Abhishek Prakashchand Chhajed Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that treatment of cash receipts from sale of gold/gold ornaments which are duly recorded in audited books of account cannot be treated as unexplained cash credit under section 68 of the Income Tax Act.
Facts-
The assessee is an individual who claimed to be engaged in the business of trading gold and silver items under the name and style of M/s Adheshwer Jewelers. The assessee during the demonetization period deposited cash amounting to Rs. 50 Lakh in the bank account held with Yes Bank and UCO Bank.
Assessee submitted that there was cash sales of Rs. 50,47,147/- during the festival time of Diwali, Dhanteras, and Pushnanakshatra which are considered as good mahurat by the people for purchase of jewelry.
AO held that the entire submission of the assessee showing cash deposits out of trading of gold and silver is camouflaged and afterthought. Therefore, the AO rejected the same. Accordingly, the AO treated the entire cash deposit of Rs. 50 Lakh as unexplained cash credit under section 68 of the Act and added to total income.
CIT(A) confirmed the addition. Being aggrieved, the present appeal is filed.
Conclusion-
It was noted held that the assessee has duly shown the cash receipt from the sale of gold/gold ornaments duly recorded in audited books of the account supported by sales bill and stock details. The AO has not pointed out any defect in the books of accounts. Therefore, in our considered opinion, AO cannot treat the cash generated from sales duly recorded in books of account from unexplained/unaccounted sources unless books of account are rejected based on valid reasons.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), Ahmedabad, arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2017-2018.
2. The assessee has raised following grounds of appeal:
1. CIT(A) erred in law as well as on fact in upholding addition of Rs.50,00,000 u/s.68 being sales credited to profit and loss account and declared as income.
2. CIT(A), erred in law as well as on fact in upholding addition of Rs.4,65,000/- u/s.68 being unsecured loans.
3. The first issue raised by the assessee is that the learned CIT(A) erred in confirming the addition of cash deposit of Rs. 50 Lakh as unexplained cash credit under section 68 of the Act.
4. The facts in brief are that the assessee is an individual who claimed to be engaged in the business of trading of gold and silver items under the name and style of M/s Adheshwer Jewelers. The assessee during the demonetization period (08th November 2016 to 31st December 2016) deposited cash amounting to Rs. 50 Lakh in the bank account held with Yes Bank and UCO Bank. The details of the same stand as under:
