PAWAN INTERNATIONAL,LUDHIANA vs. INCOME TAX OFFICER, LUDHIANA

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ITA 417/CHANDI/2024Status: DisposedITAT Chandigarh03 December 2024AY 2017-18Bench: SHRI SANJAY GARG (Judicial Member)3 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the assessee was a trader who decided to stop its business and sold its opening stock at discounted rates, leading to higher sales. The Tribunal held that the lower authorities were not justified in treating deposits from the sale of opening stock as income from undisclosed sources.

What were the facts?

The assessee deposited Rs. 32 lacs in cash into their bank account. The Assessing Officer treated these deposits as income from undisclosed sources, citing higher cash sales compared to the previous year. The CIT(A) confirmed this addition.

What were the issues?

Whether cash deposits in the bank account, explained as sale proceeds of opening stock, can be treated as income from undisclosed sources.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

�नधा�रती क� ओर से/Assessee by : Shri Ashwani Kumar, CA राज�व क� ओर से/ Revenue by :Dr. Ranjeet Kaur, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 07.11.2024 उदघोषणा क� तार�ख/Date of Pronouncement : 03.12.2024 आदेश/Order The present appeal has been preferred by the assessee against the order dated 19.02.2024 passed by the Ld. Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] for the Assessment Year 2017- 18.

417 -Chd-2034 Pawan International, Ludhiana 2 2. The Assessee is aggrieved by the action of the ld. CIT(A) in confirming the addition of Rs. 32 lacs made by the Assessing Officer by treating the cash deposits in the bank account of the Assessee as income of the Assessee from undisclosed sources.

3.

During the assessment proceedings, the Assessee explained that the aforesaid amount of Rs. 32 lacs were out of sale proceeds of the Assessee. However, the Assessing Officer did not agree with the aforesaid contention of the Assessee. He observed that the cash sales of the Assessee for the year under consideration were higher than that of earlier assessment year. He, therefore, treated the aforesaid cash deposits as unexplained income of the Assessee. The ld. CIT(A) confirmed the addition so made by the Assessing Officer.

4.

I have heard the rival contentions and gone through the record. The ld. Counsel for the Assessee has explained that the Assessee during the year, was a trader of artificial goods and flowers. That during the year, the Assessee decided to stop its business. The Assessee, therefore, sold its opening stock at discounted rates resulting into higher sales during the year under consideration as compared to the earlier years. The ld. Counsel for the Assessee has further submitted that there is no rebuttal to the fact on the file that the Assessee was having opening stock out of which the said sales

417 -Chd-2034 Pawan International, Ludhiana 3 were made. That the Sales tax / VAT Return were also filed by the Assessee.

5.

The ld. DR could not rebut that the Assessee was having opening stock out of which the sales were stated to have been made.

6.

Considering the aforesaid submissions and facts on file, I do not find any justification on the part of the lower authorities in treating the deposits made by the Assessee out of the sales of the opening stock as income from undisclosed sales. The impugned addition made by the Assessing Officer is, therefore, not sustainable. The same is ordered to be deleted.

7.

The appeal of the Assessee is allowed.

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