ACIT Vs Pearl International Services Pvt Ltd (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal for Assessment Year (AY) 2017-18 and upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting an addition of ₹1,38,25,455 made under Section 68 of the Income-tax Act, 1961. The dispute concerned cash deposits made during the demonetization period, which the Assessing Officer (AO) had treated as unexplained cash credits.
The assessee was engaged in the business of selling air travel tickets for various airlines as a registered IATA travel agent and also provided hotel and foreign tour services. It had filed its return of income declaring total income of ₹1,48,57,830, which was subsequently revised without any change in the declared income. The case was selected for complete scrutiny, one of the reasons being substantial cash deposits during the demonetization period.
During assessment proceedings, the AO observed that the assessee had deposited cash amounting to ₹2,24,01,455 during the demonetization period. The assessee explained that ₹85,76,000 represented cash in hand in specified bank notes as on the opening hours of 9 November 2016, immediately following the announcement of demonetization. The balance amount, according to the assessee, comprised cash deposited by its portal agents and cash sales received in newly introduced currency notes. The AO accepted the opening cash balance but rejected the explanation for the remaining amount and made an addition of ₹1,38,25,455 under Section 68 as unexplained cash credit.
