Subodh Chandra Seth Vs ITO (ITAT Lucknow)
The Lucknow Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal against the order of the CIT(A) concerning Assessment Year 2017-18. The dispute arose from cash deposits of Rs.43,70,500 made in specified bank notes during the demonetisation period from 9 November 2016 to 30 December 2016. The assessee, an individual engaged in the Sarafa business, explained that the deposits represented cash generated from jewellery sales. He pointed out that there was an opening cash balance of Rs.3,86,779 as on 1 April 2016 and cash sales of Rs.1,86,08,211 during the period from 1 April 2016 to 8 November 2016.
The Assessing Officer treated the entire Rs.43,70,500 as unexplained money under Section 69A of the Income-tax Act, 1961 [Section 69A – Unexplained Money], principally observing that cash sales had increased substantially during October and up to 8 November 2016 compared with the preceding year. The CIT(A), however, accepted the explanation substantially and held that the source of the deposits was sales. Since the Assessing Officer had accepted the sales and had not rejected the books of account or identified defects in the sales, the CIT(A) deleted Rs.40 lakh but sustained Rs.3,70,500 under Section 69A read with Section 115BBE on the basis of the abrupt increase in sales.
