Cash deposit post demonetization to be treated as Business Income: ITAT

As the assessee failed to furnish the return of income for the AY under consideration. The Ld. AO assessed the income of the assessee at Rs. 20,67,821 after making the addition of Rs. 7,11,250 and as income from a profession, Rs. 13,00,000 cash deposit post demonetization as undisclosed income and undisclosed bank interest of Rs. 56,571, totaling Rs. 20,67,821 as income from other sources. Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who sustained both the additions u/s. 69A r.w.s 115BBE of the Act.

Aggrieved, the assessee filed appeal before the tribunal. The tribunal held that since the Ld. AO had taken two views in respect of the same transaction/bank deposits made by the assessee, one pre-demonetization period deposit, which he treated as income from the profession of the assessee, and 50% of such deposits treated as income from profession. On the other hand, deposits of Rs. 13,00,000 made post demonetization treated as undisclosed income u/s. 69A r.w.s 115BBE of the Act. The tribunal held that the dual action of AO is not justified and it was directed that the total cash deposit in the bank account i.e. Rs. 27,22,500 including 13,00,000 to be treated as gross receipts from the profession and 50% of such total deposits be treated as ‘income from profession’ during the said assessment year.

Also, the tribunal held that since the cash deposit pre-demonetization had been accepted as a Business/Profession receipt by Ld. AO, the remaining deposit of Rs. 13,00,000 post demonetizations should also be treated as Business Income as no adverse finding is given and therefore, provisions of section 69A r.w.s 115BBE of the Act will not apply on the said deposits. Thus, the appeal of the assessee was partly allowed.