JCIT (OSD) Vs Avon Meters Private Limited (ITAT Delhi)
ITAT Delhi held that addition towards cash deposit during demonetization period is not sustainable since the same is redeposit of cash which was withdrawn for making salary payment or incurring any expenditure. Accordingly, the addition is deleted.
Facts- The assessee provides Energy Metering Solutions to the State Electricity Boards with its products range of ISI Marked High Precision Electromechanical & Electronic Energy Meters. It is also an approved supplier of single phase and three phase static meters to Assam State Electricity Board for market sale. During assessment proceedings, the AO observed that assessee had deposited cash of Rs.53 lakhs during demonetization period i.e. from 09.11.2016 to 31.12.2016. It was also observed that AO had unsecured loan of Rs. 5,79,50,000/- . Post investigation, AO proceeded to make addition of Rs. 4,71,00,000/- u/s. 68 and also disallowed interest of Rs. 8,71,051/- u/s. 69C of the Act. AO also disallowed expense claimed u/s. 37(1) to the extent of Rs. 7,62,75,655/-.
CIT(A) partly allowed the appeal. Being aggrieved, both revenue and assessee had preferred an appeal.
Conclusion- Held that assessee has withdrawn cash every month during the year and the same cash was utilized to pay the salary and wages and other administration expenses. However, during the month of October and November, assessee has withdrawn the cash, however not utilized the above said cash during the demonetization period. In this regard, it was submitted before us that assessee has withdrawn cash of Rs.55 lakhs during October, however unutilized cash was redeposited during demonetization period. It was submitted before the ld. CIT (A) that assessee has incurred the expenditure through cheque payments. Ld. CIT (A) observed that assessee has reverted back to the old system of cash withdrawal and incurred expenditure out of cash. Since the assessee could not explain through evidences to prove that unspent cash withdrawal as source for impugned addition is not probable. He accordingly dismissed the claim of the assessee. From the record, we observe that assessee has deposited SBN Notes during demonetization period in one-go. We observe that assessee has withdrawn cash in the month of October, 2016 and the same cash was not disbursed or utilized for making salary payment or incurring any expenditure. Considering the fact that the above cash withdrawn by the assessee are in SBN, therefore, assessee has redeposited the cash during demonetization period and it is not the case of the Revenue that assessee has not incurred any expenditure during demonetization period. There is no discussion on the part of the tax authorities about the payment of salary and other expenses in cheque mode or cheque payments. There is a direct link to the cash withdrawal by the assessee during October and redeposit of SBN in one-go in the month of November is very much traceable. Therefore, we are inclined to accept the submissions of the assessee and the submissions of the assessee are corroborated with the audited financial statements, bank statement and cash book. Therefore, we are inclined to allow the ground raised by the assessee.
