ACIT Vs Mallics Jewels (ITAT Lucknow)
The Income Tax Appellate Tribunal, Lucknow Bench dealt with a Revenue appeal for Assessment Year 2017–18 challenging the deletion of an addition of ₹2.75 crore relating to cash deposits of specified bank notes during the demonetisation period. The Assessing Officer (AO), by an order dated 28 December 2019 passed under Section 143(3) of the Income-tax Act, 1961, had treated the cash deposits as unexplained under Section 68 and determined total income at ₹2,98,83,240 as against the returned income of ₹23,83,240. The National Faceless Appeal Centre (CIT(A)) deleted the addition, prompting the Revenue’s appeal before the Tribunal.
During appellate proceedings, the Tribunal examined detailed submissions and paper books filed by both sides. The Revenue highlighted discrepancies between the stock available with the assessee and the sales claimed during the demonetisation period, particularly on 8 November 2016, when cash sales of ₹3.51 crore were reported. Based on assessment records called for by the Tribunal, the Revenue pointed out that the assessee’s closing stock as on 31 October 2016 was ₹2.48 crore (gold and diamonds combined). Even after considering two purchase vouchers for early November 2016, total stock worked out to ₹2.53 crore, which was insufficient to support the sales claimed. The Revenue also noted defects in purchase vouchers, lack of clarity on mode of payment, blank narrations, and absence of evidence of receipt of goods, casting doubt on the genuineness of stock and sales. It was contended that the excess sales indicated fabrication to colour unexplained cash as business receipts, especially given that the assessee had opted for PMGKY for part of the amount.
