ITAT Delhi Grants Relief to Pharmacy Owner, Deletes Rs 19.68 Lakh Addition on Demonetisation-Era Sales

Despite this, the Assessing Officer treated the cash deposits as unexplained credits and added the amount to the assessee’s income under Section 68. The assessee contended that Notification No. S.O.3416(E) dated November 9, 2016, permitted pharmacies to accept demonetised currency for medicine sales on production of prescription and identity proof, and that the sales were supported by a cash sales register and corresponding records.

The tribunal observed that the assessee’s books of accounts were not rejected, no defects were found in stock or sales records, and the cash sales had already been offered to tax. It further noted that there was no statutory requirement mandating pharmacies to preserve prescriptions or identity proofs to validate such sales during demonetisation.

The tribunal also relied on an earlier ruling of the ITAT Bangalore Bench, which held that cash sales recorded in books and subjected to tax cannot be treated as unexplained merely because they were received during the demonetisation period, reports StudyCafe.

Concluding that the addition made by the Assessing Officer was unjustified, the ITAT directed the deletion of the entire ₹19.68 lakh addition, thereby granting full relief to the pharmacy owner.