The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has upheld the revision order holding that not enquiring huge cash deposits in demonetized currency was a violation of provisions dealing with demonetized currency.
The assessee, SAP Medicals (P) Ltd was a private limited company engaged in the business of dialysis consumables and equipment. It filed its return of income on 31.10.2017 declaring total income.
The case was selected for scrutiny and statutory notices under Section 143(2) and 142(1) of the Income Tax Act were issued from time to time calling for certain information. The Assessing Officer completed the assessment under Section 143(3) of the Income Tax Act on 17.12.2019 accepting the returned income.
Subsequently, the Principal Commissioner of Income Tax (PCIT) examined the record and noted that the assessee had deposited cash during the demonetization period. From the details furnished by the assessee as available on record, he noted that the assessee had cash balance as on 8.11.2016 and had accepted from its debtors who are all private hospitals which were deposited into his bank account.
K.A. Sai Prasad, appeared on behalf of the assessee and Vijay Bhaskar Reddy appeared on behalf of the revenue.
The two-member Bench of R.K. Panda, Vice-President AND Shri Laliet Kumar, Judicial Member It is an admitted fact that the assessee has made cash deposit of Rs.39,74,500/- during the demonetization period which was accepted by him from various hospitals in demonetized currency in violation of the extant provisions regarding dealing in demonetized currency.
However, the AO in the instant case has failed to investigate this aspect and passed the order under Section 143(3) of Income Tax Act accepting the income returned.
The Bench upheld the revision order holding that “Not enquiring the huge cash deposit of Rs.39,74,500/- in demonetized currency in violation of the extant provisions regarding dealing in demonetized currency has rendered the order erroneous and prejudicial to the interest of the Revenue.”
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