Indowestern Commodities And Energy Trade Private Limited Vs ITO (ITAT Delhi)
Section 68 Addition Quashed Because Cash Deposits Were Linked to Recorded Jewellery Sales; ITAT Rules Accepted Trading Results Bar Separate Section 68 Addition on Cash Sales; Demonetisation Cash Deposits Explained Through Business Records, Says ITAT Delhi; Share Application Money Addition Deleted Because Companies Act Violations Alone Do Not Attract Section 68.
The Income Tax Appellate Tribunal (ITAT), Delhi, allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2017-18, deleting additions of Rs.6,34,53,500 and Rs.60,00,000 made under Section 68 of the Income-tax Act, 1961.
The assessee, engaged in the business of jewellery, had filed its return declaring an income of Rs.29,98,480. During assessment proceedings following a survey under Section 133A, the Assessing Officer noted that the assessee had deposited Rs.6,34,53,500 in its bank account during the demonetisation period. The assessee explained that the deposits represented proceeds from cash sales of jewellery. The Assessing Officer, however, questioned the delay in depositing cash, doubted the genuineness of the cash sales, and treated the deposits as unexplained cash credits under Section 68. The Commissioner (Appeals) affirmed the addition.
Before the Tribunal, the assessee submitted extensive documentary evidence, including sale bills, vouchers, bank account extracts, VAT returns, and other records, to establish that the cash deposits directly related to genuine business sales. It argued that the books of account had not been rejected, the trading results had been accepted by the Revenue, and the impugned cash sales formed part of the audited books. The assessee contended that once the books and trading results were accepted, no separate addition under Section 68 could be made in respect of the same cash receipts.
