2013 (5) TMI 986 - AT - Income Tax

Summary

Issues Involved: Addition of cash sales under section 68 of the Income Tax Act and charging of interest under section 234B of the I.T. Act.

Addition of Cash Sales under Section 68:
The appeal was filed against the order of the CIT(A) for the assessment year 2009-10, specifically challenging the addition of Rs. 4,75,43,168 under the head cash sales deposited in the bank under section 68 of the Income Tax Act. The Assessing Officer rejected the books of accounts due to various reasons and made the addition under section 68. The CIT(A) confirmed this addition. However, the ITAT noted that the Assessing Officer had accepted the sales shown by the assessee in its books of accounts except for the net profit. The ITAT emphasized that once the income is estimated under section 144, no further addition can be made. Citing a relevant case law, the ITAT deleted the addition of Rs. 4,75,43,168, thereby allowing ground nos. 1 to 7 of the appeal.

Charging of Interest under Section 234B:
Ground no. 8 of the appeal related to the charging of interest under section 234B of the I.T. Act. The ITAT observed that this issue was covered by a decision of the Jurisdictional High Court, where it was held that interest could only be levied on the total income declared in the returns and not on the income assessed and determined by the Assessing Officer. Following this decision, the ITAT directed the Assessing Officer to re-compute the interest under section 234B based on the total income declared by the assessee in the return filed.

In conclusion, the ITAT allowed the appeal filed by the assessee, thereby overturning the addition of cash sales under section 68 and directing the re-computation of interest under section 234B.