Anagha Jewels Vs ITO (ITAT Pune)
Pune ITAT Deletes ₹2.61 Crore Demonetisation Addition: Genuine Cash Sales of Jewellery Cannot Be Taxed u/s 68 Merely Because Sales Spiked on 8 November 2016
The Pune ITAT deleted an addition of Rs. 2,60,77,145 under Section 68 read with Section 115BBE, holding that cash sales of jewellery during the demonetisation period could not be treated as unexplained cash credits when the sales were supported by regular books, stock records, purchase records and VAT returns, and the AO had not rejected the books of account.
The assessee, a partnership firm engaged in trading gold, jewellery, silver and diamonds, deposited substantial Specified Bank Notes during demonetisation. The AO particularly doubted cash sales of Rs. 2,36,99,866 on 8 November 2016, allegedly represented by 203 bills, considering such extraordinary sales on a single day to be against human probabilities. He also relied upon the assessee’s inability to furnish complete addresses, PANs and confirmations of all retail customers.
The assessee demonstrated that its total sales of approximately Rs. 3.78 crore were recorded in the P&L account and reconciled with MVAT returns. VAT had been paid, and the sales were supported by item-wise stock registers, purchase invoices and sales bills. The MVAT J-1/J-2 cross-matching data also independently corroborated purchase transactions.
