Mahasakthi Mills Limited Vs ACIT (ITAT Chennai)
ITAT Chennai held that provisions of section 69A of the Income Tax Act could not be invoked when cash is sourced out of recorded sales. Accordingly, appeal allowed and addition u/s. 69A is liable to be deleted.
Facts- The assessee being resident corporate assessee is stated to be running a textile mill. It is manufacturing cotton / synthetic yarn and clothes. It transpired that the assessee deposited cash of Rs.800.05 Lacs during demonetization period. The assessee also made cash advances of Rs.1267.55 Lacs to its sister concerns viz. M/s Imperial Spirits Ltd., M/s Overseas Beverages Ltd. and M/s Arumuga Cottspin Ltd.
Rejecting assessee’s submissions, the cash deposits of Rs.800.05 Lacs as well as advances for Rs.1267.55 Lacs was added on substantive basis u/s 69A in the hands of the assessee.
CIT(A) confirmed the addition. Being aggrieved, the present appeal is filed.
Conclusion- Held that the sales turnover has duly been recorded in the books of accounts. The books are subjected to audit under extant regulations and no defect has been pointed out by any of the lower authorities in the books of accounts in their respective orders. The assessee has maintained and furnished day-wise stock position of cloth and yarn. The Ld. AO has accepted the stock position, production figures etc. which are reflected in the books of accounts. Having accepted the purchase and sales, the cash generated out of sales proceeds could not be taxed separately. No discrepancy has been pointed out by survey team in the stock position though the survey is primarily aimed at verifying cash and stock position. The sales have already been offered by the assessee to tax and taxing the same again as income from other sources u/s 69A would amount to double taxation which is impermissible.
