Case Law Details
Almech Enterprises Vs ACIT (ITAT Mumbai)
Introduction: The case of Almech Enterprises Vs. ACIT (Income Tax Appellate Tribunal, Mumbai) revolves around a fundamental issue – whether a shortfall in cash found during a survey, compared to the cash recorded in the books of account, justifies an addition under section 69C of the Income Tax Act. In this article, we delve into the details of the case, the arguments presented, and the ultimate decision.
Background of the Case: The appellant, Almech Enterprises, challenged an addition of Rs. 17,88,512 to its total income under section 69C of the Income Tax Act. The addition was based on the apparent shortfall of cash discovered during a survey compared to the cash shown in the books of account. The appellant failed to provide sufficient evidence to explain this difference.
Legal Rationale: The core question addressed in this case is whether such a shortfall justifies an addition under section 69C of the Act. The appellant argued that this situation does not warrant the application of section 69C. They cited the case of CIT vs. Kesarwani Sheetalaya, where a similar issue was considered by the Hon’ble Allahabad High Court. In that case, it was held that a mere difference between the cash in hand in the books of account and actual cash found during a search is not enough to justify an addition under section 69 or section 69A of the Act. This judgment supported the appellant’s position.
Precedent and Tribunal Decision: The case of Sarang & Associates vs. DCIT was also cited, where the Tribunal did not approve of making an addition under section 69C in a similar context. In the present case, the Tribunal ruled in favor of the appellant, emphasizing that section 69C is not applicable under the circumstances. Given the specific facts and the legal precedents, the addition of Rs. 17,88,512 was deemed unwarranted and was consequently deleted.
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