Fine Gujaranwala Jewellers Vs ITO (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal against the order dated 21.06.2022 passed by the CIT(A)/National Faceless Appeal Centre for Assessment Year 2017-18. The dispute concerned an addition of Rs.1,37,95,042/- made by the Assessing Officer under Section 68 of the Income-tax Act, 1961 in respect of cash deposits attributed by the assessee to cash sales of jewellery, with tax sought to be charged under Section 115BBE.
The assessee had filed its return declaring NIL income for AY 2017-18. The assessment was completed on 29.12.2019 by treating Rs.1,37,95,042/- as unexplained cash credit. The CIT(A), by order dated 21.06.2022, sustained the addition. The CIT(A) considered, among other matters, the fact that most cash-sale invoices for diamond items between 01.10.2016 and 31.12.2016 were below Rs.2 lakh and observed that cash sales during 01.10.2016 to 08.11.2016 constituted 90.59% of the cash sales for the relevant period. The CIT(A) also considered the average daily sales during the 39-day period and concluded that the cash-sales claim was an afterthought intended to explain the bank deposits during the demonetisation period.
Before the Tribunal, the assessee submitted that the cash deposited in the bank represented sale proceeds of jewellery and that the transactions were supported by books of account, purchase vouchers, sales invoices, stock register, VAT records and bank statements. The assessee also pointed out that its books had not been rejected and that the relevant sales had been disclosed to and accepted by the VAT authorities. The assessee relied upon the principle that cash sales recorded in regular books and supported by available stock could not be treated again as unexplained cash credits merely because the cash was subsequently deposited in the bank.
