ACIT Vs Shiv Shakti Traders (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) allowed the Revenue’s appeal and restored an addition of ₹7.50 crore under Section 69A of the Income Tax Act, 1961 after holding that the assessee failed to satisfactorily explain the source and movement of the seized cash.
The case arose after local police authorities intercepted a Toyota Innova car on 6 May 2017 at Daliganj crossing, Lucknow, and recovered ₹7.50 crore in new currency notes kept in four boxes. The cash was found in possession of a cash courier boy associated with the assessee, an Association of Persons engaged in the retail liquor business. Statements recorded under Section 132(4) indicated that the cash had been handed over by another courier boy connected with the assessee.
The assessee claimed that the cash represented sale proceeds from its liquor business and was being transported from Lucknow to Haldwani for deposit into a bank account. Later, the assessee also contended that the money related to cash earlier received from the Haldwani branch during the demonetization period and was being returned. The Assessing Officer rejected these explanations after examining sales records, bank statements, and other material.
The Assessing Officer observed that there was no functional office at the address from where the cash was allegedly collected and no books of account were found there. Comparative analysis of cash sales for different periods showed irregular trends. According to the Assessing Officer, average cash sales for the period from 6 May 2017 to 30 June 2017 were substantially lower than earlier periods and lower than the corresponding period in the previous year, suggesting that sales entries had been backdated to inflate cash availability as on 5 May 2017.
