ITO Vs Retro Footwear Private Limited (ITAT Delhi)
The appeal was filed by the Revenue against the order dated 09.04.2025 passed by the Commissioner of Income Tax (Appeals), New Delhi, for Assessment Year 2017–18, arising from the assessment order dated 29.12.2019 under Section 143(3) of the Income Tax Act, 1961. The dispute pertained to deletion of an addition of ₹1,23,97,000 made by the Assessing Officer under Section 68 on account of cash deposits during the demonetisation period.
The Revenue contended that the CIT(A) erred in deleting the addition without considering alleged discrepancies such as incorrect bank details, inconsistency between sales and cash deposits, revision of VAT returns, absence of prior or subsequent trends of cash deposits, failure to furnish PAN details of major parties, and lack of justification for increased cash deposits during demonetisation. It also argued that the CIT(A) wrongly relied on a High Court decision without considering applicable Supreme Court principles.
The assessee, engaged in the business of trading and manufacturing footwear, had filed its return declaring income of ₹14,78,840. During scrutiny, it was found that the assessee deposited ₹1,23,97,000 in cash between 09.11.2016 and 30.12.2016. In response to queries, the assessee stated that the deposits were out of cash in hand generated from sales. However, the Assessing Officer observed a significant and unexplained increase in cash in hand prior to demonetisation and held that the assessee failed to justify the source. Accordingly, the entire amount was added under Section 68 read with Section 115BBE.
