Bank Confirmed No Demonetized Currency Deposit on Specific Date: ITAT Deletes ₹15.45 Lakh Cash Deposit Addition [Read Order]
Observing that the bank had categorically confirmed that no demonetized currency was deposited on the specific date in question, and the assessee possessed sufficient cash balance in the books, the Tribunal deleted the cash addition made under the demonetisation.
The Cuttack Bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition of Rs. 15,45,000/- and held that the Assessing Officer (AO) was incorrect in treating a cash deposit as unexplained under the demonetisation period when the bank itself furnished a letter confirming the nature of the deposit.
Madan Lal Gupta (assessee), a wholesale dealer of Britannia Biscuits, had a cash balance of Rs. 15,50,000/- as on November 9, 2016, as per his cash book. Out of this balance, the assessee deposited Rs. 15,45,000 into the bank account on 05.12.2016.
The AO, during the assessment proceedings for the Assessment Year 2017-18, made an addition of this deposited amount, treating it as an unexplained deposit of demonetised currency.
Aggrieved by the AO’s order, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) confirmed the additions. Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT.
Read More: Assessment Framed Without Jurisdictional Notice u/s 143(2)Invalid: ITAT [Read Order]
The counsel for the assessee submitted that the addition was based on a deposit made on December 5, 2016, which was after the initial demonetisation. The assessee furnished a letter from the bank confirming that no demonetised currency had been deposited in the account on that specific date.
The Single Member Bench, comprising George Mathan, (Judicial Member) noted that the bank’s letter clearly stated that the deposit which was made was not a demonetised currency.
The tribunal also observed that the bank account of the assessee had adequate cash balance for making the deposits. The Tribunal also held that since the books of accounts were already rejected a separate addition for a transaction recorded within those same books was not sustainable.
The tribunal deleted the addition of Rs. 15,45,000 made in respect of the alleged demonetised currency deposit. In the result, the appeal filed by the assessee was partly allowed for statistical purposes.
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