Harshvardhan Tejmal Soni Vs ACIT (ITAT Ahmedabad)
The appeal before the Income Tax Appellate Tribunal, Ahmedabad arose from the confirmation of an addition of ₹22,00,000 made under Section 68 of the Income-tax Act, 1961 for Assessment Year 2017–18. The assessee, engaged in the retail business of gold and silver ornaments, had deposited ₹1.10 crore in cash in his bank account during the demonetisation period. The Assessing Officer treated 20% of these deposits as unexplained cash credits, alleging that the assessee inflated sales to legitimise cash deposited post demonetisation and failed to satisfactorily explain the nature and source of the deposits. Penalty proceedings were also initiated.
On appeal, the Commissioner (Appeals) upheld the addition, reasoning that there was a sudden and abnormal spurt in cash deposits and gold sales immediately after the demonetisation announcement, despite negligible deposits in earlier months. The CIT(A) observed that the sales pattern was inconsistent with past trends and festival cycles, that alleged purchases were paid through RTGS only after the sales, and that the entire exercise was a colourable device to launder cash. It was further noted that although only 20% was added in the impugned order, the balance amount had already been added in subsequent proceedings under Section 263, against which a separate appeal was pending.
