Veeranna Murthy Raghavendra Deekshith Vs ITO (ITAT Bangalore)
Conclusion: Addition under section 68 on account of large cash deposit made during the 2016 demonetization period was not justified and assessee was required to provide concrete evidence establishing the genuineness of the cash deposits in accordance with CBDT Circular wherein the various instructions had been issued. Tribunal remitted the case back to AO for a fresh assessment, instructing assessee to provide all necessary documents to prove the authenticity of the deposits.
Held: During the government’s demonetization drive in November 2016, when high-value ₹500 and ₹1,000 currency notes were withdrawn from circulation. Assesssee/appellant, a wholesale distributor of Cadbury products in Bangalore, had deposited ₹65,13,410 in cash into his bank accounts between November 9 and November 12, 2016. The deposits were made in both Canara Bank and ICICI Bank, with the amounts being part of his regular business transactions, according to assessee. However, during an assessment for the financial year 2016-17, AO flagged ₹50,25,540 of this amount as unexplained. While the department accepted that ₹14,87,870 of the deposits were legitimate, based on the assessee’s financial records and closing cash balances, the remaining sum was added to his taxable income as unexplained cash credits under Section 68. Assessee argued that AO had not verified demonetized currency as per the notification/circular issued by the CBDT from time to time and requested to remand back to AO for fresh consideration in the interest of justice. It was held that assessee to provide concrete evidence establishing the genuineness of the cash deposits in accordance with CBDT Circular wherein the various instructions had been issued by CBDT dated 21.2.2017, 3.3.2017, 15.11.2017 & 9.8.2019. Tribunal stressed the need for assessee to substantiate his claims with proper documentation, including bank statements, invoices, and proof that the deposits were indeed part of his business turnover and not an attempt to launder old currency. In result, Tribunal remitted the case back to AO for a fresh assessment, instructing assessee to provide all necessary documents to prove the authenticity of the deposits.
