DCIT Vs La Solitaire Jewels Pvt. Ltd (ITAT Delhi)
No Defect in Books, No Section 68 Addition – Tribunal Affirms CIT(A) Relief to Jewellery Firm- Increase in Cash Sales Not Enough to Doubt Genuineness –
Revenue filed appeal against order of CIT(A)/NFAC, New Delhi dated 22.11.2023, deleting addition of ₹8.30 crore made u/s 68 on account of cash deposits during the demonetisation period.
Assessee, a jeweller, had declared income of ₹61.11 lakh. AO noted cash deposits of ₹8.30 crore during November–December 2016, representing a 1349% increase in cash sales compared to the preceding year. AO rejected books u/s 145(3) & treated the deposits as unexplained u/s 68, alleging that purchases were fictitious, stock register unreliable, cash sales unusually high, & deposits were delayed until after demonetisation.
Before CIT(A), assessee explained that the increase was due to introduction of trading in loose diamonds during FY 2016-17, supported by purchase invoices, confirmations, VAT returns filed on 27.10.2016 (prior to 8.11.2016), & complete stock & sales registers. Purchases from Bharat Kalra & Ram Chand Kalra were verified through 133(6) enquiries. CIT(A) found that over 50% of October 2016 cash sales came from existing stock, gross profit margin was consistent, & sales were genuine. The cash sales were held to be real business receipts, not unexplained money.
