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Case Law Details

Case Name : Coastal Fertilisers Ltd Vs ITO (ITAT Kolkata)
Appeal Number : I.T.A. No.: 312/Kol/2021
Date of Judgement/Order : 22/06/2022
Related Assessment Year : 2017-18
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Coastal Fertilisers Ltd Vs ITO (ITAT Kolkata)

We note that the cash sum of Rs. 94,50,000/- was deposited in the bank account held with Union Bank of India, account no. 495601010033544 on 16.11.2016. This date of deposit falls in post-demonetization period. On 08.11.2016 demonetization scheme was announced scrapping of currencies in the Rs. 1,000/­& Rs. 500/- notes. Since such large cash deposit was made in post-demonetization period, it was under examination by the income tax Department. The assessee’s case was selected for scrutiny and the source of alleged cash deposit on 16.11.2016 was asked to the assessee.

We, further, find that the assessee is a limited company and has regularly maintained books of account including the cash and all relevant details. It also holds account with two other banks. During the pre-demonetization period the assessee had withdrawn cash sum of Rs. 1,02,75,000/- from Tamilnad Mercantile Bank, Account No. 083150050801693. As claimed by the assessee, this cash was withdrawn on various dates during July, 2016 and October, 2016 for making investment in unquoted shares and also for giving advance or purchase immovable properties. So far as this fact of withdrawing of cash is concerned the same has not been disputed by the Revenue authorities at any stage. The assessee’s claim is very simple that the source of cash deposit of Rs. 94,50,000/- is the cash withdrawn of Rs. 1,02,75,000/- on various dates during the year itself which were before the announcement of demonetization scheme on 08.11.2016.

The first observation of the Revenue authorities that why the assessee kept the funds idle with it for few months seems to have no merit in our view as it is the prerogative of the assessee company to utilize its funds in the way it finds prudent to be done so in the interest of running a business. We do not find anything unusual of the assessee keeping the cash in hand idle with it which was withdrawn from the bank and shown in the cash book.

Even otherwise the ld. AO should have appreciated that the currency in whatever form was in Indian Rupee and the same was withdrawn from bank, duly disclosed in the audited books of account, regularly shown in the cash balance carried forward and the assessee had sufficient cash in hand as on the date of announcement of demonetization scheme on 08.11.2016 and, in our considered view there remains no doubt about the genuineness of the transaction of cash deposit of Rs. 94,50,000/-in the bank account on 16.11.2016.

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