Sati Saw Mill Vs ITO (ITAT Kolkata)
Assessee, Shree Sati Saw Mill of Siliguri, engaged in timber/sawmill business, had its case reopened u/s 147 based on Insight portal information of large cash deposits without return filing. AO noted deposits of ₹25.29 lakh in SBI and ₹1.08 crore in Karnataka Bank, totaling ₹1.33 crore. Despite assessee’s submissions (cash book, cash flow, audited accounts, video conference explanations), AO was unconvinced and treated the deposits as unexplained money u/s 69A, making addition of ₹1.33 crore. CIT(A) upheld the addition.
Assessee’s Case
- Business receipts were duly accounted in audited books.
- Cash deposits represented cash sales and collections from sundry debtors.
- Turnover history showed consistency: AY 2015-16: ₹1.71 crore, AY 2016-17: ₹1.59 crore, AY 2017-18: ₹2.07 crore
- Similar cash deposits in other years had been accepted.
Tribunal’s Observations
- Assessee had regular audited books, with no adverse finding by auditor.
- Cash deposits were reflected in books as sales/receipts, duly supported by narrations in cash book.
- Treating them again as unexplained u/s 69A would amount to double taxation of same income, which is not permissible.
- Both AO and CIT(A) failed to properly appreciate facts and business turnover pattern.
- ITAT held that deposits were out of accounted business receipts, not unexplained.
- Set aside CIT(A)’s order.
- Directed AO to delete addition of ₹1.33 crore.
Business cash deposits duly recorded in audited books cannot be taxed again as unexplained income. Double taxation is impermissible – once shown as turnover, cash cannot be treated u/s 69A. Revenue authorities must reconcile business turnover and books before branding cash deposits as unexplained.
