ITAT Deletes Addition On Cash Deposit During Demonetisation On Account Of Sale Of Petrol, Diesel And Other Petroleum Products

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition of cash deposits during demonetisation on account of the sale of petrol, diesel, and other petroleum products.The bench of T.R. Senthil Kumar (Judicial Member) and Waseem Ahmed (Accountant Member) have observed that cash deposits are on account of the sale of petrol, diesel, and other petroleum products. These sales have been duly recorded in the books of accounts, and appropriate VAT taxes were also collected by the assessee. The manager of the assessee company also filed a notarized affidavit accepting the facts during the course of the assessment proceedings. The AO accepts the source of the cash deposit, and on the other side, he is making the cash deposit as an unexplained cash credit, which is self-contradictory.The appellant/assessee is in the business of trading in petroleum products and is a dealer of Reliance Industries Ltd. trading in petrol, diesel, and other related products. The assessee filed its Return of Income, declaring nil income. The return was processed and then taken for scrutiny and assessment.During the demonetization period, the assessee deposited Specified Bank Notes (SBN) in the Co-operative Bank of Rajkot Ltd. The Assessing Officer issued notice to the Co-operative Bank of Rajkot Ltd. and collected the cash deposits in SBN details during the demonetization period. The manager of the assessee company was summoned, and in his affidavit, he stated that the cash deposit as SNB to the tune of Rs. 1.24 crore was against cash sales made during the period.The assessee filed an appeal before the Commissioner (Appeals), who deleted the addition made by the Assessing Officer.The department contended that CIT(A) is not correct in deleting the addition made by the Assessing Officer and further notification dated November 8, 2016, which is applicable only to public sector oil marketing companies and not to private dealers.The assessee contended that the assessee was selling gasoline and collected the SBN from its retail customers. Thus, the provisions of Section 68 cannot be invoked since the source of the cash deposit is undisputed by the Assessing Officer.The ITAT confirmed the deletion of Rs. 1,24,59,500 made under Section 68 of the Income Tax Act.Counsel For Petitioner: Ashok Kumar SutharCounsel For Respondent: SulabhCase Title: ITO Versus M/s. Ashapura Petrochem Marketing Pvt. Ltd.Case No.: ITA No. 511/Ahd/2020Click Here To Read The Order

ITAT Deletes Addition On Cash Deposit During Demonetisation On Account Of Sale Of Petrol, Diesel And Other Petroleum Products

Mariya Paliwala

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