Zia Rathi Vs ITO (ITAT Delhi)
Cash Sales Accepted, Demonetisation Deposits Explained: ITAT Deletes ₹2.23 Cr Addition and Rejects Section 68/115BBE
The Delhi ITAT allowed the assessee’s appeal and deleted the addition of ₹2.23 crore made under Section 68 on account of cash deposits during the demonetisation period. The assessee, a retail trader in imported PVC coated fabric, had explained that the deposits were made out of regular cash sales duly recorded in audited books of account, supported by sales registers, purchase registers, stock records, cash book and VAT returns. The Tribunal noted that the Assessing Officer had accepted the trading results, not rejected the books, and even in reassessment proceedings had accepted substantial cash deposits as arising from the same business activity.
It was further observed that the supplier had confirmed sales to the assessee, VAT authorities had accepted the turnover, and there was sufficient cash balance available as on 08.11.2016. Mere suspicion that business had slowed down or that deposits were staggered could not justify treating recorded sales proceeds as unexplained income. Relying on several judicial precedents, the Tribunal held that once sales and stock movement are accepted and profits taxed, the same cash receipts cannot again be taxed under Section 68, as it would result in double taxation. Consequently, the addition and consequential taxation under Section 115BBE were deleted, and the appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
