Kandaswamy Mohan Vs ACIT (ITAT Bangalore)
ITAT Bangalore held that delay in cash deposits, during demonetization, due to unforeseen circumstances like laxmi pooja and staff vacations post deepavali doesn’t imply fabricated income or an afterthought explanation. Hence, addition liable to be deleted.
Facts- The assessee is an individual and engaged in the business of trading of areca nuts. During the demonetization period, the assessee has made cash deposits amounting to ₹ 37,00,000/-. In the books of proprietary concern M/s Eswar Supari the assessee shows receipt of cash amounting to Rs. ₹35,00,000/- on 28th October 2016 from another proprietary concern namely M/s Eshwar Areca Processing Unit owned by him. Accordingly, the cash in hand in the books of M/s Eswar Supari as on 28th October 2016 shown at ₹38,62,630/- out of which cash deposit of ₹ 37,00,000/-during demonetization claimed to be made.
AO noted that the timing of cash deposits and the failure to explain non-deposit of cash receipts before the demonetization period further supported the suspicion of fabricated sources. As a result, the explanation for the cash deposit of ₹35,00,000 was rejected, and the amount was taxed as unexplained cash u/s. 68 of the Act, subject to higher tax rates as per Section 115BBE of the Act.
