Tribunal rules on cash deposits as gross receipts and business income

The tribunal partially allowed the appeal, condoning the delay in filing, adjusting the addition of income by the Assessing Officer, and ruling that all cash deposits should be considered gross receipts from the profession, irrespective of timing. The tribunal held that post-demonetization deposits should be treated as business income, leading to the partial allowance of the overall appeal.

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Issues:
1. Condonation of delay in filing the appeal.
2. Addition of income by the Assessing Officer.
3. Treatment of cash deposits pre and post demonetization.
4. Application of provisions of section 69A r.w.s 115BBE of the Income-tax Act, 1961.

Condonation of Delay:
The appeal was filed 39 days beyond the stipulated time. The assessee sought condonation of the delay, supported by an affidavit. The tribunal, after reviewing the affidavit and relevant material, found merit in the request and condoned the delay in the interest of justice, allowing the appeal for adjudication.

Addition of Income by AO:
The Assessing Officer (AO) initiated proceedings due to the assessee's failure to furnish the return of income despite notices. The AO assessed the income at Rs. 20,67,821, including cash deposits and credits. The AO treated a portion as income from the profession, undisclosed income from cash deposits post-demonetization, and undisclosed bank interest. The CIT(A) upheld the additions. The tribunal noted the AO's differing treatment of bank deposits and held that the total cash deposit should be considered gross receipts from the profession, with 50% treated as income from the profession. The tribunal partially allowed the appeal on this ground.

Treatment of Cash Deposits Pre and Post Demonetization:
The AO treated pre-demonetization cash deposits as professional income and post-demonetization deposits as undisclosed income. The tribunal found the AO's dual action unjustified, ruling that all cash deposits should be considered gross receipts from the profession. The tribunal allowed the appeal on this ground, partially overturning the CIT(A)'s decision.

Application of Section 69A r.w.s 115BBE:
Regarding the applicability of section 69A r.w.s 115BBE, the tribunal held that since pre-demonetization deposits were accepted as business/profession receipts, post-demonetization deposits should also be treated as business income. As no adverse findings were made by the AO on post-demonetization deposits, the provisions of section 69A r.w.s 115BBE did not apply. The tribunal allowed this ground of appeal, leading to the partial allowance of the overall appeal.

In conclusion, the tribunal partially allowed the appeal, addressing issues related to the delay in filing, addition of income by the AO, treatment of cash deposits pre and post demonetization, and the application of provisions under section 69A r.w.s 115BBE of the Income-tax Act, 1961. The tribunal's decision provided clarity on the treatment of various income sources and upheld the principles of justice and equity in assessing the appellant's tax liability.

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