2025 (10) TMI 200 - AT - Income Tax

Assessee fails to prove cash deposits as sales; Rs.5,00,000 lump-sum addition sustained under s.68 with non-precedent rider

Neither party was fully accepted: the assessee failed to plead and prove all facts explaining cash deposits as cash sales in its wholesale clothing ... Unexplained cash credits u/s 68 - allegation of cash sales unaccounted - HELD THAT:- We are of the considered view that neither party’s stand deserve to be accepted in entirety. This is for the precise reason that neither the assessee has been able to plead and prove all the relevant facts explaining source of it’s cash deposits as on account of cash sales in wholesale clothes business activity nor the department could rebut the clinching fact that be it the preceding assessment year or that in question before us, the corresponding benefit of the assessee having disposed of it’s stock etc. in cash above couldn’t be altogether ruled out. Lump sum addition of Rs. 5,00,000/- only in the given facts and circumstances of the case would be just and proper with a rider that the same shall not be treated as a precedent. Appeal under section 143(3) for A.Y. 2014-15 by an HUF engaged in wholesale clothing business against CIT(A)'s order upholding Assessing Officer's addition of cash deposits of Rs. 34,62,000 as 'unexplained cash credits u/s 68'. Appeal heard ex parte for assessee. Assessee's grounds include that CIT(A) 'has erred in considering the amount of sale proceeds already credited to the Profit & Loss Account as unexplained credit and adding the same to the income of the appellant as unexplained credit u/s 69', reliance on an addition accepted in A.Y. 2013-14, and that cash deposits were verified from the cash book and sales register. Tribunal found neither party established all relevant facts: revenue could not wholly rule out cash sales, while assessee failed to fully explain source. Applying judicial consistency only partially, Tribunal made a pragmatic lump-sum addition of Rs. 5,00,000 (with the rider that the addition 'shall not be treated as a precedent'), granting relief of Rs. 29,62,000; computation to follow. Appeal partly allowed.