Hetaal Jaswantrai Parekh Vs ITO (ITAT Mumbai Bench)
Demonetisation Deposit Cannot Be Examined by Ignoring CBDT’s Own Rulebook: ITAT Restores ₹32.15-Lakh Addition U/s 69A for Verification of Cash Sales Declared U/s 44AD
Summary: The assessee, an individual, deposited cash aggregating to ₹32,15,383 in her bank account during the demonetisation period. The AO was not satisfied with the explanation regarding the source of the deposits and treated the entire amount as unexplained money u/s 69A. The assessee explained that the deposited cash represented cash sales and business receipts forming part of the turnover already disclosed in the return. The income from such turnover had been offered under the presumptive taxation scheme contained in section 44AD. Therefore, taxing the bank deposits once again u/s 69A would, according to the assessee, result in the same receipts being subjected to tax twice.
The CIT(A), NFAC, upheld the addition. The assessee therefore approached the Mumbai ITAT.
Apart from the original grounds, the assessee filed an application seeking admission of an additional ground that the AO had failed to examine the demonetisation-period cash deposits in accordance with the relevant CBDT Instructions and Circulars.
The assessee submitted that the additional ground raised a legal issue arising from facts already available on record and did not require investigation into any fresh facts. Reliance was placed upon the Supreme Court judgment in National Thermal Power Co. Ltd. v. CIT [229 ITR 383 (SC)], which permits a legal ground to be raised before the Tribunal where the relevant facts are already on record and consideration of the ground is necessary for determining the correct tax liability.
