ITO Vs Sahil Jain (ITAT Delhi)
Cash Deposits During Demonetisation: Entire Addition of ₹5.89 Cr Deleted Except ₹25 Lakhs – Treated as Business Cash Sales, Not 68/115BBE
Revenue appealed against CIT(A)’s order deleting an addition of ₹5,89,13,065 treated by AO as unexplained cash credits u/s 68 r.w.s. 115BBE. Assessee, a wholesaler/retailer of pan masala, tobacco products & mobiles, had deposited large cash during the demonetisation period, explaining it as cash sales.
CIT(A) accepted the explanation after examining VAT returns, sale bills, stock records, month-wise cash sales, peak sales of ₹9.64 Cr (July 2016), & continuous cash deposits of ₹25.65 Cr prior to 08.11.2016. No defect in books, stock or purchases was found; sales were supported by bills & matching stock movement. Relying on Hirapanna Jewellers, Kailash Jewellery House, Vishal Exports & multiple ITAT precedents, CIT(A) held that once sales are accepted, cash cannot be taxed separately u/s 68/115BBE.
Before ITAT, assessee remained ex-parte despite eight hearings. Revenue argued that CIT(A) erroneously deleted the entire addition.
Tribunal held that in a business dealing in unorganised cash-intensive goods, cash sales cannot be ruled out, & the AO had not disproved the sales or shown stock discrepancies. However, considering incomplete explanation & “peculiar facts”, ITAT sustained a lump-sum addition of ₹25,00,000 as reasonable, clarifying that it shall not be treated as a precedent. CIT(A)’s deletion was upheld for the balance ₹5,64,13,065.
