DEPUTY COMMISSIONER OF INCOME TAX, DELHI V. ADARSH KANCH UDHYOG PVT LTD, DELHI

ITA 4741/DEL/2024

AI Insights

The case involves the Deputy Commissioner of Income Tax as the appellant and Adarsh Kanch Udhyog P. Ltd. as the respondent. The core issue was the addition of Rs.1,80,90,330 to the income of the respondent under Section 68 of the Income Tax Act, which was contested by the Revenue. The addition was based on unexplained cash deposits during the demonetization period. The respondent argued that these deposits were from legitimate cash sales and collections from old debtors. The CIT(A) deleted the addition, a decision upheld by the tribunal after considering the arguments and evidence presented, including VAT orders and the nature of transactions in the glass bangle trade.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31043 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH TRIPATHI
• Section: 250; 68; 13

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘A’: NEW DELHI) BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No:-4741/Del/2024 (Assessment Year- 2017-18) Deputy Commissioner of Income Tax, R. No. 404, C R Building I P Estate, New Delhi 110002 Vs. Adarsh Kanch Udhyog P. Ltd., H.No. 61, Ground Floor, Block A Sudarshan Park, New Delhi 110015 PAN No:AACCA5631N APPELLANT RESPONDENT Assessee by : None Revenue by : Sh. Ashish Tripathi, Sr. DR Date of Hearing :13.03.2025 Date of Pronouncement : 21.03.2025 ORDER PER AMITABH SHUKLA, AM: The Revenue is contesting order u/s 250 dated 12.08.2024, passed by NFAC confirming addition of Rs.1,80,90,330/-made by the Ld. NFAC. 2. The only issue rising in the present appeal of the revenue is regarding an addition of Rs.1,80,90,330/- made by the Ld. AO under Section 68 of the Act. None appeared on behalf of the ITA No.- 4741/Del/2024 Adarsh Kanch Udyog Page 2 of 6 assessee. As per brief factual matrix of the case the assessee was found to have deposited in cash the impugned amount in his bank account during the demonetisation period. Before the Ld. AO the assessee had submitted that the impugned cash represented his sales made in cash as well as return of old debtors amount in SBNs. The Ld. AO invoked provisions of section 115 BBE of the Act. While making the impugned addition the Ld. AO held the view that the assessee had failed to explain the sources of said cash. It is the case of the Ld. AO that the cash deposited by the assessee was far in excess when compared with the corresponding cash deposits in earlier years. The Ld. DR would like to make us rely upon the order of the Ld. CIT(A). 3. We have heard the arguments made by the Ld. DR in the light of material available on record. We have noted that the Ld. CIT(A) has extensively analysed the issue as evident from page 2 to page 12 of his order. At this stage we deem it appropriate to reproduce para 9 / 10 of his order on page 12 as under :- “………….In the present case, the books of accounts of the appellant have not been rejected by the AO and hence, the purchase of the appellant are accepted by the AO and ITA No.- 4741/Del/2024 Adarsh Kanch Udyog Page 3 of 6 when the purchases stand accepted, corresponding sales can notbe denied. The AO has ignored the fact that the appellant derived cash sales and realization of cash from debtors mainly out of its Glass bangle trade in which, mostly the buyers are of unorganized sector and deal in cash only. The AO guided by surmise and conjecture while disputing the cash deposit in bank on account of having done in piecemeal manner instead of in one go. The AO was not justified in not considering the fact that during festive occasions such as Diwali, sales are increased. The AO was also not justified in not accepting realization of cash from old debtor by the appellant. It was a common phenomenon to pay the old outstandings in cash in SBNs to get rid of demonetized currency. Further, the AO was not justified in disputing the existence of Debtors from whom cash was realized. The appellant has submitted copy of UP VAT order for F Y 2016-17 in instant appellate proceedings and as per the said order, no discrepancy in salesor purchase is noticed. Considering the large volume of sales of Glass bangle trade of Rs. 17.68 Crores during ITA No.- 4741/Del/2024 Adarsh Kanch Udyog Page 4 of 6 the year as evidenced by UP VAT order submitted by the appellant, the cash sale component claimed to be appellant appears to be justified. The large volume of Glass Bangle sales also justifies high level of debtors who generally pay in cash. 10. In view of the above discussion, I hereby allow Ground No. 1 to 8 of the appellant and the addition of Rs. 1,80,90,330/- made u/s 68 of the Act is deleted. 11. Ground No. 9 to 12 are related to interest and penalty and since I have deleted the quantum addition, the grounds become academic in nature and does not need any adjudication. 12. Ground No. 13 is general in nature and does not need adjudication. In the result, the appeal is disposed of as allowed……” 4. The Ld. CIT(A) has rightly held that the books of accounts of appellant have not been rejected and the purchases stand accepted. We find sufficient force in the argument that corresponding sales cannot be suspected. We also find force in the argument that assessee’s VAT orders for F.Y 2016-17 also support his case of genuine sales having undertaken. Accordingly, we are of the considered view that there is no case for any interference to the ITA No.- 4741/Del/2024 Adarsh Kanch Udyog Page 5 of 6 order of the Ld. CIT(A) at this stage. The same is, therefore, confirmed and all the grounds of appeal raised by the revenue are dismissed. 5. In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 21.03.2025. Sd/- Sd/- (VIKAS AWASTHY) (AMITABH SHUKLA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 21/03/2025. NEHA, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "