Lalit R Jagawat HUF Vs DCIT (ITAT Mumbai)
The Mumbai Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2017-18, deleting the addition made under Section 68 of the Income-tax Act in respect of cash deposits during the demonetisation period. The assessee, a Hindu Undivided Family engaged in the business of trading in gold and silver jewellery, challenged the addition of ₹2,25,04,409 treated as unexplained income and taxed under Section 115BBE.
The Revenue had made the addition on the ground that there was an abnormal increase in cash deposits during the demonetisation period and alleged that the assessee had failed to produce the cash book, purchase register, sales register and quantitative records to establish the source of cash deposits, thereby suggesting that cash sales had been manipulated after the announcement of demonetisation.
The assessee contended that the cash deposits represented cash sales made in the ordinary course of business and submitted supporting documents including the day-wise cash book, party-wise purchase and sales details with names, addresses and PANs, purchase register, date-wise and item-wise sales register, and bank statements. It was further submitted that the business activity was not disputed, the sales were reflected in the trading account filed with the return of income, and the source of the cash deposits stood fully explained. The assessee also submitted that 8 November 2016 was an exceptional day due to demonetisation, resulting in increased demand for jewellery from customers seeking to invest in gold using specified bank notes. It was pointed out that sales of ₹2,25,04,409 made on 08.11.2016, including ₹2,05,75,291 treated by the Assessing Officer as unexplained cash credit, had already been recorded in the books of account and offered to tax. Since the Assessing Officer had accepted those sales, making a separate addition under Section 68 amounted to taxing the same income twice.
