ELCON IMPEX PVT. LTD.,DELHI vs. ACIT, CIRCLE-9(2), DELHI

ITA 9068/DEL/2025Status: DisposedITAT Delhi30 September 2026AY 2017-185 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO had not rejected the assessee's books of account, and the assessee had furnished complete details and supporting documents relating to its stock, purchases, sales, and quantitative details. The trading results of the assessee company were accepted, and no discrepancies were pointed out in the financials or audited books. The Tribunal noted that the nature of the assessee's trade, liquor sales, is duly regulated by the excise and VAT authorities, ensuring that sales correspond to reported stocks. The Tribunal found no material on record indicating that the assessee did not have the requisite stock for the sales made. The rejection of the assessee's explanation by the lower authorities, based on the principle of prudence and conduct, was considered unjustified. The Tribunal found it unexplained if the assessee was specifically asked to justify the cash sales and stock position. Therefore, the Tribunal sustained the grounds raised by the assessee on merits, quashed the assessment order, and allowed the appeal.

What were the facts?

The assessee, Elcon Impex Pvt. Ltd., is engaged in the retail trade of liquor in Delhi, operating under an L-10 license. The purchase and sale prices of liquor in Delhi are regulated by the excise department. The assessee's return of income for Assessment Year 2017-18 declared an income of Rs. 56,27,940/-. During scrutiny assessment, the Assessing Officer (AO) made an addition of Rs. 1,50,50,000/- under Section 68 of the Income Tax Act, 1961, doubting cash deposits made during the demonetization period (November 9, 2016, to December 31, 2016). The assessee's cash in hand reportedly grew significantly from Rs. 52,71,919/- on April 30, 2016, to Rs. 1,50,51,083/- on November 8, 2016. The National Faceless Appeal Centre (NFAC), Delhi, sustained this addition. The assessee is in appeal before the ITAT against the NFAC's order.

What were the issues?

1. Whether the addition of Rs. 1,50,50,000/- made under Section 68 of the Income Tax Act, 1961, on account of cash deposited in the bank during the demonetization period is justified, and consequently, whether Section 115BBE of the Act is rightly invoked? Assessee's contentions: The sales reported to VAT authorities represent the source of cash deposits, which have been duly reported as income. The assessee's audited accounts were not disturbed by the department. The assessee argued that the sales of liquor are regulated by the excise department and VAT authorities, and the AO accepted the trading results without pointing out discrepancies. The assessee also contended that it was not specifically called upon to satisfy the tax authorities regarding sufficient stock in hand to justify cash sales. Revenue's contentions: The Learned DR relied on the impugned findings of the lower tax authorities. The AO doubted the reason for the assessee holding such a large amount of cash in hand, and the plea of keeping cash for security reasons was discarded. The AO and CIT(A) doubted the cash sales while having substantial cash in hand to be deposited during demonetization.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3),Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES, NEW DELHI

Before: SHRI ANUBHAV SHARMA & SHRI SANJAY AWASTHI

Pronounced: 30.09.2026

PER SHRI ANUBHAV SHARMA, JUDICIAL MEMBER:

This appeal is preferred by the assessee against the order dated 20.11.2025 of the Ld. National Faceless Appeal Centre, Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order

ITA 9068/DEL/2025

No: ITBA/NFAC/S/250/2025-26/1082802530(1) arising out of the assessment order dated 21.12.2019 u/s 143(3) of the Income Tax

The order continues below.

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