Smt. Panjurajan Kavitha Vs DCIT (ITAT Chennai)
The appeal before the Income Tax Appellate Tribunal (ITAT), Chennai, arose from an order dated 03.10.2023 passed by the Commissioner of Income Tax (Appeals), NFAC, for Assessment Year 2017–18. The assessee, engaged in wholesale and retail grocery business, had deposited specified bank notes (SBN) during the demonetization period. The Assessing Officer added ₹51.97 lakh as unexplained cash credit under Section 68 after reducing the closing cash balance, on the ground that SBN ceased to be legal tender and such transactions were invalid.
The assessee contended that the deposits were sourced from regular cash sales, supported by books of accounts, monthly sales data, and VAT returns. It was also submitted that there was no abnormal increase in sales during the demonetization period and that the Assessing Officer had not identified any bogus or backdated sales. Despite this, the Commissioner (Appeals) upheld the addition.
The Tribunal examined the facts and found that the assessee maintained regular books of account, including a day-wise cash book, and that cash deposits were consistent with business operations. It observed that the Assessing Officer had not pointed out any defects in the books or disputed the sales turnover, which had been offered to tax. The Tribunal further noted that the deposits formed a small portion of the overall cash sales and were part of regular business collections.
