ACIT Vs Ghaziabad Ship Breakers Pvt. Ltd. (ITAT Delhi)
Demonetisation Cash Sales Accepted on Primary Evidence: ITAT Delhi Upholds Deletion of Section 68, Stock & 69C Additions
The Delhi Bench of the ITAT dismissed the Revenue’s appeal and upheld the order of the CIT(A) deleting multiple additions made in the case of a ship-breaking company for AY 2017-18. The Assessing Officer had treated cash sales of ₹1.32 crore during October 2016 as bogus and added the same under section 68, primarily relying on abnormal spikes in cash sales just prior to demonetisation, unusual pricing patterns, round-figure invoices, and statistical comparison with preceding and succeeding years. Consequential additions were also made for alleged under-valuation of closing stock and unexplained expenditure under section 69C.
The CIT(A), after admitting additional evidence and calling for a remand report, found that the assessee had produced strong primary evidence to substantiate the cash sales. This included audited books of account, cash books, sales invoices, VAT payments, excise records, and—most importantly—monthly statements of non-excisable goods submitted to excise authorities and fortnightly statements submitted to banks prior to 08.11.2016, duly acknowledged by the excise department. The CIT(A) held that once contemporaneous primary evidence established genuineness of sales, mere statistical or comparative analysis could not override factual records, especially considering the peculiar nature of the ship-breaking industry where each year’s operations depend on different ships, quantities, and timelines.
The Tribunal agreed with the CIT(A) that no material evidence was brought on record by the Revenue to rebut the primary documentary evidence. It held that unusual patterns or sharp increases, by themselves, cannot justify additions under section 68 when sales are supported by statutory records maintained under excise law and reflected in audited books. Since the addition on cash sales was deleted, the consequential additions for under-valuation of closing stock and unexplained expenditure—being based on the same presumption of bogus sales—were also rightly deleted. Accordingly, the Revenue’s appeal was dismissed in entirety.
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals are filed by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)/ NFAC, Delhi vide order dated 05.09.2024 for the A.Y. 2017-18.
