Vellaisamy Sekar Vs ITO (ITAT Chennai)
Demonetisation May Trigger Scrutiny, Not Automatic Addition—Recorded Paddy Sales Cannot Be Branded Unexplained Money u/s 69A: Chennai ITAT
The Chennai ITAT has held that cash deposited during the demonetisation period cannot automatically be treated as unexplained money u/s 69A merely because cash sales increased immediately before demonetisation.
Where the assessee was an existing paddy trader, the cash sales were recorded in the regular books, sufficient stock was available, the books were not rejected u/s 145(3) & the Revenue produced no positive evidence that the sales were fictitious, the entire cash deposit could not be taxed u/s 69A.
The Tribunal accordingly deleted an addition of ₹43,55,000.
Delay of 323 Days Condoned
The assessee’s appeal before the Tribunal was delayed by 323 days.
It was explained through an affidavit that the assessee had suffered severe lower-back pain & was admitted to hospital on 15.03.2025. After considering the explanation, the Tribunal found that the delay was neither deliberate nor attributable to mala fide conduct.
Observing that applications for condonation must receive a liberal & justice-oriented approach where sufficient cause is shown, the Tribunal condoned the delay & admitted the appeal.
Facts of the Case
The assessee was an individual regularly engaged in the business of trading in paddy. He filed his return for AY 2017-18 declaring income of ₹3,34,430, along with the tax audit report u/s 44AB.
