Sudesh Jain Vs ITO (ITAT Chandigarh)
Demonetisation Cash Deposit Addition Deleted- Chandigarh ITAT Accepts Cash Sales & Stock Position
Chandigarh Tribunal examined the validity of an addition of Rs. 63,41,000/- made u/s 68 with tax charged u/s 115BBE.
Assessee, engaged in wholesale & retail trading of sugar, edible oil & foodgrains, had deposited Rs. 68,35,000/- during the demonetisation period. AO treated the deposits as unexplained cash, granting credit of only Rs. 4,60,000/- as cash sales, and added the balance. CIT(A) sustained the addition.
Tribunal noted that the authorities had adopted a narrow & incorrect approach by analysing only demonetisation-period cash movements, instead of the entire year’s business cycle. Assessee had ample stock, regular cash sales, and dealt in commodities (oil, sugar, grains) that were permitted to be sold for cash even during demonetisation, indicating that cash availability was fully supported by business activity. AO had ignored stock levels, ignored holistic cash-flow, and created an “artificial bifurcation” of pre-demonetisation & post-demonetisation business.
Since deposits were traceable to regular cash sales & were part of normal trading operations, there was no unexplained cash. Tribunal held that Assessee’s cash balance was legitimately generated from business receipts and therefore the addition u/s 68 was unsustainable. Accordingly, the Tribunal deleted the entire addition of Rs. 63,41,000/- & allowed the appeal.
