Shivinder Pal Singh Chahal v. ACIT DELHI

Judgement held

A 'surge in cash sales' during demonetisation is mere suspicion. Without rejecting stock records, VAT returns and books, a section 68 addition cannot stand. Compare with the previous year's festive season (Oct-Nov) to show the rise is normal. For customs or CBEC mismatches, reconcile using the AS-11 exchange-rate difference.

KEEP IN MIND:-Whenever you are representing matter related to Demonetisation you have to submit Stock records, VAT records,BOOKS of accounts,Compare previous year sale surge.

Brief history

During demonetisation the assessee deposited Rs 26.35 lakh. AO and CIT(A) treated it as unexplained u/s 68 only because cash sales of Rs 25.35 lakh in 1-8 Nov 2016 were far above the earlier monthly average. ITAT deleted it: stock and sales records, VAT returns, bills and month-wise cash data were on record and never disproved, and festive-season sales had grown year on year (cash and credit). A purchase mismatch of Rs 7.53 lakh with CBEC import data (added u/s 69C) was also deleted, because it arose only from exchange-rate timing under AS-11.

Reproduced from the order of the Income Tax Appellate Tribunal, Delhi Bench, in 3248/del/2023, pronounced 21 Oct 2026. Source: itat.gov.in. The notes above are an editorial summary; read the full order before relying on it. Order No. Sh. Anubhav Sharma and Sh. Manish Aggarw.