Deletion of additions under s.68 r/w s.115BBE upheld for specified bank-note receipts after demonetisation due to documentary proof

ITAT upheld the CIT(A)'s deletion of additions under s.68 r/w s.115BBE relating to receipts in specified bank notes after demonetization. The tribunal accepted documentary evidence of a post-demonetization rush and found adequate stock and valid sales reflected in trading accounts; since the taxpayer had admitted the amounts as revenue receipts, no fresh addition or taxation under s.115BBE was warranted. Reliance on HC precedents was noted. The appellate order was confirmed, decision against revenue.

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Issues Involved:
1. Deletion of addition made under Section 68 read with Section 115BBE of the Income Tax Act, 1961.
2. Justification of sales recorded on 08.11.2016 post demonetization.
3. Acceptance of books of accounts and stock records by the Assessing Officer (AO).
4. Application of relevant case laws and precedents.

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 68 read with Section 115BBE:
The primary issue in this case was the deletion of an addition of Rs. 4,71,35,500/- made by the AO under Section 68 read with Section 115BBE of the Income Tax Act, 1961. The AO treated the sales recorded on 08.11.2016 as unexplained cash credits, suspecting them to be a device to introduce unaccounted money. However, the CIT(A) found merit in the assessee's argument that the sales were genuine and recorded in the books of accounts, and hence, the same amount could not be taxed again under Section 68 as unexplained cash credit. The Tribunal upheld the CIT(A)'s decision, stating that the cash receipts represented sales and were rightly offered for taxation.

2. Justification of Sales Recorded on 08.11.2016:
The assessee, a jewellery trading firm, recorded sales of Rs. 5.50 crores on 08.11.2016, out of which Rs. 4.72 crores were treated as unexplained cash credits by the AO. The assessee argued that the sales were genuine and resulted from a rush to liquidate old notes due to the demonetization announcement. The CIT(A) and the Tribunal accepted this explanation, supported by newspaper clippings and the fact that there was no abnormal profit recorded. The Tribunal noted that the sales were supported by bills and stock records, and there was no defect found in the stock registers during the surveys conducted by the DDIT (Inv.) and the AO.

3. Acceptance of Books of Accounts and Stock Records:
The AO conducted surveys and did not find any defects in the stock registers or the books of accounts. The Tribunal emphasized that purchases, sales, and stock are interlinked and inseparable. Since the AO accepted the books of accounts and the stock records, and there was no discrepancy in the closing stock, the Tribunal found no reason to disbelieve the sales. The Tribunal cited various case laws to support the view that once the books of accounts are accepted, there is no basis for making additions as unexplained cash credits.

4. Application of Relevant Case Laws and Precedents:
The Tribunal considered several case laws cited by both parties. The AO relied on decisions such as Durga Prasad More and Sumati Dayal, which deal with circumstantial evidence in the absence of direct evidence. However, the Tribunal found these cases distinguishable as the assessee had explained the sales with sufficient evidence. The Tribunal also referred to decisions like CIT v. Associated Transport (P.) Ltd. and Lalchand Bhagat Ambica Ram v. CIT, which support the view that if the books of accounts are genuine and the cash balance matches, the source of income is well disclosed. The Tribunal concluded that the case laws cited by the AO were not applicable in this case, as the sales were duly accounted for and offered for taxation.

Conclusion:
The Tribunal upheld the CIT(A)'s order, confirming that the sales recorded on 08.11.2016 were genuine and could not be treated as unexplained cash credits under Section 68. The Tribunal dismissed the revenue's appeal and the cross-objection filed by the assessee, concluding that the cash receipts represented genuine sales and were rightly offered for taxation. The decision was pronounced in the open court on 12th May 2021.

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