ITAT Deletes Rs. 1.82 Crore Addition on Cash Held for Payments to Farmers During Demonetisation

The Income Tax Appellate Tribunal (ITAT) in Ahmedabad dismissed the appeal and upheld the deletion of an addition of Rs 1.82 crore against Shailendrasinh Bharatbhai Barad. Basically, the department wanted to add Rs 1.82 crore to his income, claiming he didn’t explain the cash he deposited during demonetisation. But the Tribunal didn’t buy it; they said he gave a clear explanation and the Assessing Officer jumped to conclusions by calling it “unexplained money” under Section 69A.

The respondent is a registered commission agent at the Sanand APMC. Buy produce from farmers and sell it to traders and mill owners. When the tax office took a closer look at his 2017-18 financials, they saw these hefty cash deposits Rs 1,82,01,000 to be exact made during demonetisation. That made them suspicious. The officer said Barad didn’t give full details, so he labelled the whole amount as unexplained.

Respondent pushed back. He said he always kept plenty of cash on hand for paying farmers, something his books and bank statements could back up. The cash he deposited during demonetisation, he argued, wasn’t new or shady; it was already shown in earlier tax returns. Plus, the records showed he’d withdrawn a lot of cash for business from March to November 2016.

The Tribunal looked at the evidence and found that Barad (Respondent) did have enough cash on hand during that period. The tax department couldn’t poke holes in the Commissioner’s findings either. In the end, the Tribunal stuck with deleting the addition and tossed out the Revenue’s appeal.