In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ), Chennai bench has deleted the addition on the basis of production of proof for cash deposit in the bank account during demonetization period.
In the instant case the assessing officer while verifying the return filed by assessee, Mrs.Umamaheswari, found unexplained cash deposit of sum of Rs.17,25,500/- during demonetisation period. AO asked to explain the source of cash deposit and assessee explained Rs.9,58,066/- and for the balance amount given the source as cash deposit received out of sale received from one Smt.Vedavathy.
AO rejected the explanation of balance amount saying that assessee couldn’t accept demonetised currency and made addition u/s 69 of the act. The CIT appeal, National Faceless Appeal Centre, Delhi, also confirmed the addition. Aggrieved assessee filed appeal before ITAT Chennai.
In the instant case AR Shri S.Sridhar on behalf of assessee contended that assessee could transact in Specified Bank Notes up to certain date as per the Specified Bank Notes (Cessation of Liabilities) Act, 2017 and assessee had also furnished sufficient proof for sale and the statement of party to the sale also had been filed.
The DR P.Sajit Kumar on behalf of the department contended that the assessee was prohibited from dealing with Specified Bank Notes in the mentioned date and allowed only for exchange and the assessee had not provided sufficient proof for source.
G. Manjunatha (accountant member) set aside the impugned order and directed to delete the addition observing that there was no prohibition for dealing with Specified Bank Notes during those period during demonetization and assessee had already filed necessary evidences to prove the availability of source for cash deposits and the tribunal also held that the observation of assessing officer regarding addition was invalid.
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