Hira Lall & Sons (Exports) (P) Ltd. Vs ITO (ITAT Delhi)
Reasonable estimation is justified when partial verification is lacking & Sec 115BBE not applicable to FY 2016-17- ITAT Delhi
Assessee is an established exporter engaged in regular business activity. During the demonetisation period, it deposited ₹32.86 lakh in cash into its bank account. In scrutiny assessment u/s 143(3), AO treated the entire cash deposit as unexplained cash credit u/s 68, taxed it at the higher rate u/s 115BBE, & the CIT(A) upheld the addition.
Before the Tribunal, Assessee argued that:
- It had been carrying on export business for many years.
- Its books of account, balance sheet & cash book were maintained &
- The cash deposits represented cash sales from regular business operations.
- However, Assessee admitted it could not properly present all supporting documents & explanations before the AO/CIT(A).
Tribunal noted that:
- Assessee is indeed a regular exporter with audited books.
- Cash sales in business cannot be outright treated as unexplained.
- At the same time, the assessee failed to fully substantiate every detail at lower stages.
- Revenue’s demand to tax the entire ₹32.86 lakh was excessive & unjustified.
To balance both sides, Tribunal applied a fair estimation approach often used in similar demonetisation cash deposit cases. It held that a lump sum addition of ₹4,00,000 would be just & proper, giving relief of ₹28.86 lakh to the assessee.
