Hitesh Joitkumar Jain Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that based on mere suspicion arising from information received from another authority, the Assessing Officer should not have made additions without conducting an independent inquiry and providing the Assessee with due opportunity.
The Income Tax Appellate Tribunal (ITAT) Mumbai heard cross appeals concerning the Assessment Year 2017-18. The revenue contested the deletion of an addition of ₹53.31 crores, treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961, by the Commissioner of Income Tax (Appeals) [CIT(A)]. This addition was made by the Assessing Officer (AO) due to significant cash deposits made by the assessee, Hitesh Joitkumar Jain, into his Canara Bank accounts during the demonetization period. The assessee, operating as M/s. Lighting Works Corporation, claimed these deposits were from the sale of diamonds and LED. The AO, however, noted that the assessee’s diamond business was limited to the period between August 2016 and November 7, 2016. Further investigation revealed that out of ten diamond suppliers reported by the assessee, six were identified by the Investigation Wing as providing accommodation entries without actual supply of goods. These six suppliers accounted for purchases worth ₹20.29 crores. The AO, relying heavily on the Investigation Wing’s report and statements from individuals allegedly controlling these entities, suspected the genuineness of these purchases and consequently the source of the cash deposits. Despite the assessee providing purchase bills, sales records, and confirmation letters from all ten suppliers, the AO rejected the books of accounts and treated the entire cash deposit as unexplained income.
