Venkataramaiah Kumar Kiran Vs ITO (ITAT Bangalore)
SBNs May Be Invalid Tender, But Not Invalid Sales: Not Taxable Again as Unexplained Cash Credit ITAT Gives Relief to Wine Trader
Assessee, proprietor of M/s Tejaswini Wines, Bengaluru, filed return declaring income of ₹15,75,690. The case was selected for scrutiny on account of large cash deposits during the demonetization period. AO noticed that out of total cash deposits of ₹55,08,100 between 08.11.2016 & 31.12.2016, a sum of ₹36,31,000 represented Specified Bank Notes (SBNs). Treating the same as illegal tender, AO invoked s.68 & taxed it @ 60% u/s 115BE, completing assessment on total income of ₹52,06,690.
On appeal, CIT(A)/NFAC granted partial relief holding that cash in hand of ₹8,00,286 as per daily summary & deposit of ₹3,72,100 made on 08.11.2016 (before announcement) were explained. However, the balance ₹24,58,614 was confirmed on the reasoning that receipt of SBNs post-demonetization was illegal & could not be treated as part of recorded sales.
Before Tribunal, Assessee contended that all cash deposits were out of liquor sales duly recorded in the books, turnover of ₹3.68 crore was accepted in audit, VAT returns & sales registers were filed, & income already offered to tax. Hence, further addition u/s 68 would amount to double taxation.
