Phoolchand Lalchand Bafna Vs ITO (ITAT Mumbai)
Cash Deposits Shine as Turnover, Not Black Money – Tribunal Deletes Section 69A Addition on Demon Cash Deposits
Mumbai ITAT has delivered a noteworthy decision granting relief to an assessee whose cash deposits during the demonetisation period were subjected to double taxation. Tribunal held that such deposits, when forming part of business turnover, cannot be separately taxed as unexplained money u/s 69A.
Assessee, operated as a sub-dealer of two-wheelers dealing in multiple brands. His role involved collecting advances from customers, arranging insurance, transport, registration & thereafter placing orders with authorised dealers such as Roshan Automobiles, Dolphin Automobiles, Shree Durga Motors, etc. For AY 2017-18, he deposited a sum of ₹12.64 lakh in Specified Bank Notes (SBNs) during the demonetisation window. In addition, there were other deposits of ₹66.87 lakh in his bank accounts. AO treated the ₹66.87 lakh as turnover, applying 8% profit rate to estimate income at ₹5,35,024. AO also treated the demonetisation deposits of ₹12.64 lakh as unexplained money u/s 69A, taxing it separately at the higher rate u/s 115BBE. CIT(A) upheld this action, sustaining both the estimated income & the separate addition.
Before Tribunal, Assessee contended that the cash deposits were part & parcel of his business receipts, being advances from customers routed through banks. AO himself accepted the remaining deposits of ₹66.87 lakh as business turnover. Treating the demonetisation deposits separately as unexplained income amounted to double taxation. He also offered that profit may be reasonably estimated at 6% of total turnover to bring finality to the matter.
