Tack Exim Pvt. Limited Vs ACIT (ITAT Lucknow)
The Income Tax Appellate Tribunal (ITAT), Lucknow, allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, for Assessment Year 2017-18. The assessee, engaged in the business of manufacturing and export of leather and leather products, had deposited ₹1,25,82,000 in Specified Bank Notes (SBNs) during the demonetisation period. The Assessing Officer observed a substantial increase in cash realisation from debtors during the period from 9 November 2016 to 30 December 2016 and concluded that the assessee had created bogus debtor entries to legalise unaccounted money. Accordingly, the Assessing Officer treated the cash deposits as unexplained cash credits under Section 68, invoked Section 115BBE and completed the assessment. On appeal, the Commissioner (Appeals) granted partial relief by deleting ₹7 lakh but sustained the balance addition of ₹1,18,82,000.
Before the Tribunal, the assessee submitted that the cash deposits represented genuine sale proceeds and recoveries from debtors, all of which had been duly recorded in the regular books of account. It was argued that the books had not been rejected, purchases and sales had been accepted in full, and no discrepancy had been found in the audited books, stock records or ledger accounts. The assessee further contended that acceptance of SBNs and making payments in SBNs up to 31 December 2016 did not violate the Specified Bank Notes (Cessation of Liabilities) Act, 2017, and that taxing the same receipts under Section 68 after already including them in business income would amount to double taxation. The Revenue, on the other hand, argued that the assessee had failed to substantiate the alleged realisation from debtors with confirmations and other supporting evidence and that the pattern of cash receipts during demonetisation justified the addition.
