Rs 2.47 cr cash deposit gets tax notice: Why ITAT Delhi ruled in favour of assessee
The Delhi Income Tax Appellate Tribunal ruled in favor of a pharmacy owner who faced tax scrutiny over large cash deposits. The tribunal accepted the owner's audited financial records and sales invoices as sufficient proof of the source of funds.
Why it matters
This case clarifies the evidentiary standards required for small business owners to defend cash-heavy transactions against tax department scrutiny.
Cash deposits made in bank accounts can invite income tax scrutiny if the assessing officer is unable to detect a clear trail and source. In one such case a pharmaceutical and medicines retailer based in Delhi, found himself facing an income tax notice after depositing Rs 2.47 crore in cash into his own bank accounts.His explanation was rejected by the tax department and CIT(A), forcing him to subsequently appeal in the Income Tax Appellate Tribunal (ITAT), Delhi, where he managed to win relief.What the case is aboutThe deposits in question were made by the medicine shop owner in three savings accounts.They were questioned by the Income Tax Department as unexplained cash.The shop owner said that deposited cash had come from sales generated by his pharmacy and had been properly recorded for in the concerned business books.
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