Sri. Soger Malleshappa Manjunath Kanasoger Mane Mugulikoppa Vs CIT (Appeals) (ITAT Bangalore)
Demonetisation Sales Can’t Become “Bogus” Just Because SBNs Were Accepted- ITAT Bangalore Deletes ₹29.27 Lakh Addition!
The Bangalore ITAT deleted an addition of ₹29.27 lakh made u/s 68 during the demonetisation period, holding that once the assessee had properly recorded the cash sales in audited books, VAT returns, stock registers and cash book, the same could not be treated as unexplained cash credit merely because the sales proceeds were received in Specified Bank Notes (SBNs).
The Tribunal noted that both the AO and CIT(A) had in fact accepted that the deposits originated from actual business sales made during the demonetisation period. The only objection was that the assessee allegedly violated RBI guidelines by accepting SBNs after 08.11.2016. The ITAT held that such alleged violation may fall within another legal domain, but cannot justify invoking section 68 when the nature and source of deposits stood fully explained.
The Tribunal emphasized that the books of account were audited, maintained on a day-to-day basis and never rejected u/s 145(3). It further observed that the banks themselves accepted the SBN deposits and credited the amounts. Therefore, once the sales were accepted as genuine business turnover, taxing the same amount again u/s 68 would amount to double taxation.
The ITAT also rejected the argument that SBNs became worthless immediately after demonetisation, noting that under the Specified Bank Notes (Cessation of Liabilities) Act, 2017, restrictions fully operated only from 31.12.2016. Accordingly, the entire addition was deleted.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
