ITO Vs R.P. Milkmade Products Pvt. Ltd. (ITAT Delhi)
Scrap Sales Not Fully Believable, But 100% Addition Unjustified: ITAT Delhi Restricts Demonetisation Cash Addition to ₹8 Lakh; Section 115BBE cannot apply to periods before 01.04.2017,
The ITAT held that cash deposits during demonetization could be explained partly through scrap sales, but missing asset registers, transport documents, and weighment slips justified only a limited Section 68 addition. The Tribunal ruled that neither full acceptance nor complete rejection was warranted, as both the assessee and the Revenue must meet their burden of proof. It also reiterated that the higher tax rate under Section 115BBE cannot apply to periods before 01.04.2017, directing that earlier additions be taxed under normal provisions.
In this Revenue appeal, the AO had made an addition of ₹1,66,13,000 u/s 68 r.w.s.115BBE treating the entire demonetisation-period cash deposits as unexplained, rejecting the Assessee’s explanation that the cash arose from sale of old plant & machinery as scrap after closure of the ice-cream manufacturing business. The CIT(A)/NFAC accepted the Assessee’s contention & deleted the addition.
Before the Tribunal, the Department argued that the Assessee’s claim of unusually high scrap sales lacked credibility, especially when the Assessee failed to produce fixed asset register to show deletion of assets, transportation proof, weighbridge slips, or cash books of buyers in response to notices u/s 133(6). The Assessee contended that all documents were filed & the scrap sale explanation was genuine.
