GLOBAL HEALTHLINE PVT. LTD.,NEW DELHI V. ACIT CIRCLE 10(1), NEW DELHI

ITA 1586/DEL/2024

AI Insights

The case involves Global Heathline Pvt. Ltd, a domestic pharmaceutical company, which appealed against the order of the National Faceless Appeal Centre (NFAC) confirming the addition of Rs. 2,24,69,739 to its income for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer (AO) under Section 143(3) of the Income-tax Act, 1961, citing the cash deposits made during the demonetization period as unexplained. The Tribunal examined the detailed submissions and evidence provided by the assessee, including sales, purchases, and stock details, and found that the AO and NFAC did not appropriately appreciate these details. The Tribunal also noted that the enhanced rate of tax under Section 115BBE could only be applied from AY 2018-19 onwards, not for the earlier years, thus rejecting the application of this section in the current case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314381 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: SMILE Microfinance Limited vs ACIT in WP (MD) No. 2078 of 2020 and WMP (MD) No. 1742 of 2020
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: M.P. RASTOGI
• Keywords: Business income; Unexplained cash credit
• Section: 143(3); 68

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 1586/Del/2024 (Assessment Year: 2017-18) Global Heathline Pvt. Ltd, B-67, Sarita Vihar, New Delhi Vs. ACIT, Circle-10(1), New Delhi (Appellant) (Respondent) PAN: AABCG8091R Assessee by : Shri M. P. Rastogi, Adv Shri Shivam Malik, Adv Revenue by: Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 04/03/2025 Date of pronouncement 07/05/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.1586/Del/2024 for AY 2017-18, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] in Appeal No. No: ITBA/NFAC/S/250/2023-24/1060886021(1) dated 13.02.2024 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 18.12.2019 by the Assessing Officer, ACIT, Circle-10(1), Delhi (hereinafter referred to as ‘ld. AO’). 2. The only effective issue to be decided in this appeal is as to whether the ld CIT(A) was justified in confirming the addition made on account of cash deposits in the sum of Rs. 2,24,69,739/- in the facts and circumstances of the instant case. ITA No. 1586/Del/2024 Global Heathline Pvt. Ltd Page | 2 3. We have heard the rival submissions and perused the material available on record. The assessee company is a domestic pharmaceutical company. The return of income for AY 2017-18 was filed by the assessee on 28.10.2017 declaring loss of Rs. 5,25,60,240/-. The ld AO observed that the assessee had made cash deposits during demonetization period to the tune of Rs. 7,60,65,446/-. The assessee asked to explain the source for the said cash deposits. The assessee furnished the following documents before the ld AO:- S.No. Particulars Letter No. Dated Annexure No. 1. Detail of cash sales/cash withdrawals/cash deposits for the M/20/220 21/11/2019 R period 01.04.2015 to 08.11.2015 and 01.04.2016 to 08.11.2016. 2. Detail of cash deposited during 09/1 1/2016 to 30/12/2016 along with supporting documents. M/20/231 03/12/2019 A 3. Detail of Cash sales monthwise (including VAT& Services received) Rs.. 43,65,00,657/- & Cash deposited monthwise Rs. 43,35,29,484/- during the period 01/04/2016 to 31/03/2017 excluding credit card sale /credit sale of Rs. 24,11.77.759/- out of which credit card sales amounts to Rs. 23,19,64,027/- along with previous year. M/20/233 5/12/2019 A 4. Detail of Cash deposits during the month of November 2016 from 01/1 1/2016 to 08/11/2016 & 09/11/2016 to 30/11/2016. M/20/233 5/12/2019 AI 5. Detail of month wise total sales and cash deposited during FY 2015-16 and FY M/20/233 5/12/2019 C ITA No. 1586/Del/2024 Global Heathline Pvt. Ltd Page | 3 2016-17. 6. Detail of stock statement showing opening, purchases, sales and closing (quantity wise) for the FY 2016-17 and 2015-16. M/20/233 5/12/2019 E 7. Detail showing weekly cash sales and cash deposited during the period 01/09/2016 to 31/12/2016. M/20/233 5/12/2019 B 8. Detail of purchases of goods and sale of goods month wise for the F.Y. 2016-17. M/20/233 5/12/2019 F 9. Monthly stock summary in quantity monthwise& itemwise showing opening, purchases, sales & closing for the F.Y. 2016-17 & 2015-16. M/20/235 07/12/2019 A (along with soft copy). 10. Stock quantative details for the complete month of November 2016 showing opening stock, purchases, sales and closing stock. M/20/235 07/12/2019 B (along with soft copy). 11. Monlhwise purchases (in value ) & party wise during the period April 2016 to November 2016 M/20/235 07/12/2019 C 4. The assessee also submitted the complete details of purchase for the month of November 2016 totaling to Rs. 6.36 crores from parties above Rs. 10 lacs together with copy of ledger account for the whole financial year 2016-17 of suppliers exceeding Rs. 25 lakhs before the ld AO. This covered the majority of the purchases made by the assessee. The assessee also submitted that it was having sufficient stock of goods as on 01.11.2016 to the extent of Rs. 4.48 crores and made huge purchase of Rs. 6.36 crores during the month of November 2016 and made net sales of Rs. 8.42 crores, out of which, cash sales was Rs. 6.20 crores and credit sales was Rs. 2.22 crores. Similar details were given by the assessee for the month of ITA No. 1586/Del/2024 Global Heathline Pvt. Ltd Page | 4 December 2016 also. The assessee submitted that it had closing cash balance of Rs. 57,37,250/- as on 08.12.2016 and made cash sales during the period 09.11.2016 to 15.12.2016 to the tune of Rs. 6,49,20,530/- and cash deposits of Rs. 6,67,96,600/- including cash deposits made in non Specified Bank Notes (SBNs) to the tune of Rs. 8,85,500/-. The assessee gave the complete date-wise details of sales and cash balances. The assessee also submitted that being engaged in the business of retail sales of pharmaceutical goods and allied consumer goods on its 27 stores situated at various places in Delhi and Gurgaon, and more so the medical stores are permitted to receive cash in SBNs during the demonetization period as per the notification of the Govt. of India. Hence, there is absolutely no case to treat the cash deposits as unexplained. The assessee duly furnished the date wise sales together with month wise purchase and sales before the ld AO. The books of account were not rejected by the ld AO; the purchases were not doubted by the ld AO; the stock statement submitted were not doubted by the ld AO and assessee also gave details of parties to whom sales were made by it , which was also accepted by the ld AO. Despite all these facts, the ld AO concluded that cash sales exceeding the average cash sales for the month of November 2016 amounting to Rs. 2,24,69,739/- cannot be considered as genuine and added the same as unexplained cash credit u/s 68 read with Section 115BBE of the Act. While doing so, the ld AO did not even give reduction from the declared loss which includes the said sales of Rs. 2,24,69,739/- thereby resulting in double addition. This action was upheld by the ld NFAC. 5. From the above narration of facts, we find that the entire details have been filed by the assessee before the lower authorities, which was not appreciated by the lower authorities. There could not be any other better detail that are left in the instant case which was not submitted by ITA No. 1586/Del/2024 Global Heathline Pvt. Ltd Page | 5 the assessee. We find that the assessee had already disclosed the sales which has been accepted by the revenue. After crediting the entire sales, the assessee had declared loss of Rs. 5,25,60,240/-. Hence, fresh addition made in the sum of Rs. 2,24,69,739/- amounts to double addition made by the ld AO. Further, the Hon'ble Madras 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 the enhanced rate of tax prescribed in section 115BBE of the Act could be made applicable only from AY 2018-19 onwards and not for the earlier years. Respectfully following the same, we hold that there is no question of application of provisions of Section 115BBE of the Act in the instant case as the cash deposits were duly explained out of cash balance available in the books of the assessee which stood rejected by the lower authorities. Hence, we have no hesitation to delete the addition in the sum of Rs. 2,24,69,739/- and allow the grounds raised by the assessee. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 07/05/2025. -Sd/- -Sd/- (VIMAL KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07/05/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "