ITAT upheld a Rs 47.07 lakh addition as the assessee failed to justify demonetisation-era cash deposits.
Vanshika verma | Jun 13, 2026 |
Demonetisation Deposits: Company Deposited Cash During Note Ban; ITAT Upholds Income Tax Addition After Failure to Produce Sales Records
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the appeal filed by M/s Dentspro India Pvt. Ltd. and confirmed an addition of Rs 47.07 lakh made by the Income Tax Department for the Assessment Year 2017-18.
The company had filed its income tax return declaring a total income of Rs.62,41,000. During scrutiny proceedings, the Assessing Officer (AO) found that the company had deposited cash amounting to Rs 47,07,500 in its bank accounts during the demonetisation period between 9 November 2016 and 31 December 2016. The deposits included Rs 3 lakh in Corporation Bank and Rs 44,07,500 in ICICI Bank.
The assessee explained that the cash deposits came from business sales and from cash balances available with its branches before demonetisation. The AO was not satisfied with the explanation as the company could not confirm its claims by documents like cash books, cash flow statements, sales invoices, VAT returns or confirmations from the persons dealing with the cash.
AO accordingly treated the deposits as unexplained cash credits under section 68 of the Income Tax Act and added Rs 47,07,500 to the company’s income.
The company challenged the addition before the Commissioner of Income Tax (Appeals), but the appeal was dismissed. It then approached the ITAT.
No one appeared on behalf of the assessee before the Tribunal. However, written submissions were on record.
After considering all the facts, the ITAT noted that the assessee had not produced any credible evidence to demonstrate that the cash deposits were backed by genuine sales or opening cash balances. The Tribunal also observed that the company’s reported cash sales during the demonetisation period were only Rs. 2,10,946 which is much lower than the amount deposited in the bank accounts.
The ITAT agreed with the findings of the AO and the CIT(A) that the assessee was not able to substantiate its claim with documentary evidence even before the Tribunal. Held that there was no error in orders of lower authorities and addition of Rs. 47,07,500 was upheld.
Accordingly, the appeal of M/s Dentspro India Pvt. Ltd. was dismissed.
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