Case Law Details
ACIT Vs Ramlal Jewellers Private Limited (ITAT Mumbai)
ITAT Mumbai held that cash sales accepted and then deposit of said cash in bank account cannot be treated as deposits made out of any undisclosed income. Accordingly, addition under section 68 unsustainable.
Facts- Assessee Company is engaged in jewellery business, selling jewellery items to its retail customers. The case was selected for scrutiny for cash deposits in bank. Based on inquiry, AO held that amount of Rs. 2,57,59,680/- is liable to be added u/s 68 due to unusual jump in cash sales immediately before the demonetization period. Notably, AO taxed the assessed income u/s 115BEE at the rate 60%. Further, penalty proceeding u/s 271AAC is also initiated.
CIT(A) deleted the addition. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Once, AO has accepted the sales and there is direct nexus with the closing stock and the sales alongwith movement of stock linked to purchases then such credit on account of sales cannot be added u/s.68. If the cash sales have been accepted, then deposit of the same cash in the bank account which is tallying with the entries in regular cash book, cannot be treated as deposits made out of any undisclosed income.
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