Sahil Sareen vs. ITO

Parties Involved

Facts Summary

Sahil Sareen, an individual engaged in the wholesale trading of medicines, filed his return of income for assessment year 2017-18 on 25.12.2017 declaring income of ₹36,96,540/-. The Assessing Officer (AO) observed that the assessee had deposited a sum of ₹24,92,000/- in his current account and ₹600,500/- in his savings bank account during the demonetization period. The AO sought to examine the sources of these cash deposits. The assessee submitted that the deposits were from cash sales and past accumulated savings. However, the AO did not believe the assessee's contention as there were no cash sales in earlier years and the assessee had not produced the books of account or stock registers. The VAT returns for the quarter ended September and December 2016 were revised by the assessee after a period of one year. The assessee had also made cash withdrawals prior to the demonetization period. The AO observed that there were no cash sales by the assessee in the immediately preceding year and only a small amount of cash sales were made after the demonetization period. The assessee had contended that a new product was sold in June onwards, but the AO did not believe this contention. The addition was upheld by the Commissioner of Income Tax (Appeals). The Tribunal found that the assessee was able to explain the source of only ₹26,01,348/- of the cash deposits, and the addition of ₹2,41,152/- was sustained.…

Legal Issues

• 1. Whether the National Faceless Appeal Centre was justified in confirming the addition made on account of cash deposit of ₹28,42,500/- u/s 68 r.w.s 115BBE of the Act in the facts and circumstances of the instant case.

Judgment Outcome

Decided in favour of Assessee.

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