Prakash Chand Agrawal Vs ITO (ITAT Raipur)
The assessee appealed against the order of the CIT(A)/NFAC confirming additions of ₹22,73,882 and ₹2,32,186 made under Section 68 of the Income Tax Act for Assessment Year 2017-18. The Tribunal first condoned a delay of 261 days after accepting the assessee’s explanation regarding change of counsel and ill health. On merits, the additions related to cash deposits made in two current bank accounts during the demonetisation period. The Assessing Officer treated increased cash sales as artificially inflated and also added ₹2,32,186 based on revised VAT returns. The assessee contended that the increased sales were attributable to the festive season, corresponding increases in purchases and stock, audited books of account, and revised VAT returns correcting clerical omissions. The Tribunal found that the Revenue had accepted the nature of the assessee’s business, books of account, purchases and opening stock, had not established any undisclosed source of income, and had not conducted any independent enquiry to disprove the sales. It held that the additions were unsupported by corroborative evidence and that the amount of ₹2,32,186 formed part of the revised VAT return. The Tribunal further observed that the additions had been made under Section 68, although the Department’s entire enquiry related to the nature and source of cash deposits and not unexplained cash credits, indicating invocation of an incorrect charging provision. Accordingly, it held both additions to be unjustified, arbitrary and bad in law, directed deletion of the additions and allowed the appeal.
