Girraj Ji Jewellers Vs ITO (ITAT Agra)
Sales Soared, Suspicion Followed: ITAT Deletes ₹79.91 Lakh Demonetisation Additions
Higher Cash Deposits Do Not Establish Undisclosed Income
The Agra Tribunal deleted additions aggregating to ₹79,91,296 arising from cash sales and deposits during demonetisation. It held that a higher volume of cash transactions, without convincing evidence contradicting the assessee’s books, could not justify treating recorded business receipts as unexplained income.
The relief comprised ₹6,99,438 added under Section 68 as alleged bogus cash sales and ₹72,91,858 added under Section 69A as alleged excess sales. The Tribunal allowed the appeal, granting final relief rather than remanding the issues.
Jewellery Business Came Under Scrutiny
The assessee, a partnership firm engaged in trading and manufacturing bullion and jewellery, filed its return declaring income of ₹8,77,430. Its case was selected for scrutiny because of substantial cash deposits during demonetisation and an increase in sales accompanied by reduced profitability.
During assessment, the firm furnished audited financial statements, bank statements, cash books, sales summaries and other business records. It maintained quantitative records and was registered under the Uttar Pradesh VAT law.
The AO nevertheless questioned certain cash sales and estimated what he considered the permissible level of cash receipts during the demonetisation period.
