S. S. Pranav Steels Private Limited Vs ITO (ITAT Delhi)
Cash Deposits During Demonetisation Accepted as Genuine; Addition Deleted
Delhi Tribunal examined the addition of ₹1,31,11,845/- made by the AO u/s 68 r.w.s. 115BBE on account of cash deposits during the demonetisation period.
Assessee, engaged in trading of steel wire products with a declared turnover of ₹44.46 crore, had recorded substantial cash sales during October 2016 & up to 08.11.2016. All books of accounts, VAT-reconciled sales, monthly stock registers, cash books, cash memos & cash flows were filed. It was explained that higher cash sales were driven by festival-season demand & industrial expansion. The AO, however, rejected actual cash sales & substituted his own estimate based on the average cash-to-credit ratio, thereby treating the balance deposits as unexplained.
Tribunal noted that the Assessee’s cash sales formed part of the total disclosed turnover, purchases were accepted, stock movement was consistent, VAT authorities had accepted sales, cash book showed no negative balance, & there was only minor variation in cash-sales ratio compared to earlier years. The Tribunal held that once sales are accepted as genuine & taxed as business income, the same cash cannot again be treated as unexplained-otherwise it results in double addition. It further observed that the AO had not rejected books of account, nor established any discrepancy in stock, sales, or cash book. The source of deposits was proved to be business receipts, fully traceable to the books. Hence, the separate addition u/s 68 was unsustainable.
