AO neither rejected the books nor conducted verification under Section 133(6): ITAT deleted addition under Section 68 

 

Demonetisation Cash Deposits Fully Explained – ITAT Hyderabad Deletes ₹96.26 Lakh Addition Under Section 68, Accepts Books & Debtor Confirmations as Genuine

The ITAT Hyderabad deleted an addition of ₹96.26 lakh made under Section 68 for cash deposits during the demonetisation period. The assessee, a pharmaceutical trader, explained that ₹42.49 lakh represented Specified Bank Notes from existing cash balance, and the remaining deposits were from genuine realisations from sundry debtors. The books of account were duly audited, and 28 confirmations from debtors were filed, which were ignored by both the AO and CIT(A).

The Tribunal observed that turnover had actually declined, debtor balances remained consistent, and cash deposits during Oct–Dec 2016 were lower than the preceding year, indicating regular business activity. The Ld. AR relied on the decision of the ITAT Hyderabad in Ambabhavani Jettem v. ITO (ITA No. 604/Hyd/2024, A.Y. 2017–18), where similar demonetisation-related additions were deleted.

The Tribunal held that the AO neither rejected the books nor conducted verification under Section 133(6) despite having debtor details and PANs. Finding the addition based merely on presumption without factual enquiry, the ITAT directed deletion of the entire addition under Section 68.

The copy of the order is as under:

1761889285-yZhftU-1-TO