Every Deposit during Demonetization period Not amounts to Unaccounted Cash, Addition u/s 68 not allowable: ITAT [Read Order]

Every deposit during demonetization period Not amounts to unaccounted cash , the Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has held that the addition u/s 68 not allowable

The assessee Bhoopalam Marketing Service Pvt. Ltd. is a company registered under the Companies Act and carrying on the business as a franchise for various telecom and DTH service providers. The assessee declared a turnover of Rs.70,40,80,419/- and a profit of Rs.23,92,516/- as per the statement of Profit and loss, which was uploaded by the auditor while filing form 3CA/3CD on 31.03.2018, and the taxes were also paid on such profits.

The assessee is into the purchase and sale of currency for mobile phones and the customers, who are usually small-time traders, make payment online or remit the money to Canara Bank or branches of State Bank of India and purchase the currency.

It was alleged that the AO presumed that the cash deposited during the period of demonetization was unexplained money, without verifying the fact that the assessee was permitted to collect specified bank notes of any denomination during the period of demonetization for top-up to Rs.500/-. The addition made is purely on surmise, assumptions, presumptions, lack of consideration and hastiness.  

The AO made an addition of INR 5,82,76,300/- as income of the assessee under section 68 of the income tax act, by passing assessment order under section144 of the income tax Act. 

A Coram Smt. Beena Pillai, judicial member and Shri Laxmi Prasad Sahu, accountant member viewed that the instruction dated 21/02/2017 that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of backdating of cash and is or fictitious sales. The instruction also suggested some indicators for suspicion of backdating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to the earlier year

The assessee is directed to establish all relevant details to substantiate its claim in line with the above application instructions.  We are aware of the fact that not every deposit during the demonetization period would fall under the category of unaccounted cash.  the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash.

The Tribunal directed the AO to verify all the details/evidence filed by the assessee and to consider the claim in accordance with the law. The appeal filed by the assessee as well as the appeal of revenue was allowed for statistical purposes.

Shri V. Srinivasan, Advocate appeared for the assessee and Shri K. Sankar Ganesh appeared for the revenue.

To Read the full text of the Order CLICK HERE

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