Deepsons (India) Pvt. Ltd Vs ACIT (ITAT Delhi)
ITAT Delhi: CBEC Data Mismatch Cannot Justify Addition Without Enquiry; Demonetisation Cash Explained from Cash Book – Section 115BBE Held Inapplicable for AY 2017-18
The Delhi Bench “F” of the ITAT allowed the appeal of Deepsons (India) Pvt. Ltd. for AY 2017-18 and deleted additions aggregating to ₹4.78 crore, holding that both the additions for alleged under-reported turnover and cash deposits during demonetisation were unsustainable in law.
On the issue of under-reported revenue of ₹4.21 crore, the Tribunal noted that the Assessing Officer had relied solely on CBEC / service-tax data showing higher taxable services as compared to turnover recorded in the books. The assessee had furnished a detailed reconciliation, explaining that customer advances were liable to service tax but revenue was recognised only upon execution of conveyance deeds, and that certain items reflected in service-tax returns (reverse-charge payments, non-taxable sale of plots, etc.) did not constitute turnover. The Tribunal held that once the assessee disputes third-party data and furnishes reconciliation, the AO is duty-bound to conduct independent enquiry to verify the correctness of such information. Blind reliance on CBEC data, without any verification and without rejecting books under section 145, was held to be impermissible. Accordingly, the addition for alleged under-reported turnover was deleted.
With respect to cash deposits of ₹56.65 lakh during demonetisation, the Tribunal found that the assessee had sufficient cash balance in its regularly maintained cash book as on 08.11.2016, and that total cash withdrawals in the year exceeded cash deposits. The books of account were not rejected, and the explanation that demonetised currency was deposited due to exceptional circumstances was found to be reasonable. Consequently, the addition under section 68 was deleted.
The Tribunal further held that section 115BBE could not be invoked for AY 2017-18, following judicial precedents which hold that the enhanced rigour of section 115BBE is applicable prospectively and not to transactions prior to the relevant amendment.
Accordingly, all substantive additions were deleted and the assessee’s appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
