INCOME TAX OFFICER, LUDHIANA vs. ANITA WALIA, LUDHIANA

Aforesaid appeal by revenue for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] NFAC dated 31.12.2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 29.12.2019. The sole grievance of the revenue is deletion of addition of Rs.102 Lacs as made by Ld. AO u/s 69A on account of cash deposits during demonetization. The Ld. Sr. DR advanced arguments

The assessee being resident individual is stated to be engaged in trading of bullion and gold. It transpired that the assessee deposited cash of Rs.102 Lacs during demonetization period and accordingly, the assessee was required to explain the sources of the same. The assessee, inter-alia, stated that the deposits were sourced out of cash sales as made by the assessee. The assessee had reflected cash sales of Rs.88.34 Lacs during October, 2016. However, there was no sales from April, 2016 to September, 2016 and further more than 95% of the sales was made in just 38 days prior to demonetization. The assessee controverted the same on the ground that it had opening stock of Rs.153.74 Lacs which was sold and due VAT was paid on the sales. However, Ld. AO continued to allege that the assessee introduced unaccounted money in the garb of cash sales. Finally, impugned deposits were added to assessee’s income u/s 69A.

During first appeal, the assessee, inter-alia, stated that its sale were duly evidenced by copies of sales bills and copies of VAT returns which were duly furnished to Ld. AO. The assessee also furnished month-wise chart of cash-in-hand as well as copy of stock register from FYs 2009-10 to 2018-19 depicting gold purchase, available stock in hand and the stock as sold by the assessee. It was contended that the increase in cash sales was normal business phenomenon and therefore, no addition could be made in terms of various judicial decisions.

The Ld. CIT(A) concurred that each of the sale bill was less than Rs.2 Lacs and in such a case, there was no requirement to maintain the details of the customers. The assessee declared profit on entire sales. The Ld. AO accepted the audited books of accounts and the deposits were duly recorded in the regular books of accounts. The assessee had sufficient cash balance to make to impugned deposits. The books of accounts were not rejected. When cash deposits were sourced out of cash balance as available in the books, there was no question of treating the deposits as unexplained cash deposits. The Ld. AO did not reject the books of accounts. The Ld. CIT(A) also tabulated the sales made by the assessee for AYs 2011-12 to 2019-20 and observed that though the sales in earlier years was less, however, the sales in subsequent three years was on higher side. The assessee declared Gross Profit Rate of 36.68% and the gold rate at the time of sale during this year was higher than the average gold rate in previous years. The assessee declared profit on entire cash sales. The assessee has sufficient stock to make the impugned sales. The sales were admitted and offered to tax. Once there was no defect in the sales and purchases and the same were matching with the inflow and outflow of stock, there was no reason to disbelieve the sales of the assessee. On these facts, the impugned addition was deleted against which the revenue is in further appeal before us.

From case records, it emerges that the assessee is engaged in trading of bullions and gold since the past almost 20 years and the assessee is a regular income tax return filer for the past many years. For this year, the assessee declared income of Rs.22.37 Lacs and the assessee’s case was subjected to scrutiny wherein the assessee was required to explain the source of cash deposit of Rs.102 Lacs. The assessee stated that the cash deposits were sourced out of cash sales made by it during the year. The sales were carried out of opening stock of gold bullions as available with the assessee which is evident from the fact that the assessee has maintained audited books of accounts along with the quantitative details of stock. The assessee furnished copies of ledger accounts of suppliers along with copies of purchase bills from Financial Years 2010-11 onwards depicting purchase of stock of bullions in earlier years. In this year, the opening stock was sold at a gross profit rate of 36.68%. The cash deposits has thus been sourced out of cash balance available with the assessee as on 30.09.2016 and out of cash sales made from 01.10.2016 to 08.11.2016. The assessee also furnished copies of sales bills along with copies of VAT returns which duly support the case of the assessee. The assessee has also furnished copy of stock register from Financial Years 2009-10 to 2018- 19 depicting gold purchase, available stock-in-hand, and gold sold by the assessee. It is quite evident the assessee has maintained quantitative details and its has also furnished copies of sales bills, copies of VAT returns, month-wise details of cash deposits and cash

The appeal stand dismissed. Order pronounced on 17th August, 2026

""थ"/Respondent 3. आयकरआयु"/CIT 4. िवभागीय"ितिनिध/DR 5. गाड"फाईल/GF