Aditya Ornaments Vs ITO (ITAT Rajkot)
Summary: The appeal was filed by Aditya Ornaments, a partnership firm, against the order of the National Faceless Appeal Centre, Delhi, dated 27.02.2026, arising from the assessment order passed under section 143(3) of the Income-tax Act, 1961 dated 24.12.2019 for AY 2017-18. The dispute concerned an addition of Rs. 2,65,59,500/- under section 69A in respect of cash deposited during the demonetisation period. The assessee had filed its return on 17.10.2017 declaring income of Rs. 3,33,800/-. Its case was selected for complete scrutiny and notices under sections 143(2) and 142(1) were issued.
During assessment, the Assessing Officer noticed cash deposits aggregating to Rs. 3,02,80,000/- in ICICI Bank, IDBI Bank and HDFC Bank accounts. The assessee explained that the deposits represented cash sales made during October 2016 and the Diwali period. It pointed to an opening cash balance of Rs. 3,10,08,913.15 as on 31.10.2016 and Rs. 3,09,03,828.15 as on 08.11.2016 and submitted its audited cash book. The assessee also referred to CBDT Instruction No. 246/151/2017-A & PAC-1 dated 10.01.2018 and furnished purchase and sales registers, job-work details, interest details and other records.
The Assessing Officer rejected the explanation and treated the cash deposited in old specified bank notes as unexplained cash under section 69A read with section 115BBE. Against total deposits of Rs. 3,02,80,000/-, credit of Rs. 37,20,500/- representing cash on hand as on 04.10.2016 was allowed and the balance Rs. 2,65,59,500/- was added to total income. The assessee challenged the addition before the CIT(A), contending, among other things, that the sales had already been recorded and offered to tax, that the books were audited under section 44AB, and that the Assessing Officer had not invoked section 145(3). The CIT(A), however, upheld the addition.
