Sunpenta Mining Service Private Limited Vs DCIT (ITAT Chennai)
ITAT Chennai deletes demonetisation cash deposit addition – Once books are accepted, cash sales cannot be treated as unexplained money u/s 69A
Assessee, engaged in explosive retail & services, filed its return for AY 2017-18 & had deposited ₹1.56 crore in old currency during demonetisation. The deposits were claimed to be cash sales duly recorded in the books of account, which were audited & accepted by the AO. Despite this, the AO held that October & 1–8 November 2016 sales were abnormally high compared to average monthly sales, treated the cash deposits as unexplained money u/s 69A, & taxed them u/s 115BBE at 60%. CIT(A) upheld the addition relying on mere “unusual sales” & suspicion.
Before the Tribunal, Assessee argued that books of account were produced, examined & accepted. AO accepted: Total sales, Gross profit, Business loss/income computation, Cash book & ledgers, but selectively disbelieved cash sales without rejecting books u/s 145(3) or pointing out any defect, bogus sales, stock variance, VAT mismatch or fictitious vouchers.
Assessee relied on ITAT decisions such as ANS Gupta & Sons (Chennai), Waseem Ulla Khan (Bangalore), Himalaya Spinning Mills (Amritsar) & Mahesh Kumar Gupta (Jaipur) which consistently held:
- If books are not rejected, cash sales cannot be ignored.
- Cash deposits from recorded sales cannot be taxed again.
- Mere increase in cash sales during demonetisation is not proof of manipulation unless supported by evidence.
- Treating deposits as unexplained results in double taxation of the same income.
Revenue argued that the sudden spike in cash sales before 08.11.2016 shows manipulation & that Section 69A applies.
