Rakesh Kumar Vs ITO (ITAT Jaipur)
Cash Flow Comes From Turnover, Not Merely From Profit: ITAT Grants ₹20 Lakh Relief Against Demonetisation Deposit Addition
Summary: The Jaipur Bench of the ITAT has held that while examining the source of cash deposited by a small businessman, the availability of cash cannot be restricted merely to the net profit disclosed in the return. Business cash flow arises from the entire cycle of receipts & payments, including turnover, and not from profit alone. On this reasoning, the Tribunal granted the assessee relief of ₹20 lakh out of the addition of ₹25.66 lakh made u/s 69A in respect of cash deposited in his bank account.
The Tribunal also condoned a substantial delay of 247 days in filing the appeal, considering the assessee’s personal difficulties and the serious medical condition of his counsel.
Cash Deposits During Demonetisation Triggered Addition u/s 69A
The assessee was a small goldsmith carrying on jewellery business. He had not originally filed his return of income for AY 2017-18 and did not file a return even in response to notice u/s 142(1). The AO had information that the assessee deposited cash aggregating to ₹25,66,030 in his bank account, comprising ₹5,00,530 deposited before demonetisation and ₹20,65,500 deposited during the demonetisation period.
