SDM Lifescienes Pvt. Ltd. Vs ITO (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal, Delhi Bench, arose from the order of the National Faceless Appeal Centre dated 16.10.2025 for Assessment Year 2017-18 against the assessment order passed under Section 143(3) of the Income-tax Act, 1961 dated 30.12.2019. Ground Nos. 1, 2, 5 and 6 were dismissed as not pressed. The only issue considered was whether the NFAC was justified in upholding the addition made on account of cash deposits during the demonetisation period.
The assessee had filed its return of income on 30.03.2018 declaring taxable income of ₹1,39,784. It was engaged in the business of agarbatti and LED bulbs and had deposited cash of ₹1,11,41,000 in its bank account during the demonetisation period. The assessee explained that it had reported total turnover of ₹1,85,45,595, regularly made cash sales in the ordinary course of business, maintained substantial cash balances for business requirements, and that the cash deposited represented cash generated from business sales and available cash balance recorded in its books following the announcement of demonetisation.
The Assessing Officer accepted that the assessee regularly had cash sales both during the relevant year and the immediately preceding year. To verify the purchases, notices under Section 133(6) were issued to five parties. Two parties responded and confirmed the sales made to the assessee, while three parties did not respond. The Tribunal noted that the non-response of those three parties was never confronted to the assessee.
