ITAT Upholds Section 69A Addition as Identical Cash Sale Vouchers Failed Genuineness Test

Garima Leather Exports Vs ITO (ITAT Delhi)

In this case, the Income Tax Appellate Tribunal (ITAT), Delhi, considered whether cash deposits of ₹1,34,76,000 made by the assessee during the demonetisation period could be treated as unexplained money under Section 69A of the Income Tax Act, 1961. The assessee, engaged in the business of manufacturing and trading footwear, had filed a return declaring a loss for Assessment Year 2017-18. During assessment proceedings, the Assessing Officer (AO) examined cash deposits made between 9 November 2016 and 31 December 2016 and sought an explanation for their source.

The assessee contended that the deposits originated from cash sales and stated that corresponding purchases were made from M/s Sharma Chemicals and Adhesive, a sister concern. However, the AO observed that from 4 October 2016 to 27 October 2016, the assessee had recorded 539 local tax-free sales vouchers, each for an identical amount of ₹18,480. The AO considered this pattern unusual. Further, notices issued under Section 133(6) to the alleged supplier received no response. Based on these circumstances, the AO concluded that the purchases were not genuine and, consequently, the sales and cash deposits were also not genuine. The amount of ₹1,34,76,000 was therefore added as unexplained cash deposits under Section 69A. The CIT(A) upheld the addition.