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TMI Blog2023 (7) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... h deposits during demonetization period is out of business receipts, cannot be ruled out. Since, there are no details with regard to exact amount of cash receipts during demonetization period, the only way forward is to estimate receipts from business. Thus, we direct the AO to treat 50% of cash deposits during demonetization period is out of business receipts of the assessee and balance 50% cash deposits is unexplained. Decided partly in favour of assessee. - ITA No. 33/Chny/2022 - - - Dated:- 19-7-2023 - Shri V. Durga Rao, Hon ble Judicial Member And Shri Manjunatha. G, Hon ble Accountant Member For the Appellant : Mr. N.Arjunraj, CA For the Respondent : Mr. AR.V.Sreenivasan, Addl.CIT ORDER PER MANJUNATHA.G, AM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have appreciated that the misreading of the provisions under consideration would vitiate the decision rendered in sustaining the cash deposit addition in terms of section 69A of the Act. 6. The NFAC ought to have appreciated that having taking into consideration the audited financial statements in the assessment proceedings, the explanation for the source for the cash deposited into the bank account was fully and clinchingly established therefrom and hence ought to have appreciated that the application of section 69A of the Act should be regarded as bad in law. 7. The NFAC failed to appreciate that the sustenance of the cash deposit addition on various facets was wrong, erroneous, unjustified, incorrect, invalid and not sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of assessment proceedings, the AO noticed that the assessee had deposited cash aggregating to Rs. 86,25,500/- in various bank accounts held with Axis Bank during demonetization period. It was further noticed that out of said cash deposits, a sum of Rs. 72,92,000/- was in Specified Bank Notes (in short SBNs ). The AO called upon the assessee to explain source for cash deposits in SBNs during demonetization period and reasons for accepting said notes after 09.11.2016 in view of notification of Ministry of Finance and RBI. The assessee stated that source for cash deposits is out of business receipts, and further, cash has been collected from customers and deposited into various bank accounts. The AO, however, was not convinced with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld.Counsel for the assessee further referring to SOP (Standard Operation Procedure) issued by the CBDT for AO to verify cash deposits during demonetization period submits that the AO did not dispute fact that any deviation in the deposits made during demonetization period when compared to earlier. Therefore, when the source is explained towards cash deposits, no addition can be made u/s.69A of the Act. The AO and the Ld.CIT(A) without appreciating the relevant facts, simply made addition, and thus, additions made by the AO should be deleted. 5. The Ld.DR present for the Revenue Shri AR.V.Sreenivasan, Addl.CIT, supporting the order of the Ld.CIT(A) submits that from 08.11.2016 onwards legal tender of SBNs of Rs. 500/- Rs. 1,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e owner of any money and further the explanation offered by the assessee about the nature and source of money is not satisfactory in the opinion of the AO. In this case, if you go by the language used by Sec.69A of the Act, the AO must see two things, one is the nature and source of money and explanation of the assessee for said money. However, the AO, having accepted the explanation of the assessee with regard to source for cash deposits found during the course of search, went on to make additions only on the ground that legal tender of SBNs from 09.11.2016, is illegal. In our considered view, for the purpose of s.69A of the Act, there cannot be any distinction between generation of such money through legal tender or ceased legal tender in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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