DCIT Vs Viswa and Devji Diamonds Pvt Ltd (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT), Chennai, considered the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, for Assessment Year 2017-18. The appeal was filed with a delay of 440 days, which the Revenue attributed to a technical glitch in the ITBA system that prevented the appellate order from appearing on the portal. The Tribunal accepted the explanation, condoned the delay and admitted the appeal for adjudication. The Revenue challenged the deletion of an addition of ₹8,41,81,000 made under Section 69A read with Section 115BBE of the Income-tax Act.
The assessee, engaged in the retail business of gold and diamond jewellery, had filed its return of income for Assessment Year 2017-18 and was selected for scrutiny to verify cash deposits made during the demonetisation period. During the assessment proceedings, the assessee furnished sales ledgers, cash book, stock records, VAT returns and month-wise details of cash deposits and corresponding cash sales. The Assessing Officer, however, held that the cash sales were fictitious, applying the test of human probabilities, and concluded that the cash introduced into the books represented unexplained money. While accepting 25% of the sales made on 8 November 2016 as genuine, the Assessing Officer treated the balance cash deposits of ₹8,41,81,000 as unexplained money under Section 69A read with Section 115BBE and correspondingly reduced the gross profit attributed to those sales.
