BAJAJ RUBBER COMPANY PRIVATE LIMITED,NEW DELHI V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-15, NEW DELHI

CO 74/DEL/2024

AI Insights

The case involves cross appeals by the assessee, Bajaj Rubber Company Pvt. Ltd, and the revenue concerning the assessment year 2017-18. The primary issue was the addition made by the Assessing Officer (AO) under Section 68 read with Section 115BBE of the Income Tax Act, 1961, treating cash deposits during the demonetization period as unexplained. The assessee argued that these deposits were from legitimate cash sales, which were duly recorded in their books and reflected in their tax returns. The CIT(A) agreed with the assessee, leading to the revenue's appeal to the Tribunal. The Tribunal upheld the CIT(A)'s decision, emphasizing that the cash sales were legitimate and properly documented, and noted the inapplicability of the higher tax rate for the relevant assessment year.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705583 (ITAT-DELHI)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: SMILE Microfinance Limited vs ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR ARORA
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI C. N. PRASAD, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No. 2631/Del/2024 (Assessment Year: 2017-18) DCIT, Central Circle-15, New Delhi Vs. Bajaj Rubber Company Pvt. Ltd, C-47, Mayapuri Industrial Area, Phase-II, Mayapuri, Delhi-110064 (Appellant) (Respondent) PAN: AACCB0949GF CO 74/Del/2024 (In ITA No. 2631/Del/2024 (Assessment Year: 2017-18) Bajaj Rubber Company Pvt. Ltd, C-47, Mayapuri Industrial Area, Phase-II, Mayapuri, Delhi-110064 Vs. DCIT, Central Circle-15, New Delhi (Appellant) (Respondent) PAN: AACCB0949GF Assessee by : Dr. Rakesh Gupta, Adv Shri Somil Agarwal, Adv Revenue by: Shri Ajay Kumar Arora, Sr. DR Date of Hearing 05/06/2025 Date of pronouncement 30/06/2025 O R D E R PER M. BALAGANESH, A. M.: 1. These are the cross appeals filed by the assessee and the revenue in ITA No. 2631/Del/2024 and CO 74/Del/2024 filed by revenue for AY 2017-18, arises out of the order of the Commissioner of Income Tax (Appeals)-26, New Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. ITBA/APL/M/250/2023-24/1062356088(1) dated 08.03.2024 against the order of assessment passed u/s 143(3) of the ITA No. 2631/Del/2024 CO 74/Del/2024 Bajaj Rubber Company Pvt. Ltd Page | 2 Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 28.12.2019 by the Assessing Officer, ACIT, Central Circle-15, New Delhi (hereinafter referred to as ‘ld. AO’). 2. Through the revenue has raised several grounds before us, the only effective issue to be decided in this appeal is challenging the deletion of addition made on account of cash deposits during the demonization period. 3. We have heard the rival submissions and perused the material available on record. The assessee is a company engaged in the business of trading of rubber and chemicals. The return of income for AY 2017-18 was filed by the assessee company on 29.01.2018 declaring taxable income at Rs. 1,38,02,020/-. During the course of scrutiny assessment proceedings, the ld AO noted that there was some cash deposits made by the assessee during the demonetization period. The assessee stated that sales were happening from Delhi Office Counter and Faridabad Branch in cash during the demonetization period. The entire cash sales made by the assessee have been duly reflected in the books of account by the assessee and also in the income tax return. The assessee explained that it had sufficient cash balance as per its cash book and the cash deposits were sourced out of cash balance in the books. The assessee in support of its contention produced the complete details of purchase and sale together with the stock inventory showing opening stock, purchase, sales and closing stock in terms of quantity vide letter dated 04.12.2019. The ld AO further disregarded the contentions of the assessee and proceeded to hold that cash deposit made during the demonetization period remain unexplained and treated the same as unexplained cash credit u/s 68 read with Section 115BBE of the Act in the sum of Rs. 2,22,16,500/-. In appeal, the assessee reiterated the ITA No. 2631/Del/2024 CO 74/Del/2024 Bajaj Rubber Company Pvt. Ltd Page | 3 contentions. The ld CIT(A) however accepted the contentions of the assessee and deleted the addition. 4. We find that cash sales made by the assessee are duly reflected in the books of accounts of the assessee. The assessee has furnished both purchase and sale bills before the lower authorities. The cash sales are part of the total turnover declared by the assessee in the profit and loss account and the turnover disclosed in the income tax return. The assessee has furnished the stock details and to the extent of cash sales made, the stocks have been correspondingly reduced. The assessee had explained the purchase of goods which is also duly reflected as goods inward in the stock register. The stock register submitted by the assessee has not been found to be incorrect and not rejected by the ld AO. The payments to the suppliers of goods for purchase have been through regular banking channels. The purchases made by the assessee have been accepted by the ld AO. The complete address of the purchases together with their VAT bills, email ID, employee ID, employee numbers were furnished before the lower authorities. The assessee has been making cash sales in the periods even earlier to the demonetization period. Cash sales have been duly included in the VAT returns and no discrepancies thereon were either found by the VAT authorities or by the income tax department. These details were duly appreciated by the ld CIT(A) and addition has been deleted, on which, we do not find any infirmity. Hence, there is no question of making any addition u/s 68 of the Act in the facts and circumstances of the instant case. In any event, cash sales have already been disclosed by the assessee which has been accepted by the revenue. Hence, making any addition on account of cash deposits which has been sourced out of cash sales would only result in double addition. Further the Hon’ble Madras ITA No. 2631/Del/2024 CO 74/Del/2024 Bajaj Rubber Company Pvt. Ltd Page | 4 High Court in the case of SMILE Microfinance Limited vs ACIT in WP (MD) No. 2078 of 2020 and WMP (MD) No. 1742 of 2020 dated 19-11- 2024 had held that higher rate of tax prescribed in Section 115BBE of the Act could be made applicable only from AY 2018-19 onwards and not earlier. With these observations, grounds raised by the revenue are hereby dismissed. 5. The cross objection filed by the assessee is only supportive of order of ld CIT(A). 6. In the result, the appeal of the revenue is dismissed and cross objection of the assessee is allowed. Order pronounced in the open court on 30/06/2025. -Sd/- -Sd/- (C. N. PRASAD) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30/06/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "