ASSISTANT COMMISSIONER OF INCOME TAX , VALSAD vs. CHIRAG PHARMA AGENCY, VALSAD

The grounds of appeal are as under:- “1. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting addition of Rs. 3,57,34,500/- by accepting the explanation given by the assessee with regards to the source of cash deposited in bank account during the FY.2016- 17 supposed to have been received on account of debtors/cash giving or furnishing the documentary evidences to justify the claim was by not considering the fact that the assessee was

The assessee filed return of income for assessment year 2017-18 on 26-10-2016 declaring total income at Rs. 12,71,020/-. The case of the assessee was reopened u/s. 147 of the Act. The Assessing Officer observed that the assessee is involved in high value transaction worth of Rs. 9,32,89,592/- in his account Kotak Mahindra Bank which was not reflected or declaring in the return of income filed for assessment year 2017-18. The case of the assessee was reopened and statutory notices u/s. 148 of the Act was issued. The assessee filed return of income declaring total income of Rs. 12,71,020/- on 07-04-2021. After taking cognizance of the assessee’s details, the Assessing Officer made addition of Rs. 3,57,34,500/- u/s. 68 of the Act as unexplained cash sales/deposits.

The assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

The ld. A.R. at the time of hearing has given the details of cash sales as VAT tax and credit sales with VAT tax for assessment years 2015-16, 2016-17 and 2017-18. The ld. A.R. submitted that the assessee is supplying the medicines in the wholesale basis to the urban and rural areas in medical stores of Vasad district. The collection from such medical stores are in cash, cheque and other digital mode. The turnover of the assessee in the relevant assessment year is of Rs. 16,12,92,242/- and gross profit of Rs. 1,37,68,123/- at the rate of 8.54% which is higher than previous year gross profit @ 8.40% . The assessee has given the details of last three years turnover, creditors and debtors with GP and NP shown in the balance sheet and cash deposited in bank account in the current year as well as the previous years. The said chart is as under:-

The ld. D.R. submitted that the CIT(A) erred in deleting the addition by accepting the explanation given by the assessee with regard to the source of cash deposited in bank account. The assessee has not given the details and has not

We have heard both the parties and perused all the relevant material available on record. The assessee has given all the details of turnover of the previous two assessment years as well as the GP and NP rate along with the cash deposited in the bank. The details was categorically taken into account by the CIT(A) and has rightly observed that during the year, the assessee received Rs. 4,29,05,391/- as cash receipts from its customers out of which Rs. 3,57,34,500/- was deposited in the bank account. The assessee has given all the details which was duly verified by the CIT(A) and has rightly deleted the addition. Hence, there is no need to interfere with the findings of the ld. CIT(A).

In the result, the appeal of the Revenue is dismissed.

DR, ITAT, Surat 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Surat