Tirupati Jewels Vs ITO (ITAT Delhi)
Conclusion: Addition of Rs. 2.25 crore made by AO against assessee for unexplained cash deposits was deleted as assessee had discharged the onus and prove the genuineness of the transaction and addition was based on mere suspicion of AO.
Held: Assessee-firm was engaged in trading gold, silver, and diamond jewelry, filed its income tax return for the 2017-18 assessment year, declaring an income of Rs. 4.5 lakh. Subsequently, tax authorities flagged the firm for scrutiny due to cash deposits totaling Rs. 2.25 crore made in its HDFC Bank account during the demonetization period. Assessee contended that these deposits stemmed from legitimate cash sales of jewelry conducted during the busy festival season of October and early November, bolstered by the Dussehra and Diwali holidays. It provided its purchase and sale records, stock summaries, and details of festival sales as supporting documents to validate its claim. However, AO dismissed the explanation, arguing that the evidence was inadequate and that assessee had not provided enough documentation to verify the deposits as arising from legitimate business activities. Consequently, AO treated the deposits as unexplained income under Section 69A of the tax legislature, which covered undisclosed assets. It was held that assessee had explained the reason of the increase of the cash sale during the year under consideration. Assessee had deposited Rs.2,25,00,000/- during the demonetization period in the bank account and explained the reason of the cash deposit, hence he had discharged the onus and prove the genuineness of the transaction. In view of the above, there was no justification for sustaining addition of Rs.2,25,00,000/- u/s.69A. AO had wrongly made the addition of Rs.2,25,00,000/-, therefore, the addition made by AO
