M/S. SWARN SAGAR JEWELLERS PVT LTD ,MUMBAI vs. ITO WARD 15(3)(4), MUMBAI
| आयकर अपीलीय अिधकरण ायपीठ, मुंबई |
IN THE INCOME TAX APPELLATE TRIBUNAL
“F” BENCH, MUMBAI
BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT
&
SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER
I.T.A. No. 4864/Mum/2025
Assessment Year: 2017-18
M/s. Swarn Sagar Jewellers Pvt. Ltd.
Shop No. 10, Grain Merchant Society
Sector-17, Vashi
Navi Mumbai - 400705
[PAN: AAGCS2994E]
Vs
Income Tax Officer, Ward
15(3)(4), Mumbai
अपीलाथ/ (Appellant)
यथ/ (Respondent)
Assessee by :
Shri V.D. Parmar, Adv.
Revenue by :
Ms. Kavita Kaushik, Sr. D/R
सुनवाई की तारीख/Date of Hearing : 14/10/2025
घोषणा की तारीख /Date of Pronouncement : 16/10/2025
आदेश/O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
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. 2. 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 I.T.A. No. 4864/Mum/2025
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.
I.T.A. No. 4864/Mum/2025
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We have carefully considered the orders of the authorities below. There is no dispute that the assessee was maintaining regular books of accounts which were subjected to audit and the auditors have nowhere given any adverse inference insofar as the trading results of the assessee are concerned. It is true that there was sudden spike in the sales on 08/11/2016 but it is equally true that due to the demonetization there was a frenzy in the market and people wanted to get rid of the demonetized currency and, therefore, they were buying even if they did not need the goods. What is relevant for the purpose of the Income Tax Act is whether such sales are out of the accounted stock available with the seller and such sales are properly recorded in its regular books of accounts. In the case in hand, the assessee being a jeweller engaged in the business of purchase and sales of gold ornaments, the assessee was having sufficient stock as on 08/11/2016 and nothing adverse has been pointed out by the AO insofar as the availability of trading stock is concerned. The assessee made the sales. Taking full addresses and the PAN of all the customers who have purchased jewellery below Rs. 2 Lakhs, is not mandatory under the law and not taking the addresses and the PAN details during demonetization rush and pressure on sales of the jewellery which is otherwise not mandatory under law cannot be a ground for drawing adverse inference against the sales made by the assessee especially when all other parameters like purchase/stock registers, sufficient stock for sales made are accepted. Even the VAT returns were not revised in the post demonetization period and the AO has not pointed out a single defect in the audited books of accounts of I.T.A. No. 4864/Mum/2025 4
the assessee nor it is the case of the AO that the assessee inflated sales to cover up the cash deposited in the bank.
6. Considering the facts of the case in totality, we are of the considered view that the assessee had successfully explained the source of cash deposited during the demonetization period and such explanation cannot be faulted with. Moreover, the impugned sales are part of the trading results and part of the returned income of the assessee. Taking a certain transaction out of the trading results for making addition u/s 68 of the Act amounts to double addition of the sales. In any case, since the assessee had explained and the explanation cannot be faulted with, the AO is directed to delete the impugned addition.
7. In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 16th October, 2025 at Mumbai. (SAKTIJIT DEY)
ACCOUNTANT MEMBER
Mumbai, Dated 16/10/2025
*SC SrPs
*SC SrPs
*SC SrPs
*SC SrPs
आदेश की ितिलिप अेिषत/Copy of the Order forwarded to :
अपीलाथ / The Appellant 2. थ / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु")अपील (/ The CIT(A)- 5. िवभागीय ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file.
आदेशानुसार/ BY ORDER