ACIT Vs Kavinder (ITAT Delhi)
Cash Deposits from Liquor Sales Largely Accepted; Only ₹10 Lakh Sustained on Ad-hoc Basis: ITAT Delhi Restricts Section 69A Addition
The Delhi Bench of the ITAT partly allowed the Revenue’s appeal for AY 2017-18 in the case of an assessee engaged in retail liquor business, by substantially reducing the addition made on account of cash deposits during the demonetisation period.
The Assessing Officer, in a best-judgment assessment, had treated entire cash deposits of ₹4.72 crore in three bank accounts as unexplained under section 69A. The CIT(A)/NFAC deleted the entire addition after recording detailed findings that the assessee was a licensed liquor trader, had maintained audited books of account, and that the cash deposits represented regular cash sales, consistent with earlier years. Comparative data of cash sales and cash deposits for preceding years and the corresponding Nov–Dec period was analysed, showing no abnormal spike during demonetisation.
Before the Tribunal, while the Revenue challenged the complete deletion, the ITAT noted that although the assessee’s explanation was broadly acceptable and supported by audit reports and past trends, full reconciliation and verification could not be carried out before the AO due to best-judgment assessment. Balancing the facts, the Tribunal held that ends of justice would be met by sustaining a lump-sum addition of ₹10 lakh only, expressly clarifying that the relief granted shall not be treated as a precedent.
The ITAT further held that the enhanced tax rate under section 115BBE was not applicable, as the provision applies only to transactions on or after 01.04.2017, and directed assessment under normal provisions.
Accordingly, the Revenue’s appeal was partly allowed, with the addition restricted to ₹10 lakh and remaining relief granted to the assessee
FULL TEXT OF THE ORDER OF ITAT DELHI
