Jagdish Naraindas Chandan vs. ITO 24(2)(1), Mumbai

Parties Involved

Facts Summary

The assessee, Jagdish Naraindas Chandan, is an individual carrying on manufacturing activity through his proprietary concern, M/s Chandan Enterprises. The assessee filed his return of income declaring total income of ₹5,58,750 after claiming deduction of ₹1,60,000 under Chapter VI-A. The return was initially processed under section 143(1) and, thereafter, the case was selected for scrutiny under CASS on the issue of cash deposits made during the demonetisation period. The Assessing Officer noticed that cash aggregating to ₹73,70,300 had been deposited in the bank accounts maintained by the assessee. The assessee explained that the cash deposits were the result of withdrawals made from his own disclosed bank accounts during the period from April 2016 to October 2016, primarily for maintaining liquidity and meeting the immediate requirements of his manufacturing business. The Assessing Officer did not accept the explanation and treated the entire amount of ₹73,70,300 as unexplained money under section 69A. The assessee appealed against the order passed by the learned Addl./JCIT(A)-1, Jaipur.…

Legal Issues

• 1. Whether the cash deposited in the bank accounts can be regarded as unexplained money under section 69A despite the assessee’s explanation.
• 2. Whether the initiation of penalty proceedings under section 271AAC is premature.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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