DCIT Vs Bharatji Designer Jewellery Pvt. Ltd. (ITAT Ahmedabad)
Addition Under Section 69A Cannot Be Made on Mere Suspicion During Demonetisation; ITAT Deletes ₹2.35 Crore Addition Because Jeweller’s Books Showed Proper Stock and Sales Records; ITAT Upholds Deletion of Demonetisation Addition Due to Lack of Specific Defects in Books; Abnormal Sales Increase During Demonetisation Alone Not Enough for Section 69A Addition.
The ITAT Ahmedabad dismissed the Department’s appeal and upheld the deletion of addition of ₹2.35 crore made under Section 69A in respect of cash deposits made by a jewellery business during the demonetisation period.
The assessee, engaged in retail trading of diamond, pearl, coloured stone and gold jewellery, had filed its return for AY 2017-18 declaring nil income after set-off of brought forward losses. During scrutiny assessment proceedings under Section 143(3), the Assessing Officer (AO) noted that cash deposits aggregating to ₹2.35 crore were made between 09.11.2016 and 30.12.2016 in the assessee’s Kotak Mahindra Bank account.
The assessee explained that the deposits represented sale proceeds from jewellery sales recorded in regular books of account and supported by sales invoices, stock registers, cash book, bank book, VAT records and audited financial statements. The assessee also stated that anniversary offers, promotional schemes and festive demand during October and November 2016 had increased customer footfall and sales. It was further explained that sales were made out of existing stock with complete quantitative reconciliation of purchases, sales and closing stock.
