Ajit Batra Vs ITO (ITAT Delhi)
Demonetisation Cash Sales of Pharmacy Are Legal Tender, Not “Unexplained”: S.68 Addition Deleted—ITAT Delhi
Assessee, running a medical store under the name Batra Medical Store, faced addition of ₹19.68 lakh u/s 68 on account of cash deposits during demonetisation period, despite having declared income u/s 44AD. AO & CIT(A) treated cash deposits as unexplained, alleging violation of demonetisation notifications & non-maintenance of doctors’ prescriptions/identity proofs.
ITAT Delhi condoned delay & allowed Assessee’s appeal on merits. Tribunal held that Department of Economic Affairs notifications dated 08.11.2016 r.w. 09.11.2016 expressly permitted all pharmacies to accept demonetised notes on production of doctor’s prescription & proof of identity. There is no statutory mandate to preserve copies of prescriptions or ID for record. Cash received by Assessee was out of cash sales duly recorded, offered to tax & also accepted by VAT authorities; therefore, treating the same receipts again as unexplained u/s 68 would result in double taxation.
Tribunal further noted that Assessee had declared income u/s 44AD, books were not rejected, no defect was found in sales or stock register & AO himself accepted that source of deposit was cash sales. Once sales are accepted, section 68 cannot be invoked to tax the very same sales proceeds. Reliance was placed on ITO vs Manasa Medical (ITAT Bangalore) & other consistent demonetisation rulings.
Accordingly, ITAT directed deletion of entire addition of ₹19.68 lakh. Assessee’s appeal allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
