No Demonetisation Addition on Cash sales where Assessee Maintained Proper Sales, Stock and Audit Records: ITAT:

No Demonetisation Addition on Cash sales where Assessee Maintained Proper Sales, Stock and Audit Records: ITAT The Revenue filed an appeal against the order of the CIT(A) deleting two additions made in the case of Shann Jewellers for AY 2017-18. The first addition of Rs. 2.15 crore was made under Section 68 on account of alleged unexplained repayment of unsecured loans. The second addition of Rs. 1.74 crore related to cash deposits during the demonetization period, which the Assessing Officer treated as unexplained cash sales. The CIT(A), after detailed examination of balance sheets, stock movement, bank statements, and audit reports, deleted both additions. Aggrieved, the Revenue approached the ITAT. Main Issue: Whether the CIT(A) was justified in deleting additions made under Section 68 towards repayment of unsecured loans and alleged unexplained cash sales during the demonetisation period. ITAT's Ruling: The ITAT dismissed the Revenue’s appeal and upheld the order of the CIT(A). On the issue of unsecured loan repayments, the Tribunal noted that the assessee had sufficient funds from sale of closing stock and the receipt of fresh loans, all repayments were through banking channels, and the Assessing Officer had neither rejected the books of account nor brought any contrary evidence on record. The Tribunal found that the assessee had maintained complete sale invoices, stock registers, purchase records, VAT returns, and audited accounts, and the Assessing Officer had failed to point out any defects or reject the books. Mere comparison of sales with previous years and estimation could not justify the addition. Therefore, both additions were held to be unsustainable. To Read Full Judgment, Download PDF Given Below