Raj Kumar Vs ITO (ITAT Delhi)
AO Cannot Treat Accepted Cash Sales as Unexplained – Books Accepted, VAT Assessed – Tribunal Deletes 68 Addition on Demonetisation Deposits- Cash Deposits During Demonetisation from Petrol Pump Sales Held Genuine – ITAT Deletes ₹34.3 Lakh Addition
Assessee, proprietor of M/s R.S. Chaudhary Filling Station, filed appeal against the order of NFAC, Delhi dated 21.02.2025 confirming addition of ₹34,30,729/- u/s 68 in respect of cash deposits during demonetisation period.
Assessee, engaged in petrol pump business, had filed return declaring income of ₹2,91,080/-. During scrutiny, AO noticed that ₹49,58,500/- in specified notes (SBN) were deposited during the demonetisation period. AO accepted closing cash in hand as on 08.11.2016 at ₹15,27,771/- but treated balance ₹34,30,729/- as unexplained, holding that only PSU oil companies were authorised to accept old currency notes. Since the petrol pump was under franchise of Essar Company (a private entity), AO concluded that cash received from customers in SBNs could not be considered valid business receipts & added the same u/s 68 r.w.s. 115BBE. CIT(A) upheld the addition.
Before Tribunal, assessee contended that both sales & purchases were duly recorded in books & accepted by AO as well as by VAT authorities. It was argued that once sales are accepted & stock movement is supported by records, corresponding cash deposits arising from such sales cannot be treated as unexplained. The AO had not rejected the books nor pointed out any defect in the cash book. Therefore, taxing cash deposits again u/s 68 amounted to double taxation of the same income.
