ITAT Deletes Rs 1.22 Cr Addition Made Against Company in Demonitisation Case
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted an addition of Rs 1.22 crore made by the Assessing Officer (AO) under Section 68 of the Income Tax Act for the Assessment Year 2017-18.
The AO observed that the company, Ayesha Steels (P) Ltd, had made large cash deposits of Rs 1.22 crore in SBN during the demonetisation. The AO also observed that no cash sales were made in the previous financial year, 2016-17. But in the 38 days during demonetisation, the company suddenly deposited Rs 1.22 crore in cash, claiming it was from cash sales of scrap. As per the AO, the company did not submit any cash book or ledger to support its claim. The AO also observed that the list of 63 parties submitted by the company did not have any verifiable address or PAN. Therefore, the AO treated this amount as unexplained cash deposits and made an addition of Rs. 1,22,00,000.
However, as per the company, it did submit the required documents in response to the show cause notice dated 14.12.2019 along with the required reply. However, the company claimed that the documents could not be uploaded as the window on the income tax portal was closed by the Faceless Assessing Officer (FAO). The company reached out to the Jurisdictional Assessing Officer (JAO) to submit the documents, but the officer did not accept the same. Therefore, the company later submitted the documents on 18.12.2019 through email. But these were not considered while passing the assessment order.
The company submitted that it filed complete documentation, including cash books, stock and sales registers, VAT returns, sale invoices, and remand report responses before the CIT(A). But still the CIT(A) confirmed the addition.
The ITAT Delhi observed that the sales figures were already shown in the audited books of account, and they cannot be taxed twice. The Books of account were also audited, and the AO did not reject the same. Since the company’s declared turnover was accepted by the tax department, the AO cannot make further additions. In this case, the AO did not point out any mismatches in the documents submitted by the company regarding its cash sales.
The court observed that the company had submitted enough explanation about the source of the cash deposit during the demonetisation period. Accordingly, the Rs 1.22 crore addition was deleted by ITAT, and the appeal was allowed in favour of Ayesha Steels.