Case Law Details
Pilani Industrial Corporation Limited Vs ACIT (ITAT Delhi)
In the case of Pilani Industrial Corporation Limited Vs ACIT, heard by the Income Tax Appellate Tribunal (ITAT) Delhi, the issue revolved around cash deposits during the demonetization period. The appellant, Pilani Industrial Corporation Limited, contested against the assessment order of the Assessing Officer (AO) regarding the treatment of cash deposits amounting to Rs. 65,49,189/- under section 69A of the Income Tax Act, alleging failure to establish the source of the deposits.
The appellant explained during the assessment proceedings that the cash deposits were a result of normal business receipts, particularly from the operation of a petrol pump. They provided detailed submissions showcasing the breakdown of their turnover, emphasizing increased sales volume and per unit price during the relevant assessment year compared to the previous one. Additionally, they highlighted the government notification allowing specified bank notes for purchasing petrol, diesel, and gas during the demonetization period.
However, both the AO and the Commissioner of Income Tax (Appeals) upheld the disallowance, contending that the cash deposits remained unexplained satisfactorily. The AO relied on figures provided by the appellant and declared the deposits as unexplained without rejecting the books of account.
Conclusion: The ITAT Delhi, referencing the precedent set by the Supreme Court in Lalchand Bhagat Ambica Ram vs. CIT, emphasized the importance of genuine entries in books of account. It ruled that treating cash deposits as unexplained solely based on entries in the books without rejecting them is legally impermissible. Thus, the ITAT set aside the assessment order and the appellate order, allowing the appellant’s appeal.
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