AI Insights
The case involves an appeal by the Deputy Commissioner of Income Tax against Belle Laboratories P. Ltd., concerning the addition of Rs.1,41,36,733 as unexplained cash credits under section 68 of the Income Tax Act, 1961, for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer due to unexplained cash deposits in the assessee's bank account during the period of demonetization. The CIT(A) later deleted this addition, accepting the assessee's explanation that the deposits were from legitimate business activities. The Tribunal upheld the CIT(A)'s decision, finding no merit in the Revenue's appeal.
Appeal details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 668348 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-06-2025
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2017-2018
Judgement Text
" आयकर अपीलीय अिधकरण िदʟी पीठ “ए”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं ŵी एस įरफौर रहमान, लेखाकार सद˟ क े समƗ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER आअसं.3071/ िदʟी /2024 (िन.व. 2017-18) ITA No. 3071/Del/2024 (A.Y. 2017-18) Deputy Commissioner of Income Tax, C R Building, I P Estate, New Delhi 110002 ...... अपीलाथᱮ/Appellant बनाम Vs. Belle Laboratories P. Ltd., 1/562, 1st floor, 9 Friends Colony, Industrial Area, New Delhi 110095 PAN: AABCB-0005-E ..... ᮧितवादी/Respondent Assessee by : Shri C M Jain, Chartered Accountant Department by: Shri Ashish Tripathi, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 23/04/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 27/06/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)] dated 08.06.2023, for the Assessment Year 2017-18. 2. The appeal of Revenue is time barred by 323 days. The Revenue has filed application seeking condonation of delay in filing of appeal. After perusing application for condonation of delay, we are satisfied that delay in filing of present appeal is un- 2 ITA No. 3071/Del/2024 (A.Y. 2017-18) intentional and was for the reasons stated in the application which appear to be bonafide. Hence, delay of 323 days in filing of appeal is condoned and appeal is admitted for hearing on merits. 3. The revenue in appeal has raised as many as six grounds. All the grounds of appeal are in respect of single addition of Rs.1,41,36,733/- made u/s. 68 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), deleted by the CIT(A). 4. Shri Ashish Tripathi, representing the department submitted that during the period relevant to assessment year under appeal, there were cash deposits to the tune of Rs.1,50,36,500/- in bank account of the assessee. The assessee failed to substantiate source of cash deposits. Hence, the Assessing Officer (AO) vide assessment order dated 30.12.2019 passed u/s. 143(3) of the Act made addition of Rs.1,41,36,733/- as unexplained cash credits u/s. 68 of the Act. In First Appellate proceedings, the CIT(A) erred in deleting the addition of Rs.1,41,36,733/- by accepting assessee’s reasoning that is the cash deposits were out of cash sales, whereas, cash sales during the year were NIL. The ld. DR further submitted that the CIT(A) has erred in not considering the fact that the closing cash balance in the chart provided by the assessee was not matching with the opening cash balance less cash deposited in the bank plus cash withdrawals from the bank. The ld. DR vehemently supporting assessment order prayed for reversing findings of the CIT(A) and upholding addition u/s. 68 of the Act. 5. Per contra, Shri C M Jain appearing on behalf of the assessee vehemently defended the impugned order. The ld. AR of the assessee submits that the assessee company is engaged in manufacturing and sale of various textile chemicals. The AO without examining the books of assessee and without calling of any further document made addition of cash deposits u/s. 68 of the Act. The entire sales of the assessee are 3 ITA No. 3071/Del/2024 (A.Y. 2017-18) corroborated with VAT and Excise returns and Audits books of account. The assessee was able to demonstrate before the CIT(A) with same set of documents that the cash deposits during the period relevant to assessment year under appeal were out of cash sales/recovery from debtors and cash balances. Thus, source of cash deposits in the bank during demonetization period was duly explained. It was not only during demonetization period that the cash was deposited in the bank, the assesee was regularly depositing cash even before the period of demonetization. The assessee was able to demonstrate from the documents on record that during April 2016 to October 2016, the revenue of the assessee increased by 8% as compared to preceding assessment year, whereas, cash deposits decreased by 5%. The ld. AR thus, prayed for upholding the impugned order and dismissing appeal of the Revenue. 6. We have heard the submissions made by rival sides and have examined the orders of authorities below. The solitary issue in appeal is with respect to deleting the addition of Rs.1,41,36,737/- u/s. 68 of the Act by the First Appellate Authority. The addition was made by the AO on account of alleged unexplained cash deposits in the bank by the assessee during the period of demonetization. Stand of the assessee is that the cash deposits in the bank were from cash sales and recovery from debtors. In First Appellate proceedings, the assessee furnished Audited books of account, VAT & Excise returns, etc, to substantiate his submissions. The CIT(A) after examining the same concluded that the submissions of assessee are duly supported by evidences. The AO has not pointed any defect in the books of account and has also not rejected books of the assessee. The assessee has discharged its onus in proving source of cash deposits in the bank. Before us, the ld. DR has reiterated findings of the AO but has failed to controvert findings of the CIT(A). We see no reason to interfere with the findings of 4 ITA No. 3071/Del/2024 (A.Y. 2017-18) CIT(A), hence, the same is upheld and appeal of the Revenue is dismissed being devoid of any merit. Order pronounced in the open court on Friday the 27th day of June, 2025. Sd/- Sd/- (S RIFAUR RAHMAN) (VIKAS AWASTHY) लेखाकार सद᭭य/ACCOUNTANT MEMBER ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 27/06/2025 NV/- ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT/CIT(A) 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, DELHI "
