Mohit Garg Vs ITO (ITAT Delhi)
No Double Taxation -AO Accepted Sales & VAT – Still Made 68 Addition- ITAT Delhi Deletes ₹50.18 Lakh Demon Cash Addition
Assessee, a retailer of kirana items, filed return of ₹6.48 lakhs. AO, comparing cash deposits of FY 2016-17 with earlier year, noted higher deposits during Nov–Dec 2016 & treated ₹50.18 lakhs as unexplained cash u/s 68 r.w.s. 115BBE. CIT(A) upheld the addition.
Before Tribunal, Assessee argued that books were never rejected, cash sales were duly recorded in P&L & VAT returns, and VAT taxes were paid. AO had not disputed sales turnover, stock register, or VAT records. Total turnover was ₹1.27 crores (against ₹1.01 crores in earlier year), showing normal business growth. Out of total deposits of ₹52.18 lakhs, ₹39.37 lakhs came from opening balance (as on 31.10.2016) & only ₹12.81 lakhs represented November 2016 cash sales.
Tribunal observed that AO accepted cash deposits in earlier & later periods and had not questioned VAT-backed sales or stock records. Thus, treating recorded cash sales as unexplained u/s 68 was erroneous. Once sales are accepted & taxes paid, cash deposits cannot be taxed again.
Accordingly, Tribunal deleted entire addition of ₹50.18 lakhs & allowed Assessee’s appeal
