M.L.A Associates Vs ITO (ITAT Bangalore)
Liquor Trader’s Cash Deposits & Purchases Cannot Be Taxed Twice: ITAT Condones Delay and Deletes ₹3.19 Crore Additions
The Bangalore Bench of the ITAT allowed the assessee’s appeal for AY 2019-20 by condoning the delay of 264 days in filing the appeal before the CIT(A) and deleting additions of ₹1.51 crore under section 69A and ₹1.67 crore under section 69C, both taxed under section 115BBE.
The assessee, a partnership firm engaged in retail liquor business, had failed to file its return due to serious health issues of both partners. The assessment was completed ex-parte, treating cash deposits in bank as unexplained money and liquor purchases as unexplained expenditure. The CIT(A) dismissed the appeal in limine, refusing to condone the delay.
The Tribunal held that the delay was backed by reasonable and bona fide cause, supported by medical records, and deserved condonation. On merits, the ITAT found that:
- Cash deposits represented business receipts from liquor sales, a cash-intensive and price-regulated trade.
- Purchases were made from Karnataka State Beverages Corporation Ltd. (KSBCL), a Government undertaking, fully supported by confirmations and TCS reconciliation.
- The Assessing Officer’s approach resulted in impermissible double taxation, taxing the same business stream both as unexplained cash (s.69A) and unexplained expenditure (s.69C).
- Once sales and purchases are accepted as genuine, entire receipts cannot be taxed; at best, only profit element could be considered, which was already in line with past accepted GP/NP ratios.
Relying on settled judicial precedents, the ITAT held that the additions were unsustainable, condoned the delay, and deleted both additions in full, allowing the appeal on merits.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
The present appeal has been instituted against the order of the ld. CIT(A) passed u/s 250 of the Act dt. 31.01.2024
