Case Law Details
ACIT Vs Himachal Fibres Limited (ITAT Delhi)
In a recent case between ACIT (Assistant Commissioner of Income Tax) and Himachal Fibres Limited, the issue at hand was whether cash deposits made in bank accounts during the demonetization period could be treated as unexplained income. The crux of the matter revolved around the fact that the taxpayer had a history of cash sales and whether the Assessing Officer (AO) had valid grounds to question these deposits.
Detailed Analysis
The taxpayer, Himachal Fibres Limited, filed its income tax return for the assessment year 2017-18, reporting a loss of Rs. 66,41,640/-. However, during the scrutiny assessment, the AO noticed substantial cash deposits made during the demonetization period. The AO compared these deposits with those from the preceding year and concluded that there was an increase of 643%, adding the excess cash deposits amounting to Rs. 3,41,86,500/- to the taxpayer’s income under Section 68 of the Income Tax Act.
The taxpayer, in response, contended that the source of these cash deposits was the cash sales it had conducted. The taxpayer provided details of its sales, receipts, and justifications for the cash generated and deposited during those years. Additionally, the taxpayer submitted comparative data for purchases, sales, and stock positions. Copies of VAT returns were also furnished. Importantly, the AO did not reject the books of accounts or find discrepancies in them.
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