The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) held that the assessee has not provided any details as to the source of such cash deposited for the relevant financial year except for stating that these are business receipts, thus The Tribunal remanded this issue back to the AO for necessary verification.
The assessee Muniyappa Muniraju is carrying on the business of civil works contract and filed return of income for the assessment year 2017-18. The assessee declared his business income under Section 44AD of the Income Tax Act, 1961 on presumptive basis at 8% on the amount received and deposited the receipts to two bank accounts maintained in Canara Bank and State Bank of India.
The AO observed that assessee deposited cash to the extent of Rs.45,39,000/- in his bank accounts of Canara Bank and State Bank of India during the F.Y. (Financial Year) 2016-17.
The AO disallowed Rs.41,19,500/- as per the rates applicable under Section 115BBE of Income Tax Act from business deposited as cash allegedly made prior to the demonetisation period. Aggrieved by the order of the AO, assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)].
The assessee failed to furnish necessary evidence in support of the claim that the sum of Rs.41,19,500/ that represents sale proceeds of business before the CIT (A), therefore this addition so made was upheld.
Further the assessee filed an appeal before the Tribunal.
The Departmental Representative Nischal B submitted that the cash had been deposited during the period when demonetisation was declared and therefore necessary verification has to be carried out in accordance with the circulars issued by the CBDT.
G. Satyanarayana appeared as Authorised Representative of assessee.
The Bench comprising of Chandra Poojari, Accountant Member and Beena Pillai, Judicial Member observed that cash was deposited to the account of the assessee for which no explanation was offered by assessee regarding the source before the authorities.
Further it was noted that there is a disparity in the cash deposit as per the statement filed by the assessee, scanned and reproduced, and the assessee has not provided any details as to the source of such cash deposited for the relevant financial year except for stating that these are business receipts.
The Tribunal remanded this issue back to the AO for necessary verification in accordance with law, and directed the assessee to file all relevant details in respect of the source of actual cash deposited into the bank accounts in order to exonerate himself from the rigour of Section 69A read with Section 115BBE of the Income Tax Act.
Hence the appeal of the assessee was allowed for statistical purposes.
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