Rakesh Kumar Vs ITO (ITAT Delhi)
The assessee, engaged in the business of jewellery under the name M/s R.V. Gold Hallmark, filed a return declaring income of ₹8,47,920 for Assessment Year 2017-18. During scrutiny, the Assessing Officer (AO) found that cash of ₹5,60,29,500 had been deposited during the demonetisation period. The assessee explained that the deposits represented advances received in cash from customers before 08.11.2016 for the purchase of bullion, which was later procured from SS Bullion through RTGS payments and supplied to customers.
The AO issued summons to certain customers, but none appeared. The AO also noted that the assessee had not filed VAT returns for the relevant period and concluded that the business activity was not established. Consequently, the cash deposits were treated as unexplained money under Section 69A and an addition of ₹5.60 crore was made. The CIT(A) upheld the addition, citing absence of regular business activity, stock, VAT returns, buyer details, and confirmations from persons who allegedly advanced cash.
Before the Tribunal, the assessee submitted sales registers, cash receipt details, audited books of account, purchase confirmations from SS Bullion, and a cash flow statement showing sources of cash deposits. It was contended that purchases from SS Bullion were supported by invoices and payments through banking channels and that the cash deposits originated from recorded business transactions.
