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Facts
The Revenue filed an appeal against the CIT(A)'s order deleting an addition made by the AO on account of unexplained cash credits. The Revenue's appeal was filed with a significant delay, which was condoned by the Tribunal.
Held
The Tribunal held that the assessee had provided sufficient evidence to substantiate the source of cash deposits, including cash sales and recovery from debtors, which were corroborated by VAT and Excise returns. The AO had not pointed out any defects in the books of account, and the CIT(A)'s findings were supported by evidence.
Key Issues
Whether the deletion of addition on account of unexplained cash credits under section 68 of the Income Tax Act by the CIT(A) was justified, considering the evidence provided by the assessee.
Sections Cited
68, 143(3)
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Income Tax Appellate Tribunal, DELHI BENCH “A”, DELHI
(A.Y. 2017-18) Deputy Commissioner of Income Tax, ...... अपीलाथ�/Appellant C R Building, I P Estate, New Delhi 110002 बनाम Vs. Belle Laboratories P. Ltd., 1/562, 1st floor, 9 Friends Colony, Industrial Area, New Delhi 110095 ..... �ितवादी/Respondent PAN: AABCB-0005-E Assessee by : Shri C M Jain, Chartered Accountant Department by: Shri Ashish Tripathi, Sr. DR सुनवाई क� ितिथ/ Date of hearing : 23/04/2025 घोषणा क� ितिथ/ Date of pronouncement : : 27/06/2025 आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)] dated 08.06.2023, for the Assessment Year 2017-18.
The appeal of Revenue is time barred by 323 days. The Revenue has filed application seeking condonation of delay in filing of appeal. After perusing application for condonation of delay, we are satisfied that delay in filing of present appeal is un- (A.Y. 2017-18) intentional and was for the reasons stated in the application which appear to be bonafide. Hence, delay of 323 days in filing of appeal is condoned and appeal is admitted for hearing on merits.
The revenue in appeal has raised as many as six grounds. All the grounds of appeal
are in respect of single addition of Rs.1,41,36,733/- made u/s. 68 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), deleted by the CIT(A).
4. Shri Ashish Tripathi, representing the department submitted that during the period relevant to assessment year under appeal, there were cash deposits to the tune of Rs.1,50,36,500/- in bank account of the assessee. The assessee failed to substantiate source of cash deposits. Hence, the Assessing Officer (AO) vide assessment order dated 30.12.2019 passed u/s. 143(3) of the Act made addition of Rs.1,41,36,733/- as unexplained cash credits u/s. 68 of the Act. In First Appellate proceedings, the CIT(A) erred in deleting the addition of Rs.1,41,36,733/- by accepting assessee’s reasoning that is the cash deposits were out of cash sales, whereas, cash sales during the year were NIL. The ld. DR further submitted that the CIT(A) has erred in not considering the fact that the closing cash balance in the chart provided by the assessee was not matching with the opening cash balance less cash deposited in the bank plus cash withdrawals from the bank. The ld. DR vehemently supporting assessment order prayed for reversing findings of the CIT(A) and upholding addition u/s. 68 of the Act.
5. Per contra, Shri C M Jain appearing on behalf of the assessee vehemently defended the impugned order. The ld. AR of the assessee submits that the assessee company is engaged in manufacturing and sale of various textile chemicals. The AO without examining the books of assessee and without calling of any further document made addition of cash deposits u/s. 68 of the Act. The entire sales of the assessee are (A.Y. 2017-18) corroborated with VAT and Excise returns and Audits books of account. The assessee was able to demonstrate before the CIT(A) with same set of documents that the cash deposits during the period relevant to assessment year under appeal were out of cash sales/recovery from debtors and cash balances. Thus, source of cash deposits in the bank during demonetization period was duly explained. It was not only during demonetization period that the cash was deposited in the bank, the assesee was regularly depositing cash even before the period of demonetization. The assessee was able to demonstrate from the documents on record that during April 2016 to October 2016, the revenue of the assessee increased by 8% as compared to preceding assessment year, whereas, cash deposits decreased by 5%. The ld. AR thus, prayed for upholding the impugned order and dismissing appeal of the Revenue.