The dispute originated when an Assessing Officer in Balasore evaluated Mr. Patra’s bank deposits of Rs 14.74 lakh made during the November 2016 demonetisation period and categorized Rs 5.72 lakh as unexplained money. The merchant was initially prevented from appealing due to a severe injury that required hospitalization and complete bed rest, leading to a 736-day filing delay that the tribunal later condoned. Represented by his legal team, the trader presented financial accounts showing a Rs 14.78 lakh cash balance as of November 8, 2016. The tribunal struck down the tax addition after observing that the tax officer had accepted the business's books of account and net profit without rejecti…
Key points
The tribunal established that recorded cash reserves existing prior to demonetisation eff…: The tribunal established that recorded cash reserves existing prior to demonetisation effectively justified the merchant's subsequent bank deposits.
Tax additions cannot stand when an Assessing Officer has fully accepted the business's bo…: Tax additions cannot stand when an Assessing Officer has fully accepted the business's books of account and reported net profit.
The ruling successfully overturns the previous adverse decisions issued by both the Asses…: The ruling successfully overturns the previous adverse decisions issued by both the Assessing Officer and the Commissioner of Income Tax (Appeals).
Sources checked by our analysis pipeline: 1
Mr Patra, a cement trader from Balasore, Odisha, landed in trouble with the Income Tax Department after depositing Rs 14.74 lakh cash into his bank account during the demonetisation period in November 2016. The Income Tax Assessing Officer (AO) from Balasore flagged the deposit and estimated Patra’s cement sales by comparing his business activities before and after demonetisation. Based on this assessment, the AO treated Rs 5.72 lakh as unexplained cash and initiated proceedings against Patra.
However, Patra could not challenge the income tax department’s action or file an appeal at that time as he had suffered a big injury and was hospitalised. Doctor had advised him complete bed rest. Once he recovered, he filed an appeal before the Income Tax Appellate Tribunal (ITAT) Cuttack, with a delay of 736 days. The tribunal condoned the delay and decided to hear Patra’s case on merits.
Advocates Narahari Swain and Advocate P.K. Mishra, representing Patra, submitted his cash books and other evidence before the ITAT Cuttack. They said that between November 30, 2016, and December 6, 2016, Patra deposited Rs 14.74 lakh…
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