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No addition U/S 68 as unexplained cash credit, if the same

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No addition U/S 68 as unexplained cash credit, if the same reflected as turnover in the books of accounts: ITAT Amritsar



 I.T.A. No.195/Asr/2022 Assessment Year: 2017-18


  1. The assessee deposited cash in bank account amount to Rs 4,09,50,000/- during demonetization. The assessee is engaged in the business of the business of wholesale/retail of sugar, refined oil, ghee and other allied karyana items.
  1. During the assessment year the assessee’s turnover Rs.10,38,81,637/-. The ld. AO completed the assessment under section 143(3) making addition of Rs 2,74,000,00/- out of total cash deposited during demonetization period at Rs 4,09,50,000/-.
  1. The addition has been made by the ld. AO alleging that the appellant had inflated the sales to cover unaccounted money and assessed the total income at Rs. 2,82,17,200/.
  1. The Assessee maintained that the sales are made in cash, due to the nature of trade and some of the sales are on account of cheques/RTGS . There was sufficient stock and the same was duly accounted for in the books of accounts for the year under consideration. The entire sales were made from the regular stock in hand of the Assessee.
  1. The items are sold and from which cash has been received and the same stands deposited in the Bank accounts of the Assessee itself during the demonetization period. The books of accounts of the Assessee are further duly audited by a Chartered Accountant. Thus, there is no scope of any default on the part of the Assessee.

ITAT Amritsar held as below:

  1. The CIT(A) NFAC has erred in confirming the order of the AO ignoring the position of law that provisions of section 68 cannot be applied in respect of income from a source which has already been taxed which would amount to double taxation.
  1. On perusal of the text of section 68, it is evident that section 68 can only be invoked if the assessee is unable to explain the source of any sum found credited in the books of accounts.
  1. However, in the present case, the appellant had duly explained that the cash was deposited out of business receipts which were part of the audited results for the AY 2017-18.
  1. It is further pertinent to mention here that since the cash forms part of revenue receipts, as such, the appellant has duly paid tax on the same and any addition made in respect of such cash deposited would amount to double taxation which is against the principles of law.
  1. The assumption drawn by the AO in respect of estimating the sales is merely on assumption or presumption or surmises or conjectures. It is a settled law that once the adequate evidence/material has been provided which prima facie discharge the burden of the assessee in that case, the burden shifts on the revenue and the revenue has not discharged its onus in these circumstances.
  1. Here, no addition can be called for. In the result, the appeal of the assessee is allowed.


1577171253-Jatinderpal Singh – 195 – Asr – 2017

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