Trading Company Vs ITO (ITAT Nagpur)
Summary: Demonetisation cash deposits under Section 69A of the Income Tax Act, 1961 cannot be explained merely by recording cash sales in audited books of account where the assessee fails to substantiate the genuineness of such sales through stock registers, quantitative details and contemporaneous supporting evidence.
Core Issue. Whether the addition of Rs. 76,78,441 under Section 69A of the Income Tax Act, 1961, representing unexplained cash deposits during the demonetisation period, was justified when the assessee contended that the deposits were sourced from opening cash in hand and regular business cash sales duly recorded in its audited books of account. The related issue was whether such an addition could be sustained without rejecting the books of account and whether the assessee was liable to tax under Section 115BBE.
Facts of the Case. The assessee, a partnership firm engaged in the business of running a kirana store, filed its return of income for Assessment Year 2017–18 on 3 November 2017, declaring total income of Rs. 5,00,750. During scrutiny assessment proceedings, the Assessing Officer obtained information from Nagpur Nagrik Sahakari Bank under Section 133(6) regarding deposits of specified bank notes during the demonetisation period. The bank reported deposits of old currency aggregating to Rs. 98,07,500 between 10 November 2016 and 23 December 2016.
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