DCIT Vs Sachin Agrawal (ITAT Agra)
In DCIT v. Sachin Agrawal (ITAT Agra, AY 2021–22), the Income Tax Appellate Tribunal (ITAT) upheld the order of the Commissioner of Income Tax (Appeals), Kanpur, holding that surrendered jewellery and cash were taxable as business income and not as unexplained or undisclosed income under Sections 69A and 69B of the Income Tax Act, 1961.
A search and seizure operation under Section 132A was conducted on 1 November 2020 against the assessee, Shri Sachin Agrawal, proprietor of M/s Girraj Ornaments, along with two employees—Shri Sunil Garg and Shri Bhagwan Singh. During the operation, gold jewellery worth ₹648.40 lakh and cash of ₹10 lakh were intercepted from the employees, who stated that they were carrying the jewellery for sampling and sale on behalf of the assessee. The cash was explained as sales proceeds. This led to a survey under Section 133A at the assessee’s business premises.
During the survey, discrepancies were found in the stock records. To reconcile the same, the assessee surrendered ₹377.08 lakh (₹367.14 lakh for jewellery and ₹9.94 lakh for cash) and further offered ₹10.32 lakh, totaling ₹387.41 lakh, which he disclosed in his return as business income. However, the Assessing Officer (AO) classified the jewellery and cash as unexplained investment and money under Sections 69B and 69A, subjecting them to a higher tax rate under Section 115BBE.
