Treating Cash Deposit During Demonetization as unexplained cash without rejecting Boks of account is Invalid: ITAT

In a recent case, the New Delhi branch of the Income Tax Appellate Tribunal (ITAT) ruled that treating cash deposits as unexplained without rejecting the books of account is invalid. Pilani Industrial Corporation Limited's return was scrutinized, and the AO disallowed Rs. 65,49,189/- under section 69A r.w.s 115BBE, alleging failure to prove the cash deposits during demonetization as normal business receipts. \r

However, the bench found the cash deposit figures were genuine, supported by verified statements from independent auditors. The two-member Bench observed that accepting the genuineness of the books but partially rejecting the explanation regarding cash deposits is untenable. \r

The ITAT concluded that such treatment of cash deposits based on the books of account without rejecting them is legally impermissible.