Arun Rajput Vs ITO (ITAT Delhi)
Demonetisation Cash Deposit Not Unexplained: Delhi ITAT Deletes Entire ₹45.23 Lakh Addition u/s 69A- AO’s Human-Probability Theory Rejected: Delhi ITAT Accepts Cash Sales & Books, Quashes 69A Addition
Assessee, proprietor of M/s Sunny Jewellers, declared income of Rs.12,93,560. During demonetisation, Assessee deposited cash of Rs.45,23,500 (Rs.43,73,500 + Rs.1,50,000). AO held that Assessee had only Rs.4,57,741 cash-in-hand on 08.11.2016; purchases from relatives were unverifiable; & cash deposits occurred only in the demonetisation window. Applying the “test of human probability”, AO treated the entire amount as unexplained money u/s 69A r.w.s 115BBE. Ld. CIT(A)/NFAC upheld the addition.
Before Tribunal, Assessee argued that: (i) all purchases & sales were recorded; (ii) cash deposits came from cash sales & earlier withdrawals; (iii) VAT returns supported sales; (iv) AO accepted sales & stock movement; (v) Section 69A does not apply when money is recorded in books. Reliance was placed on CIT v. Anoop Jain (Delhi HC), Smt. Sadhana Jain (All HC), Shagun Jewellers Pvt Ltd, Godwin Tourism Pvt Ltd & other rulings.
Tribunal examined the month-wise cash book, sales pattern & stock movement. It found that Assessee was a small jeweller dealing primarily in cash, historically retaining cash rather than depositing it. AO himself recorded that Assessee was “not a habitual depositor of cash”. All entries, including cash sales, were duly recorded in books. Since cash was already part of recorded cash book & deposited into the bank, it could not be treated as unexplained. For invoking s.69A, money must be (a) found in possession, (b) not recorded in books, & (c) unexplained. None of these conditions were satisfied.
