KDJP Steels Private Limited Vs National Faceless Appeal Centre (Delhi High Court)
Suspicion Is Not Evidence- Cash Sales During Demonetisation Cannot Be Branded as Unexplained: Delhi ITAT Deletes ₹48 Lakh Addition- Books Accepted, VAT Turnover Accepted—69A Cannot Be Invoked: ITAT Delhi Rules in Favour of Assessee
deleted addition of ₹48 lakh made on account of cash deposits during demonetisation, holding that cash deposited out of recorded cash sales cannot be treated as unexplained u/s 69A when books of account are accepted.
Assessee, engaged in trading of iron & steel (GP/GC sheets), had deposited cash during demonetisation period, claiming the same to be sale proceeds from 93 cash customers on 08-11-2016, duly recorded in cash book, sales invoices and stock register. AO, despite accepting books of account and stock records, made addition merely on suspicion, alleging that identity and genuineness of buyers could not be verified and that delivery of goods in short time was improbable. CIT(A) sustained the addition.
ITAT found that AO neither rejected books of account nor disputed availability of stock or cash balance. Once cash sales formed part of declared turnover, and VAT Department had accepted the turnover, the same cash could not be taxed again as unexplained money—doing so would amount to impermissible double taxation. Tribunal also noted that Inspector’s so-called report was never supplied to the assessee and no independent field enquiry was actually conducted.
Relying on PCIT vs Agson Global (Del HC) and other settled principles, ITAT held that section 69A cannot be invoked where source of cash is explained through regular books, and that suspicion, however strong, cannot substitute evidence. Accordingly, the entire addition was deleted and assessee’s appeal allowed.
In demonetisation cases, accepted books + recorded cash sales + accepted VAT turnover = no room for 69A additions; Revenue must bring positive evidence, not conjectures.
FULL TEXT OF THE ORDER OF ITAT DELHI
