TaxTMI 
TaxTMI 
2026 (5) TMI 1056
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....ed income was at Rs. 24,89,000/-. The addition on the account of unexplained cash deposit was made of Rs. 4,43,000/-, out of the receipts from the debtors during the demonetization period. The aforesaid assessment order bears NO. ITBA/AST/S/143(3)/2019-20/1022639045(1) and that the same is dated 18.12.2019 which is herein after referred to as the "Impugned Assessment Order". 2.2 During the assessment year under consideration, the assessee has derived income from the business & profession. 2.3 During the year consideration, the assessee had deposited Rs. 3,61,85,500/- during the demonetization period i.e. from 09.11.2016 to 30.12.2016. Out of these cash deposit the assessee had shown the receipts from the debtors as under:- S. No Amount Received Dae of Receipts 1 30,000/- 09.11.2016 2 52,000/- 10.11.2016 3 5,500/- 10.11.2016 4 12,000/- 10.11.2016 5 8,000/- 10.11.2016 6 12,000/- 10.11.2016 7 9,000/- 10.11.2016 8 4,500/- 10.11.2016 9 59,000/- 12.11.2016 10 22,000/- 12.11.2016 11 19,000/- 12.11.2016 12 17,000/- 12.11.2016 13 14,000/- 14.11.2016 14 45....
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....ded to implement the recommendations of the Board; Now, therefore, in exercise of the powers conferred by sub-section (2) of section 26 of the Reserve Bank of India Act, 1934 (2 of 1934) (hereinafter referred to as the said Act), the Central Government hereby declares that the specified bank notes shall cease to be legal tender with effect from the 9th November, 2016 to the extent specified below, namely:- 1. (1) Every banking company defined under the Banking Regulation Act, 1949 (10 of 1949) and every Government Treasury shall complete and forward a return showing the details of specified bank notes held by it at the close of business as on the 8th November, 2016, not later than 13:00 hours on the 10th November, 2016 to the designated Regional Office of the Reserve Bank of India (hereinafter referred to as the Reserve Bank) in the format specified by it.. (2) Immediately after forwarding the return referred to in subparagraph (1), the specified bank notes shall be remitted to the linked or nearest currency chest, or the branch or office of the Reserve Bank, for credit to their accounts. 2. The specified bank notes held by a person other than a ....
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....tomatic Teller Machines (hereinafter referred to as ATMs) shall be restricted to Rs. 2,000 per day per card up to 18th November, 2016 and the limit shall be raised to Rs. 4,000 per day per card from 19th November, 2016; (ix) any person who is unable to exchange or deposit the specified bank notes in their bank accounts on or before the 30th December, 2016, shall be given an opportunity to do so at specified offices of the Reserve Bank or such other facility until a later date as may be specified by it. 3. (1) Every banking company and every Government Treasury referred to in sub-paragraph (1) of paragraph 1 shall be closed for the transaction of all business on 9th November, 2016, except the preparation for implementing this scheme and remittance of the specified bank notes to nearby currency chests or the branches or offices of the Reserve Bank and receipt of bank notes having legal tender character. (2) All ATMs, Cash Deposit Machines, Cash Recyclers and any other machine used for receipt and payment of cash shall be shut on 9th and 10th November, 2016. (3) Every bank referred to in sub-paragraph (1) of paragraph 1 shall recall the specified ba....
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....ector Oil Marketing Companies: (f) for payments at crematoria and burial grounds: (g) at international airports, for arriving and departing passengers, who possess specified bank notes, the value of which does not exceed five thousand rupees to exchange them for notes having legal tender character, (h) for foreign tourists to exchange foreign currency or specified bank notes, the value of which does not exceed five thousand rupees to exchange them for notes having legal tender character. 2. All establishments referred to in paragraph 1, shall maintain complete account of record of stock and sale of transactions made with the specified bank notes during the period between 9th November, 2016 and 11th November, 2016. [F. No. 10/03/2016-Cy. 1] Dr. SAURABH GARG, Jt. Secy. 2.8 The Ld. AO in the "Impugned Assessment Order" has recorded as under too:- "4.3.3 On going through the above Notifications, it is evident that bank notes of existing series of denomination of the value of five hundred rupees and one thousand rupees (hereinafter referred to as the specified bank notes), had cease to be legal tender on and from the 9th ....
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....ove the Ld. AO in the "Impugned Assessment Order" found the explanation of the assessee that cash receipts of Rs. 4,43,000/- were from the debtors as mentioned in para 2.3 supra as unacceptable & the same was added to the ROI u/s 68 rws 115 BBE of the Act. 2.12 That the assessee being aggrieved by the aforesaid "Impugned Assessment Order" prefers the first appeal u/s 246A of the act before the Ld. CIT(A) who by the "Impugned Order" has dismissed the first appeal of the assessee on the grounds & reasons stated there in. The core grounds & reasons for the dismissal for the first appeal was as under:- "6.4. Analysis of Grounds 6.4.1 Ground 1: Addition u/s 68 r.w.s. 115BBE unjustified a. The appellant contends that the sum represented cash sales of petrol/diesel and was already accounted as business income. However, the AO has not added the entirety of deposits; only Rs. 4,43,000/- has been treated as unexplained where explanations were deficient. b. The appellant's claim of realization from debtors is not acceptable for two reasons: 1 Legal Prohibition - Under the demonetization notification, old notes could be accepted only for fres....
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....g the demonetization period compared to other months, indicating manipulation. Hence, this plea also fails. b. This ground is rejected. 6.4.5 Ground 5: Comparison with earlier periods a. The appellant compared proportion of small denomination notes received before and during demonetization to claim consistency. However, the AO has already considered this data and found anomalies. Importantly, statistical comparison does not prove that the specific deposits of Rs. 4,43,000 were from genuine sales. The onus under section 68 is transaction-specific, not merely based on broad trends. b. This ground is rejected. 6.4.6 Ground 6: Double taxation AK of same income a. The appellant contends that since sales were recorded in P&L, addition of deposits results in double taxation. This argument ignores the settled principle that bogus sales or unexplained credits cannot be sanctified merely by routing them through P&L account. If the AO finds that part of deposits are unexplained, they are to be taxed u/s 68 notwithstanding book entries. b. The onus was on the appellant to prove that deposits reconciled with sales already recorded. ....
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.... During the period of demonetization assessee company received cash amount from few debtors. Page 3, para 4.2 of the "Impugned Assessment Order" was read out by the Ld. AR. It was submitted that bills were raised & those bills were shown to the Ld. AO. Page 3 of PB was too read out & basis that it was contended that once bills are shown & amounts are credited in the books of account no addition can be made. Source is demonstrated of sale of petrol/diesel hence No addition is required. Our attention was drawn to page 6 of PB that on 20.02.2025 submissions were filed before Ld. CIT(A) i.e. submissions, TAR, Audited Financial Statements, ITR Ack. Our attention was invited to page 51 of PB which was confirmation of CGR enterprise. i.e. Rs. 4,568.00 the cash deposit on 10.11.2016. Our attention was then invited to PB page 78 i.e. details of debtors from whom cash was collected were in some debtors have confirmed. Our attention was invited to serial No. 3 of statement were in the name of Indore hospital & research foundation appears, at serial no. 4 name of STI India ltd. appears. It was fairly submitted that amount is very slightly mismatched on account of 'rounding off'. Names of some ....
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.... statements were shown that the deposits in the bank tallies with the cash book. Confirmations-confirmed account of debtors with names & address are on record. Bills raised for sale of material on record. These documents, Material, papers etc are not expressly discarded & or rejected by the lower authorities. There is no harsh & concrete evidences from the department side that the remainder amount of Rs. 3,96,000/- was realized by the assessee company in demonetized currency (SBNs). The assessee company has successfully demonstrated by explanation, material, documents, that the money in cash is duly accounted & audited. The Initial burden of proof is discharged & to establish contrary the burden of proof shifts to the department which department has failed to do so. The transaction of purchase of petrol diesel, gas etc under SBNs were not declared illegal & old transactions of realisation of trade debts were not expressly prohibited under govt. notifications from time to time. Ultimately assessee the dealer of petrol/diesel could accept SBNs upto 02.12.2016[the new date which was reduced from 15.12.2016]. We therefore in view of above on cumulative analysis hold that the additions ....