Deepika Garg Vs ITO (ITAT Chandigarh)
ITAT Chandigarh Deletes ₹24 Lakh Addition on Cash Sales – Books Not Rejected, Evidence from Parties Produced
Background
- Assessee declared income of ₹30.05 lakh. AO assessed at ₹59.55 lakh u/s 115BBE.
- Addition 1: ₹5.5 lakh u/s 68 (unexplained credit). Assessee withdrew this ground before Tribunal.
- Addition 2: ₹24 lakh treated as bogus cash sales to four parties.
- AO noticed uniform cash receipts of ₹24,000/- at intervals, treated as fictitious & added u/s 68.
- CIT(A) upheld addition.
Assessee’s Defence
- Maintained audited books with sufficient stock; AO never rejected books.
- Filed cash book, confirmations, affidavits & ITRs of all four parties (Anant Trading Co., Sanchay Trading Co., L.K. Mechanical Works, Ram & Co.).
- Sales subject to VAT; duly reflected in returns.
- Relied on Delhi HC (PCIT vs. Akshit Kumar, 197 DTR 121) & Chandigarh ITAT rulings (Fashion Zone, Tirupati Balaji Exim, Charu Aggarwal, Moolji Diamonds, Aakriti Jain), holding that cash sales during demonetisation backed by books & stock cannot be treated as unexplained
- Cited Arun Garg vs. ITO (2023) 146 taxmann.com 10 (Chd ITAT), where similar addition deleted.
Tribunal’s Observations/decision
- AO accepted assessee’s books & day-to-day stock; no defect pointed.
- All four purchaser parties assessed to tax & confirmed cash payments via affidavits & ITRs.
- Once sales are accepted in both seller’s & buyers’ books, treating receipts as unexplained is unjustified.
- Addition merely because of “uniform pattern” of cash deposits is unsustainable.
- Addition of ₹24 lakh deleted in full.
- Ground on ₹5.5 lakh unexplained credit dismissed as withdrawn.
- Appeal partly allowed
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
Paid content
Become a Basic or Premium Member, or log in if you are already a Basic or Premium member.
