DCIT,CIRCLE-7(1), DELHI V. EP ELECTRONIC PARADISE PRIVATE LIMITED, DELHI

ITA 3566/DEL/2023

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314428 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: RANO JAIN; PRANSHU SINGHAL
• Keywords: Business income; Unexplained cash credit; Rejection of books of accounts
• Section: 68

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘B’, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA NO. 3566/DEL/2023 A.YR. : 2017-18 DCIT, CIRCLE 7(1), ROOM NO. 404, 4TH FLOOR, I.P. ESTATE, C.R. BUILDING, NEW DELHI Vs. EP ELECTRONIC PARADISE PRIVATE LIMITED, 13, GROUND FLOOR, VAISHALI, PITAMPURA, DELHI – 34 (PAN: AADCE6513E) (Appellant) (Respondent) Date of hearing : 05.05.2025 Date of pronouncement : 05.05.2025 ORDER PER SHAMIM YAHYA: AM This appeal filed by the Revenue is directed against the order dated 10.10.2023 passed by the NFAC, Delhi in relation to assessment year 2017-18 on the following ground:- “Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in deleting the addition of Rs. 4,03,83,000/- made u/s. 68 of the Act on the basis of unexplained cash deposits during demonetization period?” Assessee by Ms. Rano Jain, Adv, Sh. Pranshu Singhal, CA, Ms. Sakshi Rustagi, Adv. And Ms. Mansi Jain, CA Department by Shri Rajesh Kumar Dhanesta, Sr. DR 2 2. Brief facts of the case are that the assessee filed its return of income on 30.10.2017 electronically declaring an income of Rs. 74,76,390/-. During the year under consideration, the assessee company was engaged in the business of trading of electronic appliances through various showrooms in Delhi and NCR. The return was selected for scrutiny assessment through CASS and accordingly statutory notices were issued and served upon the assessee. During the course of assessment proceedings, the AO noticed that there were cash deposits to the tune of Rs. 4,03,83,000/- during the demonetization period. After analyzing the cash deposits, the AO came to conclusion that the cash in hand shown by the assessee company as on 08.11.2016 was 617% or 6 times of the cash in hand balance as on 01.04.2016. As the assessee failed to explain the exact source of cash deposits, the AO added an amount of Rs. 4,03,83,000/- on account of unexplained credits u/s. 68 of the Act and added to the total income of the assessee. 3. Upon assessee’s appeal, Ld. CIT(A) deleted the addition by holding as under:- “9.2 Having gone through submission made by the appellant it is very much clear that the Assessing Officer did not believe in the explanation filed by the appellant in respect of the Cash Deposits made by the appellant. But the Assessing Officer had not discharged the onus of proving how the submission made by the appellant is not satisfactory. If the Assessing Officer was not satisfied with the submission made by the appellant then the burden lies on him to point out evidence to support his decision. Moreover, the AO has not even rejected the books of accounts of the appellant. The appellant has also relied on various case laws stated above which are squarely applicable in his case. 9.2.1 In the present case the appellant also explained that the sales of consumer electronic goods in North India were normally higher side as Diwali was fell in that period. 3 Further, the appellant has sold some of obsolete stock as well during the festive season. The said explanation cannot be brushed aside considering the trend of the society in India during the festive season. 9.3 I have duly considered the submissions of the appellant, assessment order and the material placed on record. During the appellate proceeding, the appellant had brought out sufficient evidences to prove the source of cash deposits made in the bank account during the period of demonetization. Moreover, there was iota of evidence having any adverse remarks on the purchases shown by the appellate in its books of accounts. After perusal of entire material on records, accordingly addition of Rs. 4,03,83,000/- u/s. 68 of the Act on account of unexplained credits is not found sustainable and, thereby deleted.” 4. Against the above order, Revenue is in appeal before us. 5. We have heard both the parties and perused the records. Ld. DR relied upon the order of the AO. Per contra, Ld. AR for the assessee submitted that Ld. CIT(A) has passed a reasonable order which does not require any interference on our part. She submitted that books have not been rejected and assessee’s submissions have been disbelieved without any cogent basis. She further submitted that in identical situation the Coordinate Bench of the Tribunal in ITA No. 2866/Del/2022 for AY 2017-18 vide order dated 26.3.2025 in the matter of Deepak Sharma vs. ACIT has allowed the assessee’s appeal on similar cash deposit. 5.1 Upon careful consideration, we find that on identical facts this Tribunal in the case of Deepak Sharma vs. ACIT (Supra) has held as under: “3. We have heard both the parties and perused the records. At the time of hearing, Ld.Counsel for the assessee submitted that once the purchases declared in the books of account were accepted, there is no basis to treat the sales made out of such purchases as unexplained cash credits taxable under section 68 of the Act. It was further submitted that the cash 4 deposits which has already declared in the return of income as part of total sales and that it amounts to double taxation of the same amount. It was further submitted that even assuming that the additions were warranted under section 68 of the Act, the Ld. CIT(A) has erred both on facts and in law in confirming the demand computed in accordance with rate specified in section 115BBE of the Act as amended by Taxation Laws (Second Amendment) Act, 2016. Ld. DR relied upon the orders of the authorities below. We find that Ld. CIT(A) has not disputed the sales made which were duly disclosed in V AT return and also in books of accounts maintained by the assessee audited and also under section 44AB of the Act, no adverse inference could be drawn in respect of the declared sales by the assessee. We further note that once the purchases declared in the books of accounts were duly accepted then no subjective assumption and presumption could be made a basis to assume, allege and conclude that sales made out of such purchases were unexplained cash credits taxable under section 68 of the Act. It is settled law that once the books of accounts, sales have been accepted, the same could not be regarded as unexplained credits. It is also noted that aforesaid sales as made by the assessee were supported by the availability of stock in the books of accounts whose availability is not disputed and is otherwise too supported by genuineness of creditors and also sales bills maintained. In view of the aforesaid peculiar facts and circumstances of the case, we are of the considered view that addition in dispute confirmed by the Ld. CIT(A) deserve to be deleted. We hold and direct accordingly. So far as assessee’s assessment u/s. 115 BBE of the Act is concerned, Hon’ble Madras High Court in SMILE Microfinance Ltd. vs. ACIT in WP(MD) no. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue against the department that the law applies to the transaction on or after 01.04.2017 only. Ordered accordingly. 5.2 We find that the aforesaid case law is squarely applicable in the facts of the present case. Moreover, Ld. CIT(A) has passed a reasonable order, wherein he has given a finding that AO has not rejected the books of account and sales during the festive seasons sales were on higher side. Furthermore, there was no iota of evidence having adverse remark on the purchases shown by the assessee 5 in its books of accounts. Hence, we do not find any infirmity in the order of the Ld. CIT(A), thus, we confirm the same. 6. In the result, appeal filed by the revenue stands dismissed. Order pronounced on 05/05/2025. Sd/- (VIMAL KUMAR) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER “SRBHATNAGAR” Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "