SARAVANAN,CHENNAI vs. ITO, NON CORPORATE WARD-19(3),, CHENNAI

The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the addition made by the AO of - 2 - Rs.13,65,500/- deposited during demonetization period.

Brief facts are that the assessee is an individual carrying on business of trading in onion in Koyambedu Vegetable Market. The assessee also used to sell the goods of others by way of making patti purchase for which he is entitled for commission. The patti goods purchased are sold to various persons in the market by way of patti sales. The assessee filed his return of income for the relevant assessment year 2017-18 on 15.12.2017. The assessee’s case was selected for scrutiny assessment under CASS for the reason that cash deposits are made during demonetization period. The AO noticed from the bank statement that the assessee has deposited cash during demonetization period amounting to Rs.13,65,500/- as under:- Sl. Name of the Bank Account No. Cash deposit Total credits No. During during the demonetization financial year period (in Rs.) (in Rs.) 1 State Bank of India, 10398296545 0/- 2,000/- West Mambalam 2 State Bank of India, 30455982484 13,65,500/- 1,83,02,975/- West Mambalam Total 13,65,500/- 1,86,04,975/- None represented the assessee nor reply given to show-cause notice. Hence, the AO treated the entire cash deposits made

- 3 - during demonetization period as unexplained u/s.69 of the Act and taxed the same u/s.115BBE of the Act. Aggrieved, assessee preferred appeal before CIT(A).

The CIT(A) confirmed the addition by observing in para 7.11 as under:- 7.11 Having considered entire facts of the case, and the case laws cited above, it is apparent that the appellant has failed to offer any satisfactory & evidence-based explanation despite affording sufficient number of opportunities before the AO. The appellant is seeking to justify his claim for source of cash deposits by merely filing statements which are nothing but self- serving statements. Further, the appellant in the ground no. 3 of this appeal has submitted as below: "The Appellant submits the correct amount of cash deposits during the demonetization period from 09.11.2016 to 15.12.2016 is Rs. 8,65,500/- Which is reflected and support by Bank Statements. The Assessing Officer Wrongly considered the same as Rs. 13,65,500/- in his assessment order."\ In support of his claim, the appellant has filed the copy of bank account no. 30455982484 in the SBI, West Mambalam, partly (only two pages) for the period 10.11.2016 to 26.12.2016, during which the cash deposits indeed are of Rs.8,65,500/- only. However, it is not clear as to why the appellant is furnishing only the part details of bank account that too only for part period of demonetisation spanning from 09.11.2016 to 31.12.2016. Accordingly, the claim of appellant cannot be accepted in the absence of complete details, which might not have been filed by the appellant deliberately. Hence, no relief can be granted on this issue. Having considered the facts of the case and the case laws cited above, I find no infirmity in the order of AO. Accordingly, the addition made of Rs. 13,65,500/- is confirmed. Accordingly, this ground of appeal is dismissed.

I have heard rival contentions and gone through the facts and circumstances of the case. I noted form the facts and arguments of both the sides that the assessee has deposited cash during demonetization period in State Bank of India amounting to Rs.13,65,500/-. The assessee before AO and before CIT(A) claimed that the demonetized cash deposit in SBI, out of total cash deposits during demonetization period of Rs.13,65,500/- is only Rs.8,65,500/-. This reply was given by assessee in response to notice dated 22.06.2019 on 10.12.2019 that the cash deposit during demonetization period in demonetized currency i.e., Specified Bank Notes (SBNs) was only Rs.8,65,500/- and it was out of cash in hand available as per cash book maintained in the regular course of business which has been realized by way of patti sales. It was explained by the assessee that assessee was asked to furnish the total cash deposit during the period 01.11.2016 till the end of demonetization period i.e., 31.12.2016. The assessee submitted details as per which the total cash deposited during 01.11.2016 to 31.12.2016 was Rs.13,65,500/- but the cash deposited during demonetization period in SBNs was only to the extent of Rs.8,65,500/-. The ld.counsel for the assessee drew my attention to assessee’s paper-book wherein statement of SBI Bank A/c.No.30455982484 is enclosed at pages 7 to 44 and given the - 5 - (which was available before the AO and CIT(A)), which is enclosed at page 64 of assessee’s paper- book. I have gone through the bank statement of the assessee maintained with SBI and noted from the entries that the following cash deposits made in SBNs during demonetization period is to the extent of Rs.8,65,500/-. Date of Deposit Cash Deposits 10.11.2016 49000 10.11.2016 310000 11.11.2016 500000 08.12.2016 5000 14.12.2016 1500 865500 I also noted that the assessee has opening cash available as per cash book, the extract of cash book are already enclosed in assessee’s paper-book at pages 45 to 63, which reflects that the cash deposit made in SBI account during demonetization period in demonetized currency i.e., in SBNs is out of opening cash of Rs.8,37,116/-. Even the assessee to prove that this cash deposit in demonetized currency during the demonetization period is out of cash sales has already been reported to the Income-tax Department before scrutiny assessment in e-proceeding response by stating as under:- “Cash Deposit Rs.865000 during demonetization period from 09.11.2016 to 15.12.2016 is Highlighted by way of colour marking in the Bank statement Attached. The Cash balance deposited in the bank promptly reflected in the - 6 - cash book. The sources of Deposits of cash is by way of Patti sales realized in course of regular business. The cash is Deposited through out year and Not alone during demonetized period.”

In the result, the appeal filed by the assessee is partly-allowed.