DCIT Vs Rai Bahadur Narain Singh Sugar Mills Ltd. (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) decided the Revenue’s appeal against the order of the National Faceless Appeal Centre (NFAC) for Assessment Year 2017-18 concerning an addition of ₹91.77 lakh made under Section 68 of the Income-tax Act, 1961 on account of cash deposits during the demonetisation period. The assessee, engaged in the manufacture of white crystal sugar from sugarcane and the production of ethanol, liquor and CO2 gas, had filed its return declaring income under the normal provisions and book profits under Section 115JB. During scrutiny assessment under Section 143(3), the Assessing Officer treated cash deposits made during the demonetisation period as unexplained cash credits and made an addition of ₹91.77 lakh under Section 68.
The Revenue challenged the order of the CIT(A), who had deleted the addition. According to the Revenue, the Assessing Officer had observed a sudden spike in cash sales during the relevant financial year and had issued notices under Section 133(6) to eight buyers. Except for one, none of the parties responded. The sole respondent confirmed cash purchases of only ₹750, whereas the assessee had claimed sales of ₹11.58 lakh to that buyer. On this basis, the Revenue contended that the CIT(A) erred in deleting the addition.
