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Facts
The assessee, engaged in the sale of dairy products, deposited Rs. 12.50 lakh in cash, claiming it as sale proceeds. The Assessing Officer (AO) added this amount as unexplained cash credit u/s 68 as the assessee failed to provide sale/purchase bills. This was upheld by the CIT(A). The assessee did not appear before the tribunal, and the appeal was decided ex-parte.
Held
The tribunal acknowledged that the assessee is in the business of dairy products and declared a gross profit of 10.5%. While the assessee attempted to prove the source, the failure to provide supporting documents was noted. However, the revenue's disbelieving stance was also not fully justified.
Key Issues
Whether the addition of Rs. 12.50 lakh as unexplained cash credit is justified when the assessee provided a plausible explanation but lacked supporting documentary evidence?
Sections Cited
68, 144, 250
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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: SHRI SATBEER SINGH GODARA, HON’BLE JUDICIAL & SHRI NAVEEN CHANDRA, HON’BLE
ORDER PER NAVEEN CHANDRA [A. M]:
The above captioned appeal is preferred by the assesseeagainst the orders dated23.09.2011, by Ld. CIT(A)-XXVIII u/s 250 of the Income Tax Act, 1961 [hereinafter referred to as, “Act”] for A.Y. 2006-07.
The sole issue in the case is addition of Rs. 12.50 lakh as unexplained cash credit u/s 68 of the Act in assessment framed u/s 144 of the Act. None appeared from the assessee side therefore, we
5268/DEL/2011 AY 2006-07 Vinay Kumar decided to proceed ahead ex-partewith the assistance of the ld DR. We heard the Ld. DR at length and perused the case record.
The assessee is in the business of sale of dairy products and the explanation of the assessee is that the said amount of Rs. 12.50 lakh deposited in cash is out of sale proceeds of dairy products. Since no further explanation was furnished by the assessee, in the form of sale/purchase bills of the dairy products, the AO added the same u/s 68 which was upheld by the Ld. CIT(A).
Having heard the Ld. DR, we find that there is no dispute that the assessee is into business of sale of dairy products from which the assessee declares 10.5% gross profit for taxation purposes. We find that the addition is made solely on the basis of failure of assessee to produce the sale-purchase bills etc.
In the instant case, we find that the assessee has attempted to prove the entire source of cash deposit as cash sales of dairy products. Although the assessee, prima facie, appears to have discharged its onus of explaining source of cash deposit, it’s contentions to prove the source, hardly deserves to be accepted in entirety especially when the AO was not furnished with the documents /evidence to prove the sales/purchase. On the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention that cash deposit has been made
5268/DEL/2011 AY 2006-07 Vinay Kumar out of sales, cannot be fully justified. In this factual matrix, there is some element of failure to explain some of the cash deposit, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of ₹ 2.50 lakh only would be just and proper with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The ground of appeal no 1 to 4 is partly allowed.