ITAT sets aside Addition of Rs. 45.74 Lakh Cash Deposit during Demonetisation, Remands matter for fresh Examination [Read Order]

The Cochin Bench of the Income Tax Appellate Tribunal (ITAT), set aside an addition of Rs. 45.74 lakh made by the assessing officer (AO)  on cash deposits in specified bank notes (SBN) during the demonetisation period. The bench has remanded the matter to the Assessing Officer (AO) for fresh examination. 

Coming to the facts of the present case, for the assessment year (AY)  2017-18, the hospital assessee named Trichur Heart Hospital Ltd had filed its income tax return declaring an income of Rs. 1.69 crore.

After that, the AO completed the assessment at Rs. 2.15 crore, adding Rs. 45.74 lakh as unexplained cash deposits made during demonetisation period. The AO was of the strong opinion that the hospital was not authorised to accept SBN after November 9, 2016. The Commissioner of Income Tax (Appeals) upheld the AO's decision.

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The assessee who was dissatisfied with the decision of the CIT(A) appealed before the ITAT for relief.

The assessee’s counsel vehemently argued that the cash deposits were collected from patients for emergency healthcare services and pharmacy sales during the demonetisation period which is precisely from November 9 to December 20, 2016. The hospital also submitted a Ministry of Finance notification permitting hospitals to accept SBN for emergency medical situations. The counsel emphasised that the income from these transactions had already been offered for taxation, due to which the addition made by the AO was actually unjustified.

The ITAT noted that the lower authorities failed to examine the names of the patients who were admitted to the hospital and paid the fees in SBN.

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 The ITAT, comprising of George George K. (Vice President) and Inturi Rama Rao (Accountant Member), restored the matter to the AO for a fresh decision, directing a proper review of the hospital's submissions and providing the assessee a reasonable opportunity to present its case. 

In conclusion, the appeal filed by the assessee was partly allowed by the Cochin bench of the ITAT.

To Read the full text of the Order CLICK HERE

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