Possession of demonitised note found in survey

⭐Possession of demonitised note found in survey. As it is not legal tender no addition or penalty possible.

CIT vs. Andhra Pradesh Yarn Combines(P) Ltd. [TS-5427 ITAT-1995(BANGALORE)-
O]

In the present case, assessee was found in possession of unexplained money in form of high denomination notes, which had ceased to be legal tender and had no value in
market at all in terms of Ordinance issue by Government in 1978. Upon additions u/s 69A made by AO for unexplained money and penalty levied u/s 271(1)(c), Bangalore ITAT held that “Since assessee was found in possession of
unexplained money in the form of high denomination notes after these notes had ceased to be legal tender, addition under s. 69A is unsupportable and question of levying penalty under s. 271(1)(c) cannot arise.”

The said decision of Bangalore ITAT has been affirmed by *Honble Karnataka High Court 200 CTR 641*