ITAT Ahmedabad Allows Assessee’s Appeal, Dismisses Revenue’s Challenge in Furnish Home Case

Background

The Ahmedabad “A” Bench of the Income Tax Appellate Tribunal has ruled in favour of Furnish Home, a partnership firm engaged in the trading of furniture and furnishings, for Assessment Year (AY) 2017–18. During scrutiny, the AO had made additions of ₹26.96 lakh towards unexplained cash deposits, ₹51.00 lakh towards unexplained cheque credits under Section 68, and ₹42.35 lakh towards alleged unexplained import payments and customs duty under Section 69. The returned loss of ₹2.00 lakh was also not considered by the AO. While the NFAC Commissioner (Appeals) had granted substantial relief, a partial addition of ₹6.96 lakh on cash deposits was sustained, leading to cross-appeals.

Audited Books and Documentary Evidence Prevail

The Tribunal held that the assessee had fully discharged its burden of explaining the sources of cash and cheque credits through audited books of account, VAT returns, bank statements, partner confirmations, and a banker’s certificate evidencing cash withdrawals. It found no justification for sustaining even partial additions when the books were neither rejected under Section 145 nor sales doubted by the AO. On cheque credits, the Tribunal upheld the deletion granted by the CIT(A), noting that identity, genuineness, and creditworthiness were clearly established and the Revenue failed to bring any adverse material. Similarly, additions relating to import payments were deleted after noting complete documentary trails including invoices, bills of entry, customs challans, and banking records.

The Tribunal also confirmed that the returned business loss was genuine and allowable for computing income, though not eligible for carry forward. Consequently, the assessee’s appeal was allowed in full, and the Revenue’s appeal was dismissed.