Metro Agri Industries Ltd Vs ITO (ITAT Delhi)
Cash Deposits During Demonetization from Recorded Cash Sales – Addition u/s 68 Deleted ITAT Delhi
Assessee, engaged in manufacturing & trading of rice, filed return declaring Nil income after set-off of unabsorbed depreciation, while declaring book profit of ₹7,80,204/- u/s 115JB & paying MAT. AO noted that during demonetization period, Assessee deposited ₹61,45,000/- cash in bank. AO gave credit for opening cash balance of ₹13,37,249/- but treated balance ₹48,07,751/- as unexplained cash credit u/s 68, holding that cash sales were created only to introduce unaccounted money. CIT(A) upheld the addition.
Tribunal noted that Cash sales from October 2016 till 08.11.2016 were duly reflected in audited accounts, forming part of total turnover of ₹72.33 crore. Purchases & sales were accepted by Revenue & VAT authorities; VAT was paid on entire turnover. Assessee furnished complete month-wise details of purchases, sales, debtors’ receipts & cashbook. There was no negative cash balance on any day & books of account were not rejected. Tribunal observed that AO had already accepted these sales while assessing income. Therefore, making a separate addition on the very same deposits would result in double taxation. Since source of deposits was explained from regular books, addition was unsustainable. Tribunal also referred to SMILE Microfinance Ltd vs. ACIT (Madras HC, 19.11.2024) which held that enhanced tax provisions of s.115BBE apply prospectively from AY 2018-19. Tribunal deleted addition of ₹48,07,751/- u/s 68, holding that cash deposits were duly explained through recorded cash sales & accepted accounts. Appeal of Assessee was allowed.
