Shagun Jewellers [P] Ltd Vs ACIT (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT) Delhi Bench has delivered a significant ruling in the case of Shagun Jewellers [P] Ltd. Vs ACIT, largely favoring the assessee for the assessment year 2010-11. The Tribunal quashed major additions made by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)], totaling over ₹3.5 crores, primarily related to alleged unexplained cash credits and expenditure.
Background of the Case:
The case originated from a search operation conducted in Ahmedabad and New Delhi, which uncovered information about an alleged unaccounted money lending business operated by Shri Asharam Bapu and his associates. During the investigation, a statement was recorded from Shri Devi Das Tikamdas Chattani on September 25 and 26, 2015. Shri Chattani’s statement indicated that a loan account was managed by Shri Popat Lal Vani, and a significant amount (₹200 crores) was handled by Shri Sant Lal Aggarwal in Delhi, from which loans were disbursed to numerous parties, including Shagun Jewellers.
Based on this information, the AO assumed jurisdiction under Section 148 of the Income Tax Act, 1961, to reopen the assessment of Shagun Jewellers. The AO’s notice alleged that Shagun Jewellers had received cash loans amounting to ₹1,55,16,090/- from the “Govind Group” on various dates in 2009 and 2010, which were described as “Interest received” and “Delhi.” The total of these “Credit” entries shown in the seized documents was ₹1,55,16,090/-, while “Debit” entries, also linked to Shagun Jewellers, totaled ₹3,13,16,090/-. These were treated as unexplained cash credits and expenditures.
Additionally, the AO made an addition of ₹2 crores as unexplained cash credit under Section 68 of the Act, alleging a loan from M/s Index Securities and Research Pvt. Ltd. was an accommodation entry. A consequential addition of ₹5,40,000/- as unexplained expenditure under Section 69C was also made, representing interest paid on this ₹2 crore loan.
Assessee’s Challenges:
