ITA no. 2845/Del/2023

Parties Involved

Facts Summary

For Assessment Year 2016-17, Ashwani Kumar Jain, the assessee, filed his return on 27.07.2017, declaring a total income of Rs. 4,11,100/-. The assessee, being the managing director of M/s Surya Zinc Ltd., earned a salary of Rs. 4,20,000/-. The case was selected for compulsory scrutiny due to additions in earlier years on account of unsecured loans. Upon examination of the bank statement, the Assessing Officer (AO) observed that the credits in the bank statement were significantly higher than the income declared by the assessee. The AO directed the assessee to explain the nature and source of the cash deposits in his bank account and why the cash deposits should not be added to his total income as unexplained income. The assessee provided an explanation, stating that the major credit entries were due to unsecured loans taken from his son and other individuals. However, the AO concluded that the assessee could not provide a source for the excess cash deposits amounting to Rs. 1,72,500/-. The AO treated this amount as unexplained investment and made an addition of Rs. 1,72,500/- to the assessee's income. The assessee appealed to the Commissioner of Income-tax (Appeals) who affirmed the AO's decision. The assessee then appealed to the Income Tax Appellate Tribunal (ITAT).…

Legal Issues

• 1. Whether the disallowance of deduction u/s 68 and addition u/s 69 by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals) is erroneous.
• 2. Whether the Assessing Officer and the Commissioner of Income-tax (Appeals) erred in not considering the fact that the cash deposits were made from the cash available in hand and the assessee received a salary of Rs. 4,20,000/- in cash during the year.

Judgment Outcome

Decided in favour of Assessee.

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