Case Law Details
Bollam Sampath Kumar Jewellers (P) Ltd Vs ACIT (ITAT Hyderabad)
Introduction: The Income Tax Appellate Tribunal (ITAT) Hyderabad’s decision in the case of “Bollam Sampath Kumar Jewellers (P) Ltd Vs ACIT” marks a pivotal moment in the scrutiny of unexplained cash deposits during the demonetization period in India. The case, relating to the assessment year 2017-18, delves into the complexities surrounding the treatment of substantial cash deposits made by the assessee, a private limited company engaged in the jewellery business, during the demonetization period announced by the Government of India in November 2016.
Detailed Analysis
The core of the ITAT’s decision revolves around two major additions made by the Assessing Officer (AO) under sections 69A and 68 of the Income Tax Act. The first addition pertained to unexplained cash deposits amounting to Rs. 14,88,01,620 made during the demonetization period, while the second related to a difference in the gross profit (GP) rate before and after demonetization, leading to an additional income estimation of Rs. 10,97,68,945.
The assessee’s primary contention was the lack of proper consideration of submitted books of accounts, daily summaries of cash, bank statements, and sales records, which allegedly demonstrated the legitimacy of the cash deposits and maintained gross profit margins. Despite these submissions, both the AO and the CIT (Appeals) upheld the additions, citing insufficient evidence to explain the nature and source of the deposits and a lack of convincing demonstration of the sales figures and corresponding GP rates for the periods in question.
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