Overseas Beverages Pvt. Ltd. Vs ACIT (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT) Chennai, in the case of Overseas Beverages Pvt. Ltd. v. ACIT, has deleted an addition of Rs. 1 crore made under Section 69A of the Income Tax Act, 1961. The addition was made by the Assessing Officer (AO), treating the cash deposits during the demonetization period as unexplained money. The taxpayer, engaged in manufacturing Indian Made Foreign Liquor (IMFL), contended that the amount represented the recovery of old bad debts, already written off in earlier years and credited as business income. The Tribunal held that the sum was legitimately accounted for in the books and could not be taxed again under Section 69A, preventing double taxation.
During the assessment proceedings, the AO noted that the assessee had deposited Rs. 11.70 crores in Specified Bank Notes (SBNs) in its Axis Bank and Karur Vysya Bank accounts during the demonetization period. Out of this, Rs. 6.73 crores were claimed to have been received from three entities in Mumbai, with Rs. 1 crore specifically questioned by the tax authorities. The AO found that these entities were no longer traceable and treated the sum as unexplained, invoking Section 69A. The first appellate authority, CIT(A), upheld the AO’s decision, stating that the assessee failed to establish a direct link between the cash deposits and the debt recovery.
