The Income Tax Appellate Tribunal (ITAT), Bangalore bench in a matter of addition to unaccounted cash based on deposits during demonetisation directed the assessee to establish the genuineness of money.
The Assessing Officer (AO) made the disallowance in respect of cash deposited in the bank accounts of Shri T. Sriranga, the assessee amounting to Rs.46,85,140/-. During the assessment proceedings, it was submitted that the amount deposited by cash was out of the sale proceeds of areca nut and pepper being agricultural income.
The AO observed that the assessee did not file any details in respect of the sale proceeds alleged to be received in cash amounting to Rs.46,85,140/- and since it was not verifiable, the addition was made in the hands of the assessee as income from unexplained sources under section 68 chargeable to tax under Section 115BBE of the Income Tax Act,1961.
On appeal before the CIT(A), the assessee failed to furnish necessary evidence in support of the claim that the sum of Rs.46,85,140/- represents sale proceeds of areca nut and pepper and therefore this addition so made was upheld.
The appellant submitted that, during the previous year A.Y. 2016-17, there were similar circumstances, wherein the assessment was concluded by accepting the return of income. The only explanation offered by the assessee is that the source of cash deposits is from cash sales of the business
On the contrary, the department submitted that the cash has been deposited during the period when demonetisation was declared and therefore necessary verification has to be carried out by the circulars issued by the CBDT.
It was found that AO while verifying the claim has not considered the circulars issued by CBDT about cash deposits during the demonetisation period. No specific query was raised by the AO, in respect of the cash deposits during the demonetisation period. The AO did not follow the circulars issued by the CBDT to carry out necessary verifications in respect of the genuineness of cash deposited by the assessee during the relevant time.
The Coram comprising Smt. Beena Pillai, (Judicial) directed the assessee to establish all relevant details to substantiate its claim. The ITAT viewed that “not every deposit during the demonetisation period would fall under the category of unaccounted cash. However, the burden is on the assessee to establish the genuineness of the deposit to fall outside the scope of unaccounted cash. “
The Tribunal remanded the issue to the AO to carry out the necessary verification of the cash deposited in the bank account of the assessee. Further held, that the AO shall verify all the details/evidence filed by the assessee based on the above direction and consider the claim by the law.
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