Kodiyalam Floriculture private Limited Vs ITO (ITAT Bangalore)
ITAT Bangalore Accepts Cash Advances from Flower Buyers – Deletes ₹34.50 Lakh Addition- No Enquiry, No Addition: ITAT Bangalore Quashes Cash Deposit Addition in Floriculture Case
Bangalore Tribunal examined whether cash deposits during demonetisation represented unexplained income u/s 69A or advances received from customers.
Assessee, engaged in leasing of agricultural land & floriculture (cultivation & sale of roses), filed ROI declaring ₹12,180 taxable income & ₹39.58 lakh agricultural income. During scrutiny, AO noticed cash deposits of ₹34.65 lakh in bank accounts in November 2016. Assessee explained that these were customer advances in old notes for supply of flowers, duly disclosed in audited financial statements under Note 23. AO rejected the explanation & added the entire amount u/s 69A.
On appeal, CIT(A) granted relief of ₹15,000 but confirmed ₹34.50 lakh addition.
Before Tribunal, Assessee produced confirmations & ledger accounts of four parties who paid the advances, showing that part of the advances was adjusted against flower sales & balances carried forward. Tribunal observed that sales to these buyers were recorded, disclosures were made in audited accounts, & confirmations were on record. Importantly, AO made no further enquiry u/s 133(6) despite full particulars being available. Tribunal held that without disproving the explanation or making independent enquiry, the addition u/s 69A could not stand. Accordingly, Tribunal directed deletion of the entire addition of ₹34.50 lakh, allowing Assessee’s appeal in full.
