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Facts
The assessee deposited Rs. 32,20,500/- in the bank during the demonetization period, claiming the source as cash sales and past savings. The Assessing Officer made an addition under section 68, which was confirmed by the CIT (A) on the grounds of insufficient proof and a disproportionately large cash deposit compared to the declared income.
Held
The Tribunal noted that the assessee's audited accounts had no discrepancies and that cash sales, from which the cash was generated, had been accepted by the Revenue without rejecting the books of account. The Tribunal held that not accepting the availability of the deposited sum was without proper basis, hence it set aside the lower authorities' orders and decided the issue in favour of the assessee.
Key Issues
Whether cash deposited during demonetization from accepted cash sales and audited accounts can be treated as unexplained cash credit under section 68.
Sections Cited
Section 68, Section 115BBE, Section 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ : NEW DELHI
(Assessment Year: 2017-18) Navdhatu Wires Pvt. Ltd., vs. Income Tax Officer, A-2/121, Janakpuri, Delhi. New Delhi – 110 058. (PAN : AADCN9226H) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri K. Sampath, Advocate Shri V. Rajkumar, Advocate REVENUE BY : Shri Om Prakash, Sr. DR Date of Hearing : 07.02.2024 Date of Order : 12.02.2024
ORDER This appeal by the assessee is directed against the order of the ld. CIT (Appeals)/National Faceless Appeal Centre (NFAC) dated 06.09.2023 for the assessment year 2017-18. 2. The only ground of appeal taken by the assessee read as under :- “That on the facts and circumstances of the case, action of the learned CIT (A) in confirming the action of learned Assessing Officer of treating a sum of Rs.32,20,500/- deposited in Bank during demonetization period in specified currency notes as Cash Credits and taking the same u/s 68 read with section 115BBE of Income Tax Act, 1961 is bad both in the eyes of law and on facts.”
3. Brief facts of the case are that the assessee had filed return of income for the year under consideration declaring income of Rs.3,96,162/- on (for short ‘the Act’). The case was selected for scrutiny for verification of cash deposited amounting to Rs.32,20,500/- during demonetization period.
The AO issued a show cause notice requesting assessee to justify cash deposit during demonetization period. The assessee’s reply in response to show cause notice was not found acceptable to the AO. Therefore, AO completed assessment after making addition of Rs.32,20,500/- to the total income.
Upon assessee’s appeal, ld. CIT (A) noted that the submission of the assessee was that cash was deposited from sale proceeds and past savings brought forward from previous year. However, ld. CIT (A) rejected the same on the ground that no proof of source of the same was furnished. He was of the opinion that assessee declared a meagre income of Rs.3,96,162/- and was claiming to have accumulated cash of Rs.32,20,500/- by way of cash sales, which is not justifiable. Ld. CIT (A) further held that assessee has not produced various books of account and confirmed the action of the AO.
Against this order, assessee has filed appeal before me. I have heard both the parties and perused the records.
Ld. Counsel of the assessee submitted that assessee has given due evidence for the availability of cash with the assessee. Assessee’s books of account are audited for the current year as well as preceding year. Cash was books have not been rejected, hence sales were also accepted. He pleaded that when sales are accepted, the cash component of the sales cannot be said to be without any proof.
Per contra, ld. DR for the Revenue relied upon the orders of the authorities below.
Upon careful consideration, I find that assessee has submitted audited accounts. No discrepancy has been found therein. The entire transactions have been audited. Cash sales have been accepted by the Revenue. The Revenue has not rejected the books of account. In this background, not accepting the availability of sum deposited in the bank account is without proper basis. Hence, I set aside the orders of the authorities below and decide the issue in favour of the assessee.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on this 12th day of February, 2024.