Assessee wins appeal as addition under section 69A deleted when books accepted without discrepancies during demonetization

The ITAT Chandigarh allowed the assessee's appeal against an addition under section 69A regarding cash deposits from cash sales during demonetization. The AO had accepted all vouchers, cash sales entries, stock registers, and audited books without pointing out any discrepancies or questioning their genuineness. The CIT(A) provided only partial relief on an estimate basis without identifying any shortcomings in the books. The ITAT held that once complete books of account are accepted without any discrepancies being pointed out, no addition can be made based on the same accepted records. The addition was deleted entirely.

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Issues Involved:
1. Treatment of cash sales as unexplained income u/s 69A r.w. section 115BBE of the Income Tax Act.
2. Rejection of audited books of accounts for treating cash sales as unexplained income.
3. Ignoring lack of discrepancy in books of accounts for treating cash sales as unexplained income.
4. Treating cash sales as higher without proper justification.
5. Request for amendment of grounds of appeal.

Summary:
The appeal was filed against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, regarding the treatment of cash sales as unexplained income. The Assessee, a partnership firm dealing in jewellery, had deposited cash in its bank account during the assessment year 2017-18. The Assessing Officer raised concerns about the cash deposits and made additions u/s 69A of the Income Tax Act. The ld. CIT(A) partially allowed relief to the Assessee based on estimation of sales during a specific period.

During the appeal, the Assessee presented various arguments, including the maintenance of complete books of accounts, non-rejection of books of accounts, explanation for cash deposits post-demonetization, availability of sufficient stock, and compliance with VAT returns. The Assessee emphasized the interlinking of purchases, sales, and stock, highlighting that the Assessing Officer accepted certain aspects while doubting cash sales without valid reasons.

The Assessee also cited relevant case laws supporting the principle that income cannot be estimated without rejecting books of accounts. The Tribunal considered the evidence presented, noting that all vouchers of cash sales were produced, and no discrepancies were found in the books of accounts accepted by the authorities. The Tribunal referred to previous judgments emphasizing the importance of pointing out shortcomings in books of accounts before doubting cash sales.

Ultimately, the Tribunal allowed the appeal of the Assessee, concluding that the additions made by the Assessing Officer were unjustified as the books of accounts were not rejected, and no discrepancies were identified in the records. The Tribunal highlighted the necessity of concrete evidence before treating cash sales as unexplained income, thereby ruling in favor of the Assessee.

(Order pronounced on 07.05.2024.)

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