Basant Kumar Aggarwal Vs ITO (ITAT Delhi)
The ITAT Delhi deleted an addition of ₹9.41 crore made under Section 68 read with Section 115BBE on cash deposits during the demonetisation period, holding that the Assessing Officer and CIT(A) had proceeded merely on suspicion and assumptions without any concrete evidence. The assessee, a bullion trader, had deposited ₹26.89 crore in cash and explained the deposits as proceeds from cash sales recorded in the books during October and early November 2016. The Tribunal noted that the Revenue had not disputed the availability of stock, genuineness of purchases and sales, VAT returns, cash book entries, or the existence of sufficient cash balance. It held that books of account cannot be rejected under Section 145(3) and additions cannot be sustained merely because the tax authorities considered the pattern of cash sales or retention of cash as commercially improbable. In the absence of direct evidence showing manipulation or fictitious sales, the ad hoc addition of 35% of deposits was unsustainable and was accordingly deleted.
Core Issue: Whether an ad hoc addition under section 68 could be sustained in respect of demonetisation cash deposits when the assessee’s cash sales, stock records, purchases, cash book and availability of cash balance were accepted and the addition was made merely on suspicion regarding the timing of cash deposits.
