Nethravathi Distilleries Pvt. Ltd. Vs ACIT (ITAT Chennai)
ITAT Chennai held that when cash is sourced out of recorded debtors, provisions of section 69A of the Income Tax Act could not be invoked. Accordingly, addition u/s. 69A is not sustainable in law.
Facts- The assessee being resident corporate assessee is stated to be engaged in manufacture of IMFL. An enquiry u/s 131(1A) was conducted at the business premises of the assessee by investigation wing, Coimbatore on 13-03-2017. It transpired that the assessee deposited cash of Rs.29.50 Crores in Specified Bank Notes (SBNs) in State Bank of Hyderabad during demonetization period.
AO held an opinion that the assessee failed to explain the source of cash remittance into the bank accounts. Therefore, the deposits of Rs.29.50 Crores were held to be unexplained money u/s 69A. Shri Dhanakumar offered sum of Rs.5.40 Crores under PMGKY Scheme and the assessee offered another sum of Rs.2.60 Crores under the scheme. After granting credit of both these amounts, the remaining amount of Rs.21.50 Crores was added to the income of the assessee u/s 69A.
CIT(A) upheld the action of AO. Being aggrieved, the present appeal is filed.
Conclusion- Held that in such a case, the provisions of Sec.69A could not be invoked since in our considered opinion, the provisions of Sec.69A could be invoked only where the assessee is found to be the owner of any money or bullion etc. which is not recorded in the books of accounts. The same is not the case here. The assessee has realized debtors during the year which have duly been credited in the cash book. There is no unexplained money within the meaning of Sec.69A. When the cash is sourced out of recorded debtors, the provisions of Sec.69A could not be invoked. Considering the facts and circumstances of the case, the impugned addition of Rs.21.50 Crores is not sustainable in law. Therefore, we delete the same and allow the corresponding grounds as raised by the assessee.
