Bridge Medisales Private Limited Vs ITO (ITAT Mumbai)
Estimated Addition for Unreconciled Cash Deposits Cannot Attract Section 115BBE Without Proof of an Undisclosed Source: Mumbai ITAT
The assessee, a wholesale distributor of pharmaceutical products, had deposited ₹1.46 crore in cash in its disclosed bank account. It explained that the deposits represented collections from retailers against sales already recorded in its books. The AO treated the entire amount as unexplained cash credit under Section 68.
The CIT(A) noted that the assessee was carrying on an established business, its sales and bank accounts were disclosed in the audited accounts, and the Revenue had not identified any source other than business receipts. However, since the assessee could not furnish a complete item-wise reconciliation between each deposit and corresponding sale, the CIT(A) sustained 10% of the deposits- ₹14.68 lakh-on an estimated basis.
The Mumbai ITAT upheld this estimation and dismissed both cross-appeals. However, it held that Section 115BBE could not be applied to the estimated addition. Incomplete reconciliation may justify estimation of taxable income, but it does not automatically establish that the amount is unexplained income under Section 68 arising from an undisclosed source
List of Cases Discussed / Relied Upon
- Bridge Medisales Private Limited Vs ITO (ITAT Mumbai)
- Additional CIT v. A.L.N. Rao Charitable Trust (1995) 216 ITR 697 (SC)
- PCIT v. Wipro Ltd., (2022) 140 taxmann.com 223 (SC)
- Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji & Ors., 167 ITR 471 (SC)
- N. Balakrishnan v. M. Krishnamurthy, (1998) 7 SCC 123
- TKS Builders Pvt. Ltd. v. ITO reported in (469 ITR 657)
FULL TEXT OF THE ORDER OF ITAT MUMBAI
