ITAT Cuttack deletes tax notice against Odisha cement trader
The tribunal ruled that the trader had sufficient recorded cash to account for deposits made during the 2016 demonetisation period.
The Income Tax Appellate Tribunal (ITAT) Cuttack has deleted a tax addition against a cement trader from Balasore, Odisha, who was flagged for cash deposits during the 2016 demonetisation period. According to The Times of India, the trader, identified as Mr Patra, had deposited Rs 14.74 lakh in cash into his bank account between November 30 and December 6, 2016.
The Income Tax Assessing Officer (AO) in Balasore had classified Rs 5.72 lakh of those deposits as unexplained cash. The officer reached this conclusion by comparing the trader's business activity before and after demonetisation to estimate cement sales.
Mr Patra was unable to appeal the decision immediately because he was hospitalised with a serious injury and was advised to take complete bed rest. After his recovery, he approached the ITAT Cuttack with a delay of 736 days, which the tribunal condoned to hear the case on its merits.
Advocates Narahari Swain and P.K. Mishra argued that the trader's cash books showed he had Rs 14.78 lakh available as of November 8, 2016. They contended that the bank deposits were covered by this existing recorded cash balance.
The ITAT Cuttack found that the trader possessed enough cash on the date of demonetisation to cover the bank deposits. The tribunal noted that the AO had not rejected the business books of account or disputed the net profit reported in the profit and loss account.
The tribunal stated that since the books were accepted and the deposits were less than the available cash, no addition was required. Consequently, the addition made by the AO and confirmed by the CIT(A) was deleted.