The Income Tax Appellate Tribunal (ITAT), Jaipur bench, while deleting an addition, has held that the receipt of cash on account such sales after accepting the cash sales as genuine the receipt does not fall within the purview of section 68 of the Income Tax Act, 1961.
Before the Tribunal, the assessee, Smt Kanchan contended that the receipt in question is arising out of the sales made to the party named M/s. Vijay Laxmi Agro Implements which is not proved to be bogus even by that party and they have just denied to given cash against sales, sales is supported by a delivery challan mentioning the vehicle number, items sold and is supported by an invoice having serial no. of bill book. The sale invoice shows complete details of the party and this invoice is as prescribed under the VAT laws. However, the AO treated the same as unexplained.
The bench comprising Dr. S. Seethalakshmi, JM & Shri Rathod Kamlesh Jayantbhai, AM observed that the AO in the second round of litigation admitted the fact that the appellant has made the sales supported by delivery challan and invoice and copy of party’s ledger account.
Deleting the addition, the Tribunal held that “this sale since accepted and the receipt of the sales in cash cannot be considered as an amount of income under the provision of section 68 of the Act. As the credit in the books of account first is sales made as it is evident from the copy of the ledger filed by the assessee thus, the source of money received is clearly proved and there is no rejection of the books produced before the assessing officer. If the sales are accepted to have been made the related cash receipt recorded in the books of account arising out of the said sales is same receipt for which source is sales made. Thus, the separate receipt of cash on account such sales after accepting the cash sales as genuine the receipt does not fall within the purview of section 68 and thus the addition of Rs. 3,19,380/- is required to be deleted.”
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