Tax Appeal Outcome: Cash Addition Dispute Resolved The appeal involved the addition of unaccounted cash under section 69 of the Income Tax Act, 1961, related to demonetized currency deposits during the ...
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The appeal involved the addition of unaccounted cash under section 69 of the Income Tax Act, 1961, related to demonetized currency deposits during the specified period. The assessee, a distributor, had unexplained cash deposits found during a survey, leading to the reopening of the case by the AO. The CIT(A) upheld the addition, citing a diary disclosure and partner's admission. The Tribunal estimated a 10% disallowance on cash sales, directing taxation as business income under normal rates. The appeal was partly allowed based on this analysis. No separate judgment was provided in this case.
Issues involved: The appeal concerns the addition of unaccounted cash under section 69 of the Income Tax Act, 1961, related to deposits of 'Specified Bank Notes' during the demonetization period.
Summary:
Issue 1: Addition of unaccounted cash under section 69 of the Act
The assessee, a distributor for Nestle India Ltd., filed its return for the assessment year 2017-18 declaring total income at Rs. 8,460. A survey under section 133A was conducted at the business premises where unexplained cash deposits of Rs. 31,21,238 in demonetized currency were found. The partner of the assessee firm admitted to these deposits but did not declare them in the income tax return. The AO reopened the case and made an addition of unaccounted cash under section 69 of the Act. The CIT(A) upheld this decision, stating that the diary found during the survey clearly disclosed the unaccounted cash, and the partner's admission was not retracted promptly. The Tribunal noted that the entire cash deposits were from sales proceeds, but the exact breakdown between demonetized and new currency was not clear. It estimated a reasonable disallowance of 10% on the cash sales and directed the AO to tax it under normal rates as business income, not under section 115BBE. The appeal was partly allowed based on this analysis.
Separate Judgement: No separate judgment was delivered by the judges in this case.
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