Dharmendra Doshi Vs ITO (ITAT Indore)
ITAT Indore held that addition under section 68 of the Income Tax Act, after rejection of books of accounts under section 145, by the AO is not justifiable in law. Accordingly, AO is directed to delete the addition.
Facts- The assessee- individual is engaged in the business of trading of plastic scrap and old bottles. The case of assessee was selected for scrutiny assessment for the reason of abnormal increase in cash deposited during demonetization period as compared to pre-demonetisation. AO considered assessee’s submissions and accepted only a deposit of Rs. 985,000/- being the first deposit made by assessee on 10.11.2016 immediately after declaration of demonetization as explained and treated the rest of deposits of Rs. 32,67,500/- as unexplained cash credit u/s 68 and accordingly made addition. Aggrieved, the assessee carried matter in first-appeal but did not get any relief. Being aggrieved, the present appeal is filed.
Conclusion- The non-compliance of summon u/s 131 by the said debtor is not a fault of assessee and the assessee cannot be penalized for that. The higher amount of cash balance held by assessee as opening balance is also substantiated from the fact that there was high scale of business during August, 2016 to October, 2016 on account of Diwali festival. Thus, we find that the source of impugned deposits is sufficiently explained by assessee.
