Kamna Industries Pvt. Ltd. Vs ACIT (ITAT Delhi)
Cash Sales Already Taxed—ITAT Deletes Double Addition of ₹1.61 Crore- Books Not Rejected, Stock Available, VAT Accepted—Section 68 Cannot Be Invoked
Assessee, engaged in manufacture of tobacco (khaini) & windmill power generation, filed ROI declaring loss of ₹35,02,551. AO treated two categories of receipts as unexplained cash credits u/s 68 r.w.s 115BBE:
(i) Cash deposits of ₹39,30,000, allegedly not proved;
(ii) ₹1,22,00,000 received from M/s Radhavallabh Exports & M/s Mangalamuy Distributors Pvt Ltd, treated as accommodation entries.
Assessee argued before AO & CIT(A) that these were regular cash sales, already included in turnover & taxed as business income. Tribunal noted extensive documentary evidence filed by assessee, including:
- Day-wise & month-wise cash sales, stock registers, cash book for FYs 2015-16 & 2016-17;
- Revised VAT returns with reasons, & Excise returns confirming accepted turnover;
- Sale invoices, PAN, TIN, C-Forms, bank statements for export sales parties.
Tribunal listed undisputed facts:
(a) Cash sales form part of total turnover of ₹101.81 crore;
(b) Purchases & sales not doubted;
(c) Assessee had sufficient stock to generate cash;
(d) VAT authorities accepted the turnover;
(e) Complete cashbook matched deposits;
(f) No negative cash balance at any time.
Tribunal observed that AO accepted sales in P&L but again taxed the same amounts u/s 68—resulting in double addition, which is impermissible when books are not rejected & sales are already taxed as revenue.
