Cash Deposits During Demonetisation Not Unexplained when Recorded in Books: ITAT Deletes ₹1.30 Cr Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has upheld the deletion of ₹1.30 crore treated as unexplained cash deposits during the demonetisation period.

The assessee, Priti Brijal Bhatia, is engaged in the business of trading in gold, jewellery and diamond items. She filed her return declaring income of ₹12.31 lakh. During the period from 9 November to 31 December 2016, cash deposits of ₹1.30 crore were made in her bank account.

The Assessing Officertreated the deposits as unexplained, mainly on the ground that cash in hand had increased before demonetisation and complete details of transactions were not made available.

The assessee went in appeal before the CIT(A), who deleted the addition after finding that the deposits were recorded in the books and linked to the business.

The Revenue, however, argued that the timing and amount of deposits raised doubts about the source of the cash and that the explanation was not satisfactory.

Before the Tribunal, the assessee submitted that the deposits arose from regular business and were reflected in the books of account. It was also pointed out that the pattern of deposits was consistent with earlier periods.

The Tribunal, comprising Mahavir Singh (Vice President) and S. Rifaur Rahman (Accountant Member), found that the deposits were recorded in the books and that the Assessing Officer had not identified any discrepancy in the accounts or rejected the books.It also noticed that the deposits during the demonetisation period were lower than those in the corresponding period of the earlier year.

The Tribunal upheld the deletion and dismissed the Revenue’s appeal.

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