R. M. Sales Corporation Vs ITO (ITAT Amritsar)
Summary: ITAT Amritsar deleted the addition of Rs.57,32,048/- made under Section 69A in respect of cash deposited during the demonetisation period, holding that the addition was unsustainable where the cash sales stood recorded in the regular books, purchases were accepted, sufficient stock was available and the sales had been declared and accepted in VAT proceedings. The assessee, a partnership firm engaged in trading rubber goods and allied items, had deposited about Rs.67.62 lakh during demonetisation and explained the source as cash sales and recovery from debtors. The AO considered Rs.57,32,048/- to represent unaccounted income introduced in the guise of cash sales, principally because cash sales were concentrated in October 2016 and up to 08.11.2016, there was no comparable history of cash sales, purchases had been made from a sister concern and the cash was retained instead of being deposited immediately.
The AO accordingly invoked Section 69A read with Section 115BBE and the CIT(A) confirmed the addition. The assessee submitted that it maintained audited books comprising cash book, ledger, stock register, sale bills, purchase bills and vouchers; purchases had not been disputed;
sales were made from available stock; VAT of Rs.3,25,178/- had been paid; and the sales disclosed in VAT returns were accepted by the Punjab State Sales Tax Department. The Tribunal observed that the cash sales constituted the foundation of the deposits and had already been credited to the profit and loss account and offered to tax. It found the addition based on assumptions, presumptions, surmises and conjectures and held that the CIT(A) had mechanically affirmed the AO without rebutting the assessee’s documentary evidence.
