ITAT Upholds Demonetisation Cash Deposit as Because No Cash Book or Sales Evidence Produced

Dentspro India Pvt Ltd Vs ITO (ITAT Bangalore)

The assessee, a private limited company, filed its return for Assessment Year 2017-18 declaring income of ₹62,41,000. During scrutiny, the Assessing Officer (AO) found that the assessee had deposited cash of ₹3 lakh in Corporation Bank and ₹44,07,500 in ICICI Bank during the demonetisation period, aggregating to ₹47,07,500. The assessee claimed that the deposits originated from sales and opening cash balances available with its branches. However, the AO was not satisfied with the explanation and made an addition of ₹47,07,500 under Section 68 of the Income Tax Act.

The CIT(A) upheld the addition. Before the ITAT, the assessee contended that the deposits represented collections from debtors, cash sales, and cash withdrawals. However, no one appeared on behalf of the assessee, though written submissions were available on record.

The Tribunal noted that the assessee failed to produce documentary evidence substantiating the alleged sales or the opening cash balance as on 08.11.2016. It observed that cash sales during the demonetisation period were only ₹2,10,946. The assessee also failed to furnish cash flow statements, cash books, VAT returns, cash sale invoices, or confirmations from field employees before the tax authorities or the Tribunal.

Holding that the claims were unsupported by cogent evidence, the ITAT found no infirmity in the orders of the AO and CIT(A). The addition of ₹47,07,500 under Section 68 was upheld and the appeal was dismissed.