ITO Vs Mahendrakumar Bhagvandas (ITAT Rajkot)
The appeal before the Income Tax Appellate Tribunal, Rajkot concerned Assessment Year 2017–18 and arose from an order of the Commissioner of Income Tax (Appeals), NFAC, which had deleted an addition made under Section 68 of the Income-tax Act, 1961. The Assessing Officer had treated ₹1.11 crore, out of cash deposits made during the demonetisation period, as unexplained cash credits and taxed it under Section 68 read with Section 115BBE, alleging that the assessee introduced unaccounted money in the guise of cash sales. The Revenue argued that the sales were unsupported by buyer confirmations, were largely concentrated in one month, and were inconsistent with low indirect expenses.
The assessee filed a cross objection contending that the Revenue’s appeal was barred by low tax effect. Though the cross objection was delayed by 279 days, the Tribunal condoned the delay after finding sufficient cause and no serious objection from the Revenue.
On merits, the Tribunal noted that the assessee was engaged in the business of manufacturing and trading in gold and ornaments and had disclosed the cash sales in its books. The Commissioner (Appeals) had found that the books of account were not rejected, the sales were reflected in the trading and profit and loss account, and taxing the same amount both as sales and as unexplained cash credits would result in impermissible double taxation. Accordingly, the addition was deleted.
