DCIT CENTRAL CIRCLE-18, NEW DELHI vs. PARI AGENCIES PVT. LTD., NEW DELHI

This appeal by the Revenue is preferred against the order of the CIT[A]- 27, New Delhi dated 28.02.2023 pertaining to Assessment Year 2017-18.

The sum and substance of the grievance of the Revenue is that the ld. CIT(A) erred in deleting the addition of Rs. 1,59,26,716/- on account of cash sales during the demonetization period.

Having heard the rival submissions, we have carefully perused the orders of the authorities below.

Briefly stated, the facts of the case are that the assessee filed its return of income electronically on 29.09.2017 declaring total income of Rs. 9,59,664/. Return was selected for scrutiny assessment and accordingly, statutory notices were issued and served upon the assessee.

After perusing the month-wise details of cash sales, vis a vis cash deposits, the Assessing Officer came to the conclusion that cash deposited by the assessee during the demonetization period is nothing but unaccounted cash kept in the hands of the company which is now being deposited in the bank during the demonetization period.

The Assessing Officer further observed that the assessee tried its best to make it believe that these are cash sales made earlier but could not substantiate during the assessment proceedings. According to mathematical calculation done by the Assessing Officer on presumptions and surmises, he came to the conclusion that the assessee should have deposited the total amount of Rs. 35,62,284/- during the demonetization period instead of Rs. 1,94,89,000/-.

Believing his surmise, the Assessing Officer concluded by holding that cash sales of Rs. 3,77,006 is the actual cash sales instead of Rs. 1,22,21,293/- as shown by the assessee and went on to treat the excess amount of Rs. 1,59,26,716/- as unexplained and made addition of the same u/s 68 of the Act.

We are of the considered view that the mathematical calculation of the Assessing Officer is simple mathematics and has nothing to do with the actual figures recorded in the books of account during the year under consideration and also in the preceding year.

It is important to understand the cash sales pattern from 01.04.2016 to 31.10.2016 with the sales accepted by the Assessing Officer and the same is as under:

From the above chart, it can be seen that the cash sales is always more than Rs. 20 lakhs per day which went as high as Rs. 45.55 lakhs.

Nowhere in the assessment order the Assessing Officer has mentioned that after inflating the alleged cash sales the assessee has frequently revised its VAT returns. It is not the case of the Assessing Officer that the assessee has shown alleged cash sales without having sufficient stock in hand during that period. Not a single instance of defect is pointed out in the audited books of account. The entire assessment is based on assumptions/presumptions, surmises and conjectures de hors of the facts on record.

Considering the facts from all possible angles, we could not find any reason to interfere with the findings of the ld. CIT(A).

In the result, the appeal of the Revenue in is dismissed.