Raj Kumar Vs ITO (ITAT Amritsar)
The ITAT Amritsar allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, for Assessment Year 2017-18 arising from an assessment completed under Section 143(3). The assessee, proprietor of M/s Radhika Sales Corporation engaged in wholesale and retail trading of sugar, refined oil, ghee and allied grocery items, had deposited ₹4,09,50,000 in cash during the demonetisation period. The Assessing Officer treated ₹2,74,00,000 of the deposits as unexplained cash credits under Section 68, taxed the amount under Section 115BBE, and rejected the books of account under Section 145(3), alleging that the assessee had inflated sales to introduce unaccounted money. The CIT(A) dismissed the appeal ex parte and confirmed the assessment.
Before the Tribunal, the assessee submitted that its books of account were audited annually and supported by quantitative stock records. During assessment proceedings, it had furnished the cash book, purchase bills, VAT returns, stock records, purchase and sales registers, transport bills, debtor and creditor details, month-wise stock statements and other documents. It explained that the cash deposited in the bank represented business receipts from cash sales, cash withdrawals and collections from debtors. The assessee also highlighted that it had expanded its product line during the relevant year by adding sugar, cotton seed oil, vanaspati and soya products, and that higher sales in October and November 2016 were attributable to the Diwali season and increased business activity. It further contended that the Assessing Officer had accepted the purchases, opening stock, closing stock and quantitative records while disputing only the sales for October and November 2016. The assessee also argued that the addition under Section 68 would amount to double taxation because the sales had already been offered as business income.
