Satish Chandra Vs ITO (ITAT Delhi)
The ITAT Delhi granted substantial relief to an assessee whose demonetization-period cash deposits of ₹80.92 lakh had been treated as unexplained money under Section 69A and taxed at the enhanced rate under Section 115BBE. The Tribunal observed that the assessee had produced material showing that the cash deposits originated from sales recorded in the books, although he failed to satisfactorily explain the sharp rise in cash sales immediately before demonetization. Balancing both sides, the Tribunal held that complete rejection of the assessee’s explanation was unjustified, but some unexplained element could not be ruled out. Accordingly, it restricted the addition to a lump-sum amount of ₹10 lakh on an estimated basis. The Tribunal further held that the enhanced tax rate under Section 115BBE was not applicable and directed taxation under normal provisions. Since the addition ultimately survived only on an estimated basis, penalties under Sections 270A and 271AAC were deleted. The penalty under Section 272A(1)(d) was also deleted because the CIT(A) had dismissed the appeal without adequately following principles of natural justice.
Core Issue: Whether cash deposits made during the demonetisation period could be treated as unexplained money under section 69A despite the assessee’s claim that the deposits represented recorded cash sales, whether such addition was liable to be taxed under section 115BBE, and whether penalties under sections 270A, 271AAC(1) and 272A(1)(d) could survive when the addition was ultimately sustained only on an estimated basis.
