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Facts
The assessee, a fabric trader, faced additions by the AO for allegedly in-genuine inward cartage/freight expenses (Rs. 19,48,356) and unexplained cash credits (Rs. 4,69,65,500) from cash sales during the demonetization period, taxed under Section 115BBE. The Ld. CIT(A) deleted both additions, leading to the Revenue's appeal before the ITAT.
Held
The Tribunal upheld the CIT(A)'s deletion of both additions, finding the CIT(A)'s reasoning logical and the Revenue's arguments unconvincing. For the Section 37 addition, the Tribunal noted the AO had not proposed the addition in show cause notice. For the Section 68 addition, the Tribunal highlighted that the AO did not reject the books of accounts and failed to establish that cash sales were unexplained simply due to being deposited during demonetization.
Key Issues
1. Whether the deletion of disallowance for inward cartage/freight expenses under Section 37 was justified. 2. Whether the deletion of unexplained cash credit from cash sales during demonetization under Section 68, taxed under Section 115BBE, was justified.
Sections Cited
37, 68, 115BBE, 143(3)
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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY
Per contra, the Ld. DR relied on the order of the 5. Assessing Officer.
We have considered the findings given by the authorities below on this issue and we find that the details on this issue brought on record by the Ld. CIT(A) are convincing and logical. Therefore, in our view, there is no need to make any interference in the findings given by the ld. CIT(A) on this issue. Accordingly, Revenue’s appeal on this issue is dismissed.
Appeal on ground No.2 is against the addition of Rs. 4,69,65,500/- as unexplained cash credit u/s 68 of the Income Tax Act, 1961 and taxed as per the provisions of section 115BBE of the Act as the source of unexplained cash credits during the demonetization period amounting to Rs. 4,69,65,500/-.
671-Chd-2024 Anup Bansal, Ludhiana 6
On this issue, the Ld. CIT(A) in the appellate order has given his findings as under:-
“I have considered the submission of the appellant and gone through the AO's observation & decision in assessment order. I find during the course of assessment, the AO despite issuing show cause notice proposing to reject books of accounts neither reject books of accounts nor detected any specific mistake in maintenance of books of accounts. Moreover the AO has stated in its assessment order that the appellant submitted a list of customers vide which customers name and Aadhaar card number/ driving license of the purchaser provided, through whom necessary verification regarding genuineness of transaction could have been verified. But without doing so and despite no adverse view was taken by the AO for cash deposited other than that of demonetization period, the AO made addition of Rs. 4,69,65,500/-without any sound basis and supporting evidence. Accordingly I find infirmity in the observation and decision of the AO in as much as the AO was unable to establish cash credit amount during demonetization being unexplained as far as section 68 of the I.T Act is concerned. Therefore I hold that the addition of Rs.4,69,65,500/-made u/s 68 of the I.T Act is not in accordance with law and stand deleted. These grounds are therefore allowed”.
671-Chd-2024 Anup Bansal, Ludhiana 7
Per Contra, the ld. DR relied on the order of the Assessing Officer.
We have considered the findings given by the Ld. CIT(A) on this issue. We find that during the year under consideration; the Assessee had made total cash sales of Rs. 14,07,37,127/-. The Assessing Officer has accepted the cash sales in other months of the year except the cash sales made during the demonetization period. The Ld. CIT(A)’s findings sems logical that if the books of account of the Assessee has not been rejected by the Assessing Officer and the cash sales made by the Assessee in other months of the year have been accepted, then there is no reason why the part of {cash sales) has been rejected by the Assessing Officer simply because these amounts were deposited in the bank account during the demonetization period. Neither during the assessment proceedings nor during the proceedings before us, the Revenue could bring anything on record to rebut the claim of the Assessee. Therefore, we find no reason to interfere in the findings
671-Chd-2024 Anup Bansal, Ludhiana 8 given by the Ld. CIT(A) on this issue. Accordingly, Revenue’s appeal on this issue is also dismissed.
In the result, Revenue’s appeal is dismissed.
Order pronounced on 01.09.2025.