Case Law Details
Lateef Abdul Mohd. Vs ITO (ITAT Hyderabad)
Introduction: The case of Lateef Abdul Mohd. vs ITO involves an appeal against the addition of Rs.30.00 lakhs for cash deposits made during demonetization and Rs.2,40,000 for low withdrawals. The Assessing Officer argued that the cash deposits were unexplained, while the appellant contended they were from sales prior to the currency ban.
Detailed Analysis: The appellant presented month-wise cash sales data for the financial years 2015-16 and 2016-17, demonstrating a consistent correlation between cash sales and bank deposits. Comparisons with the preceding and subsequent years were made to establish a regular trend. The appellant referred to a similar case precedent, Pr. CIT vs. Agson Global (P) Ltd, where the Delhi High Court ruled in favor of the taxpayer, emphasizing the importance of examining the trend of cash sales.
Conclusion: The Tribunal found merit in the appellant’s arguments, emphasizing the substantial and regular nature of cash sales corresponding to bank deposits. Drawing parallels with the precedent case, the Tribunal set aside the addition of Rs.30.00 lakhs. Additionally, the Tribunal rejected the Rs.2,40,000 addition, noting it was based on presumptions and lacked concrete evidence of unaccounted expenditures.
Assessing Officer in the instant case made an addition of Rs.30.00 lakhs being the cash deposits made by the assessee in old denomination of Rs.1000 currency notes during the demonetization period in his bank a/c maintained with Indian Overseas Bank. Similarly, the Assessing Officer made addition of Rs.2,40,000 on account of low withdrawals. I find the NFAC sustained both the additions, reasons of which are already reproduced in the preceding paragraphs. It is the submission of the learned Counsel for the assessee that the deposit of old currency notes in the Bank A/c is out of the sale proceeds effected prior to the ban of currency notes i.e. from the midnight of 8/11/2016. It is his submission that a perusal of the month-wise cash deposits made by the assessee during the financial year 2015-16 and 2016-17 would show that such cash deposits made in the Bank A/c is commensurate with the sales made by the assessee in every month both during the preceding year and subsequent year
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