ITAT Deletes Addition On Account Of Cash Deposited In The Bank Accounts During Demonetisation Period

The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the addition on account of cash deposited in bank accounts during the demonetization period.

The bench of Ravish Sood (a judicial member) has observed that the AO, by not rejecting the books of account, has clearly accepted that the cash deposited in the bank accounts by the assessee firm during the year under consideration was not from its disclosed sources.

The appellant/assessee firm, which operates a cold storage facility, filed its income tax return, declaring a profit of Rs Nil; as a result, the assessee's case was chosen for scrutiny assessment.

During the course of assessment proceedings, it was observed by the AO that the assessee had during the demonetization period deposited a number of Rs. 38.55 lakhs and Rs. 8 lakhs in old demonetized currency notes of Rs. 500 and Rs. 1000, respectively, in its bank accounts.

The assessee claimed that it was made out of the cash in hand that was, at the relevant point in time, available as its business receipts. The assessee, in support of its claim, filed with the AO copies of its cash book and bank statements, along with details of monthly cold storage rent receipts for the year under consideration.

Although the AO called upon the assessee to produce all the documents, bills/vouchers, and registers in support of his claim that the cash deposits were sourced out of its cold storage rental receipts, the assessee failed to furnish the requisite details.

The AO observed that the cash deposits made by the assessee during the demonetization period were not sourced from its cold storage rental receipts.

The assessee contended that neither any opportunity was afforded to the assessee to place documents on record nor have the documents so filed been properly appreciated by the lower authorities.

The tribunal noted that the AO had failed to afford a reasonable opportunity to the assessee to produce supporting documents, namely cash books, rent receipts, registers, etc., which would have supported its claim that the cash deposits in its bank accounts were made out of the assessee's duly accounted rental receipts of the cold storage business.

The ITAT allowed the appeal of the assessee.

Case Title: Rahul Cold Storage Versus The Income Tax Officer

Citation: ITA No.123/RPR/2022

Date: 29.11.2022

Counsel For Appellant: CA Prabhu Das Patel

Counsel For Respondent: Sr. DR G.N Singh

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