Sri Arumuga Cottspin Pvt. Ltd. Vs ACIT (ITAT Chennai)
ITAT Chennai held that when the cash is sourced out of recorded sales, the provisions of section 69A of the Income Tax Act could not be invoked since sales have already been offered to tax and taxing same again u/s. 69A would amount to double taxation.
Facts- A survey was conducted u/s 133A at the business premises of the assessee group on 23-03-2017. It transpired that the assessee deposited cash of Rs.1902 Lacs during demonetization period. The assessee also received advance of Rs.95.55 Lacs from its sister concern i.e., M/s Mahasakthi Mills Ltd. which was also deposited in the bank account of the assessee.
Accordingly, the sum of Rs.1902 Lacs was added as unexplained money u/s 69A. The assessee received advance of Rs.95.55 Lacs from M/s Mahasakthi Mills Ltd. which was also added protectively in the hands of the assessee in similar manner u/s 69A. However, upon further appeal, Ld. CIT(A) has deleted the protective addition of Rs.95.55 Lacs.
Another disallowance was of knitting charges. It was noted that the assessee gave job work to M/s Knit Tex Fabs and paid knitting charges for Rs.88.19 Lacs. Since no tax was deducted against the same, 30% thereof was disallowed u/s 40(a)(ia). The assessee allegedly made payment in cash and therefore, the amount of Rs.88.19 Lacs was separately added u/s 40A(3).
