No Cash Book, VAT Returns or Sales Invoices Produced: ITAT Upholds Rs. 47.07 Lakh Demonetisation Cash Deposit Addition [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) upheld the addition of Rs. 47,07,500 made against Dentspro India Pvt. Ltd. for unexplained cash deposits during the demonetisation period.

Dentspro India Pvt. Ltd., the appellant, is a private limited company. It filed its return of income on October 28, 2017 declaring total income of Rs. 62,41,000. The case was selected for scrutiny under CASS and notice under Section 143(2) of the Income Tax Act was issued on September 24, 2018.

During assessment, the Assessing Officer (AO) found that the assessee had made cash deposits during the demonetisation period. The deposits included Rs. 3 lakh in Corporation Bank and Rs. 44,07,500 in ICICI Bank between November 9, 2016 and December 31, 2016.

The assessee claimed that the deposits came from sales and from cash balance available as on November 8, 2016. The AO was not satisfied with the explanation. The AO held that the assessee had not produced supporting evidence to prove the cash sales or the claimed opening cash balance. The amount of Rs. 47,07,500 was added under Section 68 of the Act.

The assessee challenged the addition before the Commissioner of Income Tax (Appeals) [CIT(A)]. Similar submissions were made before the CIT(A). The CIT(A) dismissed the appeal and upheld the AO’s order.

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Before the ITAT, none appeared for the assessee. However, written submissions were available on record. The revenue was represented by Sreenivasa Karthik, ACIT(DR). They relied on the orders of the lower authorities.

The two-member bench comprising Balakrishnan S, Accountant Member, and Soundararajan K, Judicial Member, examined the record. The tribunal observed that the assessee had not produced documentary evidence before the AO to prove the sales or the cash book showing opening balance as on November 8, 2016.

The tribunal also observed that cash sales during the demonetisation period were only Rs. 2,10,946. The assessee had not furnished cash flow statements, cash books, VAT returns, invoices for cash sales or confirmations from field employees before the revenue authorities or the Tribunal.

The tribunal held that the CIT(A) had rightly upheld the AO’s order. The appeal filed by the assessee was dismissed.

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