SMS CONCAST AG,NEW DELHI vs. ACIT, CIRCLE-3(1)(2), (INTERNATIONAL TEXATION), NEW DELHI

ORDER

PER VIKAS AWASTHY, JM:

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.