Rajendra Kumar Shet Vs ITO (ITAT Bangalore)
ITAT Bangalore Restores Jewellery Demonetisation Additions for Fresh Verification Where Cash Sales Bills Show Only “Cash” Buyers
The Bangalore ITAT partly allowed the appeal of Assessee, a jeweller, and restored to AO two major additions relating to demonetisation-period sales for fresh examination. The dispute arose from (i) addition of ₹22,65,024 as difference between September 2016 turnover declared in VAT return and higher turnover recorded in books, and (ii) addition of ₹1,32,38,548 treated as alleged excess turnover/cash credits for October–December 2016 based on average past sales.
Tribunal noted that where turnover recorded in books is higher than VAT return, mere discrepancy cannot justify addition u/s 68 unless Revenue demonstrates that corresponding sales are bogus or unsupported. Assessee claimed clerical error in monthly VAT return later rectified in annual VAT Form 240 and argued that sales were duly recorded with gross profit already offered. However, Tribunal found a critical infirmity: sales invoices during the period mentioned buyer merely as “cash”, without name or address, and quantity-wise stock linkage was not verified by AO or CIT(A).
On the alleged excess turnover during demonetisation, Tribunal held that estimation based on past averages and conjectures is unsustainable when sales are recorded in books and GP/NP is offered, unless Revenue disproves availability of stock or genuineness of sales. Yet, since buyer identification and quantity reconciliation were not examined, Tribunal remanded both issues to AO to verify identity of buyers, quantity of goods sold vis-à-vis stock, and to consider GP already offered, and then decide afresh in accordance with law. Agricultural income addition of ₹14.91 lakh had already been deleted by CIT(A) and was not in dispute. Appeal was thus partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No. 816/Bang/2025 is filed by Mr Rajendra Kumar Shet for AY 2017–18 against the appellate order passed by the National Faceless Appeal Centre, Delhi (the ld. CIT–A) on 5 March 2025 wherein the appeal filed by the assessee against the assessment order dated 30 December 2019 passed u/s. 143(3) of the Income Tax Act, 1961 [the Act] by the ITO, Ward – 1, Raichur (ld. AO) was partly allowed.
