. The primary issue was the addition of Rs. 13,61,653 as unexplained cash credits under section 68 of the Income-tax Act, 1961, due to cash deposits of Rs. 26,00,000 made during the demonetization period. The Assessing Officer (AO) had rejected the assessee's explanation that these deposits were from cash withdrawals made for emergency purposes, citing insufficient evidence of the cash balance before demonetization. The Tribunal, after reviewing the bank statements and cash book of the assessee, concluded that the cash withdrawals were properly accounted for and the source of the deposits was adequately explained.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361255 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: P.M. KATHIR
• Keywords: Set aside; Unexplained cash credit
• Section: 143(3); 68

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ \u0010ा यपीठ, चे\u0015ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0018ी एबी टी. वक , \u0010ा ियक सद एवं \u0018ी जगदीश, लेखा सद क े सम' BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.41/Chny/2025 िनधा8रण वष8 /Assessment Year: 2017-18 Deccan Construction Company, 64, New pankajam Colony, Madurai – 625 009. Vs. The Asst. Commissioner of Income Tax, Non Corporate Circle-2, Madurai. [PAN: AACFD 1541P] (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीलाथ की ओर से/ Appellant by : Shri P.M.Kathir, Advocate GHथ की ओर से /Respondent by : Ms. R. Anitha, Addl. CIT सुनवाई की तारीख/Date of Hearing : 25.03.2025 घोषणा की तारीख /Date of Pronouncement : 22.05.2025 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2017-18 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 13.12.2024 in the matter of assessment framed by the Assessing Officer [AO] u/s. 143(3) of the Income-tax Act,1961 (hereinafter “the Act”) on 27.12.2019. ITA No.41/Chny/2025 :- 2 -: 2. The effective ground of appeal in this appeal of assessee is against confirming the cash deposits during demonetization period to the extent of Rs. 13,61,653/- u/s. 68 of the Act. 3. The assessee is a civil contractor and filed return of income showing total income of Rs.45,17,630/-. During demonetization period, the assessee had made cash deposits amounting to Rs.26,00,000/-. The assessee had explained the source of cash deposits as cash withdrawals from bank account in the preceding one and a half month, and retained for emergency purposes. However, the A.O did not accept the assessee’s explanation of cash balance available before demonetization period of Rs.32,00,000/- as the assessee already had sufficient cash balance and there was no need to withdraw from the bank and retain it. The A.O computed the average cash withdrawal from April, 2016 to October, 2016, which was of Rs. 18,38,347/- and accepted only Rs. 18,38,347/- as explained and treated the balance of Rs.13,61,653/- (i.e., Rs.32,00,000-18,38,347/-) as unexplained cash credits u/s. 68 of the Act. On appeal, the Ld. CIT(A) upheld the addition made by the A.O. 4. The Ld. Authorized Representative (A.R) of the assessee has submitted that the source of cash deposit of Rs.26,00,000/- made ITA No.41/Chny/2025 :- 3 -: during demonetization period were out of withdrawal from TMB OD A/c. No.431765 which is evident from the bank statement . The Ld AR submitted that Rs.32,00,000/- has been withdrawn from the bank which is duly recorded in the cash book and the cash deposit of SBNs were out of these withdrawals. However, the A.O and the Ld. CIT(A) had only considered the average withdrawal from April to October, 2016 to consider the source of cash deposit, which is arbitrary and has no basis to make the addition. 5. On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of lower authorities. 6. We have heard the rival submissions, and perused the materials available on record. It is evident from the back account that the assessee has withdrawn cash of Rs. 30,00,000/- from TMB OD a/c. No.431765, and these transactions are duly recorded in the cash book. Further, as per the cash book, cash balance available as on 07.11.2016 was of Rs. 27,73,186/-. Therefore, the source of cash deposit stands duly explained. The A.O has arbitrarily considered the average cash balance instead of the actual cash balance available as on 07.11.2016. Since, the cash withdrawal were made from the bank and properly accounted for, the A.O was not justified in making the ITA No.41/Chny/2025 :- 4 -: addition. Accordingly, the order of Ld CIT(A) is set aside and addition made by the A.O is deleted. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced on 22nd May, 2025. Sd/- Sd/- (एबी टी. वक ) (ABY. T. Varkey) \u0010ाियक सद / Judicial Member (जगदीश) (Jagadish) लेखा सद /Accountant Member चे\u0010नई/Chennai, \u0013दनांक/Dated: 22nd May, 2025. EDN/- आदेश क\u0016 \bितिल\u0019प अ\u001aे\u0019षत/Copy to: 1. अपीलाथ\b/Appellant 2. थ\b/Respondent 3. आयकर आयु\u0010/CIT, Madurai 4. िवभागीय ितिनिध/DR 5. गाड\u0019 फाईल/GF "