The Delhi bench of the Income Tax Appellate Tribunal has sharply reduced the unexplained cash addition for Jeewan Hospital and Nursing Home Pvt. Ltd., highlighting the evolving approach to demonetisation cases and the importance of business records.
In a ruling that offers only partial relief in a demonetisation-era tax dispute, the Delhi bench of the Income Tax Appellate Tribunal has cut a Section 68 addition of ₹1.80 crore to ₹5 lakh in the case of Jeewan Hospital and Nursing Home Pvt. Ltd. The tribunal said the hospital had made a credible effort to show that the cash lodged in specified bank notes came from higher receipts from patients, even though the tax department remained unconvinced that the full amount had been explained.
According to the case summary, the assessing officer treated the entire deposit as unexplained cash and brought it to tax under Section 68. That view was later overturned by the Commissioner of Income Tax (Appeals), prompting the revenue to challenge the relief before the tribunal. The department argued that the cash build-up did not match any proven rise in patient traffic and pointed to what it considered an unusual increase in cash holdings before the ban on old notes took effect.
The taxpayer, by contrast, maintained that the addition had been made without first rejecting the books of account and without any hard evidence to support the suspicion. The two-member bench, comprising Judicial Member Satbeer Singh Godara and Accountant Member Naveen Chandra, said the hospital had tried to account for the deposits as business turnover from patients, while also acknowledging that the explanation did not fully cover the entire amount. The tribunal therefore settled on a token addition of ₹5 lakh and said the figure should not be treated as a precedent.
The ruling fits a broader pattern in Delhi tribunal decisions involving demonetisation deposits linked to ordinary business activity. In separate matters involving footwear traders, the tribunal has deleted or sharply reduced additions where the cash was backed by sales records, audited books and presumptive tax returns under Section 44AD. In one such case, the tribunal said taxing the same receipts again would amount to double taxation. In another, it held that cash deposits recorded in books and supported by stock and VAT filings could not be treated as unexplained income unless the books themselves were first rejected. In a further case, the tribunal granted only partial relief where some deposits were supported by business cash flow and earlier bank withdrawals, but other claims were not substantiated.
The latest hospital ruling also carries a procedural point: the tribunal directed the assessing officer to tax the ₹5 lakh under the normal provisions rather than under Section 115BBE, which imposes a harsher rate on certain unexplained income. While the revenue succeeded in getting a small addition restored, the outcome underscores that demonetisation disputes are still turning on the quality of the taxpayer’s records and the extent to which business cash flows can be traced with some precision.
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