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July 27, 2022

No addition for cash deposit out of receipt shown on presumptive basis during demonetisation period

by CA Shivam Jaiswal in Income Tax, Legal Court Judgement

No addition for cash deposit out of receipt shown on presumptive basis during demonetisation period

Facts and Issues of the case

The C.I.T.(A), National Faceless Appeal Centre (NFAC) erred on in upholding the addition of Rs.10,24,000/- being cash deposited in Bank on different dates during demonetization period in three bank accounts out of cash in hand being Income from Agriculture activities, Receiving from Transport Business and out of accumulated past savings.

The C.I.T. (Appeals) failed to appreciate that Assessee has offered income u/s 44AD being Gross Receiving Rs.67, 69,491/- and has shown Income Rs. 7, 50,000/- which has accepted by A.O. However, A.O. again made the addition of Rs.10, 24,000/- being cash deposited during demonetization period without appreciating that Cash was deposited out of business receiving, Agriculture activities and accumulated past savings available as cash in hand as on date of demonetization. Thus, no addition can be made in the present sets of facts and circumstances.

Observations by the Court

The Court has heard the rival parties and has gone through the material placed on record. I find that the assessee during the year under consideration declared total receipts from truck business to the tune of Rs.67, 69,491/- which is also the total of all the credits in the three bank accounts maintained by the assessee. The assessee has declared net income of Rs.7, 50,000/- on presumptive basis u/s 44AD of the Act. The total receipts declared by the assessee in her return of income included Rs.10, 24,000/- which was deposited in the bank account in cash. The only reason for not accepting the contention of the assessee that such deposits were part of business receipts is that the assessee had deposited these amounts in cash during the demonetization period.

While holding so the authorities below have ignored the fact that in the same year before the demonization period started there was cash deposits of Rs.27, 79,000/- which fact is apparent from the order of learned CIT (A) where he has noted this fact of having deposited such amount in cash during these dates. If in the same year, cash of Rs.27, 79,000/- can be accepted to be belonging to the business and has been accepted to be part of business receipts, there cannot be reason that a sum of Rs.10, 24,000/- in the same year should not be accepted as income from the same business. Moreover, I find that in the immediate preceding year, the assessee had declared total receipts of Rs.62 lacs and all of the receipts were in cash and Assessing Officer during assessment proceedings had accepted the net income declared by assessee.

The nature of business run by the assessee is transport business and agricultural income and in both businesses, there is a predominant role of cash. Moreover, I find that the assessee’s husband is also old income tax payee like the assessee. The assessee has been declaring her income on presumptive basis every year and therefore, there is no justification in the action of learned CIT (A) by which he has upheld the addition. In view of the above, the addition sustained by learned CIT (A) is deleted and the appeal of the assessee is allowed.

Conclusion  

If cash deposit is part of receipts shown on presumptive basis then there is no addition of cash deposit during demonetisation period under section 69A and when the part of cash deposit in pre-demonetisation-period was accepted.

Hardeep-Kaur-Vs-ITO-ITAT-Lucknow

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