Case Law Details
J. Kalappa Naidu Sons Vs ITO (ITAT Chennai)
The case of J. Kalappa Naidu Sons vs. ITO (ITAT Chennai) revolves around the acceptance of demonetized currency by the assessee, contrary to the notification issued by the Reserve Bank of India (RBI). The Income Tax Appellate Tribunal (ITAT) in Chennai has directed the Assessing Officer (AO) to accept 50% of the cash deposits as sale proceeds and treat the remaining 50% as unexplained money.
Background: The appellant, J. Kalappa Naidu Sons, is a wholesale distributor of ITC products, primarily cigarettes, located in Arni, Thiruvannamalai District. The case pertains to the assessment year 2017-18.
Cash Deposits During Demonetization: During the demonetization period, the appellant deposited cash totaling Rs. 1,38,30,000 in specified bank notes into their bank account maintained with IDBI Bank, Arni. The Assessing Officer initiated scrutiny and examined the source of these cash deposits.
Assessing Officer’s Findings: While verifying the details provided by the appellant, the Assessing Officer found that the source of the cash deposits was traced to sales made during the demonetization period and that there was no abnormal increase in sales during this time compared to previous financial years. The opening cash balance as of November 8, 2016, was also taken into account.
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