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of <h1>ITAT upholds deletion of unexplained cash deposits addition during demonetization citing double taxation concerns</h1> <h3>The ITO, Ward-7, Ludhiana Versus Aakriti Jain</h3> The ITO, Ward-7, Ludhiana Versus Aakriti Jain - [2024] 120 ITR (Trib) 1 (ITAT [Chand]) Issues:Appeal against order of the ld. Commissioner of Income Tax (Appeals) regarding huge sales made by the Assessee from Parwanoo, lack of bank account and strong room, and cash deposits during demonetization.Analysis:The Department filed an appeal before the Tribunal challenging the Assessee's sales from Parwanoo, a smaller station compared to Ludhiana, made in cash without a bank account or strong room in Parwanoo. The Department raised concerns about the feasibility of such operations and alleged tax evasion by the Assessee.The Assessee, engaged in jewelry trading, operated from Ludhiana and Parwanoo. The Assessing Officer disallowed a substantial amount under section 68 of the Act due to cash deposits during demonetization. The Assessee maintained that the cash deposits were from regular sales and provided various documents to support the existence and operations of the Parwanoo branch.The ld. CIT(A) found discrepancies in the Department's claims and accepted the Assessee's explanations. The CIT(A) highlighted flaws in the Inspector's report, lack of formal statements, and cross-examination. The Assessee's history of cash deposits and documentation convinced the CIT(A) that the sales were genuine, leading to the deletion of the addition.The Tribunal upheld the CIT(A)'s decision, emphasizing that once purchases and stock were accepted, sales should not be doubted. The Tribunal found no reason to question the Assessee's cash deposits, especially when VAT collections and filings were in order. Double taxation was deemed unjustifiable, and the Assessee's explanations were considered genuine and supported by documentation.In conclusion, the Departmental appeal was dismissed, affirming the CIT(A)'s decision. The Tribunal found the Assessee's explanations reasonable, supported by evidence, and rejected the notion of double taxation. The order was pronounced on 14.06.2024.
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