M/S. SWARN SAGAR JEWELLERS PVT LTD ,MUMBAI vs. ITO WARD 15(3)(4), MUMBAI

This appeal by the assesse is preferred against the order dated 11/04/2025 by NFAC, Delhi [hereinafter “the ld. CIT(A)”] pertaining to AY 2017-18.

The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the addition of Rs. 61,50,557/- made by the AO u/s 68 of the Act on account of deposit of SBNs. 3. Representatives of both the sides were heard at length. Case records carefully perused and the relevant documentary evidence brought on record duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. 4. Briefly stated the facts of the case are that the assessee filed its return of income on 31/10/2017 declaring income of Rs. 10,26,770/-. The return was selected for scrutiny assessment under CASS and 2 accordingly statutory notices were issued and served upon the assessee. The assessee is engaged in the business of purchase and sale of gold ornaments. While scrutinizing the return of income, on perusal of the bank statements, the AO found that the assessee has deposited Rs.56.40 lakhs in cash during the demonetization period. The assessee was asked to explain the source of cash sales made during FY 2015-16 and 2016-17 along with cash book for FY 2015-16 and 2016-17. The assessee furnished complete details of cash sales made from 01/04/2015 to 08/11/2015 and 01/04/2016 to 08/11/2016. The assessee explained that the sales have been duly accounted for in its books of accounts and the same can also be verified from the VAT returns filed by the assessee. The submissions made by the assessee along with documentary evidences were considered by the AO but did not find favour with him. The AO was of the firm belief that in order to prove that the transactions are not hit by Section 68 of the Act, the assessee has to establish first the identity, second the creditworthiness of the entities who have applied for the shares and lastly the genuineness of the transactions and where the assessee fails to prove to the satisfaction of the AO, the source and nature of the amount of cash credits, the AO is entitled to draw an inference that the credit entries represent income taxable in the hands of the assessee. The AO concluded by holding that the assessee has not given sufficient evidence in support of the claim that cash receipts are out of cash sales on 08/11/2016 and thereafter till 31/12/2016. The AO accordingly made addition of Rs. 61,50,557/-. 4.1. The assessee challenged the addition before the ld. CIT(A) but without any success.