P.V. Media Vision Pvt. Ltd Vs ACIT (ITAT Mumbai)
The assessee company faced addition of ₹4.74 cr u/s 68 towards cash deposits during FY 2016-17 (including demonetisation period). The AO treated the whole cash deposit as unexplained alleging fabricated cash sales, doubtful debtor recoveries & abnormal cash balances.
On appeal, CIT(A) accepted that cash deposits largely arose from regular business activities such as cash sales, debtor recoveries & earlier cash withdrawals, supported by audited books, VAT returns & historical data, and deleted ₹4.06 cr. However, CIT(A) sustained ₹68.61 lakh considering certain cash sales “unvouched” due to delayed filing of VAT returns (see tables comparing month-wise deposits & cash sales ).
Before ITAT, both parties appealed. The Tribunal held that:
- The assessee had a consistent history of cash sales & cash recoveries, supported by audited books and stock/VAT records.
- Books were not rejected u/s 145 and sales were already part of reported turnover.
- CIT(A) rightly rejected the AO’s blanket addition based on suspicion.
- However, sustaining ₹68.61 lakh merely because VAT returns were filed late was incorrect — belated VAT filing cannot render recorded sales unexplained, especially when already taxed as turnover.
Accordingly, ITAT deleted the entire addition; assessee’s appeal allowed & Revenue’s appeal dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
