ITAT sets aside addition of Rs.10 lakhs u/s 69A as Unexplained Cash Deposits During Demonetization [Read Order]

The Raipur bench of the Income Tax Appellate Tribunal (ITAT) sets aside the addition of Rs. 10 lakhs under Section 69A of the Income Tax Act, 1961, as unexplained cash deposits during demonetization period.

In this case, the assessee is engaged in the business of mobile recharge distribution of Reliance Retail Limited and had filed his return of income for the assessment year 2017-18 on 31.03.2018, declaring an income of Rs. 7,52,800.

During the assessment proceedings, it was observed by the assessing officer (AO) that during the demonetization period, the assessee had made cash deposits of Rs. 10.10 lakhs in demonetized currency (SBNs) in his bank account No.38380400000049 with Bank of Baroda, Branch.

As the assessee failed to explain the source of the above-mentioned amount, the AO made an addition under Section 69A of the Income Tax Act, 1961, treating the deposit as unexplained money, and passed an assessment order under Section 143(3) by assessing the income of the assessee at Rs. 1,880,509.

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As no vouchers or receipts were submitted by the assessee to substantiate his claim that deposts in the bank account t were sourced out of sale proceeds of his business received during the pre-demonetization period, the Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the assessee’s appeal.

The assessee’s counsel submitted that the assessee had duly explained that the cash deposits in his bank account were made from pre-demonetization business proceeds from the distribution of mobile recharge coupons by M/s. Reliance Retail Limited. Therefore, both lower authorities erred in treating this as unexplained money under section 69A of the Act.

The ITAT found that the assessee had provided a reasonable explanation linking the deposits to business sales but failed to submit supporting documentary evidence during the assessment.

The ITAT directed the AO to re-adjudicate the matter after granting a fair opportunity to the assessee by providing the assessee a reasonable opportunity of being heard, who shall remain at liberty to substantiate his claim based on fresh documentary evidence, if any.

The ITAT, comprising Judicial Member Ravish Sood, allowed the appeal filed by the assessee for statistical purposes.

To Read the full text of the Order CLICK HERE

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