Cash deposited through Bank Accounts of Company during Demonetisation Period are not Unexplained Cash: ITAT [Read Order]

The Lucknow bench of Income Tax Appellate Tribunal (ITAT) has held that cash deposited through bank accounts of companies during the demonetisation period are not unexplained cash.

The assessee Shiva Goods Carrier Pvt. Ltd assessment order was passed under Section 143(3) of the Income Tax Act, 1961 whereby the assessee’s total income was determined at Rs.81,80,860/- as against returned income of Rs.34,20,860/-. In the aforesaid assessment order, an addition of Rs.47,60,000/- was made under Section  68 of the Income Tax Act

The assessing officer during the assessment proceedings found that during the demonetisation period i.e. from 09/11/2016 till 30/12/2106, the assessee had deposited old 500 and 1000 banknotes to the tune of Rs. 2,82,60,000/- in his bank accounts.

The assessee submitted that  all the cash is generated through cash withdrawal from its bank accounts and cash is needed by the company to make payments to farmers, transporters, wages & other expenses. Without considering the submission of the assessee AO made addition and treated the cash deposited during the period of demonetisation as unexplained cash credit.

Aggrieved by the order, the assesee filed an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)], who granted partial relief to  the assessee. Thus, the assessee filed a second appeal before the tribunal.

Om Kumar, the counsel for the assessee submitted that the assessee company did not make any cash sale or cash receipt from its customers as a policy, and that the only source of cash for the assessee company was withdrawals from its bank accounts.

Further, all the expenses of the assessee company, whether made in cash or through banking channels, are duly reflected in the cash book of the assessee company.

The assessee already submitted a copy of cash book and table showing cash withdrawals to the Assessing Officer which were self-explanatory for establishing legitimate and explained sources for the deposit of SBNs during the demonetization period as well as for expenses incurred by the assessee. 

Harish Gidwani, the counsel  for revenue seeked to  set aside to the file of the respective Assessing  Officers with the direction to pass fresh orders in accordance with law after providing reasonable opportunities to the respective assessees and after due verification of facts and circumstances.

Therefore, the two members of Sudhanshu Srivastava, (Judicial Member) and Shri Anadee Nath Misshra, (Accountant Member) restored the issue to the file of the respective Assessing Officers with the direction to pass de nono orders in accordance with law, after providing reasonable opportunities to the respective assessees and after due verification of facts and circumstances.

To Read the full text of the Order CLICK HERE

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