Ramesh Bhajantri Vs ITO (ITAT Bangalore)
Demonetisation Cash Was Petrol Sales, Not Black Money: Bangalore ITAT Rejects Separate Addition &; 8% Profit Estimate
Summary: The assessee, was the proprietor of Durga Laxmi Petroleum, an authorised dealer of Bharat Petroleum Corporation Limited. He did not file his return u/s 139(1) for AY 2017-18 & was identified as a non-filer through the Department’s information-monitoring system.
The Department found total cash deposits of ₹40,49,175 during FY 2016-17, including ₹19,97,040 deposited during the demonetisation period. Since no return had been filed, notice u/s 142(1) was issued.
The assessee explained that the deposits represented cash sales of petrol & diesel. Due to his father’s illness & subsequent death, he could not regularly manage the business, which was later closed because of financial difficulties. He restarted operations in July 2019.
The AO completed an ex parte assessment u/s 144 on 26 September 2019. Profit was estimated at 8% of turnover of ₹52,67,731, while demonetisation cash deposits of ₹19,97,040 were separately added. Total income was determined at ₹23,64,050.
Revision u/s 263 & fresh assessment
The PCIT invoked section 263 & held that the AO had not properly examined all bank deposits. The entire assessment was restored with directions to enquire into the credits appearing in the assessee’s bank accounts.
