ITAT Deletes Demonetisation Cash Deposit Addition under Section 69A

The Ahmedabad Bench of the Income Tax Appellate Tribunal (“ITAT”) in DCIT v. Bharatji Designer Jewellery Pvt. Ltd.dealt with the recurring controversy arising from demonetisation-related cash deposits and the scope of additions under Sections 69A and 115BBE of the Income-tax Act, 1961. 

The Revenue had alleged that substantial cash deposits made during the demonetisation period represented unexplained money and that the assessee had artificially inflated cash sales to justify the deposits.

The Tribunal, however, upheld the order of the Commissioner (Appeals) deleting the addition and held that where cash sales are duly recorded in regular books of account, supported by stock records, VAT records, invoices and quantitative reconciliation, the corresponding cash deposits cannot again be taxed as unexplained income under Section 69A. 

The ruling reinforces the settled principle that suspicion arising from demonetisation cannot substitute evidence and that recorded sales proceeds cannot be subjected to double taxation.