Suryanarayana Gandla Vs ACIT (ITAT Hyderabad)
Cash Deposits During Demonetisation Explained from Business Receipts – Tribunal Slams “Casual & Non-Application of Mind” Approach- Audited Books & Confirmations Ignored by AO – ITAT Restores Fairness in Small-Trader’s Case
Hyderabad ITAT allowed the appeal of a pharmaceutical trader from Anantapur, deleting the addition of ₹96.26 lakh made by AO u/s 68 on account of cash deposits during the demonetisation period, holding that the addition was based merely on presumption & without factual verification.
Assessee had deposited ₹96.26 lakh in his bank accounts between November–December 2016. AO treated the entire amount as unexplained cash credits, alleging that Assessee failed to substantiate the source of deposits, & further made a small disallowance u/s 40A(3). CIT(A), NFAC, upheld the additions.
Before Tribunal, Assessee explained that only ₹42.49 lakh represented Specified Bank Notes (SBNs), which were part of his cash balance of ₹43.36 lakh as on 08.11.2016. The balance ₹53.77 lakh was deposited in new notes received from regular business collections from sundry debtors, all duly reflected in the audited books of account. It was shown that sales had in fact declined from ₹14.00 crore (A.Y. 2016-17) to ₹10.89 crore (A.Y. 2017-18), negating any suspicion of inflated turnover.
