Dairy India Pvt. Ltd. Vs ACIT (ITAT Delhi)
No Double Taxation – Cash Sales Already Recorded – Tribunal Quashes Addition u/s 68 in Dairy Business Case
Assessee, engaged in manufacture & processing of milk foods, challenged order of CIT(A) confirming partial addition on account of cash deposits during demonetization.
AO noted that Assessee deposited Rs.4.78 crore in old currency during 08.11.2016–30.12.2016. Observing discrepancies in month-wise sales, lack of party-wise details & alleged sudden surge in cash sales, AO treated entire Rs.4.78 crore as unexplained u/s 68.
In appeal, Assessee produced VAT returns, sales records & reconciliation, contending that deposits were out of regular cash sales in dairy business. Additional evidences were admitted u/r 46A. In remand proceedings, AO accepted that pre-demonetization (01.04.2016–07.11.2016) cash sales were Rs.36.54 crore & deposits Rs.35.83 crore, leaving only minor variation attributable to expenses. However, he pointed out a mismatch of Rs.53.51 lakh during demonetization period, where deposits exceeded recorded sales.
CIT(A) sustained addition only to extent of Rs.53.51 lakh, holding that Assessee failed to give verifiable explanation for this difference.
Before Tribunal, Assessee argued that opening cash balance as on 07.11.2016 & continuous daily cash flow in dairy trade explained the difference & that treating sales proceeds already recorded as unexplained u/s 68 amounted to double addition. Tribunal agreed, noting that overall during the year, cash sales were Rs.48.03 crore while deposits were Rs.47.45 crore – showing consistency. Authorities erred in ignoring available cash balance & arbitrarily sustaining addition. Accordingly, Tribunal deleted entire Rs.53.51 lakh addition & allowed Assessee’s appeal in full
