The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition under section 69 of the Income Tax Act, 1961 as the cash sales can’t take place before commencement of business.
Appliances Forever, the respondent- assessee is a trader in electrical goods trader, filed its return declaring income of Rs.4,700/-. During scrutiny, the Assessing Officer ( ‘AO’) held the cash sales aggregating to Rs.65,53,340/- deposited in the bank during the course of the demonetization period non-genuine and taxed it under section 69A r.w.s. 115BBE of the Income tax legislation. The assessee preferred appeal before the CIT(A) and succeeded there.
The revenue challenged the order of the Commissioner of Income Tax (Appeals). It was argued that the cash sales of Rs.65,53,340/-had taken place on various days during the period 05.10.2016 to 19.10.2016 and 02.01.2016 to 18.01.2017 and there was no cash sales prior to 05.10.2016 when the respondent/assessee was having imported goods worth Rs.2.68 Crores as stock-in-trade in September, 2016.
Section 69A of the Income-tax Act, states that where in any financial year the assessee is found to be the owner of any money, bullion, or other valuable article and such money, bullion or valuable article is not recorded in the books of account, on the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion or other valuable article may be deemed to be the income of assessee for such financial year.
The Bench found that the assessee has made cash sales as well as credit sales, and had maintained sales vouchers and filed VAT return within the stipulated time. Further stated that revision of VAT return has not affected the turn over shown in the original VAT return, and the Revenue has not placed any material on record to demonstrate that the details of cash sales shown by the assessee are fictitious/bogus.
The two member bench of Madhumita Roy (Judicial Member) and Avdhesh Kumar Mishra (Accountant Member) observed that the purchases are entirely through imports. Also found that the revenue has also failed to place any material on the record to demonstrate that the VAT returns of the relevant year have not been accepted by the VAT authority and the Custom authority has not accepted the imports/purchases.
The ITAT deleted the addition made under section 69A and dismissed the appeal filed by Revenue.
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