No Sec. 68 additions for cash deposited during demonetisation from available balance: ITAT

Case Details: R. S. Diamonds India (P.) Ltd. v. ACIT - [2022] 145 taxmann.com 545 (Mumbai-Trib.)

Judiciary and Counsel Details

• • B.R. Baskaran, Accountant Member
  • Rahul Sarda for the Appellant.
  • Ms Naina Krishnakumar for the Respondent.

Facts of the Case

Assessee-company engaged in the business of trading in diamonds, filed its return of income for the relevant assessment year. During the year under consideration, the Assessing Officer (AO) noticed that assessee deposited a sum of money into its bank account during the demonetisation period, and the case was selected for scrutiny assessment.

In the assessment proceedings, the assessee explained that the said cash was received on account of cash sales made to the customers over the counter. Unsatisfied with the reply received from the assessee, AO treated the cash deposits as unexplained cash deposits under section 68 of the Income-tax Act and computed the income accordingly.

On appeal, CIT (A) confirmed the additions made by AO. Aggrieved by the order, assessee preferred an appeal to the Mumbai Tribunal.

ITAT Held

The Tribunal held that the AO accepted the books of accounts of the assessee and the cash deposits were made out of the cash available with the assessee. Since, the cash receipts were represented by the sales amount in the books of accounts which were offered for taxation by the assessee, there is no question of treating the same as unexplained deposits.

List of Cases Reviewed

• • Lakshmi Rice Mills v. CIT [1974] 97 ITR 258 (Patna)
  • Asstt. CIT v. Hirapanna Jewellers [2021] 128 taxmann.com 291/189 ITD 608 (Visakhapatnam – Trib.) (para 6) followed.

List of Cases Referred to

• • Lakshmi Rice Mills v. CIT [1974] 97 ITR 258 (Patna) (para 5)
  • Asstt. CIT v. Hirapanna Jewellers [2021] 128 taxmann.com 291/189 ITD 608 (Visakhapatnam – Trib.) (para 5).GSTR 37 (Ker.) (para 7)