Deposit of Banned Notes received out of Cash Sales during Demonetization Period is Legally Valid: ITAT deletes Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Visakhapatnam bench has deleted an addition under section 69A of the Income Tax Act, 1961 by holding the deposit of banned notes received by the assessee from cash sales during demonetization period is legally valid.

During the assessment proceedings, the AO made addition under section 69A towards unexplained cash credit against the assessee, Mr. Polepalli Srinivasulu Gupta.

The assessee contended that he is consistently depositing amounts arising out of the cash sales and hence it is not unaccounted money.

A bench of Shri Duvvuru Rl Reddy, Judicial Member & Shri S Balakrishnan, Accountant Member has relied on the judicial pronouncement in the case of Principal Commissioner of Income Tax vs. Agson Global (P) Ltd, and held that the cash sales made by the assessee deposited in the bank account are in accordance with law and hence the addition made by the AO is deleted.

“From the submissions made by Ld AR, we find that the assessee is consistently depositing the sale proceeds realized by way of cash. We also refer to the Specified Bank Notes (Cessation of Liabilities Act, 2017) wherein section 5 of the Act clearly states that On and from the appointed day, no person shall, knowingly or voluntarily, hold, transfer or receive any specified bank note. Section 2(1)(a) of the Specified Bank Notes (Cessation of Liabilities Act, 2017) also refers “appointed day” means the 31st Day of December, 2016. In this context, we find that the sales made by the assessee and the specified notes deposited by the assessee into the account are legally valid and hence no addition is warranted on these deposits,” the Tribunal said.

To Read the full text of the Order CLICK HERE

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