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July 18, 2022

Unsustainable to accept addition on cash sales, accepted as revenue receipts, as unaccounted cash deposits.

by CA Shivam Jaiswal in Income Tax

Unsustainable to accept addition on cash sales, accepted as revenue receipts, as unaccounted cash deposits.

Facts and issues of the case

The assesse is an individual stated to be engaged in the business of manufacturing of electrical wires and trading in electrical equipment, products etc. The assesse filed his return of income for the A.Y. 2017-18 on 31.10.2017 declaring total income of  Rs.9,55,960/-.  The case of the assesse was selected for scrutiny and thereafter assessment was framed under section 143(3) and the total income of the assesse was determined at Rs.47, 55,460/-

.Aggrieved by the order of the A.O, assesse carried the matter in appeal before the Ld. CIT (A). The Ld. CIT (A) vide order granted relief to the extent of Rs.3 lakhs and upheld the balance addition.

Aggrieved by the order of the Ld. CIT (A), the assesse is in appeal before the Tribunal and has raised the following grounds that the addition made because of suspected missing cash deposits in the bank during the demonetization period is illegal and should be rejected.

Observations by the Court

The Court has heard the rival submissions made by both the parties and perused the material on record. The dispute before the Tribunal is with respect to addition at Rs.34, 99,500/- made on account of cash deposits   during the demonetization period. It is an admitted fact that assesse is engaged in the business of trading of electrical wires and trading in electrical equipment, products etc.  The court finds assesse has placed on record the details of cash sales made [a copy of which is placed in paper book] contains the details namely the date of sale, the voucher number, the name of the party, the amount of sales. It is also an undisputed fact that on the aforesaid sales, VAT as per the applicable rates has been paid by the assesse and the payment of VAT is also reflected in the VAT returns filed by the assesse with the Department of Trade and Tax, Government of Delhi.

Before the curt , Revenue has not placed any material on record to demonstrate that the details of cash sales filed by the assesse are fictitious or bogus. Further, the Revenue has also not placed any material on record to demonstrate that the VAT return filed by the assesse before the Appropriate Authorities have been rejected by the Authorities. It is also a fact that the assesse is having only one source of income which is also not in dispute. Further the purchase of goods from which the alleged sales have been made by the assesse has also not been rejected by the Revenue.

The court is of the view that in the present case no addition is called for. The Court therefore, direct for deletion of the addition made by A.O. and upheld by the Ld. CIT (A).

Conclusion

Appeal of the assesse that addition made because of suspected missing cash deposits in the bank during the demonetization period is unstainable. Is allowed.

Ramesh-Kochar-Vs-ITO-ITAT-Delhi-1

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