Short Overview: As assessee had duly proved source of cash deposit in her bank account to be opening cash balance and gift from her parents, no addition could be made under section 68.

AO required assessee to explain cash deposits amounting to Rs. 13 lakhs in her bank account. Assessee filed cash book showing opening cash balance of Rs. 11 lakhs and gift of Rs. 2 lakhs received during the year from her parents. Also, assessee filed gift deeds and tax returns of donors. AO did not accept the same and made addition under section 68.

It is held that the assessee had shown availability of cash of Rs. 11 lakhs in the books of account being opening cash balance as on 1-4-2010. The said cash was also closing cash balance as on 31-3-2010 in balance sheet. AO was very well aware of the fact that Rs. 11 lakhs were stated to have been introduced in books during the earlier assessment year and, therefore, if said claim of assessee was not acceptable then proper course of action was to make addition under section 68 in the relevant assessment year in which said cash was introduced in books and not in the year under consideration when it was shown as opening cash balance. Hence, to the extent of availability of cash of Rs. 11 lakhs being opening cash balance which was duly reflected in books of assessee for the year under consideration as well as in earlier year, addition under section 68 could not be sustained. Also, assessee had discharged onus of proving identity and creditworthiness of donors and genuineness of gift of Rs. 2 lakhs. Therefore, in the fact and circumstances of case, addition made by AO of Rs. 13 lakhs were deleted.

Decision: In assessee’s favour