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2023 (9) TMI 1528 - AT - Income TaxAddition u/s 68 - cash deposits during demonetization period - analyzing the cash deposits during the demonetization period vis- -vis during the same period in the immediately preceding year, the AO came to his own conclusion that there was an increase of 643% - CIT(A) deleted addition - HELD THAT - AO did not point out any defects in the books of account nor discrepancies were found in the stock, sales and purchases. The VAT returns have been accepted by the authorities and there is not even a whisper in respect of revised VAT return to show that the assessee manipulated its books of account to show inflated cash sales during the demonetization period to justify the cash deposit. In fact there is not even a single finding by the AO that the purchases were inflated to show inflated sales to cover up the cash deposit in the bank during the demonetization period. As observed that the AO did not point out any defects in the books of account, no discrepancies were found in the stocks, sales and purchases. AO s conclusion is that there are huge deposits in the bank account during demonetization period and the assessee could not explain such deposits. Assessee has ampty demonstrated with evidences that the cash sales and the cash deposits during FYs 2015-16 and 2016-17 were almost same and there is only a minimal increase in cash deposits during the FY 2016-17 relevant to the AY 2017-18. CIT(A) has passed a well reasoned order considering all the submissions of the assessee and the averments of the AO. As decided in Hirapanna Jewellers 2021 (5) TMI 447 - ITAT VISAKHAPATNAM since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. No merit in the impugned addition and the same has been rightly deleted by the CIT(A) by proper appreciation of facts, therefore, we decline to interfere with the finding of the CIT(A). Appeal filed by Revenue is dismissed.
Issues Involved:
1. Whether the CIT(A) erred in deleting the addition of Rs. 3,41,86,500/- made by the AO on account of cash deposits during the demonetization period. Issue-wise Detailed Analysis: 1. Deletion of Addition by CIT(A): The Revenue's solitary grievance is that the CIT(A) erred in deleting the addition of Rs. 3,41,86,500/- made by the AO on account of cash deposits during the demonetization period. The assessee filed its return of income electronically, declaring a loss. During scrutiny assessment, the AO noticed significant cash deposits during the demonetization period, which were 643% higher than the same period in the preceding year. The AO concluded that the excess cash deposits were the income of the assessee under Section 68 of the Income Tax Act, 1961, and added the amount to the returned income. The assessee challenged this assessment before the CIT(A), contending that it had provided complete details of sales, receipts, and justifications for the cash generated and deposited. The assessee also submitted VAT returns and comparative details of purchases, sales, and stock positions. The CIT(A) found that the AO did not discharge the onus of proving the assessee's explanation unsatisfactory and had based his conclusions on conjectures and surmises. The CIT(A) noted that the AO did not find any defects in the books of accounts or discrepancies in stock, sales, and purchases. Consequently, the CIT(A) deleted the addition. 2. Tribunal's Consideration: The Tribunal carefully considered the orders of the authorities below. It was noted that cash sales were a regular feature of the assessee's business. The Tribunal observed that the cash sales increased from Rs. 3.02 crores in FY 2015-16 to Rs. 5.97 crores in FY 2016-17, with the total turnover increasing from Rs. 47.54 crores to Rs. 55.86 crores. The AO did not point out any defects in the books of accounts, nor were there discrepancies in stock, sales, and purchases. The VAT returns were accepted by the authorities, and there was no indication of manipulation to justify the cash deposits during the demonetization period. 3. Judicial Precedents: The Tribunal referred to several judicial precedents to support its decision. In the case of ACIT vs. Hirapanna Jewellers, it was held that purchases, sales, and stock are interlinked and inseparable. The Tribunal emphasized that once there are no defects in the purchases and sales, there is no reason to disbelieve the sales. Similarly, in the case of Smt. Charu Aggarwal vs. CIT, it was held that proper books of accounts maintained in the regular course of business, duly audited, and accepted by the VAT/Sales Tax Department, should not be doubted without specific defects pointed out by the AO. The Tribunal also noted the decision in Anantpur Kalpana vs. ITO, where it was held that when cash receipts are admitted as sale proceeds and income from sales is declared, adding the same as unexplained cash credit would amount to double taxation. The Tribunal further observed that the Delhi High Court in PCIT vs. Agson Global Pvt. Ltd. affirmed the Tribunal's decision that there was no unaccounted income from cash deposits during the demonetization period. Conclusion: Considering the facts of the case and judicial precedents, the Tribunal found no merit in the impugned addition made by the AO. The CIT(A) had rightly deleted the addition by properly appreciating the facts. Consequently, the Tribunal dismissed the Revenue's appeal. Result: The appeal of the Revenue is dismissed.
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