Dy. CIT, Aayakar Bhawan, Haryana, Karnal Vs. Nivaya Resources Pvt. Ltd.

Parties Involved

Facts Summary

The assessee company, Nivaya Resources Pvt. Ltd., is engaged in the business of trading fuel oil, lubricants, and other similar products. It filed its return of income for the assessment year 2017-18 declaring income of Rs. 3.46 crores. During the assessment proceedings, the Assessing Officer (AO) noticed cash deposits of Rs. 2,12,56,500 in the assessee’s bank account post demonetization. The assessee explained that the cash was deposited partly from the opening cash balance of Rs. 3,74,87,384 as on 01.04.2016 and partly from cash withdrawn from the bank during the year. The assessee provided a cash book and a certificate from statutory auditors to substantiate their claims. The AO, however, rejected the books of accounts and assessed the cash deposits as unexplained income under section 68 of the Act. On appeal, the Commissioner of Income Tax (Appeals) (CIT(A)) deleted the addition, holding that the rejection of books of accounts was bad in law. Both the revenue and the assessee have filed appeals against the CIT(A)'s order.…

Legal Issues

• 1. Whether the cash deposits of Rs. 2,12,56,500 should be treated as unexplained income under section 68 of the Income Tax Act.
• 2. Whether the disallowance under section 14A should be restricted to the exempt income earned by the assessee.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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