2025 (8) TMI 1579 - AT - Income Tax

Unexplained demonetisation cash deposits treated as regular business receipts; AO directed to apply Section 44AD at 11.5%

ITAT DELHI - AT held that unexplained cash deposits during demonetisation are prima facie regular business receipts and directed the AO to apply ... Unexplained cash deposits during demonetization period - AO has himself accepted assessee’s case seeking presumptive taxation u/s 44AD on the declared business turnover @ 11.5% - HELD THAT:-This being the clinching case emerging from the case file, the only prima facie inference which arises is that assessee’s impugned cash deposits are his regular business receipt only. Revenue’s vehement contention is that the impugned addition be partly upheld to this limited extent. Faced with this situation hereby direct the learned Assessing Officer to frame his consequential computation thereby assessing the assessee’s cash deposits of Rs. 10.25 lakhs @ 11.5% in very terms. Ordered accordingly. Appeal arises for assessment year 2017-18 against National Faceless Appeal Centre order dated 27.02.2024 in proceedings under section 143(3) of the Income-tax Act, 1961. The sole substantive issue is treatment of assessee's cash deposits of Rs. 10.25 lakhs during demonetization as unexplained. The Assessing Officer had accepted the assessee's claim for presumptive taxation under section 44AD on declared business turnover of Rs. 5,00,743 at 11.5%. The tribunal finds that this acceptance is dispositive: the 'only prima facie inference which arises is that assessee's impugned cash deposits are his regular business receipt only.' Revenue's challenge to uphold part of the addition is noted but disallowed to the limited extent. Direction is given to the Assessing Officer to 'frame his consequential computation thereby assessing the assessee's cash deposits of Rs. 10.25 lakhs @ 11.5% in very terms.' Appeal is partly allowed on these terms.