9911796707
TMI Blog2025 (4) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. 3. Brief facts are that the assessee is engaged in the business of mobile phone recharge, train and bus ticket booking and trading in vegetables and fruits in wholesale vegetable market on commission basis at Koyambedu, Chennai. The AO during the course of assessment proceedings made addition under the head 'income from business and profession' based on deposits made in assessee's bank accounts by treating the same as turnover amounting to Rs. 8,77,09,335/- and estimating the profit rate at 8%. The AO also added cash deposits made during demonetization period in SBNS amounting to Rs. 80,46,130/- deposited w.e.f. 09.11.2016 to 31.12.2016. The AO treated the same as unexplained money u/s.69A of the Act and taxed the same u/s.115BBE of the Act. Aggrieved, assessee preferred appeal before CIT(A). 4. The CIT(A) deleted the addition made by AO being income from business and profession added separately, for which Revenue is not in appeal. As regards to addition made by AO of cash deposit made during demonetization period in SBNs, the CIT(A) after taking remand report from the AO restricted the addition at Rs. 69,46,130/- as against addition made by AO of Rs. 80,46,130/-. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was forced to receive only in cash from the vendors during demonetization period. It was also contended that during demonetization period, the assessee had realized outstanding amount from debtors in demonetized currency as well as sale consideration received during the course of that period and had been deposited in his bank accounts. It was contended that the entire cash deposits includes are part of sales turnover. The assessee has recorded the receipts in the books of accounts which is evident from audit report, financial statements and even the assessee has adopted the same modus operandi in future year also. The ld.AR filed audit report in Form No.3CD from where, he drew our attention to gross turnover during preceding previous year as detailed out in Item No.40, wherein immediately preceding previous year, the turnover was Rs. 49,18,500/- but in this year, the turnover is Rs. 10,79,17,296/-. It was contended that in this year, the turnover increased due to the fact that the assessee has started wholesale trading of fruits and vegetables and hence, margin has become lower compared to earlier years, which is evident from comparative audit reports which are enclosed in asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pared to November, 2015, but the explanation of the assessee was that during demonetization period, he has dealt with specified bank notes because he was dealing with perishable goods like fruits. Further, unless he sells his goods by accepting specified bank notes, he could not recover whatever amount invested for purchase of fruits. We find that, the main business activity of the assessee is trading in fruits, which is highly perishable. We further, noted that the assessee is declaring huge turnover from last three to four financial years which runs into several crores. The assessee had made huge cash deposits from financial year 2014-15 to 2016-17, which runs into several crores. For example, cash deposit in the financial year 2014- 15 is about Rs. 16.90 crores. Similarly, cash deposit in the financial year 2015-16 is about Rs. 17.63 crores. If you see the pattern of cash deposits for last two financial years, we find that there is no sudden spike in cash deposits made during the demonetization period i.e., November, 2016. Although, there is slight increase in cash deposits in the said period, explanation furnished by the assessee is plausible because of nature of business he is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other words, up to appointed date i.e., 31.12.2016 there is no restriction in holding or receiving specified bank notes, even though its legal tender was banned from 08.11.2016 onwards. Since, there is no blanket prohibition on receiving demonetized currency notes up to 31.12.2016, we are of the considered view that, when the assessee has explained reasons for accepting specified bank notes even after 08.11.2016, the AO ought to have accepted the explanation furnished by the assessee when he is not disputing the nature of business and source for cash deposits. In our considered view, what is relevant to decide the issue is, whether the assessee is able to explain source for cash deposits or not. In case, the assessee explains the source for cash deposits, even though there is certain violation of any other Acts or Rules, the AO cannot make addition towards cash deposits. 11. We further noted that a similar issue has been considered by the co-ordinate bench of ITAT, Visakhapatnam in the case of ITO vs Sri Tatiparti Satyanarayana (Supra), where the Tribunal after considering cash deposits out of specified bank notes after 08.11.2016 and also by considering Specified Bank Notes ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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