Cash deposited during demonetization as unexplained credit: Rejection of books of accounts u/s 145 & Addition u/s 68/69A with 115BBE –




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Cash deposited during demonetization as unexplained credit: Rejection of books of accounts u/s 145 & Addition u/s 68/69A with 115BBE –

 

Here is an interesting judgment by Jaipur ITAT regarding Cash deposited during demonetization as unexplained credit: Rejection of books of accounts u/s 145 & Addition u/s 68/69A with 115BBE.

The case citation is as under:

ITAT JAIPUR:

SUWALKA AND SUWALKA PROPERTIES AND BUILDERS PVT. LTD.

VERSUS

ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTA.

No.- ITA No. 302/JP/2024

Dated.- October 3, 2024

The key observations by the Hon’ble ITAT were as under:

1.  We note that out of the sales of worth Rs. 3,24,44,415/-, sales worth Rs. 2,64,00,000/- was not considered as genuine because the assessee out of those sales deposited the amount in the specified bank notes.

Thus, on the same set of records revenue was satisfied for sales of Rs. 60,44,415/- [ Rs. 3,24,44,415 less Rs. 2,64,00,000/- ] and for Rs. 2,64,00,000/- hold a view that the assessee has not maintained proper sales records and therefore invoked the provision of section 145(3) of the Act is not correct.

2.  Ld. AO or that of ld. CIT(A) has not considered it fit to make the verification of the contention at the place of business / site to verify the contention and thereby tried to collect the corroborative evidence and without doing so part sales is accepted and part not is not correct reasons to reject the books of accounts.

Based on these observations ground no. 1 raised by the assessee is allowed.

3.  Ground no. 2 relates to action of the lower authority treating the part of the sales attributable to cash sales as unexplained money (under section 69A) or that of the unexplained cash credits (under section 68 ) of the Act.

As we hold a view that the revenue cannot be accept the part of the sales as explained and part of the sales not explained on the same set of evidence. Therefore, the cash deposited in the demonetized currency added as income of the assessee by applying the provisions of section 68 of the Act while the provisions of 68 as such are not applicable on the sale transactions recorded in the books of accounts because the sale transaction are already part of the income which is already credited in statement of profit & loss account. Therefore, there is no occasion to consider the same as unexplained credit entry of the assessee by applying the provisions of section 68 of the Act.

4.  We get support of our view from the decision of our High Court of Rajasthan in the case of Smt. Harshila Chordia vs Income-tax Officer [2008] 298 ITR 349 (Rajasthan) wherein it was held that no addition could be made in respect of the amount standing in the books of the assessee, which was found to be the cash receipts from the customers and against which delivery of vehicle was made to them.”

As the fact of this cash being similar that part of the sales is considered by the revenue has explained and part of it not is not correct and therefore, we hold that cash deposited by the assessee out of sales proceeds of stone cannot be considered attributable to the provision of section 68 or that of 69A of the Act. Based on these observations ground no. 2 raised by the assessee is allowed.

The copy of the order is as under:

1728017716-ITA No 302-JP-2024 Suwalka and Suwalka Properties and Builders Pvt. Ltd.




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