Spectra Motors Limited Vs ACIT (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, in the case of Spectra Motors Limited Vs ACIT (Assessment Year 2017-18), deleted an addition of ₹15,01,57,610 that had been made by the Assessing Officer (AO) and confirmed by the CIT(A) under Section 68 of the Income-tax Act, 1961. The addition was made on the grounds that cash received from the sale of old vehicles constituted unexplained cash credit. The ITAT held that once the AO accepts the transaction as a sale, treating a part of it as unexplained cash credit merely due to the absence of buyer identification details is legally untenable.
The dispute centered on the tax treatment of a substantial cash deposit, including ₹3,53,23,000 in specified bank notes (SBNs), made by the assessee, Spectra Motors Limited, which is engaged in the business of purchasing and selling new and old cars.
Background and Lower Authority Findings
During the scrutiny of the return of income for A.Y. 2017-18, the AO observed the significant cash deposits. The assessee explained that the cash represented proceeds from the sale of old cars, which had been acquired through an exchange scheme involving the sale of new vehicles. The assessee furnished details of total sales, cash sales, and the names of the customers.
