2022 (4) TMI 1277 - AT - Income Tax

Tribunal rules in favor of assessee, deletes cash deposit addition during demonetization, upholds sales legitimacy

Mr. Ramesh Kochar, Prop. National Electric Co. Versus The Income Tax Officer, Ward-45 (1), Delhi.

The Tribunal allowed the appeal of the assessee, directing the deletion of the addition of cash deposits during demonetization and upholding the ... Unexplained cash deposits in the bank of the assessee including the period of demonetization - HELD THAT:- Undisputed fact that on the aforesaid sales, VAT as per the applicable rates has been paid by the assessee and the payment of VAT is also reflected in the VAT returns filed by the assessee with the Department of Trade and Tax, Government of Delhi. Before us Revenue has not placed any material on record to demonstrate that the details of cash sales filed by the assessee are fictitious or bogus. Revenue has also not placed any material on record to demonstrate that the VAT return filed by the assessee before the Appropriate Authorities have been rejected by the Authorities. It is also a fact that the assessee is having only one source of income which is also not in dispute. The purchase of goods from which the alleged sales have been made by the assessee has also not been rejected by the Revenue. I find that the Bangalore Bench of the Tribunal, on similar facts, in the case of Anantpur Kalpana, Gangavathi, Karnataka [2021 (12) TMI 599 - ITAT BANGALORE] and M/s. Hirapanna Jewellers, Visakhapatnam [2021 (5) TMI 447 - ITAT VISAKHAPATNAM] has held that when the sales have been accepted as revenue receipt, the same could not have been again added as income. We find the issue in the present case is also covered by the aforesaid two decisions relied on the assessee. In such circumstances and in absence of any contrary material brought on record by the Department, in the present case no addition is called for - therefore, direct for deletion of the addition made by A.O. and upheld by the Ld. CIT(A). Thus, the ground raised by the assessee is allowed. Issues:1. Addition of unexplained cash deposits in the bank account during demonetization period.2. Application of section 69A of the Income Tax Act on cash deposits representing cash sales.3. Levy of tax as per provisions of section 115BBE of the Income Tax Act.4. Applicability of higher rate of taxation under Section 115BBE to the assessment year 2017-18.5. Allegations of adverse findings by the Assessing Officer being perverse.6. Validity of penalty proceedings under section 271AAC of the Income Tax Act.7. Levy of interest under sections 234B and 234C.Analysis:Issue 1:The assessee challenged the addition of cash deposits during demonetization as unexplained. The Assessing Officer (A.O) held the deposits to be from undisclosed sources and made an addition under section 69A of the Income Tax Act. The CIT(A) partially upheld the addition. The Tribunal found that the sales were genuine, supported by sales registers and VAT returns. Relying on precedents, the Tribunal directed deletion of the addition as no contrary material was presented by the Revenue.Issue 2:The application of section 69A on cash deposits representing cash sales was contested by the assessee. The Tribunal found the sales to be legitimate, evidenced by sales registers and VAT returns. No evidence was provided by the Revenue to dispute the genuineness of the sales. The Tribunal directed the deletion of the addition under section 69A.Issue 3:The CIT(A) upheld the levy of tax under section 115BBE. The Tribunal considered the sales to be in the regular course of business and not liable to be assessed as income from other sources. As the sales were genuine and supported by documentation, the Tribunal directed the deletion of the addition under section 115BBE.Issue 4:The assessee argued against the applicability of the higher rate of taxation under Section 115BBE to the assessment year 2017-18. The Tribunal found the sales to be legitimate and not liable for taxation under section 115BBE. Relying on precedents, the Tribunal directed the deletion of the addition under section 115BBE.Issue 5:The assessee contended that the adverse findings by the Assessing Officer were erroneous and made without proper consideration of evidence. The Tribunal found the sales to be genuine, supported by documentation, and directed the deletion of the addition.Issue 6:The validity of penalty proceedings under section 271AAC was questioned by the assessee. The Tribunal did not provide specific details on this issue in the judgment.Issue 7:The assessee challenged the levy of interest under sections 234B and 234C. The Tribunal did not provide specific details on this issue in the judgment.In conclusion, the Tribunal allowed the appeal of the assessee, directing the deletion of the addition of cash deposits during demonetization and upholding the genuineness of the sales made by the assessee.