ITAT Delhi Ruling: No Double Taxation on Recorded Cash Sales; Unverified Creditors Accepted if Purchases Genuine
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, delivered a significant ruling in the case of ITO Vs Himanshu Goel, addressing the issue of double taxation on cash deposits derived from disclosed sales. The Tribunal held that once cash sales are recorded in the books of accounts and offered to tax, the same amount cannot be treated as unexplained money under Section 69A of the Income Tax Act, 1961. Furthermore, the Bench clarified that trading liabilities cannot be treated as unexplained merely because creditors failed to respond to notices under Section 133(6), provided the underlying purchases and stock records are accepted by the Assessing Officer (AO).
Background of the Case
The dispute arose from the assessment proceedings for the Assessment Year (AY) 2017-18. The assessee, a jewellery trader, filed a return of income which was selected for scrutiny. Upon completion of the assessment under Section 143(3), the AO made substantial additions to the assessee's income:
- ₹70,89,000/- treated as unexplained cash deposits under
Section 69A. - ₹51,58,301/- treated as unexplained sundry creditors.
Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) ruled in favor of the assessee, deleting both additions. Consequently, the Revenue Department challenged the CIT(A)'s order before the ITAT Delhi.