Lalithaa Jewellery Mart Ltd. Vs DCIT (ITAT Chennai)
Mere Loose Notings Without Corroboration Cannot Justify Unaccounted Income- ITAT Chennai Deletes Additions on “MD Sheet”
Chennai ITAT delivered a consolidated order in six appeals filed by a leading South Indian jewellery retailer with nearly sixty showrooms, against assessments framed for AYs 2016-17 to 2021-22. The assessments had been completed pursuant to a search conducted u/s 132 on 04.03.2021, triggering proceedings u/s 153A. Earlier, the Madras High Court, by order dated 11.11.2022, had set aside the initial assessments & directed AO to frame de-novo assessments after hearing Assessee. In the fresh round, AO made several high-pitched additions, many of which were confirmed by CIT(A). These were challenged before the Tribunal.
The principal dispute revolved around an excel sheet titled “MD Sheet” recovered from the email account of one Mr. Stanley, AGM (Operations), during the course of search. AO alleged that the sheet contained details of unaccounted cash withdrawals by the Managing Director, aggregating to ₹10.13 crore across five assessment years & proceeded to tax them as unexplained income. Assessee explained that the sheet did not contain any reference to cash or sales; rather, it was only an internal control record of leftover metals like silver, copper, dust & stones, arising in the process of melting old gold ornaments. These residues were reused in jewellery manufacturing, & the values mentioned were mere estimates noted for the management’s information. It was further pointed out that the sheet was emailed by Stanley to himself, not to the Managing Director or to the accounts team, which underscored its internal nature. Assessee also highlighted that in the search, no evidence of cash diversion or unaccounted sales was unearthed & that the stock registers seized tallied without any discrepancies.
