Making Deposit At One Go After Declaration Of Demonetization Is No Reason For Doubting Cash Sales: Indore ITAT

While deleting the addition made by the AO u/s 68 of the Income Tax Act, the Indore ITAT held that once the cash sales and availability of the cash with the assessee is duly supported by the books of account of the assessee, then making deposit at one go in the circumstances after declaration of demonetization cannot be a reason for doubting the availability of cash with the assessee. Therefore, the reason for making deposits of Rs.5,00,000/- in the specified bank notes declared as demonetized is not an abnormal act on the part of the assessee as there was a limited window for depositing of those currency notes in the bank account of the person holding such notes.” As per the brief facts of the case, the Assessee's return was selected for scrutiny, wherein AO noted that the assessee has deposited cash of Rs.13,15,000/- during the demonetization period and out of sum of Rs.5,60,000/- in the form of SBN old demonetized currency notes of denomination of Rs.1000/- & Rs.500/- in two parts. The Bench observed that the assessee has produced relevant record showing cash balance as per the books of account and particularly as per the cash book but the AO has not accepted the said explanation of the assessee on the ground that during the demonetization period deposited in the bank account is abnormally higher than the deposit in the bank account during the non-demonetization period. Therefore, on finding the addition made by the AO on account of deposit in the bank account during the demonetization period is not justified, ITAT allowed the assessee's appeal.