Badam Krishnamurthy Shobha Vs ITO (ITAT Bangalore)
Old Notes Deposited After 24 November 2016: Does That Make the Cash “Unexplained”?
During demonetisation, ₹19.53 lakh was deposited in a bank account held in the name of Badam Krishnamurthy Shobha. She explained that the account was used for the business of Mysore Kerosene Trading Co., a partnership firm in which she was a partner, and that the cash represented the firm’s kerosene sale proceeds.
The Assessing Officer (AO) did not reject that business explanation on the basis of fictitious sales or unreliable books. Instead, he treated ₹9,51,400 deposited after 24 November 2016 as unexplained money because the receipts involved specified bank notes allegedly accepted beyond the permitted date. He made an addition under section 69A, taxable under section 115BBE.
The Bengaluru ITAT deleted the addition. Its central point was straightforward: an alleged breach of the rules governing acceptance of old notes does not, by itself, prove that the source of the cash is unexplained.
Why was the cash deposited in the partner’s account?
The assessee filed her return for assessment year 2017–18 declaring income of ₹3,22,010. Her case was selected for scrutiny, among other reasons, to examine cash deposits made during demonetisation.
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