TaxTMI 
TaxTMI 
2026 (5) TMI 847
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....837221(1) passed under Section 250 of the Income Tax Act, 1961 (in short "the Act") for the assessment year 2017-18. 2. The assessee has raised the following grounds of appeal:- 1. That the Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.29,27,000/- u/s 68 of the Act, despite the fact that the said amount represents recorded business receipts duly supported by audited books of account, VAT returns, stock registers, invoices, and cash book. 2. That the Ld. CIT(A) has failed to appreciate that the essential conditions for invoking Section 68 of the Act were not satisfied, inasmuch as (i) the entries are recorded in the regular books of account, and (ii) the Appellant has furnished a complete and ....
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....dents which categorically hold that cash deposits supported by books and tax returns cannot be treated as unexplained; that retail cash sales do not require identification of each customer; that Section 68 of the Act does not apply to business turnover; and that cash deposits during demonetization cannot be treated as income when supported by records. 9. That the impugned addition results in double taxation, as the turnover corresponding to the deposits has already been subjected to VAT and offered as business income, and taxing the same again u/s 68 of the Act is wholly unjustified. 10. That the Ld. CIT(A) has erred in sustaining interest u/s 234A/B/C without proper computation, and without appreciating that interest is c....
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.... of Rs. 45,81,500/- during the demonetization period. Thus, the AO was of the clear view that the assessee had made cash sales during the period from 10/11/2016 to 17/12/2016 and accepted SBN which the assessee was not authorized to accept in view of RBI guidelines. Considering the fact that the cash balance available as on 08.11.2016 was only Rs. 16,54,500/- and accordingly the balance cash deposit of Rs. 29,27,000/- (Rs.45,81,500 - Rs. 16,54,500) was treated as unexplained cash credit under Section 68 read with Section 115BBE of the Act under the head income from other sources. The AO completed the assessment proceedings under section 143(3) of the Act on a total assessed income of Rs. 34,84,560/-. 4. Aggrieved by the assessment order ....
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....essee solely on the ground that the assessee had accepted the SBNs in violation of RBI guidelines & accordingly treated the balance amount of Rs. 29,27,000/- as unexplained cash credit under Section 68 of the Act which is illegal and bad in law and accordingly prayed that appeal of the assessee may be allowed. 8. The learned DR on the other hand relied on the order of the Authorities below and vehemently submitted that the assessee had accepted the SBNs during the demonetization period in violation of RBI guidelines and therefore that cannot be considered as valid explanation towards the source of deposit of cash into the bank account. 9. We have heard the rival submissions and perused the material available on record. The assessee in....
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....of the cash sales proceeds made by the assessee during the demonetization period. The learned CIT(A)/NFAC also held that the explanation of the assessee that the excess deposits of Rs. 29,27,000/- during the demonetization period represents subsequent cash sales is not sustainable, as the assessee was prohibited by law from accepting the SBNs after 08.11.2016. Thus, in our considered opinion, both the Authorities below admitted the fact that the cash deposits were made out of the cash sales but did not accept the contentions as the assessee had accepted SBNs which the assessee was not authorized to accept in view of RBI guidelines. Thus, undisputedly the assessee has explained the sources and nature of cash deposits into the bank accounts. ....
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....ed Bank Notes (cessation of liabilities) Act, 2017 also deals with prohibition on holding, transferring or receiving Specified Bank Notes. Section 5 states that "on and from the appointed day, no person shall, knowingly or voluntarily, holds, transfer or receives any specific bank note". We therefore, finds that the Specified Bank Notes was cease to be liabilities of the Reserve Bank under section 34 and also was cease to have the guarantee of the Central Government under sub-section (1) of section 26 of the said Act only on and from 31/12/2016. In view of the above, the contentions of the learned DR that the receipt of SBNs on account of cash sales during the demonetization period were just worthless pieces of paper having zero value canno....