#Demonetization

The ITAT Delhi has ruled that cash deposits made during demonetization, if fully supported by genuine, audited cash sales recorded in the books of account and already taxed as turnover, cannot be reclassified as unexplained income under Section 68. This protects businesses with transparent cash-based operations from double taxation and reinforces that proper bookkeeping is a valid defense against presumptive tax additions.

The ITAT Delhi has struck down a 35% ad hoc addition under Section 68, ruling that mere suspicion of unexplained cash deposits during demonetization cannot substitute for concrete evidence of bookkeeping defects. This reinforces that tax authorities must identify specific irregularities in accounts - not rely on broad assumptions - when taxing cash inflows, protecting honest taxpayers in the informal sector from arbitrary assessments.

The ITAT Agra ruled that cash deposits made during demonetization in AY 2017-18 cannot be taxed at the 60% enhanced rate under Section 115BBE, as the provision came into force only from AY 2018-19. This protects taxpayers with unexplained cash from retrospective application of punitive rates, clarifying the temporal scope of the law for millions affected by demonetization.

The ITAT Delhi has ruled that cash deposits made during the demonetization period, when fully documented through audited financial books, VAT returns, and stock records, cannot be taxed as unexplained income under Section 68. This sets a critical precedent for small and medium retailers who rely on cash transactions, affirming that proper bookkeeping overrides mere suspicion of undisclosed income.

ITAT Ahmedabad ruled that cash deposits made during demonetization cannot be taxed as unexplained income under Section 69A if the assessee proves the funds arose from genuine, recorded sales with supporting documentation, and the corresponding profits were already offered to tax. This prevents double taxation and affirms that proper bookkeeping overrides suspicion, offering critical relief to cash-intensive businesses like jewellery retailers.

ITAT Delhi sets aside an ex-parte assessment order for failing to provide the assessee a genuine chance to respond to notices, emphasizing that procedural fairness under natural justice is non-negotiable even in tax proceedings. The ruling mandates de-novo proceedings, reinforcing that mechanical compliance with notice issuance does not suffice to uphold an ex-parte order.

ITAT Jodhpur rules that cash deposits during demonetization under Section 69A of the Income Tax Act demand rigorous documentary proof of source. The Tribunal remanded the case for fresh assessment, emphasizing procedural compliance and the assessee’s burden to substantiate transactions with valid evidence, impacting tax litigation and banking law.

ITAT Bangalore rules that cash deposits from demonetization-era sales, backed by audited books and VAT returns, cannot be taxed as unexplained income under Section 68, even if payments were made in Specified Bank Notes (SBNs). The ruling clarifies that RBI guidelines on SBNs do not override statutory provisions of the Income Tax Act, reinforcing the primacy of documented business receipts over procedural currency norms.

ITAT Delhi rules that where an assessee explains cash deposits during demonetization as past savings, 50% must be accepted as genuine, limiting additions under Section 68. The decision sets a precedent for income tax appeals, shifting the burden of proof on unexplained cash deposits and curtailing arbitrary disallowances.

ITAT Delhi rules that cash deposits by regular taxpayers in cash-based businesses during demonetization may be treated as business income without strict reconciliation, reducing the burden of proof. The tribunal limited additions to 10% of deposits, excluding Section 115BBE applicability for transactions pre-April 2017, offering relief to small businesses.

ITAT Delhi clarifies that Section 68 additions require substantive explanation of cash deposit sources during demonetization; mere surmise insufficient. Tax cannot be levied under Section 115BBE for pre-2017 transactions.

ITAT Kolkata holds that cash deposits during demonetization from verified cash books cannot be taxed under Section 68 without evidence of unexplained income.