Neeraj Camellia Private Limited Vs DCIT (ITAT Raipur)
The assessee company appealed against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Center, Delhi, dated 20.11.2023, arising from the assessment order passed under Section 143(3) for A.Y. 2017-18. The assessee, engaged in the wholesale and retail trading of gold, diamond and silver ornaments, had filed its return of income on 31.10.2017 declaring a total income of Rs.2,61,38,530. The return was processed under Section 143(1), and the case was subsequently selected for limited scrutiny to verify cash deposits made during the demonetisation period.
During assessment, the Assessing Officer found that the assessee had deposited Rs.3,06,32,000 in cash between 09.11.2016 and 31.12.2016, of which Rs.2,71,30,000 comprised Specified Bank Notes (SBNs). The assessee explained that these deposits represented cash sales and collections from debtors received before demonetisation. The Assessing Officer rejected the explanation, observing that the assessee had reported unusually high cash receipts in October 2016 and that the cash deposits were not commensurate with cash sales. The books of account were rejected under Section 145(3). The Assessing Officer concluded that the sales recorded as pre-demonetisation sales were actually sales effected during the demonetisation period and had been antedated. Referring to newspaper reports, Income Tax Department status reports relating to “Operation Clean Money”, and the fact that certain jewellers had offered part of their cash deposits under the IDS and PMGKY Schemes, the Assessing Officer presumed that the assessee had earned a profit of 25% on such sales. Since the assessee had already disclosed 11% net profit, the Assessing Officer added the balance 14% on cash deposits after reducing the opening cash balance, resulting in an addition of Rs.36,57,000. The Commissioner (Appeals) upheld the addition while dismissing the appeal ex parte due to non-compliance by the assessee during appellate proceedings.
