Bhaumik Jewellers Private Limited Vs ITO (ITAT Ahmedabad)
Summary: The Ahmedabad Bench of the Income Tax Appellate Tribunal allowed the appeal filed by Bhaumik Jewellers Private Limited against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 26.07.2024, arising from the assessment order passed under section 143(3) of the Income-tax Act, 1961 for Assessment Year 2017-18. The dispute concerned the addition of Rs. 9,65,97,834/- made by the Assessing Officer under section 68 of the Act on account of unexplained cash deposits during the demonetisation period.
The assessee, a private limited company engaged in trading in bullion and jewellery, had deposited Specified Bank Notes (SBNs) aggregating to Rs. 10,69,00,000/- in its RBL Bank and Axis Bank accounts during 09.11.2016 to 30.12.2016. The assessee explained that the deposits represented cash advances received from customers against cash sales of jewellery/bullion, with such advances having been received shortly before the demonetisation announcement on 08.11.2016 and subsequently invoiced as sales. According to the assessee, the receipts were duly recorded in its regular books of account.
The AO rejected this explanation, principally relying upon the receipt of approximately Rs. 9.65 crore in cash advances on 05.11.2016, 07.11.2016 and 08.11.2016 from 573 persons. The AO considered the entries to be an accommodation of unaccounted cash in the guise of trade advances and also noted that complete PAN and address details were not furnished for all customers. The AO further relied upon notices issued under section 133(6), some of which were returned unserved or remained unanswered, and upon the cash balance maintained immediately before demonetisation. The books were rejected under section 145(3), and Rs. 9,65,97,834/- was treated as unexplained cash credits under section 68 read with section 115BBE.
