Lokendra Kumar Gautam Vs ITO (ITAT Agra)
Re-deposit of Earlier Withdrawals Accepted; ₹1.24 Crore Demonetisation Cash Addition u/s 68 Deleted – ITAT Agra
The Agra Bench of the ITAT allowed the assessee’s appeal and deleted the addition of ₹1.24 crore made under section 68 read with section 115BBE on account of cash deposits during the demonetisation period for AY 2017-18.
The assessee, engaged in manufacturing and trading of pan masala and zarda, had withdrawn large sums from his disclosed business bank account during July–August 2016 and subsequently re-deposited ₹1.23 crore in November 2016 after demonetisation. The Assessing Officer treated the deposits as unexplained cash credits, ignoring the assessee’s explanation supported by cash book, bank statements, audited accounts, and details of debtors and creditors.
The Tribunal noted that:
- The assessee’s books of account were not rejected and no defects were pointed out,
- Withdrawals and re-deposits were from and into the same disclosed bank account, duly reflected in the cash book,
- Sales of over ₹4.04 crore were accepted, and no material was brought to show that the withdrawn cash was used elsewhere or was unavailable at the time of redeposit, and
- Business decisions regarding withdrawal and redeposit fall within commercial expediency.
Relying on decisions such as Ajit Bapu Satam (ITAT Mumbai) and Veena Makam Nandakumar (ITAT Bangalore), the Tribunal held that cash re-deposited out of explained earlier withdrawals cannot be taxed under section 68.
Accordingly, the ITAT deleted the entire addition of ₹1.24 crore and allowed the appeal in full.
FULL TEXT OF THE ORDER OF ITAT AGRA
