DCIT Vs Aura Jewels (ITAT Bangalore)
ITAT Bangalore held that addition u/s. 68 treating cash sales as unexplained cash credit merely due to unusual increase in volume of sale during demonetization period as compared to average monthly cash sales not justified as extraordinary event of demonetization not considered.
Facts- The assessee, a partnership firm, is engaged in the retail trading of jewelry, gold, silver, and other ornaments. During the assessment proceedings, AO found that the assessee had reported a gross receipt of ₹21.99 crores in its return of income, with cash sales amounting to ₹11,64,59,923/- only. Out of such cash sales, a sale worth of ₹6,85,43,098/- was made between November 1, 2016, and November 8, 2016, out of which ₹6,72,68,168/- was transacted on a single day, i.e., November 8, 2016 only. Thus, on the day of the demonetization announcement, the assessee claimed to have made cash sales of ₹6,72,68,168/-, accounting for more than 57% of the total cash sales made during the year. AO held that the cash sales recorded in a day before the demonetization period were nothing but a book entry, a sham transaction, or a colorable device to evade taxes. AO treated the excess cash sales of ₹6.61 crores as unexplained cash credit u/s. 68 of the Act and added the same to the total income of the assessee.
