YOGESH GUPTA ,DELHI vs. ACIT, CENTRAL CIRCLE 29, DELHI

This appeal filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals)-30, New Delhi, [“Ld. CIT(A)”, for short], dated 25/11/2021 for Assessment Year 2017-18. The following grounds of appeal taken by the assessee:

The Ld. Counsel for the assessee submitted that the assessee was engaged in the business of retail trading sector, where the cash sales were in exist which has been properly recorded in cash book and books of accounts are properly maintained. The assessee has submitted the Cash Book, Bank Accounts and its statement, Copies of Vat returns, copy of deeds, but the AO made addition arbitrary and in mechanical manner u/s 69A of the Act, without rejecting the books of accounts or finding fault in the books of account of the assessee. Based on the erroneous findings, the assessment has been made by the A.O., which has been confirmed by the Ld. CIT(A), therefore, sought for deletion of the additions.

Per contra, the Ld. DR relied on the orders of the lower authorities and sought for dismissal of the appeal filed by the assessee.

We have heard the parties and perused the materials available on record. During the assessment proceedings, the AO was of the Yogesh Gupta vs. ACIT opinion that there is an abnormal increase in the sales with decrease in profitability compare to previous year, therefore, total cash amounting to Rs.27,00,000/- deposited during the demonetization period has been treated as unexplained investment and made addition u/s 69A of the Act. It is specific case of the assessee that the year under consideration was the first year in operation of the assessee’s business, but the Ld. AO had committed error by comparing the fictitious sales of previous year without any basis. It is observed that the assessee was maintaining cash books and also regular books of accounts, at no point of time, the AO doubted the regular books of account of the assessee and without finding any fault in the books of account of the assessee, the Ld. AO proceeded to make addition u/s 69A of the Act. When the assessee maintained and produced the books of account and the cash books before the Ld. AO by offering the explanation and by submitting the copies of VAT returns to justify the sales and corresponding receipts of cash books deposited in bank, the Ld. AO without even disputing the books of account, committed an error in making addition u/s 69A of the Act, therefore, the addition made by the AO is not Yogesh Gupta vs. ACIT sustainable, hence, the addition made by the AO u/s 69A of the Act which was confirmed by the CIT(A) is hereby deleted.

In the result, the appeal filed by the assessee is allowed.