Varun Kumar Jain Vs ITO (ITAT Chandigarh)
The Chandigarh Bench of the Income Tax Appellate Tribunal Chandigarh examined the taxability of cash deposits made during the demonetization period for AY 2017–18 in a best judgment assessment framed under section 144. The Assessing Officer noted cash deposits of ₹12.34 lakh in old currency and treated the entire amount, along with the returned income, as undisclosed income taxable under section 115BBE, rejecting the assessee’s business claim and presumptive income declaration under section 44AD. The rejection was based on a belated return, alleged abnormal turnover, and insufficient documentary evidence, including failure to substantiate a claimed gift. The first appellate authority upheld the assessment.
Before the Tribunal, it was observed that the assessee had furnished sales bill books and had declared income on a presumptive basis under section 44AD, under which maintenance of detailed books is not mandatory. The Tribunal also noted that similar presumptive income had been offered in earlier years, supporting the existence of business activity. Accordingly, the business claim and returned income were accepted as normal business income. However, considering incomplete substantiation, the Tribunal sustained a lump sum addition of ₹2.50 lakh. Importantly, it held that the higher tax rate under section 115BBE was not applicable for the year, directing taxation at normal rates. The Assessing Officer was directed to recompute income accordingly. The appeal was partly allowed.
