Perumal Karthik Vs ITO (ITAT Bangalore)
ITAT Bangalore Deletes Additions on Demonetisation Cash & Lorry Cost — Fish Trader’s Books Found Genuine & Audited
Assessee, a small fish trader from Bhadravathi, filed return declaring ₹6.99 lakh income on total sales of ₹2.72 crore. During scrutiny, AO noted cash deposits of ₹9.51 lakh (₹9.09 lakh in old notes) during demonetisation & made addition of ₹7.46 lakh treating it as unexplained. AO also added ₹4 lakh alleging inflated cost of lorry purchase & excessive depreciation, as part of payment for body-building was later returned by the vendor.
Before CIT(A), Assessee contended that all cash deposits were duly recorded in books as sale proceeds & the refund of ₹4 lakh was merely return of earlier cash advance once the lorry was financed by bank. CIT(A) however dismissed the appeal, mechanically confirming addition of ₹11.76 lakh without any discussion.
On further appeal, Tribunal found that Assessee’s books were duly audited, sales & cash book tallied, & AO had not pointed out any defect. The cash deposits were part of accounted sales, & mere deposit during demonetisation cannot render them unaccounted. Accordingly, addition of ₹7.46 lakh was deleted.
As to the lorry cost, ITAT observed that Assessee had purchased the vehicle through a bank loan & paid ₹5 lakh by cheque & ₹4 lakh in cash to the body-builder, which was later returned. Since the cash book clearly reflected both payment & refund, there was no inflation of asset cost & consequently no ground for depreciation disallowance.
