Banarsi Das Gupta HUF Vs ITO (ITAT Delhi)
Demonetisation Cash Deposits Explained by Cash Sales Recorded in Books: ITAT Delhi Deletes Addition
The Delhi Bench of the ITAT allowed the assessee’s appeal and deleted the addition of ₹46.80 lakh made on account of cash deposits during the demonetisation period for AY 2017-18. The Assessing Officer had treated the deposits as unexplained, alleging that the cash sales preceding demonetisation were artificial, confined to a short period, supported by handwritten invoices with buyers shown as “cash,” and lacked proper identification of purchasers.
The Tribunal noted that the assessee had produced comprehensive documentary evidence, including audited financial statements, tax audit report, regularly maintained books of account (cash book, sales register, purchase register, stock register), VAT returns, stock ledgers, and bank statements. The Revenue had neither rejected the books of account nor doubted the purchases, stock position, or overall turnover, which included the impugned cash sales and had been accepted by VAT authorities. There was no negative cash balance at any point, and corresponding reduction in stock was duly reflected.
The ITAT held that once cash sales are recorded in the regular books and form part of the declared turnover accepted by the department, making a separate addition for cash deposits sourced from the same sales would result in impermissible double addition. The assessee had satisfactorily explained the source of cash deposits from recorded cash sales and available cash balance. Accordingly, the addition was deleted. The Tribunal also noted that the enhanced tax rate under section 115BBE was not applicable to the year under consideration. The appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal in ITA No. 2277/Del/2025 for AY 2017-18, arises out of the order of the ld National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A), in short] in Appeal No. ITBA/NFAC/S/250/2024-25/1065675546(1) dated 14.06.2004 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 21.03.2023 by the Assessing Officer, NFAC, Delhi (hereinafter referred to as ‘ld. AO’).
