Shalimar Corp Ltd Vs DCIT (ITAT Delhi)
Cash Deposit Addition Partly Deleted Because Prior On-Money Receipts Explained Source; No Separate Section 68 Addition Because Advances and Loans Formed Part of Business Turnover; Section 115BBE Inapplicable Because Transactions Occurred Before 1 April 2017; ₹40 Crore Addition Deleted Because Identity, Genuineness and Creditworthiness Were Established.
The case involved cross appeals filed by the assessee and the Revenue against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2017-18. The assessee, engaged in the real estate development business, had earlier been subjected to a search and seizure operation on 18.06.2015, during which documents and evidence relating to receipt of on-money payments were found. Based on the search findings, assessments for earlier years were completed. In a consolidated order concerning those years, the Tribunal had directed that gross on-money receipts quantified by the Special Auditor at ₹197.82 crore be considered and that income be computed at 20% of such receipts or the profit already disclosed in the books, whichever was higher. Additions relating to share capital and loans were also directed to be treated as regular business turnover assessable at 20%.
For AY 2017-18, the assessee filed its return declaring income of ₹27.49 crore. During assessment proceedings, the Assessing Officer noted that cash deposits of ₹65.79 crore had been made into the assessee’s bank account during FY 2016-17. The assessee explained that the deposits were sourced from opening cash balances and cash receipts already recorded in its books. The Assessing Officer accepted the opening cash balance of ₹12.41 crore but rejected the explanation that the remaining deposits represented on-money received in earlier years. Consequently, ₹49.30 crore, comprising ₹41.38 crore reflected as cash receipts in April 2016 and ₹8 crore deposited in December 2016, was treated as unexplained cash deposits and added under Section 68.
