2026 (6) TMI 278

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....after referred as 'the Act') arising from the assessment order dated 27.04.2021 by the NFAC, Delhi under section 143(3) of the Act for the Assessment Year 2018-19. 2. The Revenue has raised the following grounds of appeal: 1. "On facts and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 2,83,76,907/- made by the Assessing Officer under section 68 of the Income-tax Act, 1961, without appreciating that the assessee failed to discharge the primary onus to establish the nature and source of the cash credits. 2. The Ld. CIT(A)failed to appreciate that mere filing of bank statements or reconciliation does not establish genuineness of the cash deposits and that the assessee failed to produce corresponding sale inv....

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....n and balance Rs. 2,83,76,907/- has been added as income u/s 68 of the Act on account of unexplained cash deposit during the period of demonetization. It is the addition u/s 68 of the Act which is in contest. Upon appeal, the CIT(A) deleted the addition. Aggrieved Revenue is before us. 4. The ld DR vehemently supported the order of the AO whereas the ld AR relied on the order of CIT(A). 5. We have heard the rival submissions and perused the material available on record. We find that the assessee is a retailer of "Harley Davidson Brand of Motor Cycles", which are sold in the market. The assessee also gives services and trades in spares parts which generates the cash. The assessee has explained that the said cash was deposited in the ba....

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....tment to prove that the explanation is false (CIT v. Orissa Corporation 159 ITR 78 SC). Section 68 cannot be invoked merely on conjecture or disbelief. The mere fact that the business involves high-value products does not prohibit cash receipts, particularly when the sales are within the statutory limit of section 40A(3) and properly recorded in the books. Further, cash receipts for service income, merchandise sales and booking advances are common industry practice and fully permissible under law. The AO has not brought on record any evidence of unaccounted purchases, on-money transactions, or diversion of funds to suggest that the cash deposits were from unexplained sources. 6.9.9. The appellant also points out that the bank state....