Krish Wines Vs ACIT (ITAT Pune)
ITAT Pune Upholds Additions on Demonetisation Cash & GP Rate — Liquor Trader’s Appeal Dismissed
Assessee, a firm engaged in retail sale of country liquor & IMFL, filed return declaring ₹13.40 lakh income. During scrutiny, AO noted cash deposits of ₹1.68 crore during demonetisation, including ₹33.66 lakh in specified bank notes. Since available cash balance on 08-Nov-2016 was only ₹18.65 lakh, AO treated ₹15,00,283 as unexplained u/s 69A.
AO also observed low gross profit (GP) at 5.95% on turnover of ₹13.38 crore. As Assessee failed to furnish separate purchase/sale details for IMFL & country liquor or MRP & stock details, AO rejected books u/s 145 & estimated GP at 10%, resulting in addition of ₹54,18,873.
CIT(A)/NFAC upheld both additions, allowing verification only for ₹5.40 lakh allegedly deposited before midnight of 8-Nov-2016.
Tribunal’s Findings
- The argument that assessment was void due to lack of 143(2) notice by new jurisdictional AO was rejected, following DCIT vs Kalinga Institute of Industrial Technology (SC)—since the Assessee participated in proceedings without objecting to jurisdiction, it cannot later challenge validity.
- AO provided sufficient opportunities; non-filing of required details justified best judgment approach.
- CIT(A) rightly confirmed the 69A addition, subject to verification of ₹5.40 lakh deposit.
- For GP estimation, the Assessee’s failure to submit MRP, purchase price, or liquor-type-wise profitability left no basis to disprove AO’s adoption of 10% margin, which was within normal range (10–15%) for liquor trade.
- Both additions sustained—₹15,00,283 as unexplained cash & ₹54,18,873 for low GP. Tribunal found no infirmity in CIT(A)’s order.
FULL TEXT OF THE ORDER OF ITAT PUNE
