ITO Vs Imranbhai Umarbhai Qureshi (ITAT Ahmedabad)
When Sales Are Real, Purchases Can’t Be Fake ; AO’s Logic Butchered – Cash Withdrawals for Purchase of Bulls Duly Explained – ITAT Ahmedabad on ₹8.89 Cr 69C Addition
Assessee had filed return declaring income of ₹3.12 lakh. The case was selected for scrutiny under CASS owing to large cash withdrawals. AO noted withdrawals of ₹8.89 crore from bank account. Assessee explained that he was in the business of procuring live bulls from farmers & supplying them to slaughterhouses. The amounts received from slaughterhouses were deposited in his bank account & subsequently withdrawn in cash for payment to farmers in rural areas. Commission income was offered to tax. AO, however, rejected the explanation & treated the entire cash withdrawals as unexplained expenditure, making addition of ₹8.89 crore u/s 69C.
Before CIT(A), Assessee produced complete evidences including cash book, bank book, purchase & sales ledgers, party-wise details, as well as bills of purchases & sales. CIT(A) admitted the evidences, sought remand report, but AO merely objected to admission without effectively rebutting the documents. CIT(A) noted that AO had accepted sales of bulls to slaughterhouses but disbelieved the purchases from farmers, which was inconsistent. On verification of records, CIT(A) held that cash withdrawals were part of regular business cycle & duly explained. The addition was deleted.
