Hamasamani Silks Vs ITO (ITAT Chennai)
No Defect in Books, No Section 68- When Books Are Clean, Additions Can’t Stand — ITAT Deletes Cash Deposit Addition- Audited Books Prevail — Cash Deposits Accepted as Genuine
Assessee, a silk saree trader, deposited cash during the year-including the demonetisation period-& AO added ₹40,32,500 u/s 68, treating it as unexplained, merely because cash deposits in AY 2017-18 exceeded those in AY 2016-17. Books were audited u/s 44AB, & 95% of sales were in cash, generating large cash balances duly reflected in the cash book.
ITAT held that:
- Assessee had a cash balance of ₹1.63 crore, fully evidenced by books; no defects were found.
- All deposits had the same source—cash sales. Accepting part of the deposits & rejecting only the incremental part was arbitrary.
- A mere difference between cash deposits of two years cannot justify addition; increased turnover naturally results in higher cash deposits.
- Case law on SBN deposits during demonetisation (relied on by the Revenue) was distinguishable, as the AO himself did not allege SBN deposits.
Relying on its earlier decision in Balu Vignesh, ITAT deleted the entire addition.
Held: Cash deposits were properly explained; no unexplained money, no escapement of income.
Result: Addition u/s 68 deleted; appeal partly allowed; stay petition dismissed as infructuous.
