ACIT Vs Radhika Jewellers (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT) in Ahmedabad has dismissed an appeal filed by the Assistant Commissioner of Income Tax (ACIT) against Radhika Jewellers, a firm engaged in the gold and silver ornaments business. The case centered on the firm’s cash deposits during the demonetisation period in 2016. The ACIT had challenged a decision by the Commissioner of Income Tax (Appeals), or CIT(A), which had deleted additions of ₹83.50 lakh made by the Assessing Officer (AO) to the firm’s income for the Assessment Year 2017-18.
During the demonetisation period, Radhika Jewellers deposited ₹6.28 crore in old currency notes. The AO, dissatisfied with the firm’s explanations, treated ₹83.50 lakh as unexplained cash credits under Section 68 of the Income Tax Act, 1961, and also disallowed ₹34.49 lakh in job-work expenses. The firm had already recorded these sales in its books and paid tax on the corresponding income.
The CIT(A) later reversed the AO’s order, finding no discrepancies in the firm’s financial records, including its cash book, stock register, and audited books of accounts. The ITAT upheld the CIT(A)’s decision, stating that the AO’s additions were based on “presumptions and assumptions without any cogent material evidence.” The Tribunal emphasized that the firm’s sales, from which the cash was generated, were duly accounted for and had already been subjected to taxation. The ITAT also noted that the AO had not rejected the firm’s books of accounts, making the ad-hoc additions legally untenable.
