Case Law Details
ITO Vs Sahana Jewellery Exports Pvt. Ltd. (ITAT Chennai)
Introduction: The Income Tax Appellate Tribunal (ITAT) in Chennai recently adjudicated a case between the Income Tax Officer (ITO) and Sahana Jewellery Exports Pvt. Ltd., revolving around the assessment year 2017-18. The dispute primarily centered on the cash deposits made during the demonetization period, with the ITO asserting that the deposits amounting to Rs. 51,39,39,100 were unexplained cash credits under Section 68 of the Income Tax Act, 1961.
Factual Background: Sahana Jewellery Exports Pvt. Ltd., engaged in the trading of gold and jewelry, filed its return for the assessment year 2017-18, admitting a total income of Rs. 15,36,890. The case underwent scrutiny under the Computer Assisted Scrutiny Selection (CASS) to examine cash deposits during the demonetization period. The ITO, through notices and summonses, sought information from various banks, discovering cash deposits totaling Rs. 48,80,73,000 during demonetization.
Assessee’s Defense: The assessee contended that the source of cash deposits was advances received from customers for a gold scheme, recorded in its books of accounts. It claimed a cash balance of Rs. 48,82,75,750 as of the demonetization date, originating from sales declared before the event. The ITO, however, alleged a modus operandi designed to create a facade of cash receipts, citing a disproportion in the number of parties and collections pre and post-demonetization.
Assessment and Appeal: The ITO treated the total cash receipts as unexplained cash credit under Section 68 of the Act. The assessee, dissatisfied, appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], presenting detailed submissions and evidence. The CIT(A) acknowledged the genuineness of the source for cash deposits and nullified the additions made by the ITO.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
