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Facts
The assessee, engaged in jewellery trading, declared cash sales of Rs. 73.50 Lacs in October 2016 and Rs. 11.06 Lacs in early November 2016. These amounts were deposited into bank accounts. The Assessing Officer (AO) alleged artificial inflation of cash-in-hand and added Rs. 49.87 Lacs to the assessee's income based on statistical trends, considering the sales abnormal compared to previous periods.
Held
The Tribunal noted that the assessee maintained proper books of accounts, which were duly audited. The deposits were made from available cash balance, and VAT returns reflected the sales. No defects were pointed out in the books, and the addition was based on statistical inferences. To ensure justice and prevent revenue leakage, a lump sum addition was deemed appropriate.
Key Issues
Whether the addition of Rs. 49.87 Lacs on account of alleged excess cash sales, based on statistical inferences, is justified when the assessee has maintained proper books of accounts and duly audited records.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, “DB” BENCH, AGRA
Before: HON’BLE SHRI SATBEER SINGH GODARA, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year: 2017-18) बनाम/ Shri Pradeep Kumar Kohli ACIT-Circle-2(1)(1), 14/69 Hospital Road, Agra Agra Vs. �थायीलेखासं./जीआइआरसं./PAN/GIR No.ADPK-9860-R (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri Anurag Sinha, Adv.– Ld. AR ��थ�कीओरसे/Respondent by : Shri Shailendra Shrivastava – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 10-02-2025 घोषणाकीतारीख /Date of Pronouncement : 28-03-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 05-12-2022 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 29-12-2019. The sole grievance of the assessee is confirmation of addition of cash deposit for Rs.49.87 Lacs. Having heard vehement arguments of both the sides, the appeal is disposed-off as under.
The assessee is stated to be engaged in trading of jewellery. The assessee made cash sales of Rs.73.50 Lacs during October, 2016 and cash sales of Rs.11.06 Lacs during 01-11-2016 to 08-11-2016. The same was utilized to make deposits in its bank accounts. The Ld. AO alleged that the assessee artificially inflated the cash-in-hand. The sales during this period were abnormal in comparison to earlier years. The sales in October, 2016 could be twice that of cash sale of September, 2016. Accordingly, alleged excess cash sales of Rs.49.87 Lacs were added to the income of the assessee.
During appellate proceedings, the assessee stated that it maintained proper books of accounts and the books were duly audited. The deposits were made out of cash balance as available in the cash book. The assessee filed VAT returns reflecting sales made by it during October, 2016. However, Ld. AO, going by statistical trends, upheld the impugned addition against which the assessee is in further appeal before us.
It is quite clear from the facts that the assessee has maintained proper books of accounts and the books were duly audited. The deposits were made out of cash balance as available in the cash book. The assessee filed VAT returns reflecting sales made by it during October, 2016. The books have not been rejected and no single defect has been pointed out in the same. The impugned addition is based on mere statistical inferences. Considering the facts of the case and to plug any possible leakage of revenue, we would hold that lump sum addition of Rs.5 Lacs would meet the end of justice. The same would be assessable as normal business income only. We order so. The Ld. AO is directed to re-compute the income of the assessee.
The appeal stand partly allowed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.