Ohm Developers Vs ACIT (ITAT Ahmedabad)
Demonetisation Cash Deposits Upheld as Unexplained: ITAT Ahmedabad Confirms Section 68 Addition for Lack of Business Necessity
The Ahmedabad Bench of the ITAT dismissed the assessee’s appeal and upheld the addition of ₹1.72 crore under Section 68 in respect of cash deposits made during the demonetisation period (AY 2017-18). The assessee, a construction firm, claimed that the deposits were sourced from earlier cash withdrawals from disclosed bank accounts. Both the AO and the CIT(A) found the explanation unsatisfactory, noting continuous withdrawals despite availability of cash, absence of any cogent or contemporaneous business need for accumulating large idle cash, and lack of nexus between withdrawals and redeposits.
The Tribunal affirmed these concurrent findings, holding that mere availability of prior withdrawals does not automatically explain subsequent deposits unless the assessee proves that the withdrawn cash remained unutilised and was available for redeposit, tested on the touchstone of human probabilities. Vague explanations such as future tax payments or partner disputes, without evidence, were rejected. Relying on settled law, including the Supreme Court’s principle that explanations must be satisfactory and credible, the ITAT found no infirmity in the CIT(A)’s order and dismissed the appeal.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
