Santhosh Thanmal Mutha vs. Income Tax Officer

Parties Involved

Facts Summary

The assessee, Santhosh Thanmal Mutha, engaged in the business of trading gold, gold bars, and jewellery, filed his income return under section 139(1) on 30th October 2017, declaring a total income of ₹7,25,850/-. The return was selected for complete scrutiny through CASS, and a show cause notice was issued on 19-12-2018, asking for details and explanation for cash deposits of ₹61,44,000/- made during the demonetisation period from 08-11-2016 to 30-11-2016. The assessee responded on 10-02-2017, stating that the source of cash deposits was cash sales effected by him during the period up to 08–11–2016. The assessing officer observed that there was no cash deposit during the year till 10–11–2016, but a sudden deposit of ₹61,44,000/- was made between 11–11–2016 to 19–11–2016. The assessing officer noticed complete irregularity in cash deposits, treating them as unexplained cash credit under section 68 of the Act and levied tax under section 115BBE of the Act @ 60%. The assessee, aggrieved by the assessment order, preferred an appeal before the Learned Commissioner of Income Tax (Appeals). The Commissioner upheld the rejection of books of accounts under section 145(3) and sustained the addition under section 68 of ₹61,44,000/- with findings that the assessee failed to explain the cash flow pattern, lack of consistency in record keeping, and absence of customer details.…

Legal Issues

• 1. Rejection of books of accounts under section 145(3) of the Income Tax Act, 1961.
• 2. Addition under section 68 of the Income Tax Act, 1961 for cash deposits of ₹61,44,000/-.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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