Rakesh Jain Vs DCIT (ITAT Mumbai)
ITAT Mumbai Strikes Down ₹3.49 Crore Section 68 Addition—Demonetisation Cash Deposits Held as Genuine Recorded Sales; 115BBE Re-Taxation Unsustainable
The Tribunal held that the ₹3.49 crore cash deposit stands fully explained as recorded cash sales, duly supported by audited books, VAT Form-704, stock register, cash book and sales invoices. The AO rejected books without issuing show-cause, violating natural justice, and then invoked Section 68 on rejected books, which is impermissible in law. The ITAT noted that the difference in figures was only due to VAT-inclusive vs VAT-exclusive amounts, eliminating any alleged discrepancy. The assessee had sufficient stock, consistent cash-sales pattern, and all receipts were already offered to tax, making any further addition double taxation, contrary to judicial principles. The AO brought no adverse material, made no enquiry, and relied purely on suspicion during the demonetisation period. Since Section 68 cannot apply to recorded sales, and Section 115BBE cannot re-tax the same income, the entire addition and consequential actions were unsustainable in law and were deleted.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal has been filed by the assessee challenging the impugned order dt.28.11.2024 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2017-18. The following grounds have been raised by assessee.
1. The Ld CIT(A) erred in making an addition of Rs.3,49,00,000/- as cash deposited in the bank during demonetization period u/s 68 treating the same as unexplained income and added the same to the income of the assessee.
2. The Ld CIT(A) erred in initiating penalty proceedings u/s 274 r.w.s 271AAC of the income tax act.
3. The Ld CIT(A) erred in charging interest 234A,234B and 234C of the act.
4. The appellant craves leave to add further grounds or to amend or alter the existing grounds of appeal on or before the date of hearing.
2. The brief facts of the case are that the assessee is Proprietor of M/s Spllendid Jewellery engaged in business of Manufacturer and Reseller in Gold Bar and Ornaments. The order of assessment was passed u/s 144 r.w.s 143(3) on the ground that there was abnormal increase in cash deposit during demonetization period as compared to predemonetization period. Although assessee preferred appeal but the additions made were upheld and consequently the appeal was partly allowed.
