M/S. LALITHA JEWELLERY MART LTD.,CHENNAI vs. DCIT, CENTRAL CIRCLE-1(4), CHENNAI

आयकर अपीलीय अिधकरण, ‘बी’
यायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘B’ BENCH: CHENNAI

ी एबी टी. वक
, ाियक सद एवं
एवं
एवं
एवं

ी मनोज कुमार अवाल, लेखा सद के सम

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRIMANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER

आयकरअपीलसं./ITA Nos.675 to 680/Chny/2025
िनधारणवष/Assessment Years: 2016-17 to 2021-22

M/s. Lalithaa Jewellery Mart Ltd.,
No.123, Usman Road,
T. Nagar,
Chennai-600 017. v.

The DCIT,
Central Circle-1(4),
Chennai.
[PAN: AAACL 1523 A]

(अपीलाथ/Appellant)

(यथ/Respondent)

अपीलाथ क ओर से/ Appellant by :
Mr. D. Anand, Advocate
यथ क ओर से /Respondent by :
Mr. Shiva Srinivas, CIT
सुनवाईकतारीख/Date of Hearing
:
30.04.2025
घोषणाकतारीख /Date of Pronouncement
:
12.06.2025

आदेश / O R D E R
PER ABY T. VARKEY, JM:

These appeals by the Assessee are arising out of the orders of the Learned Commissioner of Income Tax (Appeals) -18, Chennai [in short
'ld. CIT(A)'] all dated 31.01.2025 against the orders passed by the Dy.
CIT, Central Circle-1(4), Chennai [in short 'the AO'] for the Assessment

Years [in short 'AYs'] 2
are common, all the a together. Both the pa arguments on these iss brevity, we dispose all t
2. Before we advert be relevant to cull out t in respect of certain A engaged in the busines articles made of prec segment across South taxable income declared are as follows:
Ass
20
20
20
20
20
20
3. Search u/s 132 of as "the Act") was co
M/s.Lalithaa Jewellery thereby triggering Secti
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 2 ::

2016-17 to 2021-22. Since several appeals for all the assessment yea rties also argued them together sues. Accordingly, for the sake of co the appeals by this consolidated orde to the grounds taken in the appeal the basic facts of the case and effec
AYs. The assessee is a private lim ss of manufacturing and trading of ious metals and stones, catering
India, having almost sixty (60) sh d by the assessee in the AYs impu st Year
Returned income
016-17
₹96,37,10,370/-
017-18
₹52,41,64,040/-
018-19
₹134,29,66,360/-
019-20
₹139,74,81,200/-
020-21
₹188,82,39,920/-
021-22
₹286,51,12,790/- f the Income Tax Act, 1961 (hereina onducted in the group cases of Mart Pvt. Ltd. (in short ‘LJMPL’), o on 153A of the Act. Prior to the date to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
issues involved ars were heard raising similar onvenience and er.
s, it would first t of law in brief mited company f jewellery and g to the retail howrooms. The gned before us after referred to the assessee, on 04-03-2021
e of search, the income-tax assessment
143(1) / 143(3) of the 2019-20 stood complet
(AO) on the date of sea abate consequent to the AYs 2020-21 & 2021-22
abated assessments. C issued and the assessm captioned years before filed several Writ- petit which, were disposed o aside all the impugned a assessment de-novo a assessments were taken
143(3) all dated 31-03- additions/disallowances the appeals for AYs 201

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 3 ::

t under section (hereinafter referre e Act (scrutiny assessment) for A ed and were not pending before As arch, therefore, assessments of thos e search on 04-03-2021. As far as a 2 are concerned, it was undisputed t
Consequent to the search, notices ments were completed on 27-12-2
us. Against these assessments, the tions before the Hon’ble Madras Hig off by a common order dated 11-1
assessment orders with a direction t after hearing the assessee. Con n up afresh and the assessment ord
-2023 was passed by the AO. The s in Rupees made by the AO which a 6-17 to 2021-22 are as follows:- to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ed to as "u/s.")
AYs 2016-17 to ssessing Officer se years did not assessments for that these were u/s 153A was 022 for all the e assessee had gh Court, all of 11-2022 setting to complete the sequently, the ders u/s 153A /
summary of the are in dispute in Sl
No.
Issue
16
1. Addition on a/c of cash withdrawals by MD found in ‘MD
Sheet’ in emails of Mr. Stanley
1,30
2. Addition of unexplained cash credit based on material seized at third party,
Shri
Anbuchezhiyan
3. Addition of profit element on the cash transactions with M/s
Mohanlal Jewellers Pvt Ltd
4. Addition made on account of cash deposited during demonetization
5. Addition made on a/c of cash investment made with M/s
Bhoomi & Building Pvt Ltd
6. Disallowance of excess wastage shown on conversion of existing own gold ornaments into gold
7. Disallowance of excess wastage shown on conversion of old gold ornaments brought from parties into gold
8. Addition made on account of unaccounted interest paid to parties
9. Disallowance of excess labour charges paid to Asita Jewellery
Manufacturing Pvt Ltd
10. Addition made on account of valuation of closing stock
4. We first take up th
ITA No.675/Chny/20
of income on 30.11.201
is understood that the i of the Act. After the se filed a return in respon statutory notices u/s 14
certain details/informat
01-2023 conveyed to ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 4 ::

6-17
17-18
18-19
19-20
0,59,974
1,81,04,999
2,02,45,191
3,04,26,93
-
6,85,00,000
35,14,00,000
33,46,24,25
-
81,05,050
1,10,28,230
1,62,93,62
-
54,11,66,350
-
-
-
-
15,30,00,000 12,00,00,00
-
-
-
5,11,18,98
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- he appeal filed by the assessee for A 025. For AY 2016-17, the assessee h
16 declaring total income of Rs.96, income tax assessment was comple earch was conducted on 04.03.2021
nse to notice u/s 153A of the Act,
43(2) & 142(1) of the Act were iss tion. The AO in his show- cause no the assessee that an email at to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
20-21
21-22
37
1,95,31,356
87,66,675
50
19,51,00,000
-
23
1,07,67,376
58,63,415
-
-
86
36,19,83,792
27,58,29,025
62,99,36,957
42,81,19,429
13,52,07,096
45,74,07,096
16,33,38,625
6,86,75,232
-
10,42,97,645
AY 2016-17 in had filed return
37,10,370/-. It eted u/s 143(1)
1, the assessee and thereafter sued calling for otice dated 13- ttachment was downloaded from the assessee company, whi given by way of an Ann this sheet was the d assessee. The AO summ which was as follows:-
“12. MD sheet in On verification of a sheet named “
the sheet, it wa carried out. The p this report. Summ

F
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 5 ::

mail-box of Mr. Stanley, AGM-Ope ch contained an Excel Sheet whose nexure. According to the AO, the da etails of cash transactions carrie marized the notings on this excel she stanley’s mail :- f the email attachment downloaded from S ac” was found. On verification of the data s noticed that there were details of cash printouts of such ac sheets are given as An mary of the cash receipts is given below:
Month wise breakup of MD ac transactions
FY
Month
Amount
15-16
Apr-15
2,71,600
15-16
May-15
26,22,100
15-16
Jun-15
6,11,450
15-16
Jul-15
3,83,330
15-16
Aug-15
-
15-16
Sep-15
3,73,220
15-16
Oct-15
8,66,150
15-16
Nov-15
5,44,650
15-16
Dec-15
42,22,241
15-16
Jan-16
4,58,454
15-16
Feb-16
20,333
15-16
Mar-16
26,86,355
16-17
Apr-16
3,33,185
16-17
May-16
9,96,020
16-17
Jun-16
4,24,810
16-17
Jul-16
4,14,530
16-17
Aug-16
53,61,906
16-17
Sep-16
6,96,965
16-17
Oct-16
2,58,430
16-17
Nov-16
6,03,160

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
erations of the printouts were ata contained in ed out by the eet month-wise
Stanley’s mail, a contained in h transactions nnexure 11to

FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1
FY 1

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 6 ::

16-17
Dec-16
-
16-17
Jan-17
50,88,895
16-17
Feb-17
17,71,360
16-17
Mar-17
21,55,738
17-18
Arp-17
3,82,720
17-18
May-17
3,42,130
17-18
Jun-17
7,67,695
17-18
Jul-17
17,23,965
17-18
Aug-17
10,83,914
17-18
Sep-17
31,50,442
17-18
Oct-17
25,55,949
17-18
Nov-17
4,82,370
17-18
Dec-17
7,46,510
17-18
Jan-18
23,08,281
17-18
Feb-18
54,56,331
17-18
Mar-18
12,44,884
18-19
Arp-18
14,11,641
18-19
May-18
7,98,688
18-19
Jun-18
31,59,488
18-19
Jul-18
13,00,205
18-19
Aug-18
51,74,563
18-19
Sep-18
6,46,087
18-19
Oct-18
17,69,270
18-19
Nov-18
22,60,915
18-19
Dec-18
3,86,000
18-19
Jan-19
34,49,695
18-19
Feb-19
92,00,385
18-19
Mar-19
8,70,000
19-20
Arp-19
9,71,465
19-20
May-19
-
19-20
Jun-19
6,14,629
19-20
Jul-19
7,67,184
19-20
Aug-19
6,16,950
19-20
Sep-19
15,20,174
19-20
Oct-19
7,25,118
19-20
Nov-19

19-20
Dec-19
13,69,981
19-20
Jan-20
1,83,855
19-20
Feb-20
7,12,000
19-20
Mar-20
1,20,50,000

10,13,68,457

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.

Pe
FY
FY
FY
FY
FY
12.1. As per the 10,13,68,457/-fro books of accoun
Please show caus be taxed for the a 4.1
According to the A cash receipts aggregati which were not record summary was also set o assessee to explain as as assessee’s unexplain their replies vide letters pointed out that, the in observations didn’t ema explained that, this all there any mention of c that, this excel sheet w over articles or metals which were under the ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 7 ::

Year-Wise summary eriod
AY
Amount
15-16
2016-17
1,30,59,974
16-17
2017-18
1,81,04,999
17-18
2018-19
2,02,45,191
18-19
2019-20
3,04,26,937
19-20
2020-21
1,95,31,356

10,13,68,457
e summary of sheet, they have received om various operations which were not re nt. Since the above income has escaped se as to why an amount of Rs. 10,13,68,45
assessment years mentioned above.”
AO therefore, the assessee had rec ing to Rs.10,13,68,457/- from vari ded in the books of accounts, wh out in the above notice. The AO thu to why the said cash receipts shou ned income. In response, the asse s dated 27-01-2023 and 02-02-2023
nference drawn by the AO was mis anate from the contents of this shee leged sheet was neither a cash re cash in this entire excel sheet. It was merely a chart containing the v extracted upon conversion of old g e supervision of Mr. Stanley. Acc to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
as sum of Rs.
ecorded in the d assessment.
57/- should not ceived following ious operations hose year wise us required the ld not be taxed essee furnished
3. The assessee splaced and his t. The assessee eceipt nor was was explained value of the left gold ornaments cording to the assessee, this chart w regarding the value of from the old gold stock given by Mr. Stanley in him in the course of se after the purchase of o other purchases and t weight, remove the sto reports and then send t fine gold. The assessee sheet did not contain a or any other material outside the books, it w values maintained by receipts. The assessee items were never withd for re-use in manufactu out that, there was no course of search which into cash and that the m the assessee company.
assessee, the AO obs
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 8 ::

as maintained by Mr. Stanley to left over items like silver, copper k. For this, the assessee referred t his statement to Question Nos. 11
earch, wherein he had stated that, old gold processing and general m that, he would individually check ones, wax and melt it and would a the melted gold to the refinery for e accordingly submitted that, when ny particulars of sales or mention o which would suggest that these it was unjustified for the AO to infer the supervisor represented una further submitted that, these artic rawn nor converted into cash but w ure of new gold ornaments. The as o corroborative material or evidenc would suggest that these articles w money was withdrawn by the Manag
After taking into account these sub served that, the onus was on th to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
inform the MD r, etc. obtained to the answers
& 12 posed to he was looking machineries and and tally the also obtain test processing into the said excel of cash receipts tems were sold that the article accounted cash cles / left over as handed over ssessee pointed ce found in the were converted ging Director of bmissions of the he assessee to substantiate their claim only provided values of The AO held that as th acceptable evidences to the addition on account relevant year, as mentio
4.2
Aggrieved by the before the Ld. CIT(A). O the action of the AO by he had stated that, the sheet are not reflected
Ld. CIT(A) is as under:
“8.4
I have made by the app mail with name M was explained by process of meltin copper (other th engaged in man form melting of o the data pertains the amounts me metals were conv
8.5
Howeve response to Q.No of customers left tally accounts, m not recorded in entering the data are sold and not ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 9 ::

m with documentary evidence that t f the articles and did not relate to e assessee was unable to bring an o support their claim, the AO proce of unaccounted income of Rs.1,30, oned in the show cause notice.
action of the AO, the assessee prefe
On appeal, the Ld. CIT(A) is noted relying upon the statement of Mr. S e details of these articles mentione in the tally accounts. The relevant perused the assessment order and the pellant. The printout of the e-mail is take
MD Sheet. When questioned during search p y Sri Stanley that he deals with old fold m ng, he recovers stones, other valuable met han gold), etc. As per the appellant si ufacture of gold jewellery, the other met old gold was sent for re-use and are part to these transactions and nowhere it was entioned in the seized material are cash verted into cash and handed over to MD.
er, as could be seen from the reply of o.5, it was clearly averred that these sheet t over items and that these details are no eaning thereby that the sale of left over ite the books of account. Then the person m a had clearly spelt that the items entered in recorded in the books, there can be no o to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
this excel sheet o cash receipts.
y such credible eeded to make
59,974/- in the erred an appeal to have upheld
Stanley wherein ed in the excel findings of the e submissions en form Stanly proceedings, it melting: in the tals like silver, ince they are tals recovered t of stock, and made out that or that these
Sri Stanley in ts contain sale ot reflected in ems / dust are managing and n the said data ther go but to treat the amount income and acco
Accordingly, this Aggrieved by the order before us.
4.3
Assailing the actio assessee, Shri D. Anan addition was the print- himself. Relying on the assumed that, the valu withdrawals by the Ma said sheet and showed receipts nor was there transactions. The Ld. AR sheet comprised of ite similar by-products whi ornaments. He pointe approximate value of th that there was no ment excel sheet, and that th his subjective notions.
assistant general manag of old gold processing
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 10 ::

s as appearing in the said data as unaccou ordingly the addition made by the AO ground of the appeal is dismissed.”
r of the Ld. CIT(A), the assessee is on of the Ld. CIT(A), the Ld. AR/Ld.
nd pointed out that, the basis of out of an email allegedly sent by e attached excel sheet in that e-ma ues reflected in the excel sheet re naging Director. The Ld. AR took us that, it didn’t constitute a stat any reference to suggest that it pe
R instead showed us that, the entri ems other than gold such as silve ich are recoverable during the melt ed out that, Mr. Stanley woul hese items in the excel sheet. The a tion of any cash sales, or cash with he inference drawn by the AO was b
The Ld. AR explained that Mr. S ger in the company who was in-char and general machineries and ot to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
unted business is confirmed.
s now in appeal
Counsel of the the impugned
Mr. Stanley to ail, the AO had presented cash us through the tement of cash rtained to cash ies in this excel er, copper, and ting of old gold ld record the ssessee argued drawals on this based solely on Stanley was an rge of purchase her purchases.

According to him the processing, it was und internal control sheet o process of melting of o use in manufacture of n would estimate the va recorded by Mr. Stanley the management of the 4.4
Upon query from by the AO to be cash w
Shri Anand pointed out and based on this tit
Managing Director was and materials recover ornaments. The Ld. AR
AO was based on his o by any corroborative ma
4.5
Shri Anand furthe even a single instance o by the Investigating Au the excel sheet didn’t c
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 11 ::

erefore, being the supervisor of derstandable that Mr. Stanley wou of the articles and materials recove ld gold ornaments and thereafter d new gold ornaments. The Ld. AR exp lue of such recoverable items, wh y in this excel sheet for the control &
company.
the Bench, as to how were these n withdrawals by the Managing Direc t that, the title of this excel sheet w tular reference, the AO had assu withdrawing cash generated from ed during the process of meltin
R thus submitted that, this entire in wn figment of imagination, which w aterial or tangible evidence.
er pointed out that, in the entire sea of any cash sale of such left over art uthorities. He also stressed on the contain any such noting or referenc to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
the old gold ld maintain an ered during the deployed for re- plained that, he hich was being
& knowledge of notings inferred tor, the Ld. AR was ‘MD Sheet’
umed that the m these articles ng of old gold nference of the was not backed arch action, not ticles was found fact that, even ce which would indicate that these mate the assessee has all al metals other than go manufacturing operation
The Ld. AR therefore su
AO solely on assumption unjustified and ought to 4.6
Per contra, the Ld of the lower authorities demonstrate with evide internal control record
Mr. Stanley had adm recoverable alloys we according to him, clear for. He accordingly urge
4.7
The Ld. AR Shri A cannot be expected to notings in the excel sh their corresponding v considered on a stand statement of unaccoun
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 12 ::

erials were sold in cash. The Ld. AR ong explained that these recovera ld was being utilized in the reg ns under the instructions of the Man ubmitted that the impugned additio ns without any tangible corroborativ o be deleted.
d. CIT, DR Shri Shiva Srinivas suppo s. He submitted that the assessee w nce that the notings in the excel she and not cash receipts. He further mitted in his statement that th re not reflected in the tally ac rly suggested that these items wer ed that the order of the Ld. CIT(A) b nand, in his rejoinder, submitted tha o prove a negative. He first subm heet only contained the names of t values. He pointed out that thi
-alone basis didn’t suggest at all nted cash receipts. According to h to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
submitted that able wastage of ular course of naging Director.
on made by the ve material was orted the orders was not able to eet was only an submitted that ese values of ccounts, which re unaccounted be upheld.
at the assessee mitted that, the the metals and s excel sheet that it was a im, it was the Revenue’s case that th though there was no su
Revenue to bring on re case that these notings which in his view, the submitted that, ordinar and hundreds (100’s), w was down to a rupee an would have been made person would have infe estimated values of the no name or details of a this sheet and thus, it statement of cash receip
4.8
Shri Anand, there and particularly, his ans was no mention of any statement was based therefore, not reliable,
The Ld. AR submitted th in fact negated this stat left over articles were ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 13 ::

he notings on this sheet suggested uch reference therein and therefore ecord, corroborative material to sub represented unexplained income o e Revenue had failed to do. The rily, cash sales are made in values whereas, the values mentioned in t nd paise and that it was improbable e in such a manner and therefore erred these notings to be an approx ese articles. He further pointed out t any purchaser or mention of any c was unjustified to infer this excel pts.
after took us through the statement swer to Question No.5, and pointed y cash receipt therein. He explained on mistaken understanding of which we shall discuss in the ensui hat, the contemporaneous facts ava tement of Mr. Stanley. It was explai reused in the new gold ornaments to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
cash receipts,
, it was for the bstantiate their of the assessee,
Ld. AR further s of tens (10’s) the excel sheet that cash sales e, any prudent ximation of the that, there was cash receipt on sheet to be a t of Mr. Stanley d out that there d to us that his fact and was ng paragraphs.
ilable on record ned that, these manufacturing process and it is for th reflected in the tally ac inventory value. It was converting the old gold recoverable wastage of registers and the books search. The Ld. AR also there was no discrep inventory maintained i inventory found in th corroborated the assess were part of the books outside the books. The was not tenable and liab
4.9
We have heard b before us. From the f impugned addition has found in the email of M observed that Mr. Sta company who was in machineries and other
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 14 ::

his reason that their details were ccounts, as they formed part of th submitted that the entire process d into bullion as well as the deploy metals other than gold was evident s of accounts, which was seized in o pointed out that, even in the co pancy found in the quantitative n the books of accounts, vis-a-vi he course of search, which acco see’s case that these recoverable me of accounts and it had not been d
Ld. AR thus submitted that the imp ble to be deleted.
both the parties and perused the m facts as discussed above, it is n been based on an excel sheet tit r. Stanley, which was sent by him t anley is an assistant general m n charge of old gold processing purchases. The relevant answers g to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
not separately he consolidated of melting and yment of these t from the stock n the course of urse of search, details of the is the physical ording to him, etals and alloys diverted or sold pugned addition material placed oted that, the tled ‘MD Sheet’
to himself. It is anager in the g and general given by him in his statement u/s 132(4
follows:-
“Q.11
Please
Jewellery Mart
A.11
Sir, I j
Assistant Genera am drawing a m purchase of old purchases.
Q.12
Please you in A.no.11. Sir, we received
We open the pack stones, wax and the melted gold and get back us f
4.10 We thus observe process involving purch the gold smiths which w
& metals such as silv processing of such gold articles & metals in the Having regard to his j
Stanley was expected involving conversion o articles / metals for con
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 15 ::

4) of the Act dated 06-03-2021, is e Furnish details of your job profile at M
Private Limited.
joined M/s Lalithaa Jewellery Mart Privat l Manager (General Operations) in the yea monthly salary of Rs. 1,05,000/-. I loo gold processing and general machinerie e elaborate old gold processing as me old gold ornaments from our branches /
kets individually check and tally the weight melt it. We cut a small piece for test rep to the refinery where it will be processed fine gold.”
e that Mr. Stanley was supervis ase of old gold ornaments, getting t would lead to generation of gold an ver, copper etc. He would also into fine gold / jewellery and also r e manufacturing process of new g ob-profile, we agree with the ass to maintain the internal records f old gold ornaments into raw g trol purposes.

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
noted to be as M/s Lalithaa te Limited as ar of 2013. I ok after the es and other entioned by / showrooms.
t, remove the port and send d for refining sing the entire them melted at d other articles supervise the e-use the other old ornaments.
sessee that Mr.
of the process gold and other

bove, we first examine the conten from his email attachment. Readin only contains the names of the m the process of melting the old gold ts are mentioned against the same.
, there is no mention of any sale or onsidered on a stand-alone basis, t ontain anything incriminating and it als/articles outside the books of a e made out by the lower authorities ontents of this excel sheet. We are it would be imprudent to read an ext into these notings, which ot tead, the notings are to be conside search. As noted above, these notin which would lead any ordinary man ed details of cash withdrawals by rticles/metals. There is no mention etc. and thus this excel sheet, ac statement of cash receipts.
ointed out to us the fact that, this a himself and not to any other person to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ts of the excel ng of this excel metals / articles ornaments and The Ld. AR has cash or receipt this excel sheet t didn’t suggest ccounts. Prima doesn’t appear e in agreement nything new or herwise is not ered as found &
gs are bereft of of prudence to y the Managing of the name of ccording to us, attachment was , accountant or the Managing Director, contained details of cer to someone else. There emailed this sheet to h was only an internal rec control purposes in the the supervisor of this en
4.13 It is noted that, stand-alone basis was involved in any unaccou lower authorities mainl
Stanley in his statemen as under:-
“Q.5 In the mont these sheets of December 2019
through the print
A.5 I have gone sales of customer will not reflect in 4.14 Reading of the qu first blush, shows that, bald notings found on th was not reflected in the ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 17 ::

, which could have otherwise sug rtain transactions, which was being e is merit in his plea that, the fa imself supports the assessee’s expl cord which he was maintaining for h e course of discharging his respons ntire old gold processing.
though the contents of the above insufficient to incriminate the ass unted transactions, we observe that y hinges on the answer given to t u/s 131 of the Act dated 30-07-20
thly excel sheets, there are worksheets na
MD, a/c as per the “ac” sheet for th
(given as Annexure 3 of this statement out and explain the transactions noted the through the sheets shown to me. In these rs left over items, dust etcs. Are entered.
tally accounts.”
uestion put to him and his answer t
Shri Stanley had suggested that, t his excel sheet, denoted sales of the e tally accounts. It was this statem to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
gested that, it communicated ct that he had anation that, it his own internal sibility of being excel sheet on essee of being the case of the Q No.5 by Mr.
021, which read amed “ac”. In he month of t). Please go ese sheets.
e sheets, the These details to the same, at these otherwise ese items which ment u/s 131 of the Act, which led to assessee.
4.15 The Ld. AR howe statement that the noti not reflected in tally acc a whisper of any specifi metals were diverted, manner of cash recei
Managing Director etc discussed above, was b statement, the Ld. AR averment which had according to the Ld. AR, adverse inference in an absence of any evidenc
Therefore, according to bereft of any factual ba be given to it.
4.16 It was also broug given in his statement(
03-2021, copies of whic
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 18 ::

the impugned addition in the m ver pointed out that, apart from g ings found in excel sheet denoted counts, the statement of Mr. Stanley ic details viz., the manner in which to whom were they sold, details pts and modus of cash withdraw c., particularly when even the ex ald and bereft of the same. Taking submitted that, his answer was no basis whatsoever. Per se, t
, was hollow and therefore cannot b y manner against the assessee, pa ce or material to corroborate his em the Ld. AR, Shri Stanley's statemen sis and so it deserves to be ignored ght to our notice that, the above a s) u/s 132(4) of the Act dated 06- ch are placed at Pages 961 to 974

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
matters of the iving a general sales and were y didn’t contain these articles /
s of the same, wals made by xcel sheet, as us through the only a general the statement, be used to draw rticularly in the mpty averment.
nt was bald and d and no weight answer was not -03-2021 & 07- of Paper Book.

Instead, it was recorded
07-2021, copy of which Book. Having taken note evidentiary value of the Act cannot be equated stands on a lower pede the Act, as the statu applicable to a stateme this statement of Mr. St said to carry evidenti recorded u/s. 131 of th purpose of assessment,
4.17 Under section 1
empowered to examin confers power to the in course of proceedings b to make enquiries and disclosure or surrender
Indian Evidence Act, 1
against admitted proo admission bind the mak was held by the Hon’
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 19 ::

d in his statement given u/s 131 of h is found available at Pages 975 t e of this fact, we agree with the ass statement of Shri Stanley recorded with his statement(s) u/s 132(4) o estal than the statement(s) recorded utory presumption available u/s ent u/s 131 of the Act. Accordingly tanley recorded u/s 131 of the Act a ary value. According to us, such he Act can be said to be valid and b only if it is supported by corroborat
131 of the Act, the income tax e any person on oath. Section 1
come tax authority to record the st before them. The power vested u/s.
investigation and is not meant to o r of concealed income. As per sec
1878, admissions are not conclusiv of. In the absence of rebuttab ker when these are not rebuttable
’ble Supreme Court in the case o to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
the Act on 30- o 978 of Paper sessee that, the d u/s 131 of the f the Act and it d u/s 132(4) of 132(4) is not y, we hold that alone cannot be h a statement be used for the tive material.
x authority is 131 of the Act tatement in the . 131(1) is only btain voluntary ction 31 of the vely proved as ble conclusion, or retracted. It of Pullengode

Rubber Produce Co.
admission is an extrem said that it is conclusive the case of Satinder K the High Court has h constitute a relevant pi in making the admission or on misconception of relied upon without cons
4.18 We are therefore cannot be independently assessee and the said s making any addition evidences. It is also op which such statement w on mistake of fact.
4.19 In light of the a examine the veracity o circumstance of this ca and in the given facts o not the assessee to co
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 20 ::

Ltd. v. State of Kerala (91 IT mely important piece of evidence bu e and the maker can show that it w
Kumar (HUF) v. CIT [1977] 106
held that the admission made by ece of evidence but if the assessee n, he had proceeded on a mistaken f facts or untrue facts, such admis sidering the aforesaid contention.
of the view that the statement rec y used for making any addition in th tatement cannot, in our view, be th and it must be independently co pen to the assessee to show the ci was recorded, if under threat or coe above legal understanding, we no of the statement of Shri Stanley in ase. Accordingly, for the reasons d of the case before us, it was for th rroborate the statement u/s 131 o to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
R 18) that an ut it cannot be as incorrect. In ITR 64 (HP), y an assessee e contends that n understanding ssion cannot be corded u/s. 131
he hands of the he sole basis for orroborated by rcumstances in ercion or based ow proceed to n the facts and iscussed above e Revenue and of the Act, with other independent tang the same to be lacking to have all along be correctness by bringin contrary.
4.20 From the answers the statement u/s 132
that, Mr. Stanley had ex supervise and manage statements recorded u/
2021 shows that he w various aspects of purch purity of gold, testing re search, at no point of t
& finance aspects of the questioning during the noted to suggest that S processing operations a finance of the assess subsequent answers to Act wherein he had stat not aware as to the ma
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 21 ::

gible and corroborative material. W in the present case. Rather, the as een denying this statement and ng on record facts & supporting s given by Shri Stanley to his Q N
2(4) of the Act dated 06-03-2021, xplained in detail his job-profile wh e the old gold processing. Perusa
/s 132(4) of the Act dated 06-03- as thoroughly investigated and ex hases, processing of old gold, purifi eports etc. It is observed that, durin ime was Shri Stanley examined on e business of the assessee. The ton course of search u/s 132(4) of t
Shri Stanley was involved in the pur and that he was not in charge of t see. This is noted to be corrob
Q Nos. 6 & 7 in his same statement ted that, the accounts section is sep anner in which account entries are to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
e however find sessee is noted d disputing its to prove the os. 11 & 12 of it is observed ich was only to al of both his
2021 & 07-03- xamined on the ication process, ng the course of the accounting ne and tenor of the Act thus is rchase and gold the accounts &
borated by his t u/s 131 of the parate and he is made. We thus find merit in the Ld. AR or accounts background system of accounting unusual for him to answ the tally accounts.
4.21 The Ld. AR has incorrect understanding the Ld. AR brought to followed by the assesse and that the finished manner by way of ‘g assessee’s jewellery bu articles recovered durin being of comparatively the manufacturing pro recorded, at any stage, the consolidated entry therefore explained to u manner of accounting a heads/accounts maintai process of melting o understanding of fact
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 22 ::

R’s submission that, being a person d, Shri Stanley was not equipped to followed by the assessee and th wer the notings found noted in the e submitted that, his statement g of the relevant facts. To substant our notice that, under the system e, only the gold bullion is accounted stock of jewellery is reflected in gold jewellery’. Explaining to us usiness, the Ld. AR submitted that ng the process of melting of old g lesser / minimal value and having b ocess of new gold ornaments is , in the tally accounts but the same y passed for the inventory move us that, since Mr. Stanley was not a and that he was only aware there w ined for the left over articles recove of old gold ornaments, he had stated that, they are not reflecte to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
with no finance understand the herefore it was excel sheet with was based on tiate the same, m of accounting d for separately a consolidated the modus of t, the left over gold ornaments being re-used in not separately e forms part of ement. It was ware about the was no separate ered during the on mistaken ed in the tally accounts, whereas the c of the inventory recorde the books of accounts.
4.22 In support of the of the purchases, stock record to show that the melting, movement o corresponding value and recorded in the books o articles which are rec ornaments formed part on record nor was any corroborate the AO’s c metals / articles were d
4.23 The Ld. AR had supporting submitted fo involved. Having peruse the relevant AY 2016-1
modus operandi is foun
From Page 754 of the purchased old gold orna
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 23 ::

contemporaneous fact remains that ed under the head ‘old gold’ and ‘go above, the Ld. AR brought to our no k inventory movement etc. which entire process of purchase of old g of gold and other articles/met d subsequent re-use in manufacturi of accounts. We accordingly note th overed in the process of melting t of the books of accounts and the ything found in the course of searc case or the statement of Shri Sta iverted or sold outside the books of also taken us through the releva or all the years in which this impug ed the same, we discuss the detai
17 as a sample instance, as the sa d to be provided for the subsequen
Paper Book, it is noted that, the aments having value of Rs.1243.37

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
, it formed part old jewellery’ in otice the details was placed on gold ornaments, als and their ng process was at the metals /
g the old gold re was nothing ch which would nley that such accounts.
ant details and gned issue was ils provided for me details and t years as well.
e assessee had 7 crores, out of which old gold ornamen whose value was Rs.98
that, the bullion gener accounts at the same v then sent back to the manufacture of new articles/metals obtained from purchase of old go and then for manufactu are noted to be corrob financials as well as ta placed at Pages 756 to 7
material contemporane statement of Shri Stanl reflected in the books of 4.24 It is also noted th post-search enquiries co any tangible material or show that the notings
Shri Stanley, contained articles / metals. It is a evidence or details of c
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 24 ::

nts weighing 42,00,351 gms. was s
0.99 crores. The details of stock mo ated from melting was recorded in value of Rs.980.99 crores and all t goldsmith for purification into gold items of gold ornaments includ d during the melting process. The st old ornaments to melting process to ure of new gold ornaments along w borated by the amounts reflected ax audit report for AY 2016-17, w
758 and 792 of the Paper Book resp eous facts, according to us, thu ey that these articles / metals inte f accounts.
at, the Revenue was unable to bring onducted by the Investigating auth r corroborative evidence was broug found in excel sheet, in light of th d details of unaccounted sales of also not a case that, the Revenue fo ash sales of these items from any o to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
sent for melting ovement shows n the books of the items were bullion and/or ding the other tock movement o the gold smith ith their values in the audited which has been pectively. These s negates the er alia were not g on record any orities in which ht on record to he statement of these leftover ound any other of the locations or at the factory premi support their case that accounts. There is also noted in the excel she against the normal hum have made all the cas further dilutes the corre
4.25 We also take note
Investigating authoritie jewellery and other ite appearing in the books found whatsoever. We articles / metals been physical stock would h books of accounts. This material fact further co correctness of the state
4.26 In light of the abo by the assessee, we fi unreliable but even the did not in itself inspire
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 25 ::

ses etc. during the course of searc t these items were diverted outsid force in the assessee’s contention t eet were down to the rupee/paise man probabilities today that the a sh sales in last rupee/paise. Henc ectness of the statement of Shri Stan e of the fact that, during the course es had taken physical stock of t ems/articles which was reconciled s of accounts and that there was are in agreement with the assessee n diverted or sold outside the bo have been lesser than what was r s was however not the case. Accord orroborates the assessee’s case and ment given by Shri Stanley.
ove explanation & relevant facts bro ind that, not only was the excel s e statement of Mr. Stanley conside confidence to justify the addition m to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ch which would e the books of that, the values and that it is assessee would ce, this aspect nley.
e of search, the the gold, gold with the stock no discrepancy e that, had the ooks, then the reflected in the ding to us, this d disproves the ought on record sheet bald and ered on its own made by the AO u/s 68 of the Act, for th inconsistencies with the made by him was gen details regarding the during the melting proc of any material to subs
131 of the Act, in ou assessee. As rightly po being asked to prove a an unreasonable dema followed by the State ag
4.27 Hence, for the paragraphs, we are of sheet nor the stateme
Assessing Officer as corroborative material.
authorities on this iss addition. Hence, Groun
4.28 Since on merits, assessee, the Ground the impugned order p
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 26 ::

e reason that not only were there a e facts available on record but also eral in nature, which didn’t divulg sales/diversion of the articles/m cess of old gold ornaments. Hence, stantiate the statement given by S ur view, the same cannot be use inted out by Ld. AR, in our view, t negative fact, which is an impossi and and goes against the fair pr gainst assessee.
detailed reasons, discussed in the view that neither the content ent of Shri Stanley supported th it was not backed by any i
We accordingly set aside the orde ue and direct the AO to delete d Nos. 4 to 8 stands allowed.
, we have decided the issue in Nos.1 to 3 raised challenging the passed u/s 153A of the Act for to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
apparent factual o the averment ge any specific metals obtained in the absence hri Stanley u/s ed against the the assessee is ible task and is rocedure to be the preceding ts of the excel e case of the ndependent &
er of the lower the impugned favour of the legal validity of r want of any incriminating material f infructuous and is there
ITA No.676/Chny/20
5. We now take up t for AY 2017-18. 6. Ground Nos. 1 t noted to be subsumed relation to each of the Accordingly, these grou adjudicated upon.
7. Ground No. 4
Rs.1,81,04,999/- made in the mail attachme submissions, it is observ adopted both by the AO same as in AY 2016-17. 7.1
Following our re
Ground Nos. 4 to 8 of a addition of Rs.1,81,04
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 27 ::

found in the course of search has efore not being separately adjudicate
025 for AY 2017-18. the assessee’s appeal in ITA No.67
to 3 are noted to be general in na d in the subsequent grounds taken e addition/disallowance impugned unds are being dismissed as not be to 8 of the appeal relates to t by way of unaccounted cash receip nt of Mr. Stanley. After conside ved that, except variation in figures
O & Ld. CIT(A) to justify this addit
.
asons and conclusions recorded ssessee’s appeal in A.Y. 2016-17, w
4,999/- is untenable on facts an to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
been rendered ed upon.
6/Chny/2025
ature which are n separately in in this appeal.
eing separately he addition of pts found noted ering the rival s, the reasoning ion is verbatim while deciding we hold that the nd in law. We therefore allow the Gro the AO to delete the imp
8. Ground Nos. 9
relates to the additio unaccounted repaymen
The facts relating to this was conducted upon documents, diaries and observed that, these several unaccounted c assessee. The AO furth
Shri Kiran Kumar, Mana blank cheques, etc. wa which according to the money lent by Shri Anb
Anbu was provided to cause notice. This mate that, there were cash lo
8.1
The AO further o assessee, a number of which was marked a ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 28 ::

und Nos. 4 to 8 raised by the asse pugned addition made in AY 2017-1
to 13 of the assessee’s appeal fo on of Rs.6,85,00,000/- made o t of loan to Shri Anbuchezhiyan [in s issue are that, a search action u/s Shri Anbu on 05-02-2020, w d notebooks were found and seize material inter alia contained deta cash transactions between Shri A her observed that, immovable pro aging Director of the assessee, pro s found in control of the associates
AO, was a collateral given by the a u to them in cash. These material s the assessee by way of Annexure- erial, according to the AO, unambigu oans accepted and repaid by the ass observed that, in the course of se f SQL databases were unearthed s ANN/VSP/LJMPL/ED/S. Upon a to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ssee and direct
8. or AY 2017-18
on account of n short ‘Anbu’].
s 132 of the Act herein several d. The AO has ails relating to Anbu and the perty deeds of omissory notes, s of Shri Anbu, ssessee for the eized from Shri
-7 to the show uously revealed essee.
earch upon the from a server, nalysis of the database ‘atp201920’, according to the AO, contained details of loan to Rs.125 crores as on to 31-05-2019 was Rs.
Rs.1 crore. The AO furth in the table named ‘vou
The relevant notings fo
Pages 43 to 48 of the as 8.2
The AO further explanation was sought database, to which, no a resolution passed by confirmed the acceptan resolution. The AO was assessee had availed ca
02-2018. Further, the A 12-2018 found from th showed that Shri Kiran
RTGS and Rs.10 crores verification of the seized
Shri Anbu showed that t
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 29 ::

a table named ‘closetbcls’ was was a trial balance as on 31.05
n accepted by the assessee from An 31-03-2019 and further credits fro
.10 crores. Also, there was a debi her referred to certain entries which ucher log’ which also contained the ound in these electronic data has b ssessment order for AY 2017-18. r observed that, in the post sea t from the assessee for these entrie explanation was given. It was furt y the Board of Directors of the a nce of loan of Rs.50 crores befo s of the view that, this resolution p ash loan to the extent of Rs.100 cr
AO also took cognizance of a cash re e premises of Shri Anbu, which acc
Kumar had confirmed receipt of R s as cash loan. The AO thus obse d material found from the assessee’
the assessee had accepted cash loan to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
found, which 5.2019, and it nbu aggregating om 01-04-2019
t/repayment of h were detected name of Anbu.
been set out in arch enquiries, es found on the ther noted that, assessee which re the date of proved that the rores as on 23- eceipt dated 04- cording to him,
Rs. 5 crores as erved that, the ’s premises and ns.

ound that, the seized material of S date-wise cash receipt of Rs.94.96 c
2016 to 04-02-2020. After analy arized the cash payments made by ns to Shri Anbu as follows:
l Year
Cash receipts by Shri
Anbuchezhiyan from Lalitha
-17
68500000
-18
351400000
-19
334624250
-20
195100000
al
949624250
how caused the assessee to expla not reflected in the books of the bove sum by way of unexplained e noted to have furnished their respo e assessee had first explained that, ted from the database seized from d and contained malware. For buttr the data in the purported trial bala erous accounts which though duly nies, firms and individuals of the a ccount to another and was appearin ssessee also demonstrated on sam to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
Shri Anbu inter crores from the yzing all these y the assessee ain these cash e assessee and expenditure u/s onse vide letter
, the purported their premises essing this, the nce was mixed reflected in the assessee group ng in the name mple basis that, the details found mentio assessee company actu
/ family members of the channel and were no submitted that, it was in data entries were un
According to the asses data, the purported rec assessee pointed out t database was only Rs.
the seized material of further showed that the did not reconcile with th
It was further shown tha it would suggest that t whereas in the search o investment or expend
According to the assess data was not reliable.
8.5
As far as the doc
Shri Anbu was concern found from third party
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 31 ::

oned in the data software against t ally related to its sister concern and e directors which were conducted th ot cash transactions. The asses ncorrectly being assumed by the AO naccounted and represented cash ssee, due to the AO’s reliance on conciliation issues arose. To prove that, the amount of debit as per
1 crore whereas the amount found f Shri Anbu was Rs.94.96 crores.
e data entries in the seized electro he material seized from the premise at, if these data entries are assume the transaction value was nearly R operations, no corresponding unacco diture was found to corroborate ee therefore, the contents of the all cuments and material found from t ned, the assessee submitted that premises was inadmissible evidenc to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
he name of the d / or individual hrough banking ssee therefore
O that, all these h transactions.
this corrupted their case, the their corrupted d mentioned in The assessee onic device also es of Shri Anbu.
d to be correct,
Rs.1000 crores, ounted asset or such entries.
leged corrupted the premises of these material ce, since it was not backed by any co statement of the pers assessee further showe reflected transactions e
Director with Shri Anbu regular books of accoun so far as the un-reconc
Anbu was concerned, i expected to reconcile th
After considering the su the arguments were to submissions of the asse the show cause. Relying of Shri Anbu, the AO inf towards repayment of c
Anbu which aggregated sum of Rs.6,85,00,000/
in the show cause not relevant AY 2017-18. A preferred an appeal befo
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 32 ::

rroborative material or evidence o son from whose possession it w d that, the documents which were either between the assessee and / o and that the borrowings were duly nts and the financials of the respect ciled sums contained in the seized m t was submitted that, the assesse he notings which were maintained by ubmissions of the assessee, the AO oo facile to be accepted. The AO essee did not address the specific g on the seized material found from ferred that, the assessee had made cash loans out of their unaccounted d to Rs.94.96 crores. The AO acc
/- as mentioned in the year wise su tice to the total income of the as Aggrieved by the order of the AO ore the Ld. CIT(A).

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
or any adverse as found. The found inter alia or its Managing reflected in the tive entities. In material of Shri e could not be y a third party.
O observed that held that the point raised in m the premises cash payments income to Shri cordingly added ummary set out ssessee for the O, the assessee

assessee challenged the addition
The assessee also furnished the d up had availed from Shri Anbu and tions were conducted through banki ooks of accounts. The Ld. CIT(A) is eport based on the submissions of ounter submissions of the assessee, plea of the assessee that, the imp made in the assessment u/s 153A o ting material found in the premises ng to the Ld. CIT(A), the impugned material found from the assessee’
on third party material. On merits, eized material found from the pr hat the assessee accepted huge lo t balance as on 31.05.2019 was Rs.1
log’ was noted to contain the nam
CIT(A) held that the assessee in Anbu. Thereafter, the Ld. CIT(A) obs was found from the premises of Shr e repaid in cash. The Ld. CIT(A) redible because one particular repa to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
both on legal details of loans it was claimed ng channel and s noted to have f the assessee.
the Ld. CIT(A) pugned addition of the Act, as it s of third party, addition had a s premises and the Ld. CIT(A) remises of the oans from Shri
134 crores. The me of Shri Anbu ndeed had loan served that, the ri Anbu, showed held that, the yment entry of Rs.1 crore made on 31
with the repayment dat this co-relation, the Ld assessee had taken loa repaid in cash, as the re were not appearing in concluded that the sou assessee and according that, though, the Ld. C
Commission passed in repayment notings of R that the findings rende of Shri Anbu could not b the order of the Ld. CIT
8.7
At the time of hea the impugned addition o wise entries found in th
He submitted that, thou assessee was referred entries found in the ma way of evidence, but t seized from the prem
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 34 ::

1-05-2019 in the database of the a ta found from the premises of Shri A d. CIT(A) upheld the AO’s observ an of Rs.134 crores as on 31-03-2
epayment data found in the premise the books of the assessee. The L rce of repayment was unexplained gly confirmed the addition. It is fu
CIT(A) took note of the order of the matters of Shri Anbu where
Rs.94.96 crores was held to be unre red by the Settlement Commission be relied upon by the assessee. Bein
(A), the assessee is now in appeal b aring, the Ld. AR, Shri Anand first po of Rs.6,85,00,000/- was solely base he material seized from the premise ugh the data entries in the seized to by the AO to justify the adm aterial seized from the premises o the AO did not ultimately rely upo ises of the assessee for making to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
assessee tallied
Anbu. Based on vation that the 019 which was es of Shri Anbu
Ld. CIT(A) thus sources of the urther observed the Settlement ein these cash eliable, but held in the matters ng aggrieved by before us.
ointed out that, ed on the date- es of Shri Anbu.
material of the issibility of the f Shri Anbu by on the material the impugned addition. This according credibility and reliabilit seized from the premise
8.8
The Ld. AR sub assessee’s premises su aggregating to Rs.134
of ‘cash’ in these entri entries to be in cash b regular books of the ass entries inter alia compr of the group, which wer in the database, due to brought to our attentio from Shri Anbu was Rs the corrupted database banking channel and n correspondingly repaym been made and not R database and that, the respective books of acco
AR thus submitted th transacted through pr
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 35 ::

g to him, showed that, the AO hims ty of the electronic data found in es of the assessee.
bmitted that, the data entries fo uggested that, the assessee had crores. He showed us that, there w ies and that, the AO had simply because the same was not found r sessee company. The Ld. AR showed rised of different loans availed by o re wrongly appearing in the name o o corruption/malware in the system on that, actually the loans availed
.114.70 crores and not Rs.134 cro e, and that all these loans were re not cash. The assessee further sh ment of loans to the extent of Rs.50
Rs.1 crore as found mentioned in balance was outstanding and duly ounts of the other assessees of the hat, the loan transactions with S roper banking channel and that to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
elf doubted the n the database ound from the availed loan(s) was no mention assumed these recorded in the d us that, these ther assessee’s of the assessee, m. The assessee by their group res as found in eceived through howed us that,
0.67 crores had the corrupted reflected in the group. The Ld.
Shri Anbu was there was no element of cash involv majorly with Shri Kira inference could have be 8.9
To support the a that, the AO had conv and seized from the p showed that the assess unaccounted cash loan that, it was Shri Kiran a from Shri Anbu and tha
Kiran/Managing Directo
Pages 15 to 23 of the P between Shri Kiran/Ma
Managing Director had for the loan availed by our notice, the letters capacity to Shri Anbu co
Pages 24 to 29 of the year wise details of th individual capacity and M/s Gopuram Films, th which were placed at Pa
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 36 ::

ved, and more particularly, the tra an/MD; and thus under no circu een drawn in the hands of the assess above submission, Shri Anand furt veniently ignored other material wh premises of Shri Anbu, which acc see company itself had not accepted from Shri Anbu. The Ld. AR brough nd not the assessee itself, who had at such loan(s) was accounted in th or and other group concerns. He to Paper Book, which comprised of a s naging Director and Shri Anbu to placed his own immovable property him in his individual capacity. Next issued by the Managing Director in onfirming the receipt of loan, which Paper Book. The Ld. AR thereafte he loans availed by the Managing his proprietorship concern M/s A.K he proprietorship concern of Shri A ages 1658 to 1668 of the Paper Boo to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
nsactions were mstances, any see company.
her showed us hich was found ording to him, d or repaid any ht to our notice availed loan(s) e books of Shri ook us through sale agreement show that, the y as a collateral
, he brought to n his individual were placed at er narrated the Director in his
K. Exports from Anbu, details of ok. According to the assessee therefore,
Anbu and Shri Kiran/
inferred the purported the hands of the assess
8.10 According to Ld. A make any addition ba corrupted database fro conspicuously silent on entries in the database
/ repayment to Shri Anb added by the AO, by re from the premises of S material were not relia repayments were made the tune of Rs.50.67
reflected and recognized
8.11 Coming back to material seized from th such third party mate sheets / diaries was not Ld. AR, relying upon ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 37 ::

, the loan transactions were majorly
Managing Director and that the A notings found from the premises o ee company.
AR, the AO, having taken note of th ased on these unreliable data en om the premises of the assessee n these aspects. He pointed out th was to be taken as sacrosanct, then bu was only Rs.1 crore and not Rs.9
elying upon the data found in the Shri Anbu. According to him, none able, as the contemporaneous fact e through banking channel which w crores and that the outstanding d as due to Shri Anbu in the books o the premise of the impugned add he premises of Shri Anbu, the Ld. A rial which comprised of notings f t admissible as evidence against the Section 34 of the Indian Eviden to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
y between Shri
O had wrongly of Shri Anbu in he above, didn’t ntries found in and remained hat, if the data n the cash debit
94.96 crores, as material seized of these seized ts showed that was actually to g balance was of accounts.
dition viz., the AR argued that found on loose e assessee. The nce Act, 1872, submitted that, the en regularly kept, are not s liability. He also relied u the cases of Hon’ble Su
SCC 410 and Commo
India (394 ITR 220) found in third party pre cannot be treated as ad
AR further showed us th notings were found had in his statement reco therefore, when the se notings found in the unjustified for the AO assessee, without bring support such an inferen
8.12 The Ld.
Couns contemporaneous facts in cheque, which aggr balance outstanding wa that view of the matter unreliable notings found
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 38 ::

ntries in the books of accounts sufficient by themselves to charge a upon the decisions of the Hon’ble Su preme Court in the case of V.C. Sh on Cause (A Registered Society) wherein it was held that loose sh mises containing mention of names dmissible evidence qua such third p hat, even Shri Anbu, from whose po d denied any cash transactions with rded u/s 132(4) of the Act. Acc earched person himself did not c loose sheets seized from his pre of the assessee to use the sam ing on record any clinching evidence ce.
el
Shri
Anand further submitt on record showed that the repayme regated to almost Rs.50.67 crores as also recorded in the books of a r, these admitted facts contradicted d in the premises of Shri Anbu, whic to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
found, even if any person with upreme Court in ukla [1998] 3
) Vs Union of heets or diaries of third person erson. The Ld.
ossession these h the assessee, cording to him corroborate the emises, it was me against the e or material to ted that, the ents were made s and that the accounts and in d the purported ch in AO’s view suggested cash repay submitted that Shri
Settlement (in short the 12-2023. According to the contents of these se had not advanced any cash from the assessee submissions on this asp from the PCIT u/s 245D report(s) and Shri Anbu
PCIT. According to the of Shri Anbu accepted that the loans were adv cash. The Ld. AR accor the material seized from unreliable by the IBS in finality; then as a corol unreliable notings was a 8.13 Per contra, the Ld lower authorities. He su seized from the premis assessee and therefore
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 39 ::

ments of loan. The Ld. AR for Anbu had approached the Inter e ‘IBS’) and settled the issues by o the Ld.AR, before the IBS, Shri An eized material and had categorically loan in cash nor did he receive any e. according to him, Shri Anbu had pect, for which, comments was sou
D(3) of the Act, who had submitted in his rejoinder had rebutted the co
Ld. AR, the IBS after considering t his claim that, these notings were vanced through proper banking cha rdingly submitted that, when the n m the premises of Shri Anbu had be n their order dated 27-12-2023 whic llary, the impugned addition made also untenable and liable to be delet d. CIT, DR vehemently supported t ubmitted that, the entries found in ses of Shri Anbu depicted cash rec e, according to him, the impugned to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
the assessee rim Board for order dated 27- nbu had denied y stated that he y repayment in given detailed ught by the IBS his verification omments of the he submissions unreliable and nnel and not in otings found in een found to be ch had attained on the basis of ted.
he order of the the documents ceipts from the d addition was rightly made by the Commission in the mat the basis of these noting the matters of Shri An Anbu and that these adjudicating the impugn
8.14 We have heard bo our record. Upon taking before us relates to the AY 2016-17 on the basi the course of an unrelat on 05-02-2020, much p
According to the lower seized from the premise i.e. ‘Lalitha’ and there w observed that, these n loans to the extent of R opinion, was paid out added the said sum acr out to us by the Reven party notings, the AO h the assessee.
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 40 ::

AO. He submitted that though t tters of Shri Anbu had not made a gs, but according to him, the finding bu was only binding upon the app findings could not be taken int ned issue in the matters of the asses oth the parties and perused the mat g note of the facts as discussed abo addition of Rs.6,85,00,000/- made s of the notings found in the loose s ted search conducted upon a third p prior to the search conducted upon authorities, the notings found in th es of Shri Anbu were in the name o was mention of ‘cash’ also in these n notings suggested that the assess
Rs.94.96 crores in cash to Shri Anb of assessee’s unexplained source ross the years u/s 69C of the Act.
nue that, only to justify the verac had referred to the entries found in to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
the Settlement any addition on gs of the IBS in licant, i.e. Shri to account for ssee.
terial placed on ove, the dispute in the relevant sheets seized in party, Shri Anbu n the assessee.
he loose sheets of the assessee notings. The AO see had repaid bu, which in his s and thus he
It was pointed ity of the third n a database of 8.15 Having considered us, the first issue whic and reliability of the no third party premises i.e assessee, in light of th notings found in the ass premises of Shri Anbu search and his stateme which has been placed relevant portion is repro
“Q.34. During t theresidence o documents rela related parties from Shri Kathi question nos 6
kept in four box to 96 are the o documents wer
Ans. Sir I advan
Jewellery Mart P documents which opinion who is m property in his sa
Q.35. Please fu
JewelleryMart P
Banking chann
Lalitha Jeweller
Ans. Sir I gave lo
I don’t remembe time.”
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 41 ::

d the gamut of facts placed before u ch is required to be answered is th tings found in loose sheets / diaries e. Shri Anbu, in the income-tax ass e facts placed before us. It is obse sessee’s name in the loose sheets s had been confronted to Shri Anbu nt was recorded u/s 132(4) of the A at Pages 1678 to 1680 of Pape oduced hereunder:- the course of search proceedings in of Shri
Kathiravan, many origin ating to M/s Lalitha Jewellery Mart Pv were seized. A sworn statement w iravan and it is shown to you now. In & 7 he had stated that the property xes which are seized vide ANN/BMD/
ones pledged with you. Please explai e kept in the custody of Shri Kathirava nced loan to Mr. Kiran Kumar, Director o
Pvt Ltd. For that he promised to pledge h was already in the custody of Shri Kathir my friend. So I asked Shri Kathiravan t afe custody only.
urnish the details of loans given to Pvt Ltd and its related parties both in el.What is the outstanding loan am ry Mart PvtLtd and its related parties ?
oans to M/s Lalitha Jewellery only in accoun r the exact details. I will furnish the detai to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
us, according to he admissibility s seized from a essment of the erved that, the seized from the at the time of Act, extracts of r Book, whose your case in al property t Ltd and Its was recorded n his reply to y documents
CK/B&D/8 1
n why those an ?
of M/s Lalitha the property ravan for legal to keep those
M/s Lalitha cash and via ount of M/s nts. Right now ls in two days

e person from whose possession an d had denied having any cash transa ad averred that all the transactions ts and had sought time to provide not a case where the third perso ned material was found had inc er. We find that, there is also no m ws that the Revenue had unearth material or evidence in the course ld corroborate these notings foun premises. It is necessary to keep in 4A) of the Act regarding the cont t the searched person and not to a ssee in the present case. Reason be eized material at third party premise y, at its face value, then any person name in any loose paper / diary at to implicate such other person for entry made in a diary or notebo ails cannot be used to fasten tax e name appears therein, in th to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
nd control these actions with the s were recorded the same. We on from whose criminated the material brought hed any other of search upon d in the loose mind that, the tents of seized any other third eing that, if any es is presumed for that matter their sweet will no fault of the ook by a third liability on the he absence of 8.17 For this, we gainf
Court in the case of V.C value of entries in the b shall not alone be suffic even if they are releva independent evidence is which is a requirement t
8.18 The Hon'ble Sup registered society) &
rendered in case of V.C loose papers/sheets are the Evidence Act. It wa themselves sufficient to that a man cannot be a chooses to write in his must be independent e relate and in absence o who relies upon such e
Hon’ble Apex Court fu regularly kept in the ord not alone be sufficient not enough merely to p
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 43 ::

fully refer to the decision of the Ho
C. Shukla (supra) wherein, as to books of account, it was held that s cient evidence to charge any perso ant and admissible. It has been h s necessary as to trustworthiness o to fasten the liability.
preme Court in case of Commo
& Ors Vs. UOI (supra) following
C. Shukla (supra) has explained e irrelevant and not admissible unde s held that, entries in books of acco o charge any person with liability, th allowed to make evidence for hims own books behind the back of the evidence of the transaction to wh f such evidence no relief can be giv entries to support his claim agains urther held that, even if books o dinary course of business, the entri evidence to charge any person wit prove that the books have been re to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
on’ble Supreme the evidentiary such statement on with liability, held even then of those entries on Cause (A g the judgment that, entries in er Section 34 of ount are not by he reason being self by what he e parties. There ich the entries ven to the party st another. The of account are es therein shall th liability. It is egularly kept in the course of business incumbent upon the pe were in accordance with 8.19 We also gainfully the case of CIT Vs. P.V
Para 5, it was observe may be a cause for sus there is corroboration b the parties to the transa
8.20 Having taken note back to the facts of the the course of search up confronted the Managi regarding these notings
Shri Anbu, who is also with him and had clearl part of the books of acc out hereunder:-
“Q.20
I am s blank cheques signature seiz during the cou verification of t by Shri.Anbuch to Rs.64,15,05,
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 44 ::

and the entries therein are correc rson relying upon those entries to p h facts.
refer to the decision of Hon’ble Su
V. Kalayanasundaram (294 ITR ed that, the notings on the loose p spicion but the same cannot be relie by corresponding entry in regular ac action.
e of the above position of law, we no present case. It is observed that, l on the assessee, the Investigating O ng Director of the assessee, Shr s found in the material seized from t o found to have denied having any ly averred that the loan transaction counts. The relevant portion of his s showing you certain promissory notes, and other supporting evidences con ed from Shri.Anbuchezhiyan (Gopu urse of search u/s.132 of the IT A the details as per the books of accoun ezhiyan, you have accepted cash loa
800 and repaid a sum of Rs.94,96,24, to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ct. It is further prove that they preme Court in 49) wherein at pieces of paper ed upon, unless ccounts of both ow again revert later on, during
Officer had also ri Kiran Kumar the premises of y cash dealings s were forming statement is set agreements, ntaining your uram Films)
Act,1961. On t maintained n amounting
250/. Please go through the annexure 1 and A.20
I have nor paid any cash were shown in m payments TDS w cheque/ papers loans.”
8.21 The AO however
Shri Kiran Kumar becau in the post search e transactions with Shri entries to be cash trans material seized from the entries were not tracea
Having gone through th were entries of amount there is no mention of ‘
the entries found in the was factually inconsiste therein did not relate to their group. The assess relevant evidences viz.
from Shri Anbu, which obtained through bankin
It is observed that, t
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 45 ::

e papers which is annexed to this s d annexure 2, and identify the documen neither taken any cash loan from Mr An h to Mr Anbuchezhiyan for the same. Only t my books are the actual loans and for the were deducted accordingly. The promissory were signed and given while taking tho is noted to have doubted the abov use of electronic data later on found enquiries which inter alia contain
Anbu. The AO is found to have a sactions because there was mention e premises of Shri Anbu and corresp ble in the regular books of the asse he contents of the database, it is no ts credited / debited in the name of ‘cash’ therein. The assessee has sho e database in the name of the asse ent as the dates and amounts fou o the assessee company but to othe see is found to have backed their c
, they had provided the details o aggregated to Rs.114.70 crores, al ng channel and was recorded in boo hese loans were majorly availed to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
statement as nts.
nbu Chezhiyan the loan which corresponding notes / blank ose accounted ve statement of d in a database ned entries of assumed these of ‘cash’ in the pondingly these essee company.
oted that, there f Shri Anbu but own to us that, essee company und mentioned er assessees of contention with f loans availed l of which were oks of accounts.
by Shri Kiran

Kumar/Managing Direct of Rs.50.67 crores was and the balance outsta
Anbu in the books of a placed at Pages 1656
the assessee that the database to be unaccou recorded in the books the same was that thes assessees of the grou inference drawn by the in assessee’s name in suffered from factual in to other assessees of t also unable to factually
8.22 Our above view is these contemporaneous according to us, show acknowledged that the e that not been the case, thousand crores and d
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 46 ::

tor himself and not the assessee. Als s made, which was also through b nding was recognized as due and p accounts. The relevant summary de of Paper Book. We thus find meri
AO had wrongly assumed these e unted cash transactions because it of the assessee company. Rather, se related to and was recorded in p. According to us therefore, not AO was misplaced but these entrie n the database was evidently un accuracies in as much as several en the group. The Ld. CIT, DR for the controvert the same.
s further supported by the conspicu s facts in the orders of the lower au ws that the lower authorities ha entries found in the database was n then the purported entries which r did not reconcile with the books o to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
so, repayments anking channel payable to Shri etails are found it in the plea of ntries found in was not found the reason for books of other t only was the es per se found nreliable, as it ntries pertained e Revenue was uous silence on thorities, which ad also tacitly ot reliable. Had ran into several of the assessee company (since it was r would otherwise been v
8.23 It is also noted t were mostly availed by Director of the assesse were found recorded i loans are not availed b notes, receipts etc. fou placed at Pages 15 to been executed by the S further lends credenc circumstance, these loa
8.24 For the reasons d considered view that, t database seized from transactions was factua database is held to be been used for undertak from the premises of Sh
8.25 In light of the a assessee had provided
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 47 ::

recorded in books of other assessees iewed adversely.
that, the loans found mentioned in y Shri Kiran Kumar who happens t ee from Shri Anbu in his individua n his personal books of accounts by the assessee. Also, the collatera und from the premises of Shri An 28, 30 to 32 of Paper Book, are Shri Kiran Kumar in his individual c ce to the assessee’s case tha n entries cannot be said to relate or discussed in the aforesaid therefore he AO’s assumption that, the entrie the premises of the assessee rep ally inaccurate and also the conten unreliable. Hence, the database c king any valid co-relation with the hri Anbu.
above discussed facts, we thus relevant evidences that the loan tr to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
s of the group), n the database to be Managing al capacity and . Hence, these als, promissory nbu, which are e found to have capacity, which at, under any r pertain to it.
, we are of the es found in the presented cash nts of the said could not have material seized note that, the ransactions and repayments with Shri A the statement of the Ma found to be backed by t
8.26 Having taken note seized from the prem addition has been made found and seized from t other tangible independ notings. These loose s observed that there was on these loose sheets.
loose sheets were with only he could have ex therefore, the assessee notings, particularly whe prove the contrary. As were cash notings bu assessee were recorded if AO of the assessee s relevant evidence again substantiate the veracit some independent tang
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 48 ::

Anbu were in cheque and not cash anaging Director recorded u/s 132( tangible material and evidence.
e of the above, we now come back mises of Shri Anbu, basis which, e. As noted above, the impugned loo the possession of Shri Anbu and tha dent material found which would cor sheets were maintained by Shri A s no signature or acknowledgment o
According to us therefore, the con in the exclusive knowledge of Shri xplained these notings. In our co e cannot be expected to explain th en the assessee has brought on rec s noted earlier, Shri Anbu had den ut had averred that the transact d in regular books of accounts. In th still wanted to rely on these third p nst the assessee, then the onus wa ty of the same by corroborating the ible material, or by confronting Shr to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
h and therefore
4) of the Act is to the material the impugned ose sheets were at there was no rroborate these
Anbu and it is of the assessee ntents of these
Anbu and that onsidered view ese third party ord evidence to nied that these tions with the his background, arty notings as s on the AO to se notings with i Anbu with the same, seeking explanat cross-examine him. We do so. Rather, the AO notings to be gospel t assessee. Having regar decisions (supra), whic present case, we hold s for the above discussed notings found in loose s
Anbu was not reliable a the assessee, due to lac
8.27 We further find th the findings rendered in post search, Shri Anbu
(‘IBS’) wherein he offe penalty and prosecution had inter alia stood by had denied having any accordingly did not o impugned notings of Rs verification report from same, these notings we
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 49 ::

tion from him and then affording t however note that, the AO had mis is noted to have simply treated th truth and added the same in the rd to the ratio decidendi laid down ch is found to be applicable in th such action of the AO to be unsustai d reasons, we are of the considered sheets seized from the premises of t and admissible for making addition ck of any corroborative material or e hat the case of the assessee is fully n the assessment of Shri Anbu. It is had approached the Interim Board red additional income and sought n. It is observed that, before the his statement recorded u/s 132(4) y cash loan transactions with the offer any additional income in r s.94.96 crores. The IBS is noted to the Department and thereafter afte ere held to be unreliable and no add to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
the assessee to serably failed to ese third party e hands of the n in the above he facts of the inable. Instead, d view that, the third party, Shri in the hands of evidence.
y supported by observed that, d of Settlement immunity from IBS, Shri Anbu of the Act and e assessee and relation to the have called for er analyzing the ition was made in the hands of Shri A cognizance of two oth
03.12.2018 & 04.12.2
income of Shri Anbu. T finally admitted as his
This order of IBS thus crores which were foun seized from his premise own income-tax assess as well. Also, the only a of Shri Anbu, did not re foregoing, we find mer rendered by the lower the IBS, which has atta therefore, as the impug income-tax assessmen possession it was seized be relied upon as releva hands of a third party v
8.28 For the elaborate having regard to the sta the assessee and also t
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 50 ::

nbu for the relevant year. Instead her notings/material of Rs.10 cror
018 which was claimed to repre
Though Shri Anbu is noted to have own income in AY 2019-20 to sett reveals that, the impugned notin nd in the possession and control of es, has been held to be unreliable a ment finalized by IBS, which has a addition of Rs.20 crores made by IB elate to the relevant AY before us.
rit in the Ld. AR’s submissions tha authorities are in direct conflict wi ined finality and is binding. In our c ned notings has been found to be u nt of the searched person itsel d, then as a natural corollary, these ant evidence to make the impugned iz., the assessee, in the present cas e reasons discussed above, and mo atements of Shri Anbu & the Manag he IBS’s order passed in the matter to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
d, the IBS took res each dated sent additional e denied it but tle the matters.
gs of Rs.94.96
Shri Anbu and and dumb in his attained finality
BS in the hands
In light of the at, the findings th the order of considered view unreliable in the f from whose notings cannot addition in the se.
ore particularly ging Director of rs of Shri Anbu, we hold that the impug cash loans was untena directed to be deleted. T
9. Ground Nos. 14
addition of Rs.54,11,6
deposited during the de cash credit u/s 68 of the the AO in his show ca assessee to explain t
Rs.61,48,21,500/- mad
2016. The assessee is letter dated 02-02-2023
in the business of who their branches & showro and having regard to phenomenon. The asses sales made during the stock registers and ban deposited.
9.1
The assessee also wise details of the cash
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 51 ::

gned addition on account of alleged able both on facts and in law and These grounds are therefore allowed
4 to 20 raised by the assessee a 66,350/- made by the AO on ac emonetization period, holding it to e Act. Briefly stated, the facts of the ause notice dated 13-01-2023 ha the non-assessability of the cas e during the demonetization period noted to have furnished their ex
3. It was submitted that, the asses olesale cum retail trading of jewell ooms situated at prime location acro the nature of trade, cash sales ssee is noted to have submitted the e month of demonetization, ledge nk statements to substantiate the o furnished a comparative chart giv sales for FY 2014-15, 2015-16 and to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
d repayment of is accordingly d.
are against the ccount of cash be unexplained e case are that, d required the sh deposits of d of November, xplanation vide ssee is engaged lery items with oss South India is a common e details of cash rs, cash book, source of cash ving the month d 2016-17. The assessee submitted tha
Rs.5860.85 crores in FY their aggregate cash s lower than the earlier y deposits during demone
9.2
The assessee obs since been set aside, t sales on the date of de amounting to Rs.62,32, deposits during the dem assessee explained that known and documented all the jewellery showr the jewellery showroom customers who wanted only valid on that dat reported record sales across all their several the aggregate sales ma sales invoices. The asse sales on the date of de assessee further submit
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 52 ::

at, though, their total sales had Y 2015-16 to Rs.6055.70 crores in F sales made during the relevant FY year. According to the assessee ther etization period should not be viewed served that, in the original assessm the main allegation of the AO was emonetization, i.e. 08-11-2016 was 80,025/- and for this reason, the su monetization period was being doubt t, on the eventful day of demonetiz d in public domain that, there was ooms on the date of demonetizatio ms were open up to midnight to to spend their demonetized curre te, and that all these jewellery s on that date. Likewise, there was showrooms located across three s ade across all these showrooms wer essee thus explained that, this unusu monetization should not be viewed tted that, though the figure of sales to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
increased from FY 2016-17, but Y 2016-17 was refore, the cash d adversely.
ment, which had s that the cash unusually high ubsequent cash ted. To this, the zation, it is well a huge rush in on and that all cater to their ency which was howrooms had s a huge rush states and that re supported by ual hike in cash adversely. The s on the date of demonetization may at but the assessee showe percent (7%) of the corroborated with their also submitted the mon all the showrooms had submitted that, all the also credited in the P&
details was found in t cumulatively, according sales.
9.3
The assessee furth backed by these sales, from where, was such that the Revenue was u which, such cash could spite of having conduct assessee further submi being doubted to be bog physical inventory ough as per books, which was found and as per boo
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 53 ::

first glance look substantial to any ed that the sales made on this date ir gold ornament stock and th regular sales during festive season th-wise and branch-wise stock deta sufficient inventory to justify thes purchases were accounted for and &L Account and that no discrepanc the course of search. All these fa g to the assessee proved the genu her submitted that, if these cash de then the question which was to be huge cash otherwise sourced. It unable to bring on record any othe have possibly been deposited by t ed intrusive search action u/s 132
tted that, if these cash sales on 0
gus, then as a corollary, at the time ht to have been higher than the clo s not the case and instead the inven oks stood fully reconciled. The as to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
normal person was only seven at, this value n. The assessee ils to show that e sales. It was the sales were cy in the stock acts considered uineness of the posits were not e answered was was contended er source out of he assessee, in of the Act. The 8-11-2016 was e of search, the osing inventory ntory physically ssessee further submitted that even th the books of accounts d
Revenue. These mater genuineness of the sale
9.4
The assessee furt to month-wise, period-w
2015-16 to justify the c assessee also submitte presumption that the c months. The assessee during festive periods ordinary days and ther analysis across all twelv date of demonetization the assessee contend demonetization stood ju
9.5
The AO, however, for the assessee to h demonetization. The rea

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 54 ::

e inventory details, purchases and during the course of search was not ial facts, according to the assessee, s made on the date of demonetizati ther submitted several comparative wise cash deposited by them in FY 2
cash deposited during demonetizat ed that, the AO was proceeding cash sales ought to be consistent pointed out that, in their line of tra are substantially higher than cash refore, it would be imprudent to co ve months, to correlate the cash sale
. With these explanation, documen ded that the source of cash d ustified.
, was of the view that it was huma have achieved such huge sales o asoning given by the AO is as follow to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
sales found in doubted by the , supported the on.
charts relating
2016-17 and FY ion period. The on the wrong across all the ade, cash sales h sales on any onduct average es made on the nts and details, deposit during nely impossible on the date of s:

5) It is of significa a) In a highly se industry the bi handled that p b) On such an ev assessee cont after the anno
Minister of Ind employee cod ipsofacto natur c) In this context
Minister was fo on demonetiza about 9 PM an d) It was announ legal tender between the e
160 minutes.

e) The assessee’s
Corporate offi internet).

f) The assessee shop timings o demonetization g) It is unlikely tandem and th at the end of t h) The branches and a major d could have not i) It is highly un awaiting demo shops in no ti assessee was short duration totally uncerta

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 55 ::

ance highlight herein the following:
ensitive and incentive driven industry viz ills do carry the employee code of the perso particular sales invoice.
ventful day of demonetization on 08/11/2
end that there had been huge rush and ouncement of the demonetization by the dia at 8:15 pm on 08/11/2016, the missin de in the invoices raises more queries re of the transactions per se.
t it is to be stated that the speech of the or 1 hour 2 Minutes and 43 seconds. The a ation was made at the 46th minute of his sp d was concluded around 9:20 PM.
ced that the specified bank notes (SBNs) w from midnight of 08/11/2016, the inte end of speech and the deadline of midnig s shop timing are between 9.30 AM to 8.3
ce timings were 9.30 AM to 9 PM (as must have definitely downed the shutters on 08/11/2016 even before the PM’s ann n was in the air.
that uniform crowd has thronged all th hat the assessee has accommodated with he day.
spread across 3 states are supervised by t decision of making sales against demone t been possible in a jiffy.
nlikely that the assessee’s customers we onetization announcement and reached t ime with hoards of demonetized currency willing to give away gold jewellery in cro of about 3 hours, accepting the SBNs who in at the dawn of the following day to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
the jewellery onnel who had 2016 when the sale effected
Hon’ble Prime ng entry of the regarding the Hon’ble Prime announcement eech that is at will cease to be ervening time ght was about
30 PM and the found in the as per regular ouncement on e branches in brisk business the employees tized currency re cash ready the assessee’s y and that the ores in such a ose future was j) As started th especially in re bring more th genuineness a effecting sale obvious reason k) It is hard to ac such high va employee code l) It is also noted being relating specify the pa stated that oth employee code of the item of j m) The list of such have been coll and enclosed a of all the bran comes to Rs.5

n) The assessee sales made on same have bee in respect of a not produced t o) The assessee the genuinene power for the weighing, billi given point of take 30 to 45
volume of sa thousands of impossible.”
9.6
With these obser extent of Rs.50,43,24,9
carry employee code a could not be produced b
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 56 ::

he invoices which do not carry the em espect of the transactions which in such c han the value of Rs. 1 Lakh does not ca as no employer would venture into takin even to a lesser value / lesser quantity o n ccept that the assessee could have allowed lue of more than Rs. 1 Lakh without e.
d that the assessee in its software as mad to sale of gold jewellery even though the r articulars of items sold. In this connectio her invoices which were sold on 08/11/201
e have been entered in the software with t jewellery sold.
h of those invoices which do not carry the e lated in respect of each of the branches o as annexures to this order. The total amo ches put together which do not carry the e
504324974/- did not produced copies of the invoices r n 08/11/2016 in respect of each of the bra en enclosed as annexures to this order. The all the branches put together for which the the copies of the invoices works out to Rs.3
could not have had the facility and profici ess of the SBNs, the counting of the sa said exercise, manpower to attend to t ng packing etc., in such a short span of time and date, a gold jewellery purchase minutes for a customer to conclude a tra ales claimed by the assessee should customers in each of outlets, which is rvations, the AO held that, the cas
974/- was not genuine since the in nd that invoices to the tune of Rs by the assessee. Accordingly, out o to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
mployee code cases relate to rry the stamp ng the risk of of jewellery for d the billing of carrying the e the entry as respective bills on it is to be 16 carrying the the particulars employee code f the assessee ount in respect employee code relating to the nches and the e total amount e assessee has 36841376/- iency to verify ame, the man he customers, f time. At any e will normally ansaction. The have covered s nothing but sh sales to the nvoices did not s.3,68,41,376/- f the total cash deposited during demo
[Rs.50,43,24,974 (+) R the source of cash depo of the Act.
9.7
Aggrieved by the in appeal before the L treating the impugned s
The Ld.
CIT(A) how
Rs.54,11,66,350/- was Act, he directed the A recomputed the profi aggrieved by the order before us.
9.8
Assailing the actio assessee, Shri Anand justify the impugned ad that none of these reas
The assessee submitted regular internal audit, t not reject the books of a did he record any ad
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 57 ::

onetization, the cash sales of Rs.
Rs.3,68,41,376/-] which was stated osit was treated as unexplained cas order of the AO, the assessee agit
Ld. CIT(A), who confirmed the or sum as unexplained cash credit u/s wever held that, since the c treated as unexplained cash credit
AO to reduce the total sales by th t on the remaining sales acco of the Ld. CIT(A), the assessee is on of the lower authorities, the Ld.
contended that the reasoning give ddition was based on surmises and c sons were decisive enough to mak d that their books of accounts wer tax audit and statutory audit, and t accounts by invoking Section 145(3
dverse finding in relation to the to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
54,11,66,350/- d to have been sh credit u/s 68
tated this issue rder of the AO s 68 of the Act.
cash sales of t u/s 68 of the is amount and ordingly. Being s now in appeal
Counsel for the en by them to conjectures and e this addition.
re subjected to that the AO did
) of the Act nor corresponding purchases and the clos part to dispute the cor demonetization. The as rejection or books of ac that the entries recorde that, if the source of ca being disputed, then th would also have to be assessee, the fact tha credence to their case accounted cash sales.
9.9
The assessee fur accounted cash sales, t ought to have been f admitted position that contemporaneous fact cash sales was indeed m was genuine. The asses point out any defect maintained by them at the inventory register, that, each of these sh
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 58 ::

ing stock, and thus it was unjustifi rrectness of the cash sales made sessee contended that, the fact tha ccounts u/s 145(3) of the Act led to ed in the books were correct. The Ld ash deposit out of the accounted c e corresponding purchases, closing e disturbed or doubted upon. Ac at the AO did not dispute these that the source of cash deposits w rther submitted that, if the sourc then it would necessarily follow tha found at the time of search. How no excess stock was found and tha corroborated the assessee’s conte made out of their existing stock and ssee further submitted that, the AO or infirmity in the quantitative t their respective show rooms. Tak details of cash sales, etc. the Ld.
howrooms had sufficient stock in to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ed on the AO’s on the date of at there was no a presumption d. AR submitted cash sales, was inventory, etc.
cording to the aspects lends was indeed the e was not the at excess stock wever, it is an at this material ention that the d that the same
O was unable to stock records king us through
AR pointed out their books to justify the cash sales o were not even seven p date. The assessee furt to levy of VAT and that such sales and had filed the VAT authorities did accepted the same. The sales summaries and th relevant year with th demonstrated that the submitted that, the ca accounts and offered to matter, the impugned a the AO had not brough evidence which would s
Ld.AR argued that, the source out of which su not these cash sales. Ta in the impugned order reasoning was based on ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 59 ::

on the date of demonetization and percent (7%) of the stock value av ther submitted that, all these sales t the company had discharged the d VAT returns as well. It was pointed not dispute the genuineness of the e Ld. AR took us through the releva he comparative analysis of the cas he preceding years, which, acco cash sales was not abnormal. The ash sales were duly recorded in tax in the return of income and in t addition was unjustified. The assess ht on record any cogent material o suggest that these cash sales were AO had also not pointed out any ch huge cash deposits would have aking us through the observations m r, the Ld. AR showed us that, his n conjectures and statistical improba to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
that the sales vailable on that was subjected
VAT liability on d out that even cash sales and nt VAT returns, sh sales for the ording to him e assessee also the books of that view of the see argued that or independent e fictitious. The other probable been made, if made by the AO s entire line of ability.

ught to our notice that, the ma ess of the cash sales was that the in employee code. The Ld. AR point codes was not any substantive irre es invoices to be fundamentally im has contended that the impugned sis and thus, the Ld. AR prayed tha
Ld. CIT, DR appearing for the Reve r authorities. According to him, the not mentioned on these invoices med to have been sold without th his view, was impossible. He subm ssessee for the non-mention of emp ation was general and vague. Also uced for verification. He thus urged should not be interfered with.
both the parties and gone throug is noted that, the AO had mad ccount of cash deposited during out of the sales of Rs.62.32 crore to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
in premise for bills issued on ted out that the egularity which proper. Overall addition lacked at the same be enue supported e fact that the suggested that he help of the mitted that the ployee code on o, some of the that the orders h the material de addition of demonetization s made on the date of demonetization, accounts for the releva reservations regarding across all the branches
Their primary reason fo absence of mention of e of demonetization, whi invoices issued on other
9.13 From the facts pla the business of manuf having retail outlets ac different Southern Stat demonstrated before demonetization was su their ‘Jibala’ software accounts. The assessee discrepancy was found that, the quantity of sal even seven percentage whose details as noted b

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 61 ::

, which were accounted for in the re ant year. The lower authorities are the magnitude of sales made wit s of the assessee on the date of d or doubting the genuineness of the employee code on the sales invoices ch were otherwise found mentione r dates.
aced before us, it is noted that, the facture & sale of gold jewellery a ross twelve different cities/towns lo tes during the relevant year. The us that, the sales reported on upported by sales invoices and du used for maintaining their reg e had also furnished their stock r in the quantitative tally therein.
es reported on the date of demonet
(7%) of the inventory available wit by us, is as follows:- to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
egular books of noted to have thin four hours demonetization.
e sales was the s issued on date ed on the sale e assessee is in and ornaments, ocated in three e assessee has n the date of ly entered into gular books of register and no It is observed tization was not h the assessee,

Branches
T.Nagar Panagal
Park
Madurai
Trichy
Pondy
Kumbakonam
Bangalore
Ramnad
Coimbatore
Tirupati
Anna Nagar
Purasaiwalkam
Vizhag
Bus [Sale on Wheel]
Total

Sales as on 08.11.2016
Qty
Value
Closing sto on 07.11. 45,791.83
14,30,31,978
3,18,9
22,631.33
7,06,84,900
2,57,6
9,038.35
2,88,20,856
2,19,8
21,910.32
6,68,02,425
1,93,5
3,453.43
1,05,70,143
1,60,6
8,559.97
2,64,08,771
3,72,3
7,147.28
2,23,69,509
1,13,5
6,955.01
2,16,23,627
2,20,3
24,090.89
7,37,96,386
1,54,5
2,630.46
81,19,595
83,0
10,021.30
3,07,48,023
99,8
39,217.49
12,22,22,886
3,61,3
338.69
10,19,486
30,7
2,01,786.34
62,62,18,585
25,86,5
that the sales shown by the asse entory available in stock, and tha ales was reduced in the stock reg ll as purchases made during th eafter the closing inventory has bee course of search conducted on 0
of cash or stock was found. Thi neness of the impugned sales record otherwise excess stock would have ance would have been noted. The L to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ock as .2016
% of Gold stock sale
903.68
14%
627.05
9%
896.16
4%
540.78
11%
632.72
2%
307.08
2%
598.84
6%
390.88
3%
586.89
16%
029.95
3%
896.06
10%
309.06
11%
780.65
1%
44.80
7%
essee was duly at the quantity gister from the he year under n reported. We
04-03-2021, no s material fact ded on the date been found or Ld. CIT, DR also could not controvert th did not reveal any disc balance etc.
9.15 It is also noted t with the VAT Departme
1592
of Paper
Bo difference/defect was p available with the asse has been accepted by t is also noted that, the s declared in the VAT ret assessee. In our consid demonetization is found received by the ass goods/jewellery out of t
9.16 It is noted that th accounts of the assesse
The AO had also no Accordingly, the openin to be have been accept the fact that, no discrep
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 63 ::

is factual aspect that, the intrusive crepancy in stock register, closing i that, the assessee was also filing ent, copies of which are placed at P ook, and in those
VAT
Retu pointed out which clearly shows ssee in the form of opening stock the Department as well as the VAT sales made on the date of demonetiz turns and taxes have also been dis dered opinion therefore, the cash de d to be prima facie substantiated essee from the customers afte the accepted stock (opening stock a e Revenue also did not reject the a ee nor did they invoke Section 145
t disputed the book results of ng stock, purchases & closing inven ted by the Revenue, which is also c pancy therein or in physical stock w to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
e search action inventory, cash regular returns
Pages 1572 to urns also, no that the stock and purchases
Department. It zation has been charged by the eposited during by the amount er selling the nd purchases).
udited books of 5(3) of the Act.
the assessee.
ntory are found corroborated by was found in the course of search. Acco details & values of the by the assessee, then reject the books of acc
144 of the Act.
9.17 Moreover, once th to tax and the book res have been legally agai credit u/s 68 of the Act note of this apparent directed the AO to excl figure of sales and re-co
9.18 According to us, from inconsistencies. If deposited during demon date of demonetization inventory which was red
Reason being, the Ld. C
31-03-2017. The Reven would otherwise show t or that the amount
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 64 ::

rding to us, if the AO was not sat sales recognized and the financial r the correct & proper course would ounts u/s 145(3) and then frame a he sales had already been accepted sults were not rejected, the same n added separately by way of un t. We find that later on, the Ld. CIT fallacy in the action of the AO, ude the amount added u/s 68 of th ompute the normal profits assessabl the above action of the Ld. CIT(A f the Ld. CIT(A) was of the view netization was not out of the cash
, then question would arise as to duced due to such sales then divert
CIT(A) had not disputed the closing i nue has not brought any material o that, the said inventory was sold ou t received by the assessee b to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
tisfied with the results reported d have been to assessment u/s d and assessed sales could not explained cash
T(A) had taken and thereafter he Act from the le to tax.
A) also suffered that, the cash sales made on where was the ted or used for.
inventory as on on record which tside the books y selling the jewellery/goods out o otherwise utilized elsew also find force in the deposits was not the ca on record some materi assessee generate such account during the dem
9.19 In the instant ca stock has not been d suppressed sales were 04-03-2021. It is also making cash sales regu demonetization is inco period(s) or that there i to the impugned sale financials for the releva of turnover reported by F
2014
201
(AYs 201
M/s. Lalithaa
:: 65 ::

f the opening stock and the p where and not deposited in the ban
Ld. AR’s contention that, if the s ash sales, then the Revenue was re ial or evidence to show as to whe h magnitude of cash which it deposit onetization period.
se the opening stock, purchases a doubted, no inflated purchases w noticed during the course of search o not the case that the assessee ularly or that the cash sales shown nsistent with the cash sales repo is any unusual deviation in gross pr s in dispute. From an analysis o nt FY 2016-17 and the past two ye the assessee is noted to be as follo
FY
Total Sales (in Rs)
4-15
66,81,91,87,159
5-16
58,60,85,54,533
6-17
60,55,70,08,603

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
purchases, was nk account. We source of cash equired to bring erefrom did the ted in the bank and the closing were found or h conducted on has not been on the date of orted in earlier ofit margin due of the audited ears, the details ws:-

(Rs.)
April
4,60,31,66,
May 6,47,96,92,
June
4,74,90,84,
July
3,63,87,41,
August
4,16,53,59,
Sept.
3,63,84,66,
October
5,17,86,49,
November
6,87,31,46,
December
7,93,62,29,
January
7,17,57,57,
February
4,91,95,36,
March
7,46,13,57,
Grand total
66,81,91,87,

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 66 ::

at the above sales of the assessee nue. We thus note that, the magn emonetization though appears to be g regard to the size & turnover o hes / outlets, the same is found to e assessee is also found to have he turnover recorded in the books
7 and the preceding two years, wh
5
FY 2015-16
(Rs.)
%
Growth
(
,608
4,82,91,75,208
5%
2,97,
,387
4,77,82,70,374
-26%
5,33,
,237
4,86,80,11,927
3%
3,40,
,663
8,27,85,07,605
128%
4,16,
,596
8,61,87,24,771
107%
6,91,
,016
3,40,70,02,565
-6%
4,35,
,465
3,58,65,99,170
-31%
5,86,
,787
5,46,76,53,148
-20%
4,47,
,133
4,23,35,82,004
-47%
3,53,
,556
4,03,54,92,268
-44%
5,21,
,084
3,84,04,90,074
-22%
6,02,
,629
2,66,50,45,418
-64%
8,30,
,159
58,60,85,54,533
13,86, to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
have not been nitude of sales high on stand- of the assessee be only 1% of e furnished the of accounts for ich is observed
FY 2016-17
(Rs.)
%
Growt h
,31,79,505
-38%
,61,25,260
12%
,04,33,205
-30%
,48,66,146
-50%
,47,83,813
-20%
,83,62,759
28%
,29,76,536
63%
,27,03,802
-18%
,23,94,202
-17%
,57,98,993
29%
,24,32,402
57%
,29,51,981
212%
,80,74,540

t is noted that the sales reported in ber 2016 was in fact comparatively ccordingly, we find that, there was n the past sales pattern of the assess also noted to have provided the de n relevant AY 2016-17 and the prece t even the value of cash sales repo
2016 i.e. the period of demon ier year and that there was no un the demonetization period. The r as follows:-
“Total sales vs Cash Sales
FY 2014-15

Total sales
Cash sales
4,60,31,66,608
1,34,50,69,968
6,47,96,92,387
2,10,45,60,894
4,74,90,84,237
1,81,66,50,310
3,63,87,41,663
1,33,49,19,422
4,16,53,59,596
1,71,67,13,701
r
3,63,84,66,016
1,83,89,88,988
5,17,86,49,465
1,8364,41,549
r
6,87,31,46,787
2,47,49,80,939
r
7,93,622,29,133
1,41,21,04,020
7,17,57,57,556
1,30,13,06,999
4,91,95,36,084
1,22,79,02,153
7,46,13,57,629
2,13,64,09,868
66,88,91,87,161
20,54,60,48,811

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
n the months of lower than the no unusual hike see.
etails of cash &
eding AY 2015- rted during the netization, was nusual surge of relevant details

Month
April
May June
July
August
September
October
November
December
January
February
March
Total
Month
April
May June
July
August
September
October
November
December
January
February
March
Total
9.23 So it is not a cas cash sales were more.
making cash sales re
November 2015, the ca
These comparative pat thus found to prima fac
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 68 ::

FY 2015-16

Total sales
Cash sales
4,60,31,66,608
1,34,50,69,968
6,47,96,92,387
2,10,45,60,894
4,74,90,84,237
1,81,66,50,310
3,63,87,41,663
1,33,49,19,422
4,16,53,59,596
1,71,67,13,701
r
3,63,84,66,016
1,83,89,88,988
5,17,86,49,465
1,8364,41,549
r
6,87,31,46,787
2,47,49,80,939
r
7,93,622,29,133
1,41,21,04,020
7,17,57,57,556
1,30,13,06,999
4,91,95,36,084
1,22,79,02,153
7,46,13,57,629
2,13,64,09,868
66,88,91,87,161
20,54,60,48,811
FY 2016-17

Total sales
Cash sales
4,60,31,66,608
1,34,50,69,968
6,47,96,92,387
2,10,45,60,894
4,74,90,84,237
1,81,66,50,310
3,63,87,41,663
1,33,49,19,422
4,16,53,59,596
1,71,67,13,701
r
3,63,84,66,016
1,83,89,88,988
5,17,86,49,465
1,8364,41,549
r
6,87,31,46,787
2,47,49,80,939
r
7,93,622,29,133
1,41,21,04,020
7,17,57,57,556
1,30,13,06,999
4,91,95,36,084
1,22,79,02,153
7,46,13,57,629
2,13,64,09,868
66,88,91,87,161
20,54,60,48,811
se that in the month of November
Instead, it is noted that, the asse egularly and that in comparison sh sales for the period November 2
terns and analysis provided by the cie support their case that that cas to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
2016 only the essee has been to the period
016 was lower.
e assessee are sh sales and its magnitude was a comm generated in the regula deviation.
9.24 It is also noticed year under considerati preceding AY 2016-17
shows that, it was also assessee during the extraordinary increase were consistent with on 9.25 In light of the fact stock, purchases & sale not been doubted, the opening stock and pur accepted. The sales wer not been disturbed by year-wise, month-wise found to be justifiable w difference / discrepanc search and, therefore, t stock is found to suffic
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 69 ::

mon phenomenon in their line of ar course of their business, withou that the GP rate shown by the as on was 6.08% which was compa at 5.71%. Hence, these contemp o not the case that the cash sales pre-demonetization period res in the G.P. rate, instead the gross ly a gradual increase.
ts taken note above, we observe th es and closing stock, declared by th e sales were made by the assess chases and the resultant closing s re also subjected to levy of VAT and the sales tax/VAT Department. Th sales pattern, gross profit margin with no major deviation in trend. Als y in stock or cash balance found the sales made by the assessee out ciently explain the deposit of cash to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
trade and was ut any unusual ssessee for the arable with the poraneous facts s made by the sulted in any profit margins at, the opening e assessee has see out of the stock has been d the same has he comparative s etc. are also so there was no at the time of t of the existing
(obtained from realization of the sales considered opinion, the impugned sales as undis
9.26 In this regard, w
Court in the case of Pr.
wherein on similar fac upheld the findings of t the form of opening & p sales made by the asse same could not have b of the Hon’ble High Cou under:-
“16.5 It is in this the case put up b data pertaining t year in issue i.e
FYs 2014-2015
showed that, in th less corresponded
16.6 Besides this FYs 2014-2015, percentage terms
2015 and 2015- terms, sales had terms amounted between FYs 201
by Rs. 221.34 cr
53.66 %. Based year in which d increase in sales
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 70 ::

s) in the bank account. On these e lower authorities were unjustified sclosed income of the assessee.
we rely on the decision of the Hon
. CIT v. Agson Global (P.) Ltd. ( cts and circumstances, the Hon’b this Tribunal that, when the stock w purchases, then it was unjustified t essee were not out of the available een treated as unexplained. The re rt found relevant to the present cas s background that the Tribunal examined by both sides. In this context, the Tribunal to cash sales and cash deposits made in ., FY 2016-2017 (relevant AY 2017-2018
and 2015-2016. The analysis made by he three financial years, the total cash dep d with the cash sales….
s, the Tribunal also noted the increase in s
2015-2016 and 2016-2017, both in a s. Insofar as the increase in sales betwee
-2016 was concerned, it was found that increased by Rs. 175.08 crores, which, i to an increase of 73.74%. Likewise, th
5-2016 and 2016-2017 had increased in ab rores, but, in percentage terms, the increa on these figures, the Tribunal concluded demonetization kicked in i.e., F.Y. 201
in percentage terms was less than the ear to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
e facts, in our in treating the ’ble Delhi High
(441 ITR 550) ble High Court was available in to hold that the e stock and the elevant findings se, are noted as the merits of analysed the the financial
), as against the Tribunal osits more or sales between absolute and en FYs 2014- t in absolute n percentage e cash sales bsolute terms ase was only d that, in the 16-2017, the lier year. The Tribunal, thus, h booked non-exist
16.7 Similarly,
November of th anomalies. The T
2014, was Rs. 1
made was Rs.
recorded a slight that there was November 2014. which, in percen
November 2015
cash sales figure percentage terms
Tribunal, this aga non-existing sale them.
16.8 In the same made in Decemb which was Rs. 97
crores. The comp
2015, as compar
Rs. 75.09 crores, was compared wi
In percentage ter
December 2015 w decreased by 2
Tribunal, that ass not taken place, a 16.9 In sum, it w record that cash noticed above, m entered into by it the fact that the assessee had bac could only conclu
17. The Tribunal furnished by the physical stock wa register represen physically. This Tribunal to be er
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 71 ::

held that it could not be said that the a ting sales in its books post demonetization.
the Tribunal examined the cash sales he following three years to see if ther
Tribunal noticed that the cash sales made
16.49 crores; whereas in November 2015
45.18 crores, while in November 2016
increase i.e. was Rs. 47.43 crores. The Tri a substantial jump in sales in Novembe
In absolute terms, the increase was Rs. 2
ntage terms, amounted to 173.98%, wh cash sales figure was compared with Nov e, the increase was merely Rs. 2.55 crore s, amounted to an increase of 5.64%. Acc ain was an indicator that the assessee had s in November 2016 by showing cash dep e vein, the Tribunal picked up the figures er 2014, which was Rs. 22.26 crores, Dec
7.35 crores and December 2016, which w parison made showed that the cash sales red to December 2014, in absolute terms, whereas when figures of cash sales of De th December 2016, it showed a dip of Rs.
rms, the increase in sales between Decemb was 337.33%, whereas, in December 201
8.27%. This again demonstrated, accor sessee had not attempted to book cash sa as alleged by the revenue.
was the Tribunal's assessment of the mater deposits made by the assessee with its more or less compared with the cash sale t with its customers. The Tribunal's view w ere was no allegation made by the reve ckdated its entries to enhance its cash sale de that there was a growth in the assessee l also took note of the fact that one of A.O., in support of the impugned additi as short by Rs. 450 crores. In other word nted a higher figure, as against that whic conclusion arrived at by the A.O. was f roneous, inasmuch as the A.O. had failed to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
assessee had s figures for re were any in November
5, cash sales
, cash sales bunal noticed er 2015 over
28.69 crores, hereas when vember 2016
es, which, in ording to the d not booked posits against of cash sales cember 2015, was Rs. 69.83
in December increased by cember 2015
27.52 crores.
ber 2014 and 6, cash sales rding to the ales that had rial placed on s bankers, as transactions was that given nue that the e figures, one e's business.
the reasons on, was that ds, the stock ch was found found by the to notice the fact that part of Sonipat, Haryana
17.1 The Tribuna gross profit ratio
F.Y.2016-2017) w
Tribunal took not seizure action h adjustments towa could be made on 17.2 Besides th explanation given the gross profit r was compared w context that the T
2015-2016 (6.14
also the respect according to the The sense that th was based on doc variation in eithe
A.Y. 2017-2018,
17.3 Furthermore
2017-2018 conc purchases and sa and books of acc where it could be unidentified partie
….
17.6 Having rega by the Tribunal, i cash deposited b that there was n the Tribunal to unaccounted inc represented by correctly found in by CIT(A) of Rs. 7
9.27 Similarly the Hon'
Mills (97 ITR 258) hel
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 72 ::

the stock was available at the assessee'
…
l also seems to have accepted the explana o for the AY in issue i.e., AY 2017-20
was in line with the earlier years. In this te of the fact that, at the time when the ad taken place, the data had not been ards depreciation, interest and provisions nly after the end of the relevant financial ye is, the Tribunal also appears to have a n by the assessee that the purported mis ratio occurred, as unaudited data of the ith the audited data of the previous years
Tribunal took note of the gross profit perce
4%), 2016-2017 (4.19%) and 2017-2018
ive net profit ratio for the very same y assessee, were 0.72% 0.81% and 1.35%
he Tribunal derived from the data presente cumentary evidence, was that there was n r the gross profit or net profit in the relev as compared to the previous years.
e, based on details furnished by the assess erning its closing stock, list of debtors ales made, list of creditors, copies of ban counts—the Tribunal concluded that it wa e said that the assessee had purchased or s es.
ard to the extensive material which has be in particular, the trend of cash sales and c by the assessee with earlier years, we are nothing placed on record—which could hav conclude that the assessee had, in come i.e., made cash deposits which cash sales. Therefore, in our opinion, n favour of the assessee and deleted the a 73.13 crores, under section 68 of the Act.”
ble Patna High Court in the case of ld as under:

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
's godown at ation that the 018 (relevant context, the e search and finalized as for expenses ear.
accepted the salignment of year in issue s. It is in this entage of AYs
(5.85%), as years, which, respectively.
d to it, which no substantial ant year i.e., see for the AY s, details of k statements as not a case sold goods to een examined corresponding e of the view ve persuaded fact, earned h were not the Tribunal ddition made
Lakshmi Rice

"It is a fundamen income or secret find sufficient exp hand on the rele denomination no absence of any f not genuine, the to any secreted p disclosed and est money, not the which were legal
9.28 We now proceed authorities to justify the AO’s opinion, it was no of demonetization for statistical analysis. The would have actually a demonetization was ann such sales. Alternativel possible to achieve suc pointed out that, these has been rightly submi demonetization was in i inter alia led to unimag across India as the Ind would stand demonetiz article / thing. In fact,
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 73 ::

ntal principle governing the taxation of any ed profits that the income or the profits a planation at the hands of the assessee. If th evant date is sufficient to cover the value tes subsequently demonetized and even finding that the books of account of the as source of income is well disclosed and it ca profits within the meaning of the law. Wh tablished is the source of the 'income or t source of the receipt of the high denom tender at the relevant time."
d to address the reasons given e impugned addition. The first reas t possible to achieve such huge sa which he has undertaken certai
AO is noted to have observed tha already put down their shutters, nounced at 8PM and thus could not y, the AO observed that, it could h sales in only four hours. The Ld.
observations are mere conjecture a itted by the assessee that, the an tself an unusual and surprising even ginable rush across all retail jewelle ian diaspora wanted to use their cu zed from the end of the date for b several news article were also pu to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
y undisclosed as such must he balance at e of the high more, in the ssessee were annot amount hat has to be the receipt of ination notes by the lower on was that, in les on the date in hypothetical t, the assessee
, by the time t have achieved not have been AR has rightly and surmise. It nouncement of nt whose fallout ery showrooms urrencies which buying valuable ublished on the next date wherein the the date of demonetiz reported on the date cannot be viewed adve achieved across its tw details have been prov valid tax invoices and t to justify the same. Acc drawn by the AO, wit dispute the correctness was unjustified.
9.29 The next reason employee code was no date of demonetization.
which requires the ass their invoices. Hence, th decisive enough to treat had explained to us th code on their invoices.
the assessee in identify showrooms who were o also done to identify an ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 74 ::

record sales achieved by jewellery zation was reported. Hence, the i of demonetization in comparison rsely. Also, the sales made by the welve branches plus a bus on the vided. All the sales are noted to be the assessee also had sufficient inv cording to us therefore, the subject hout any corroborative evidence o of the sales made on the date of d given by the lower authorities ot mentioned on the sales invoices
. We agree with the assessee that, essee to mandatorily mention emp he absence of the same on the invo t the sales as unexplained cash cred he rationale behind the mention of The Ld. AR submitted that, this pr ying the meritorious employees at outperforming and generating more nd incentivize the sales employees to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
showrooms on ncreased sales to other dates assessee were wheel, whose e supported by ventory balance tive conjectures or material, to demonetization, was that, the s issued on the there is no law ployee code on oices cannot be dits. The Ld. AR f the employee ractice assisted t the individual e sales. It was based on their sales performance, who
Paper book. He howeve apprehending the huge customers would be immediately taken a st that night, to avoid employees, and that th the sales and also assi incentive would get ham date of demonetization but as a consequence had opted not to incen date. He further expla showrooms, the employ the billing process. Acc the billing system cann the other substantive co considered view, this ex
9.30 Another reason g were not produced for furnished voluminous in that, in value terms, on ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 75 ::

ose details have been provided at Pa er submitted that, on the date of d rush & sales in the showrooms an handled by the workforce, the trategic call to suspend their incent any confusion or misunderstan he employees would concentrate so st their co-workers, free from any mpered. He further explained that, t was not due to any sales efforts of of the extraordinary event. Hence tivize their employees for the sales ained that, due to the huge rus yee tagging was also avoided to s cording to the Ld. AR, this procedu not be viewed adversely, that too ompliance with the accounting and t xplanation given by the assessee wa given by the Revenue was that, a r verification. It is noted that, the nvoices which aggregated to 93% o nly 6.8% could not be furnished. T to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
age 1608 of the demonetization, nd that multiple assessee had tive system for nding amongst olely on making bias that their the sales on the the employees e, the assessee s made on this h at all these ave on time in ral deviation in in ignorance of tax laws. In our as justifiable.
all the invoices e assessee had of the sales and The Ld. AR had explained that, their n sales made on that dat readily traceable. The search action at all misplaced / missing and He however pointed ou books of accounts and seized on the date of se doubted. It is also note returns and the VAT lia which according to us, regard to the foregoing the invoices were produ production of few of the 9.31 We find that ident the coordinate Bench of Hirapanna Jewellers (
“7. We have hear record. In the in sales and offered u/s 68 as unex accounted in the into section 68 w
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 76 ::

on-availability was due to the hug te and therefore, some of these inv
Ld. AR further submitted that, p their premises, certain physical d thus some of these invoices could t that, all the sales had been accou also the ‘Jilbala’ software, which earch and therefore, its genuineness ed that, the entire sales were repor ability thereupon was also paid by supported the genuineness of these reasons, overall facts and that mo uced and verified, in our considered ese invoices should not be adversely tical issue was involved in the decisi f the ITAT, Visakhapatnam in the ca
(189 ITD 608) wherein it was held rd both the parties and perused the mater stant case, the assessee has admitted th d for taxation. The assessing officer made plained cash credit of the same amoun books as sales. In this regard, it is worth hich reads as under:

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ge quantum of voices were not ursuant to the records were d not be found.
unted for in the was found and s should not be rted in the VAT y the assessee, e sales. Having re than 93% of view, the non- y looked upon.
on rendered by ase of ACIT Vs d as under:
rial placed on e receipts as e the addition t which was hwhile to look

sum is found credited in the books of ny previous year, and he assessee offers no and source thereof or the explanation offe on of the [Assessing] Officer, satisfactory charged to income-tax as the income of the ar:
l of section 68, the sum found credited in ch the assessee offers no explanation, the come of the assessee. In the instant case e source as sales, produced the sale bills a enue receipt. The assessee is engaged in aintaining the regular stock registers. Bo
AO have conducted the surveys on diff nd no difference was found in the stock re essee.
and the Stock are interlinked and insepa ses the stock and every sale decreases t ales either the assessee should not have possession or there must be defects i
Once there is no defect in the purchases a atching with inflow and the outflow of stock eve the sales. The assessing officer accep
He has not disturbed the closing stock whi sales. The movement of stock is directly e sales. Audit report u/s 44AB, the financia er book clearly shows the reduction of s th the sales which goes to say that the ca es. The assessee has furnished the trading age No. 7 of paper book and we obse ck is matching with the corresponding s ot declared the exorbitant profits. Tho es were noticed by the AO as well as the ties did not find any defects in the books unt, P&L account and the financial statemen condition of the assessee. Suspicion howe ould not be decided against the asses les with tangible evidence.
t case the assessee has established the s nting outgo of stocks. The sales were duly a ccounts and there were no abnormal profit urvey the AO did not find any defects in s we do not find any reason to suspect the e routine observation of suspicious nat to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
an assessee o explanation red by him is , the sum so e assessee of the books of e said sum is the assessee and admitted the jewellery th the DDTT ferent dates, egister or the arable. Every the stock. To the sufficient in the stock and sales and k, there is no ted the sales ch has direct linked to the al statements stock position sh generated g account, P&
rve that the ales and the ough certain
DDIT (Inv.), s of accounts nts and failed ever strong it ssee without ales with the accounted for ts. In spite of sales and the sales merely ture such as making sales of 2
documents for sa non-availability o contention of th became panic an notes becomes jewellery, thereby and supported b
Hindu etc. It is o undue rush in va of demonetization
Hence, we are of and sustained by is deleted.”
9.32 In the present cas of account in regular co independent Chartered same has not been re purchases and stocks w not been doubted by th accepted by VAT/ Sales assessee are found to b cash sales made by th account and reduction i course of search, neithe the stock register main the decisions (supra),
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 78 ::

270 bills in the span of 4 hours, non availa ales, non writing of tag of the jewellery to t of CCTV footage for huge rush of pub he assessee that due to demonetization nd the cash available with them in old d illegal from 9-11-2016 and made the in y thronged the jewellery shops appear to b by the newspaper clippings such as The observed from the newspaper clippings th arious jewellery shops immediately after an n through the country.
f the view that the impugned addition mad y the Ld. CIT(A) was not justified, accordin se also, the assessee maintained th ourse of business which were duly
Accountant under section 44AB of t ejected by the lower authorities. A were recorded in the books of acco he AO. The sales shown by the asse s Tax Department. The book results be on the same lines as the preced he assessee had been credited in n the stock has not been doubted. E er any excess nor shortage of stoc ntained by the assessee. So, respec we are of the view that the imp to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ability of KYC the sale bills, blic etc. The n, the public denomination nvestment in be reasonable
Tribune, The hat there was nnouncement de by the AO gly the same he proper books audited by the he Act, and the All the sales &
ount which had essee had been s shown by the ding years. The n the books of Even during the ck was found in ctfully following ugned addition made by the AO and accordingly the same is 10. We now come to 2017-18 which relates
Ld. CIT(A) on the un-
Jewellers Pvt. Ltd. [in that, a search action w which, a ‘Jpack’ appl according to the AO c assessee. The AO is not 35 of the impugned or cash and bullion transac
2020-21. According to maintaining these entri unaccounted for and tha
100s. The AO accor unaccounted cash and b software seized from t follows:
Period
FY 2016-17
FY 2017-18
FY 2028-19
FY 2019-20
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 79 ::

sustained by the Ld. CIT(A) was deleted. These grounds are therefo o Ground Nos. 21 to 27 of the to the addition of profit element co
-reconciled purchases made from short ‘MJPL’]. The facts concerning was conducted upon M/s MJPL in ication software was found and omprised of the entries of transac ted to have tabulated the said data rder, which in his view, represente ctions with the assessee during the o AO, Shri Rajendra Kothari of M ies in the software had admitted t at the amount shown in the ledgers rdingly summarized the year-wi bullion transactions found in the ‘Jp the premises of MJPL, which are n
Cash receipt
Metal receipt
Tota
25,23,29,410
25,92,66,014
51,15,9
20,05,15,460
78,79,30,445
98,84,4
3,84,16,450
27,71,61,862
31,55,7
11,15,45,854
32,60,76,699
43,76,2

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
s not justified, ore allowed.
appeal for AY onfirmed by the M/s. Mohanlal g this issue are the course of seized, which ctions with the at Pages 24 to ed unaccounted
FYs 2016-17 to MJPL who was that, they were s are actually in ise details of ack’ application noted to be as al
5,424
5,905
8,312
2,553

e view that, the above amounts we ts of the assessee. The AO further of the assessee in his sworn statem ed transactions with MJPL. Accordi alance dated 31-05-2019 uneart
L database namely ‘atp1920’ found f t, there was a credit balance of Mr.S.Khatri who was the Managin e AO observed that, this noting co-r efore, held that the electronic data s ained actual unaccounted transactio h these observations, the AO sho to why the amount as tabulated ab ained expenditure.
e their reply dated 02-02-2023 is ted transactions with MJPL. The and admissibility of the material he assessee submitted that, the sea screpancy in physical stock or ons carried out with MJPL and th third party material being relie nsubstantiated. The assessee poin to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
re not reflected observed that, ment had denied ing to the AO, thed from the from assessee’s f Rs. 9 crores ng Director of related with the seized from the ons carried out ow caused the bove should not noted to have assessee also seized from a arch action had cash or any herefore it was ed upon, was nted out that, according to the show purchases equivalent t therefore, the search a unaccounted stock or in which was not the case transactions actually ca books of accounts. The the manner in which M thus they could not b premises of MJPL. The a ledgers were under the there was no direct ev pertained to the assess
‘Lalitha’ is very commo material corroborating t to the assessee, the a notice was unjustified a 10.3 The AO however i assessee. According to maintained at the prem the assessee. For arriv relied on the statement
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 81 ::

w cause, the assessee had mad to 613 kgs which was not a sma action ought to have revealed any nvestment or unaccounted sales or . The assessee further submitted th arried out with MJPL, which were re e assessee submitted that, it had n
JPL passes entries in their ‘Jpack’
e expected to explain the notings assessee further contended that, th e name ‘Lalitha’, ‘Lalitha P’ and ‘Ba vidence to show that the notings i see. The assessee also pointed out n and in absence of there being an that the entries found in the ledger assumption drawn by the AO in th nd bad in law.
s noted to have rejected the above o the AO, the ledgers found in ises of MJPL contained transactions ving at this conclusion, the AO is of Shri Rajendra Kothari, who had to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
e unaccounted ll quantity and y corresponding r cash balance, he details of the ecorded in their no control over application and s found in the e entries in the azulla’ and that n these names that, the name ny independent of MJPL related he show cause submissions of n the software conducted with found to have stated that the names ‘Lalitha’, ‘Lalitha transactions of the asse cash and bullion transa to 2021-22 [ Rs.51,15, expenditure in the hand
AO, the assessee prefer
10.4 On appeal, the Ld assessee, found that t showed that there were the ‘Jpack’ application o not given any credence remand report from t provided by the assess accepted that, out of across AYs 2017-18 to 2
reconciled amount to th accounts and that the b the books of accounts. T to be as follows:
“The CIT(A) vide claims all transac
Mohanlal Jewelle requested the AO
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 82 ::

P’ and ‘Bazulla’ were maintained fo essee. The AO accordingly added th ctions of Rs. 283,63,59,247/- acros
,95,424/- in AY 2017-18] by way ds of the assessee. Aggrieved by th rred an appeal before the Ld. CIT(A)
.CIT(A) after taking note of the sub the ledgers and reconciliations of e several matching entries with the of MJPL. The Ld. CIT(A) observing th e to the reconciliation, had accordin he AO on this issue. After tallyi ee, the AO in his remand report is the total addition of Rs. 283,63,5
2021-22 on this impugned issue, th he extent of Rs.214,51,60,793/- with balance of Rs.69,11,98,454/- was n
The relevant portion of the remand e his letter dated 01.10.24 stated that ctions are reflected in the books of account ers and there are no unaccounted tran
O to submit the report on this issue. Durin to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
or recording the he unaccounted ss AYs 2017-18
of unexplained he action of the ).
bmissions of the f the assessee e data found in hat, the AO had gly called for a ng the details s noted to have 59,247/- made he assessee has h their books of ot appearing in report is noted the appellant ts in respect of nsactions and ng the remand proceeding, the a crores out of the 2017-18 to 2021
assessee and a d books of accou documents such a in the books of a Jewellers, copy o as well as bank a Additionally, this Ledgers and com jewellers.Further, ledger and supp basis and is foun consider in on me
10.5 In the rejoinder t to have pointed ou
Rs.8,32,98,385/- which & payment entries in required to be ignored
Rs.60,79,00,069/- [Rs.6
was reiterated that, th standalone basis could without there being an The assessee alternativ element of this unrecon considering the submiss that, the unreconciled
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 83 ::

assessee has claimed that amount of Rs.21
total addition of Rs. 283,63,59,247/- cro
1-22, is accounted for in the books of ac difference of Rs. 69,11,98,454/- is not ap unts. The assessee has submitted th as copy of bill/invoice, ledger copy of Moha assessee, ledger copy of assessee in book f GST/VAT credit application, copy of gold ccount statements in support of its claim.
s office has obtained the ledger accoun mpared the entries to that of ledger accou
, the entries in J-pack software was trace porting documents submitted were verifie nd to be correct. So it is requested that th erits.”
o the above remand report, the ass t that, there were contra en were appearing on both the sides the ‘Jpack’ software of MJPL, w d. As far as the balanced unreco
69,11,98,454 - Rs.8,32,98,385] wa ese entries found in third party do not be presumed to be true qua y independent material to corrobo vely argued that, at the most only t nciled sum ought to be added. The L sions of the appellate and the rema sums, after tallying the entries in to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
14,51,60,793/- res for the AY ccounts of the pearing in the he supporting anlal Jewellers ks of Mohanlal stock register, t of Mohanlal unt of Lalithaa ed back to the ed on sample he CIT(A) may sessee is noted ntries also of of the receipts which also was onciled sum of as concerned, it ocuments on a a the assessee, rate the same.
the Gross Profit
Ld. CIT(A) after and report held the assessee’s books of accounts with was Rs.69,11,98,454/-
FY
Entries as per Jp
Softw
Cash (Rs.)
2016-17
25,23,29,410
2017-18
20,05,15,460
2018-19
3,84,16,450
2019-20
11,15,45,854
2020-21
16,43,27,195
Total
76,71,34,369
10.6 The CIT(A) obser could not be treated as no excess stock was according to the CIT(A account transactions w held that, in such a s added. Taking note of profit rate of 6.08% for addition for the relevan
* 6.08%] and deleted t this order of the Ld. CIT
10.7 The Ld. AR app impugned addition mad third party material and course of search con
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 84 ::

h the material seized from the pre whose details were tabulated as foll pack Application ware
Entries reconciled with books
Metal (Rs.)
Cash(Rs.)
Metal (Rs.)
25,92,66,014
22,33,93,054
15,48,95,63
78,79,30,445
14,02,96,191
69,97,21,31
27,71,61,862
40,50,000
9,85,39,77
32,50,76,699
7,78,06,175
22,72,13,22
41,87,89,858
15,27,55,195
36,64,90,24
2,06,92,24,878
59,83,00,615
1,54,68,60,17
rved that, the above remaining un s an unexplained investment in purc found during the course of se
), it was a case where certain ent ere left unmatched. The CIT(A) is scenario, only the gross profit ele the fact that, the assessee had ad r the relevant year, the Ld. CIT(A) nt AY 2017-18 at Rs.81,05,050/- [R he balance addition made by the AO
T(A), the assessee is now in appeal b pearing for the assessee submit de by the lower authorities was b d that, no incriminating material wa ducted upon the assessee. Acco to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
mises of MJPL, lows:
s
Balance
Unmatched entries
30
13,33,06,740
13
14,84,28,401
70
21,29,88,542
25
13,26,03,153
40
6,38,71,618
78
69,11,98,454
reconciled sum chases because earch. Instead, tries of running noted to have ment could be dmitted a gross worked out the Rs.13,33,06,740
O. Aggrieved by before us.
tted that, the based solely on as found in the ording to him, therefore, in absence search at the assessee made in the unabated such third party informa
10.8 The Ld. AR furthe record by the Revenu pertained to the assess control over the manne accounts and as to whe been either mistakenly was also submitted t common generic names any nexus of these entr the burden of proof was unmatched entries fou assessee and that, m independent evidence, w no opportunity to cross the assessee. Agitating has relied upon the follo

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 85 ::

of any incriminating material fou e premises, no addition could hav assessments u/s 153A of the Act o ation.
er submitted that, there is no evide e to show that the residual unm see. It was contended that, the as er in which MJPL is passing entries ether entries pertaining to some oth y or deliberately reflected in asses that, the unmatched entries wer s and that there was no direct evi ries with the assessee. The Ld. AR c s on the department to conclusively und in the ledger of MJPL was mere entries in the ledger, witho was not reliable. The Ld. AR further examine Shri Kothari of MJPL was a the merits of the impugned additi owing decisions:

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
und during the ve been legally on the basis of nce brought on matched entries ssessee has no in its books of her persons has ssee’s name. It re recorded in idence to show contended that, y prove that the related to the out any other submitted that also afforded to ion, the Ld. AR

- Pepsi Foods Pvt. L
- CIT v. Ved Prakas
- Mahendra Lalka v
- B.S. Yediyurappa
- Anand Jaikumar J
- S. K. Gupta v. DC
10.9 It was further su conducted upon the ass with MJPL and even th appearing in the boo corroborated the assess purchases from MJPL.
Revenue supported the 10.10
We have h placed before us. From assessee is engaged in gold jewellery. In the purchases bullion, gold the assessee, all the tra accounts, which were statements, ledger etc.
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 86 ::

Ltd. v. ACIT (2014) 367 ITR 112 (De sh Choudhary [2011] 218 CTR 99 (D
. DCIT (ITA No. 172/Lkw/2023) v. ACIT (ITA No. 14/Bang/2019) ain v. ACIT (ITA Nos. 3820-3823/M
IT (2005) 2 SOT 457 (ITAT Del) ubmitted by the assessee that, the sessee did not reveal any unaccount he physical stock found reconciled oks of accounts, which accordin see’s case that, it had not made an Per contra, the Ld. CIT, DR app order of the lower authorities.
eard both the parties and peruse m the facts on record, it is obse n the business of manufacture and course of its business, the asse and precious metals from M/s MJP ansactions with MJPL are recorded in supported by relevant purchase
It is observed that, a search action to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
el HC)
Del HC) um/2019) e search action ted transactions with the stock g to Ld. AR, ny unaccounted pearing for the ed the material erved that, the d marketing of essee regularly
PL. According to n their books of invoices, bank n u/s 132 of the Act was conducted upon maintained in one ‘Jpa team observed that, the in the names of ‘Lalitha of issue of metal and team of the MJPL, this by Shri Rajendra Kotha entries represented una that, later on in the c assessee was confronte
MJPL, to which he is no explain these notings statement is reproduced
“Q. 22
I am s
Private Limited in Limited during th
Mohan Lal Jewelle in large scale un
Private Limited. O
M/s. Mohan Lal J was noticed that per tally account this statement a comments.
A.22
Sir, I r me. I will reconc week’s time.”
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 87 ::

n M/s MJPL in the course of which, ack’ application software was foun e said software contained three sep a’, ‘Lalitha P’ and ‘Bazulla’ which co receipts of metal/ cash. According
‘Jpack’ application software was be ri, who in his statement had submit accounted transactions with the ass course of search, the Managing D ed with these material seized from t oted to have averred that he would in a week’s time. The relevant d below, for the sake of convenience showing you various ledgers of Lalitha n the actuals books of M/s Mohan Lal Jew he course of search u/s 132 of the IT Act, ers, on verification it was noticed that you naccounted transactions with M/s. Mohn
On cross examination of the actual ledger
Jewellers with the tally accounts maintain most of the entries are not matching with ts. Please go through the ledgers which a s annexure 6, annexure 7, annexure 8 a request the copy of the mentioned ledger ile the same with my records and explain to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
electronic data nd. The search parate accounts ontained details g to the search eing maintained tted that, these sessee. We find
Director of the the premises of d reconcile and portion of his e :-
Jewelery Mart wellers Private
, 1961 on M/S have involved
Lal Jewellers rs seized from ned by you, it the entries as re annexed to and offer your rs be given to the same in a 10.11
In the cour unequivocally denied h with MJPL. The assessee in ‘Jpack’ application s cannot be expected t maintained by third par all their transactions w furnished the relevant d
AO as well. The AO is h found in ‘Jpack’ applicat cash & bullion transactio
AO was influenced by t admitted these entries t
10.12
Having gone the action of the lower factual inaccuracies. As entries found in ‘Jpack cash & bullion transacti find that there was no record by the AO to su found to have presume purported statement of ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 88 ::

se of assessment, the assessee is having engaged in any unaccounte e had objected to the contents of th software of MJPL and had submit to explain or reconcile the conte rty. The assessee is noted to have with MJPL are in the books of acc details along with account confirmat however found to have simply relied tion software and held it to represe ons of the assessee. We find that th the statement of Shri Rajendra Ko to be unaccounted for.
e through the material placed befo authorities to be riddled with inco s noted above, the case of the AO k’ application software represente ons aggregating to Rs.225.32 crore o independent corroborative mater ubstantiate such an allegation. Rat ed these entries to be unaccounted, f Shri Kothari. It is not in dispute, to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
noted to have ed transactions he entries found tted that, they ents of entries reiterated that, counts and had tions before the d on the entries nt unaccounted his action of the othari, who had ore us, we find nsistencies and O was that, the d unaccounted es. We however rial brought on ther, the AO is , in light of the in the present facts before us that, th not lead to unearthing or discrepancy in physic merit in the submission huge scale unaccounte into several hundred c incriminating material o in their search which However, we note tha unaccounted asset foun material facts, the obs represented unaccounte was to be taken with a face value. The AO ha was thus required to pr suspicion. However, Ld.
10.13
We agree expected to prove a ne substantiate these entr they were seeking to us also, the entries found from the premises of MJ
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 89 ::

he search action conducted upon th of any such unaccounted transacti cal stock or cash balance etc. There of the assessee that, had it been in d cash & bullion transactions with crores on such regular basis then or unaccounted asset would have b would have corroborated the ca at, there was no such incriminati nd in the course of their search. In servations rendered by the AO tha ed transactions of the assessee, ac pinch of salt and cannot be simply ving dual role of an investigator a robe further to unearth the true fact
AO has failed to do so in the presen with the Ld. AR that, the asses egative. Instead, the onus lay on t ries with some independent tangib se the same against the assessee. A in ‘Jpack’ application software wh
JPL, could have been explained by M to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
he assessee did ons with MJPL, e is prima facie nvolved in such h MJPL running at least some been unearthed se of the AO.
ng material or n light of these t these entries ccording to us, accepted at its and adjudicator ts and belly his nt case.
see cannot be the Revenue to ble material, if According to us hich was seized
MJPL alone. The case of the Revenue i entries to be unaccount of the assessee. On the statement given by Sh books of accounts of M that, Shri Kothari who w known as to whethe transactions in their boo showing that majority accounts of the assess examine Shri Kothari wa
Ld. AR’s plea that, the s the Revenue out of c paragraphs.
10.14
As already
132(4) and 132(4A) o
Hence, the contents of viz., entries in ‘Jpack’
presumed to be true
Kothari recorded on the used as valid evidence presumption cannot be ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 90 ::

is that, Shri Kothari of MJPL had ted for, and thus it was rightly adde e other hand, the Ld. AR has subm ri Kothari would have been in the MJPL and not the assessee. The Ld was an employee of MJPL could no r the assessee had accounted oks of accounts. He corroborated his of these entries were recorded in see. We also note that, no oppor as given to the assessee. We thus f statement of Shri Kothari was being context, which we shall discuss i held earlier, the presumption set of the Act is only against the sea the material seized from the poss application software seized from only qua MJPL. Likewise, the stat e basis of material found in his pos in the income-tax proceedings of e extended to the assessee, unles to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
claimed these ed in the hands mitted that, the context of the . AR submitted t have possibly or not, these s submission by n the books of tunity to cross find force in the g interpreted by n the ensuing out in Section arched person.
session of MJPL
MJPL, can be tement of Shri ssession can be MJPL. The said s the assessee was afforded an opportu that, such third party conclusive proof agains material linking the sam
10.15
In this rega
ITAT, Mumbai in the ca the decided case, entrie the premises of Dalmi details of transactions c the Dalmia Group had On the basis of these addition in the hands o that, these entries were corroborative material employees of Dalmia G about the correct impo because two cheque e books of the assessee d pages represented una have accordingly delete
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 91 ::

unity to cross-examine him. It is we material or statement cannot be t an assessee, unless there is othe me to the assessee.
rd, we gainfully refer to the decision se of Anand Jaikumar Jain v. AC es were found in the data found a a Group, which according to AO, conducted with the assessee. The ke averred that these entries were un third party material & statement, of the assessee. On appeal, the Tri e not substantiated with any clinchi and that the assessee had sh
Group maintaining these entries w ort of the transaction. It was thus entries on these seized pages mat did not ipso facto mean that other e accounted transactions. The Tribun d the addition.

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ell settled in law e treated as a er corroborative n of the Hon’ble
IT (supra). In nd seized from contained the ey employees of naccounted for.
, the AO made bunal observed ing evidence or hown that the were not aware held that, only tched with the entries on these nal is noted to 10.16
Gainful refe coordinate bench of t
Premchand Nagda v also, a search was cond key person of the grou paid cash to the group.
the assessee, he denie department made addit the group. This Tribuna that in absence of any can be made on the ba party and the statemen in third party premises.
10.17
We also refe the case of Mahendra search action was condu a ledger copy of the ass several entries, some o books of the assessee.
the AO held that th transactions of the asse appeal, this Tribunal ob
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 92 ::

erence is also made to another d his Tribunal at Mumbai in the c
ITO (ITA No. 3265/Mum/2015
ducted at the premises of builder. Th p was recorded who stated that the When the statement of the key per ed of making any payment in cash tion by relying on the statement of l relying on series of judicial pronou evidence found against the assess sis of documents found from the pr ts recorded during the course of se er to the decision of the Hon’ble ITA a Lalka Vs ITO (supra). In the d ucted upon one SSS Group, in the c sessee was found which according t of which, matched with the cheque
Based on the statement of Mr. Pate e unmatched entries represented essee and added the same to the to served that, the assessee had denie to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
decision of the case of Naren
5). In this case he statement of e assessee had rson was put to . However, the f key person of uncements held ee, no addition remises of third arch conducted
AT, Lucknow in decided case, a course of which, o AO contained e entries in the l of SSS Group, d unaccounted otal income. On ed the contents of the ledger at all stag authorities to have inve was noted that, there support the ledger en opportunity to cross exa have deleted the additio
“7. It is very mu assessee not on appellate authori them to rebut th evidence has bee ledger copy sei
Surprisingly, no s whom the incrimi the ledger copy.
party from who received the cash the Assessing O statement or ad seized material.
Shri Viral K. Pa
Authorities. Thus stated to have be other corroborat
Departmental Au ledger copy are g payment. Merely the ledger copy a to the conclusion
More so, when f denied of having opinion, in absen had made the cas
Rs.17 lacs could being wholly uns same.”
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 93 ::

ges and therefore it was incumbent estigated further to bring out the c was no clinching evidence brough ntries and also the assessee was amine Mr. Patel. The Tribunal is acc on, by observing as under:- uch evident in the face of such specific d nly before the Assessing Officer but bef ity, no further inquiry or investigation w e contention of the assessee. No further en brought on record to establish that the e zed from a third party are genuine statement has been recorded from the thir inating material was seized with regard to t
There is nothing on record to suggest t m the ledger copy was seized admitte h payment from the assessee. This is so bec fficer nor learned CIT(A) have referred mission by Shri Viral K. Patel with refe
Even, assessee's repeated request to cr atal have been cold shouldered by the s, as facts on record stand, except the le een seized from the computer of Shri Vira tive material has been brought on rec thorities to establish that the entries app genuine and the assessee had actually m because the payments made by cheque and actually made by the assessee tallied, i n that the assessee has also made the cas rom the very beginning the assessee has g made the cash payments. Thus, in m ce of any clinching evidence to show that sh payments, the addition of so called cash not have been made. Accordingly, the ad sustainable, I direct the Assessing Officer to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
upon the lower correct facts. It ht on record to not given an ording noted to denial by the fore the first was made by corroborative entries in the and correct.
rd party from the entries in hat the third ed of having cause neither to any such rence to the ross examine
Department dger account l K. Patel, no cord by the earing in the ade the cash appearing in t cannot lead sh payments.
s vehemently y considered the assessee h payment of ddition made, to delete the 10.18
In light of th assessee that the conte maintained by a third p the assessee, without pointed out to us that, the premises of the knowledge about it, but attempting to reconcile admitted factual posit reconcile entries to the of Rs. 283,63,59,247/- reconciliation is noted to particularly observe th application software we use of nomenclature ‘Ca all were cash transactio evidences that, actuall made in cheque through have accepted this su reason, the alleged un the cheque transaction sums. It is observed th
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 94 ::

he above decisions (supra), we thus ents of the ‘Jpack’ software, which w arty cannot be straightway used ad any corroborative material evidenc though the impugned entries were assessee and therefore, the ass t still the assessee had undertaken e the same with their books of acc ion before us that, the assessee tune of Rs.214,51,60,793/- out of t
- found in the ‘Jpack’ application o have been accepted by the lower hat, all the receipts in these ent re mentioned under the nomenclatu ash’ had originally led the AO to be ons. The assessee has however dem y these entries inter alia represe h proper banking channel. The AO i ubmission in the remand proceed accounted cash transactions which s were omitted by the AO from th hat, for AY 2017-18 the alleged una to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
s agree with the was unilaterally dversely against ce. The Ld. AR not found from sessee had no the exercise of counts. It is an e was able to the total entries software. This authorities. We tries in ‘Jpack’
ure ‘Cash’. This elieve that they monstrated with nted payments is also noted to dings. For this h matched with he unreconciled accounted cash transactions, after ded reduced by the AO from it was reduced from Rs
2019-20 to 2021-22, i conducted by the ass therefore dispels the A unaccounted in the bo development in the ap submission that, the sta qua the assessee and t accounted for, was be regular books of the as the entries in the ‘Jpac in as much as the actu erroneously recorded as 10.19
The Ld. AR that, entries to the e application software we was an ‘issued’ entry o there was a correspon
18905.000 gms on 28/
by the assessee to the ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 95 ::

ducting the matching cheque tra m Rs.25.23 crores to Rs.2.9 crores. F
.20.05 crores to Rs.6.03 crores and n the remand report. This reconci sessee and accepted by the low
AO’s initial allegation that all thes ooks of the assessee. According to ppellate proceedings, corroborated atement of Shri Rajendra Kothari w that his averment that all these en ing mistakenly presumed to be re ssessee. These facts, according to k’ application software were factua ual cheque payments by the assess s cash receipts by MJPL.
R thereafter had rightly identified a extent of Rs.8.32 crores made ere evidently contra entries. For of ‘Metal Issue’ of 18905.000 gms nding contra ‘receipt’ entry of ‘M
12. Though these contra entries we e lower authorities, but they are to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
nsactions, was For AY 2018-19
d so on for AYs liation exercise wer authorities e entries were o us, this later the assessee’s was not reliable ntries were not eferring to the us, shows that ally inconsistent see were being and showed us in the ‘Jpack’
instance, there on 27/12 and Metal Issue’ of ere pointed out noted to have wrongly refrained from these bald contra entrie the nature and content with mistakes and infirm
10.20
In so far assessee has contended by Shri Rajendra Kothar
To support his contentio in his view, suggested t were wrongly posted to entry to transfer it to these unmatched entrie mistaken identity or t wrongly posted to these
‘Lalitha’ is commonly u
Southern States and th some other entity or cu
‘Lalitha’ has been mista the assessee. According books of third party ra peculiar facts of the pr inconsistencies pointed
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 96 ::

taking cognizance of the same. A es further cements the assessee’s c of these entries were not reliable a mities.
as the unmatched entries are c d that, these could have been mist ri in the software under the name o on, he referred to the above contra that, when Shri Kothari identified th the name of the assessee, he woul the correct head. According to Ld es could also be a case of incorre that the entries of some other c e accounts. The Ld. AR pointed out used by jewellery businesses and hus there is a possibility that a tr stomer whose name may also inclu akenly entered by the third party g to us, ordinarily any unmatched e ises a suspicion against the assess resent case, and having regard to out in the entries maintained by th to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ccording to us, contention that, and are fraught concerned, the takenly entered of the assessee.
a entries, which e entries which d pass a contra
. AR therefore, ect accounting, ustomers were that, the name persons in the ransaction with de reference of in the name of entries with the see, but in the infirmities and e third party in their application softwa of the assessee that th pertain to it.
10.21
It is noted t acknowledged that the unaccounted investmen matrix wherein certain seized material of M/s M and the balance remain
CIT(A) shows that, eve reliability of the entries reason the unreconciled in stock.
10.22
The Ld. AR bringing to our notice th acknowledged by MJPL transactions which were outstanding closing bal there was no mention o that the lower authoritie third party confirmation
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 97 ::

re, as discussed above, there is me e remaining unmatched entries ma that even the Ld. CIT(A) in his appe impugned issue did not involve ins nt in stock, but rather, it was a c entries in the running account extr
MJPL matched with the assessee’s bo ned unmatched. This tacit acknowle en the appellate authority was not s found in Jpack application softwa d sum was not treated as unaccoun further corroborated the case of th he confirmation of accounts which w
L. We note that, the MJPL had e recorded in the books of assessee ances for each of the years in que or reference to these unmatched e es have also not disputed the corre ns. In our considered view, once th to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
erit in the case ay not relate or ellate order had stance of direct complex factual racted from the ooks of account edgment by Ld.
sure about the are and for this nted investment he assessee by were signed and confirmed the e as well as the estion and that entries. We find ectness of these e assessee had provided these confirm these unmatched entrie
10.23
It is settled cannot take the place o in Uma Charan Shaw income must be based o the present case befo initially made on the ba third party. The entries acknowledgment of the proof against the asses above, the assessee ha entries in the Jpack a instead also showed th accounts. The assessee in this software was f contra entries in the sof
Shri Rajendra Kothari t qua the assessee. Furt assessee did not reve unaccounted transactio circumstantial evidence
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 98 ::

mations, then the reliability and a s was in serious doubt.
in law that suspicion however str of proof or evidence as held by the & Bros. Vs CIT (37 ITR 271). An on cogent, credible, and corroborate re us, we find that the addition asis of unverified, unilateral data m s made therein do not bear the e assessee. Hence, such entries are ssee, without independent corrobora ad not only dispelled the AO’s cas application software were unacco hat majority of it reconciled with also showed that, the use of nome factually misplaced and, also there ftware. These facts also rendered th o be unreliable as being based on ther, even the search action condu eal any discrepancy in stock or ons with MJPL. In light of the es, coupled with the confirmation to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
admissibility of ong it may be,
Supreme Court y addition(s) to ed evidence. In impugned was maintained by a endorsement or not conclusive ation. As noted se that, all the unted for, but their books of enclature ‘cash’
e were several he statement of mistake of fact ucted upon the r cash or any ese facts and ns provided by MJPL, we are of the co the onus was on the unmatched entries repr and not the other way r authorities sat back with their evidences and ex without bringing on reco
This action of the lower
10.24
According t evidences and materia
Jpack application softw not only the AO ought t of his original stateme
Kothari of M/s MJPL t unmatched entries. Als assessee to cross-exam all times had denied ha even MJPL had subm considered view, on th poisonous tree would a contents of third party unaccounted, was factu
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 99 ::

onsidered view, on the given facts e Revenue to corroborate their resented unaccounted transactions o round. We find that, instead of doin h folded hands, waited for the asses xplanations, and then simply rejec ord any clinching evidence in suppo authorities cannot be countenanced o us, once the assessee had brou l which disproved the contents of are and also the statement of Shr to have examined Shri Kothari to te ent but he also ought to have c o ascertain the true content and o, an opportunity should have bee mine Mr. Kothari, particularly when t aving any unaccounted transactions mitted their confirmation of acco he given facts, the doctrine of th apply, as once the assessee has s y material, as originally alleged to ually incorrect, then other content to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
before us that, case that the of the assessee ng so, the lower ssee to exhaust cted the same, rt of their case.
d.
ught on record entries in the ri Kothari, then est the veracity confronted Shri nature of the en given to the the assessee at with MJPL and ounts. In our he fruit of the shown that the be completely ts of the same material also stands r independent corroborati
10.25
For the ab material, as discussed a the decisions (supra), found in the Jpack app upon in the matters of t partially sustained by unmatched entries is he to delete the same. The ITA No.677/Chny/20
11. We now take up t for AY 2018-19. 12. Ground Nos. 1 t noted to be subsumed relation to each of the Accordingly, these grou adjudicated upon.
13. Ground No. 4
Rs.2,02,45,191/- made
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 100 ::

rendered as unreliable, without th ive material in relation thereto.
ove reasons, factual deficiencies above, and having regard to the rat we hold that the remaining unm plication software of M/s MJPL could the assessee, and therefore the imp the Ld. CIT(A) by applying gross eld to be untenable. The AO is accor ese grounds are therefore allowed.
025 for AY 2018-19. the assessee’s appeal in ITA No.67
to 3 are noted to be general in na d in the subsequent grounds taken e addition/disallowance impugned unds are being dismissed as not be to 8 of the appeal relates to t by way of unaccounted cash receip to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
here being any in third party tio laid down in matched entries d not be relied pugned addition profit rate on rdingly directed
7/Chny/2025
ature which are n separately in in this appeal.
eing separately he addition of pts found noted in the mail attachme submissions, it is observ adopted both by the AO same as in AY 2016-17. 13.1 Following our con of assessee’s appeal i
Rs.2,02,45,191/- is unt
Ground Nos. 4 to 8 rais impugned addition mad
14. Ground Nos. 9 t of Rs.35,14,00,000/- m loans to Shri Anbu u submissions, it is observ adopted both by the A arguments put both by AY 2017-18. Following o
9 to 13 of assessee’s ap addition on account unsustainable. We thus the impugned addition m
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 101 ::

nt of Mr. Stanley. After conside ved that, except variation in figures
O & Ld. CIT(A) to justify this addit
.
clusions drawn while deciding Grou in A.Y. 2016-17, we hold that t enable on facts and in law. We ther ed by the assessee and direct the A e in AY 2018-19. to 13 raised in the appeal are again made by way of unaccounted repa u/s 68 of the Act. After conside ved that, except variation in figures
AO & Ld. CIT(A) to justify this ad the rival parties before us are verba our conclusions drawn while decidin ppeal in A.Y. 2017-18, we hold that of alleged repayment of cas s allow these grounds and direct th made in AY 2018-19. to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ering the rival s, the reasoning ion is verbatim und Nos. 4 to 8
the addition of refore allow the AO to delete the nst the addition ayment of cash ering the rival s, the reasoning ddition and the atim same as in ng Ground Nos.
t the impugned sh loans was he AO to delete

4 to 18 raised by the assessee a 00,000/- made by way of une
/s Bhoomi and Buildings Private Lim
Act. Briefly stated, the facts relatin
32 of the Act was conducted in the ound and seized. From the ledgers rved that, there was a ledger titled tained several entries of cash rec that the cash totaling to Rs.27.3
Lalitha Jewellery’ or ‘Kiran Anna’.
that these notings related to the rt Private Limited and that it ha ores towards T Nagar Investment. T oks of accounts of the assessee to flected therein and found that this AO accordingly required the assesse d sum should not be treated a the Act. The assessee is noted to notice vide letters dated 27-01-202
-2023 wherein he denied having m
BBPL. It was also pointed out by t e assessee that BBPL had retract to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
are against the explained cash mited [in short ng to this issue case of BBPL in extracted from ‘Lalitha Jwel-T ceipts with the 30 crores was Based on this assessee, M/s ad made cash
The AO is noted check whether cash payment ee to explain as as unexplained have furnished
3, 02-02-2023, made any such he Ld. AR who ted from their statement with regard t therefore submitted tha in absence of any sign assessee cannot be e accordingly contended t corroborative material proposed addition u/s 6
have acknowledged the data but rejected the after-thought. The AO f the tally data of BBPL w sufficient to justify the have added sum of R expenditure u/s 69C of before the Ld. CIT(A) w
Being aggrieved by the in appeal before us.
15.1 Assailing the actio contended that, it is a w third party ledger by its addition in the hand corroborative material
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 103 ::

to the tally data found from their pr at, the third party notings were unre nature or acknowledgement by the xpected to explain such notings.
that without there being any cogent between these notings and the 69 of the Act was unwarranted. The retraction(s) filed by BBPL in relatio same by observing that their retr further held that, the fact that the e was not reflected in the books of the impugned addition. The AO is the Rs.15,30,00,000/- by way of une the Act. The assessee carried this m ho is noted to have confirmed the o order of the lower authorities, the a on of the lower authorities, the Ld.
well settled jurisprudence that, the e self cannot be treated as conclusive ds of the assessee without the to support the same. He subm to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
remises. It was eliable and also e assessee, the The assessee nexus and any assessee, the AO is noted to on to their tally raction was an entries found in e assessee was refore noted to explained cash matter in appeal order of the AO.
assessee is now
AR Shri Anand entries found in proof to justify ere being any itted that, the impugned addition was extracted from tally da third party, M/s BBPL.
therein, the Revenue’s c
Rs.27.30 crores towards brought to our notice transaction with BBPL a builder. He pointed out unaccounted investmen pointed out that, the n that the search action w the assessee made an Rs.27.30 crores, some builder would have be explained that, it is ag dealings and would be invested in a property even paying a single agreement for sale to sa
15.2 The Ld. AR also su also denied the content the income-tax authorit
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 104 ::

s solely based on the entries fou ta seized in the course of search
He pointed out that, based on the case was that, the assessee had ma s investment in a property at T Nag e that, the assessee had not u and it had not acquired any property t the search action also did not re nt or property acquisition by the notings related to the period 2018
was conducted in March, 2021 and ny such investment with BBPL t e evidence or document or agree een there, which was not the cas gainst the normal practice followed impractical to assume that, a pers with a builder and paid cash com amount by cheque or by enterin afeguard their interests in the invest ubmitted that, it was not in dispute ts of this tally data and had filed a ties. He argued that, the findings re to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
nd in a ledger conducted at a e entries found ade payment of gar. The Ld. AR ndertaken any y from the said eveal any such e assessee. He and 2019 and therefore, had o the tune of ment with the se. The Ld. AR d in real estate son would have ponent without ng into a valid tment.
that, BBPL had retraction with endered by the Ld. CIT(A) that, their re qua the income-tax ass the presumption u/s 13
the searched person an said presumption to th notings found in the ta the assessee, then the o independent material to that the impugned a unsustainable.
15.3 It was further sub 20 in which this addition
Ld. AR claimed that th course of search condu made solely by relying
BBPL. According to him that the Hon’ble Supr
Buildwell Pvt Ltd (45
unabated AYs was leg incriminating material f premises.
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 105 ::

etraction was not tenable could have sessment of BBPL. The assessee ha
32(4), 132(4A) & 292C are only av nd that the Ld. CIT(A) had erred in he assessee as well. He submitte lly data of BBPL was being sought onus was on the Revenue to bring o o back the same. The Ld. AR accordi addition made by the lower a bmitted that the impugned AYs 2018
n has been made were unabated ass here was no incriminating materia cted upon the assessee and that th on the seized material found at t therefore, having regard to the prin reme Court in the case of Pr.CI
54 ITR 212), the impugned additio gally unsustainable due to the a found in the course of search at to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
e been relevant as claimed that, vailable against n extending the ed that, if the to be linked to on record, other ngly contended uthorities was 8-19 and 2019- sessments. The al found in the he addition was he premises of nciple laid down
T Vs Abhisar on made in the bsence of any the assessee’s

appearing for the Revenue, on th the order of the lower authorit he Ld. CIT(A), he pointed out that ee had undertaken certain loan tra period which according to him, ind nd thus contended that the entrie e assessee. He further argued that e tally data of BBPL was missing i ee, incriminated the assessee of be ash payments. According to him, the mbiguously clear that the assessee accordingly urged us not to interfere
.
parties. The facts on record show m the premises of BBPL which inter the tally titled ‘Lalitha Jwel-T N r suggested that cash was received towards their project at T Nagar. C that all of them were purported
According to the AO, the key person also accepted these notings to be Armed with these third party mate to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
he other hand, ies. Taking us t the Managing ansactions with dicated that the es found in the t, the fact that n the books of eing involved in e entries in the had made cash e with the order ws that certain r alia included a agar Inv’. The d by BBPL from Careful analysis d cash receipts n of BBPL in his e cash receipts erial, the AO is found to have made th paid by the assessee to the assessee is noted t ledger and has also re assessee had paid cash
15.6 Having perused th that the assessee or his investment at T Nagar real. Upon dwelling into the assessee, an oppos brought to our notice th or make any investme conducted upon the ass after the date of the f completed in the year record any evidence investment which has Revenue has also not investment, if any, foun such on-monies were name of project, exact details, etc., a doubt is ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 107 ::

e impugned addition by way of una o BBPL. Before us, as well as the low to have unequivocally denied the c efuted the allegation levelled by th in relation to certain property trans he contents of this ledger, at first bl s managing director has paid cash t
. However, what is apparent may o the contemporaneous facts brough site picture is found to emerge. Th hat, at no material time, did it acquir ent with BBPL. It is noticed that t sessee in the year 2021, i.e. more irst entry in this ledger and the a 2023. The Revenue however has n or detail regarding the purporte been made by the assessee w been able to provide the details nd in the course of search at BBPL, paid. In absence of these basic d location of property, copy of agree s cast upon the veracity of these e to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
accounted cash wer authorities, contents of this he AO that the sactions.
lush, it appears towards certain not always be ht on record by e assessee has re any property the search was than two years ssessment was not brought on ed property or with BBPL. The of property or towards which, etails, such as ement, booking entries found in the ledger seized from t shown to have actually be in possession of any by the Revenue that th connection therewith, fa
15.7 The Ld. AR also p a group entity of the unrelated real estate co by a customer in any pr necessarily be evidenc allotment letter, etc. A been paid by cheque t unlikely that any custom estate developer toward there being any unregi portion of the aggriev establish right to specif
We find this explanation
15.8 For the above re denial with regard to the from the premises of B
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 108 ::

the third party premises. When the purchased any property from BBPL y property developed by BBPL, then he assessee had made cash payme ails.
ointed out to us that BBPL was neit assessee. Instead, it was an ind ompany. He submitted that, ordinari roject undertaken by a real estate d ced by some form of MOU or ag lso, ordinarily, at least some amou to the builder towards such proper mer, would pay such huge sums of m ds purchase of any property or inve istered or registered agreement or ed consideration paid through ch fic performance qua such property n of the assessee to be reasonable.
easons, in our considered opinion, e contents of the entries found in th
BBPL is found to be justifiable. It to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
assessee is not L or is found to , the case built ents to BBPL in ther related nor dependent and ly, any booking developer would reement or an unt would have rty. It is highly monies to a real estment without r at least some eque so as to or investment.
the assessee’s he ledger seized is noticed that these material aspects w authorities as well but contrary material or e assessee. According to impugned third party m and also shown that it h
AO ought to have prob record some tangible m entries found in the imp to do so. Instead, the A key person of BBPL ha furnished a retraction a the AO could not have alleging it to be an aft third person upon recei state of affairs. Having findings of the lower particularly, in light of t the assessee.
15.9 The lower authori by the Managing Directo veracity of the entries
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 109 ::

were pointed out by the assessee b the Revenue has failed to bring evidence to disprove the case ma o us, when the AO, came in pos material, but the assessee had deni had not acquired any property from bed further, cross examined BBPL a material which would justify the v pugned ledger. We find that the AO
AO is noted to have acknowledged ad retracted from his original state affidavit, before his AO. In our cons simply brushed aside this retracti ter-thought, but should have cross ipt of such retraction so as to unea not done so, we are unable to co r authorities rejecting this retra the above discussed aspects brough ties are noted to have stressed on t or of the assessee, Shri Kiran Kuma found in this ledger. We find the to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
before the lower on record any de out by the ssession of the ied its contents
BBPL, then the and brought on veracity of the however failed that, even the ement and had sidered opinion, ion affidavit by s examined the arth the correct ountenance the ction affidavit, ht on record by the loans taken ar to justify the eir action to be factually misplaced. Fir record that, Shri Kiran through banking channe repaid the loan as well.
noted to be recorded in neither, the transaction is found to appear in t earlier, all the entries i no cheque notings fo credence to the cash no nothing much turns o assessee knew BBPL an 15.10
It is true th
Act, raises a presumptio other documents seized be kept in mind that searched and/or from documents are found rebuttable. In the given was not found or impo course of search conduc in Section 132(4A) / 29
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 110 ::

rstly, it is observed from the mate
Kumar had received loans from t el on which, he serviced the interes
This loan availed by Shri Kiran Kum the regular books of accounts. It is involving receipt of loan or repaym the impugned purported ledger. Ra n this ledger are only cash receipts und therein, which would have otings against the assessee. Hence, on the fact that the managing d d had availed regular business loan hat section 132(4A) read with sectio on that that the contents of books d during the course of search is true this presumption is only qua the whose possession the books o and none else. Moreover this p facts of the case, since the docume ounded from the assessee's premi cted against a third party, the presu
92C of the Act does not apply to the to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
erial placed on he BBPL group st and later on, mar is therefore s observed that ment of this loan ather, as noted s and there are otherwise lend in our opinion, director of the from them.
on 292C of the of account and e. But it should person who is f account and presumption is ents in question ises but in the umption set out e assessee. The assessee, therefore, is these documents, wh premises, and can seek possession such docum defense with cogent evi
15.11
As discusse reasonable explanation ledger and has made o third party has retracte
AO cross examine him examine him. Apart fro ledger, we note that th could lead to conclusio towards any project of B
15.12
In the given regard to the fact tha property from BBPL, if in the BBPL’s ledger pe
Nagar investment, is ta matter can mention an implicate such other pe
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 111 ::

legally entitled to an opportunity ich were admittedly not impoun k cross examination of the third pa ment was found and furnish its dence.
ed above, the assessee has been rebutting the veracity of the entrie out a case that it may not pertain ed from his original statement and or provide the assessee an opport om extracting the entries found in he AO did not bring any material o on that the assessee had paid th
BBPL.
n facts, as discussed above, and par at the assessee had not actually the Revenue’s assumption that, the ertained to cash receipts from the aken at its face value, then any p nyone’s name in any ledger at his erson for no fault of the latter, w to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
y of examining nded from its rty from whose rebuttals and able to furnish es found in this to it. Also, the neither did the tunity to cross- the third party on record which ese on-monies rticularly having purchased any e notings found assessee for T person for that sweet will and hen admittedly such person did not act gainfully again refer to Court in the case of CI no addition can be ma amounts found mentio seized from third party, substantiate that it pert on the decisions (supra)
15.13
Hence, for impugned addition of R year on the basis of unc without any independe therefore the same i accordingly allowed.
16. Ground Nos. 20
action of taxing the gro the unmatched transact in figures, the reasonin this addition is verbatim argued this issue whic together. Following our
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 112 ::
Rs.15,30,00,000/- made by the AO corroborated and retracted third pa nt corroborative material, was uns s directed to be deleted. These
0 to 26 of this appeal relates to th ss profit element of Rs.1,10,28,230/
tions with MJPL. It is noted that, e g adopted both by the AO & Ld. C m same as in AY 2017-18. Both t ch is involved across AYs 2017-1
r reasons and conclusions recorded to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
this regard, we n’ble Delhi High was held that, on the basis of y or document tive evidence to , in this regard, earlier.
y hold that the in the relevant rty documents, sustainable and e grounds are he Ld. CIT(A)’s
/- in relation to except variation
CIT(A) to justify he parties also 18 to 2021-22
while deciding

Ground Nos. 21 to 2
accordingly hold that, t premises was unreliab
Rs.1,10,28,230/- made assessee’s books and th unjustified both on fact and direct the AO to del
ITA No.678/Chny/20
17. We now take up t for AY 2019-20. 18. Ground Nos. 1
therefore being dismisse
19. Ground No. 4
Rs.3,04,26,937/- made in the mail attachme submissions, it is observ adopted both by the AO same as in AY 2016-17. 19.1 Following our reas
Nos. 4 to 8 of assess
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 113 ::

27 of assessee’s appeal in A.Y.
the entries found in the material s le and therefore the addition of e on account of unmatched entrie he data seized from the premises of ts and in law. We therefore allow lete the impugned addition made in 025 for AY 2019-20. the assessee’s appeal in ITA No.67
to 3 are noted to be general in n ed as not being separately adjudicat to 8of the appeal relates to th by way of unaccounted cash receip nt of Mr. Stanley. After conside ved that, except variation in figures
O & Ld. CIT(A) to justify this addit
.
sons and conclusions drawn while d see’s appeal in A.Y. 2016-17, we to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
2017-18, we seized from the gross profit of es between the MJPL is held to these grounds
AY 2018-19. 8/Chny/2025
nature and are ted upon.
he addition of pts found noted ering the rival s, the reasoning ion is verbatim deciding Ground hold that the addition of Rs.3,04,26
therefore allow the Gro the AO to delete the imp
20. Ground Nos. 9 t of Rs.33,46,24,250/- m loans to Shri Anbu u/s 6
in figures, the reasonin this addition was the s put forth by the both pa impugned AY is that, fo of Shri Anbu had identif unaccounted for. As n owned up by Shri Anbu our considered view, t bearing on the case of case that, the notings reflected their unaccoun conclusions recorded w appeal in A.Y. 2017-18, alleged repayment of ca grounds and direct the 2019-20. ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 114 ::

6,937/- is untenable on facts an und Nos. 4 to 8 raised by the asse pugned addition made in AY 2019-2
to 13 raised in the appeal are again made by way of unaccounted repa
68 of the Act. It is observed that, e g adopted both by the AO & Ld. C same as earlier AY 2017-18. Even arties was common. The only additi r AY 2019-20, the IBS in their order fied two notings aggregating to Rs.
noted earlier, these two notings w u as his own undisclosed income an the said finding of the IBS does the assessee. Instead, it reinforces found from the premises of Shri nted transactions. Thus, following o while deciding Ground Nos. 9 to 13
we hold that the impugned additio ash loans was unsustainable. We th
AO to delete the impugned additi to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
nd in law. We ssee and direct
20. nst the addition ayment of cash except variation
CIT(A) to justify the arguments onal fact in the r in the matters
20 crores to be were ultimately nd therefore, in not have any the assessee’s i Anbu did not our reasons and 3 of assessee’s n on account of hus allow these on made in AY

5 to 18 are noted to be against t way of unaccounted cash expendit tally entries found in the premises variation in figures, the reasoning a o justify this addition was the sam uments put forth by the both parties easons and conclusions recorded of assessee’s appeal in A.Y. 2018-19
on on account of alleged unac stified and thus direct the AO de in AY 2019-20. These grounds a 9 to 23 raised by the assessee rmed by the Ld. CIT(A) on acco upon conversion of old gold ornam d are that, the AO had observed tha new gold ornaments back into fine essee had claimed wastage on su was excessive. According to the essee’s inventory ought to have b rnment Gold Standard Regulations.
doing purity checking in the stage o to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
the addition of ure u/s 69C of s of BBPL. It is dopted both by e as earlier AY s was common.
while deciding
9, we hold that ccounted cash to delete the are accordingly relate to the ount of excess ments into new at the assessee e gold. The AO uch conversion
AO, the gold been of 91.6%
. The AO noted of making these ornaments and these o
In this background, the these ornaments to fine this, the AO relied upon all the branches and th
2020 at the time of ope the assessee. The AO n stone weight percentag total weight loss upon these observations, th wastage which ought ornaments to pure gold assessee, he worked ou
FY
Gross weight new to old
Wastag as pe assess workin
%
2018-19
702400
14.40
22.1 The AO is accord explain as to why such be brought to tax. Th objections before the A proceeded on the mist
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 116 ::

ornaments were also hallmarked as AO was of the view that the loss o e gold should only be 8.4% [100% ( n the data obtained from the Jilaba he sample test check which was d eration of the PO, whose working w noted that the sample test check re e was only 1% of the gross weight conversion would be 9.4% [8.4%
e AO is noted to have computed to have been incurred on conv and having regard to the wastage ut the excess wastage loss in the foll ge er ee ng
Actual wastage allowed
Excess wastage claimed
Excess loss claimed in weight
Ave ra
0%
9.40%
5.00%
35093.85
ingly noted to have show caused t excess wastage claimed in the bo he assessee is noted to have furn
AO. It was inter alia contended th taken assumption that the gold o to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
s 91.6% purity.
n conversion of (-) 91.6%]. For a Application of done on 02-11- was provided to vealed that the t and therefore
% + 1%]. With d the value of ersion of gold claimed by the lowing manner:
rage ate
Amount
2736
96016783
the assessee to ooks should not nished detailed hat the AO had rnaments were mandatorily required to the mandatory hallmark
2021 and therefore, th manufactured prior to t that the gold ornament their stock lying unsold out of fashion and ther and fashion, these item therefore, the assump ornaments ought to b pointed out that the AO was also erroneous. The test check conducted o several of its branches w the stone weight depen application of a single assessee further expla meenakari or kundan w have low purity due to was further submitted
14.14%, adopted by t
12.16%, for which work
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 117 ::

o be of 91.6% purity. The assessee king of purity of 91.6% was notified he same was not applicable to the this press release. The assessee fu ts which were being converted into for more than 10 years or those sto refore, due to the changes in the cu ms were being melted. According t tion being made that the gold p e 91.6% was factually incorrect.
O’s assumption that the stone weigh e assessee inter alia explained throu on 02-11-2020 to show that the s were as high as 6%. It was further nded upon the types of jewellery an e arbitrary rate of 1% was unw ained that there are various item work and it is commonly known t the meenakari / kundan work done that even the wastage rate of th the AO was incorrect and that i king was also provided by the assess to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
explained that only on 16-06- gold jewellery rther explained o new gold was ock which were ustomers’ taste o the assessee purity of these
It was further ht would be 1%
ugh the sample stone weight at submitted that d therefore the warranted. The ms which have hat such items e upon them. It he assessee of t was actually see.

rther submitted that there was no he books of accounts and that the v verted was equivalently assigned t no separate debit or deduction c the assessee therefore, in absence question of any such disallowance e search action didn’t reveal any disc nts or fine gold and therefore, ac e shown in the books were excess uld have been physically found at t he case.
to have rejected the submissions fu the AO, the narration of the entrie nts’ transferred to old gold and thu e aging stock had been converted the sample test check only revealed herefore, having regard to the h e AO concluded that the wastage w ted in his show cause notice. The AO he excess wastage loss as compute above, to the income of the asses to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
o wastage loss value of the old to the fine gold claimed in the of any claim of e. The assessee crepancy in the ccording to the ive then higher the time of the urnished by the s found in tally us rejected the into fine gold.
d average stone hallmark purity would not have O accordingly is ed in the show ssee. Aggrieved by the order of the AO
CIT(A).
22.4 On appeal, the Ld wastage rate from 9.4%
further observed that t
12.16% and not 14.14
consider the correct rat allowing wastage rate o
CIT(A), the assessee is 22.5 Heard both the pa the business of manufa showrooms spread acro the assessee is found t old, outdated or out-o purposes of crafting new is noted to involve me gold. It is not in dispu would result in wastage gold extracted would ornaments and also th stones, non-precious m
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 119 ::

O, the assessee preferred appeal d. CIT(A) is noted to have increase
% as computed by the AO to 9.5
the correct rate of wastage of the % and accordingly directed the AO te and recomputed the excess was of 9.5%. Still not satisfied by this ac now in appeal before us.
arties. It is noted that, the assessee acture and sale of gold jewellery th oss Southern States. In the course o be regularly undertaking the con of-fashion gold jewellery into fine w jewellery in contemporary design lting the old gold ornaments to ex ute between the parties that this m e loss in as much as the quantity &
be lower due to the impurities in he weightage would be influenced metals etc. which was earlier used i to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
before the Ld.
d the allowable
%. The CIT(A) e assessee was O to verify and stage loss after ction of the Ld.
e is engaged in hrough its retail of its business, version of age- e gold for the ns. This process xtract the pure melting process weight of pure n the old gold d by the other in their making process. The limited dis of wastage loss in this reported conversion loss
21 and 15.17% in AY 2
case of the Revenue is t that weight of stones should not be more tha
CIT(A).
22.6 On examination o that the impugned findi any incriminating mate unaccounted asset fo disallowance is based o to us, an addition ca conjectures. A suspicion by relevant material. W evidence to substantiat loss upon conversion ha take note of the fact discrepancy with regard found. Besides, none of lower authorities. The b
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 120 ::

spute before us relates to the reaso s entire process. The assessee is ses of 12.16% in AY 2019-20, 15.36
2021-22. On the other hand, as no that, the gold ornaments have purity ought to be 1% and thus overal an 9.4%, which was increased to 9
of the facts and circumstances of th ing of the lower authorities is not e erial unearthed in the course of ound in the search. Rather, n the own subjective opinion of the annot be made on the basis of n however strong it may be, has to We however find that no material le te their basis for alleging that exc ad been claimed by the assessee.
that, even during the course of t d to the stock of fine gold and gold f the purchases or sales have been books of accounts have been audited to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
onable quantum noted to have 6% in AY 2020- oted above, the y of 91.6% and l, the wastage
.5% by the Ld.
e case, we find emanating from search or any the impugned e AO. According surmises and o be supported eave alone any essive wastage
We particularly the search, no d jewellery was doubted by the d with complete quantitative tally for pu defects were found by t complete quantitative throughout these years
Paper Book. It was a completed the regula
31.03.2025 for the s conversion loss was inc adverse inference has b also not been able to therefore, the impugne based only on assumpti
22.7 It is noted that t
AO’s assumption that, a ought to have yielded 9
superficial. As rightly po to account for the inh practices. The Ld. AR industry convention and all ornaments, which ca and durability requirem gold ornaments are dif
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 121 ::

urchase and sale of gold and gold je the Revenue. The Ld. AR has taken and value details of the invent s, which were placed at Pages 7
also brought to our notice that the ar assessment u/s.143(3) of th subsequent AY 2023-24 wherein curred upon melting of old gold orn been drawn in that assessment. Th controvert these facts. In our co ed action of the lower authorities on and suspicion, which has no mer the impugned disallowance was a c all the old gold jewellery items whic
91.6% of pure gold. We find this a ointed out by the assessee, the Rev erent variations in the assessee’s explained to us that, the term “2
d does not uniformly represent the an vary based on design intricacy, ments. We also agree with the ass fferent and unique and some may to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ewellery and no us through the ory movement
753 to 940 of e Revenue has he Act dated n also similar aments and no he Revenue has onsidered view is found to be rit.
consequence of ch were melted, assumption was enue had failed manufacturing
22 carat” is an actual purity of , workmanship, sessee that, all y require more intricate designs which structural integrity and has also rightly explain with precious or semi-p the stones in place, as p same. These practical gold content in a jewell
It is noted that, the s wherein the conversion yield of as low as 84.56
relevant Question and a “Q 26Please refer received is as low variation in the %
old gold is of 91.6
A The purity of t on the quality (p
% of fine gold o
(purity) of old go according to the p
22.8 It is also obse acknowledged this fact he also observed that t presumption of BIS-cert ornaments. The Ld. CIT
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 122 ::

necessitate the use of additional al wear ability, resulting in lower pur ned that, in cases involving jewel recious stones, additional alloys are pure gold alone lacks the strength f aspects thus necessitates reduction ery piece to below the presumed 91
search team had also found any n of old gold ornaments into fine g
6%, which was put to question to Sh answer, taken note of by us is as foll r to your answer to the last question. The w as 84.56% on certain dates. Please expl
% of the fine gold obtained from the old g
6% purity.
the fine gold obtained from refining of old purity) of the old gold received from the c obtained out of old gold is less whenev old received is low. The value of old gold purity of the old gold received.”
erved that, even the Ld. CIT(A at Para 7.4 of his impugned appella he AO had erred on facts by procee tified purity at 91.6% across all cat
T(A) is also noted to have rightly r to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
lloys to provide rity. The Ld. AR lery embedded used to secure for securing the n of the actual
1.6% standard.
such instances gold resulted in hri Stanley. The lows:-
% of fine gold lain such huge gold when the gold depends ustomers. The er the quality d is also done
A) has tacitly ate order where eding on a rigid tegories of gold rejected such a generalized approach o the actual purity of in features, and the existe precious and semi-prec accepted that the exten nature and type of orn this clear recognition o
Ld. CIT(A) is found to h adjudication wherein he only marginal relief of 0
such action of the Ld.
discussed in the foreg assumption that the p ornaments ought to c unacceptable and divorc
22.9 We next take up holding that the stone which was based on a details we find are place is found to have been melted during the rel
According to us, such ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 123 ::

of the AO by overlooking critical va ndividual items, the presence of i ence of embedded non-metallic elem cious stones. The Ld. CIT(A) is also nt of melting loss is not uniform but naments subjected to conversion. N of the factual and technical nuance have failed to translate such finding e essentially confirmed the action of 0.1% to the overall disallowance. A CIT(A) cannot be countenanced. F going, we accordingly hold that, purity of fine gold extracted from compulsorily be 91.6% / 91.7%
ced from the commercial and mater p the finding rendered by the low content in old gold ornaments wou a sample test conducted on 02-1
ed at Page 978 of the Paper-book. T n applied across all jewellery item levant year as well as the subs h sampling done to ascertain the to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
riables such as ntricate design ments, including o noted to have varies with the Notwithstanding s involved, the gs into his final
AO by allowing
According to us,
For the reasons the Revenue’s m the old gold is held to be ial realities.
wer authorities ld only be 1%,
1-2020, whose
This sample test ms which were sequent years.
e conversion /

wastage loss was uns designs and styles of j
Also, the sample test overall inventory size of of the Revenue is held leading to an inaccurate
22.10
The Ld. AR items, which were plac the assessee was inte
Kundan and Meenak embellishments and th upon melting. He point by the lower authorities
02-11-2020 only majo other specialized jewell support his case, the L test size taken by the R
Page 980 of the paper are excluded, then th components constituted component going as h
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 124 ::

cientific as it failed to account fo jewellery, which directly affect the size is found to be very small co f the assessee and thus, the extrapo d to be untenable. Rather accordi e conclusion.
R explained to us with invoices of ed at Pages 982 to 1316 of Pap er alia dealing in specialized jew kari, which involve substantial herefore these items would yield l ed out to us that, this factor was a s. He also showed us that, the samp rly contained plain gold ornament lery or jewellery embedded with s
Ld. AR took us through an analysis
Revenue on 02-11-2020, which is f book. He showed us that, if the p he average weight of stones an d approximately 6% of the total wei high as 13% in the sample size to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
or the varying e stone weight.
ompared to the olation exercise ng to us, it is gold jewellery per Book that, ellery such as l non-metallic ower fine gold also overlooked ple test done on ts and not the stone items. To s of the sample found placed at plain gold items d non-metallic ght, with stone of Marathahalli branch. Having consid contention put forth by 22.11
We find tha contention by bringing pertaining to stone-stud at Pages 982 to 1316 o that the presence of n embellishments, constit such jewellery, which contemporaneous data authorities that the pro be 1%.
22.12
Overall ther demonstrated before us the Ld. CIT(A) was unju on the other hand, has had not exaggerated t above, the intrusive sea variation in stock which corroborates the asses and not backed by an ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 125 ::

dered these relevant facts, we the assessee.
at the assessee has also corroborat g on record sample purchase and dded gold jewellery, whose copies a of the Paper Book. Perusal of these non-metallic components, particula tutes a substantial portion of the g h on average is found to be is found to contradict the finding oportion of stone weight in jeweller refore, we find that, the assessee s that, the conversion loss of 9.5%
ustified and based only on surmises placed before us verifiable records the quantum of melting loss. Fur arch action also didn’t reveal any s would justify the impugned disallow see’s case that the disallowance w y evidence. Moreover, no such di to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
find merit in ted their above d sale invoices re found placed invoices reveal rly stones and gross weight of e 6%. These gs of the lower ries would only has sufficiently
% estimated by . The assessee, to show that, it rther, as noted such substantial wance; rather it was speculative sallowance has even been considered b
24. In view of these fa account of excess wasta to be deleted. Therefo allow these grounds of t
23. Ground Nos. 24
relating to the Ld. CIT
Rs.1,62,93,623/- in rela is noted that, except va the AO & Ld. CIT(A) to 2017-18. Both the pa involved across AYs conclusions recorded w appeal in A.Y. 2017-18, material seized from addition of gross pro unmatched entries bet from the premises of M therefore allow these g addition made in AY 201

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 126 ::

by the AO in the subsequent AYs 20
cts, we hold that the impugned ad age loss lacked any merit and is the re, based on these facts and circ the assessee.
4 to 30 raised in this appeal ar
(A)’s action of taxing the gross pr ation to the unmatched transaction ariation in figures, the reasoning ad o justify this addition is verbatim rties also argued this impugned
2017-18 to 2021-22 together.
while deciding Ground Nos. 21 to 27
, we accordingly hold that, the entri the premises was unreliable and ofit of Rs.1,62,93,623/- made o ween the assessee’s books and t
MJPL is held to unjustified on facts rounds and direct the AO to delete
19-20. to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
022-23 & 2023- dition made on erefore directed umstances, we re noted to be rofit element of ns with MJPL. It dopted both by same as in AY issue which is Following our
7 of assessee’s ies found in the therefore the on account of he data seized and in law. We e the impugned

ITA No.679/Chny/20
24. We now take up t for AY 2020-21. 25. Ground Nos. 1
assessee has inter al material found in the co unabated assessment. T the time of hearing, assessment and theref
Therefore, these ground
26. Ground No. 4
Rs.1,95,31,356/- made in the mail attachme submissions, it is observ adopted both by the AO same as in AY 2016-17. Nos. 4 to 8 of assess addition of Rs.1,95,31
therefore direct the AO
21. These grounds are a ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 127 ::

025 for AY 2020-21. the assessee’s appeal in ITA No.67
to 3 are noted to be general lia contended that in absence o ourse of search, no addition was pe
The Ld. AR for the assessee fairly that the relevant AY 2020-21
fore these grounds have no legs ds are therefore dismissed.
to 8 of the appeal relates to t by way of unaccounted cash receip nt of Mr. Stanley. After conside ved that, except variation in figures
O & Ld. CIT(A) to justify this addit
.Following our reasons given while d see’s appeal in A.Y. 2016-17, we
1,356/- is untenable on facts an to delete the impugned addition ma accordingly allowed.

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
9/Chny/2021
in nature. The f incriminating rmissible in the pointed out, at is an abated s to stand on.
he addition of pts found noted ering the rival s, the reasoning ion is verbatim deciding Ground hold that the nd in law. We ade in AY 2020-

to 14 raised in the appeal are again made by way of unaccounted repa
68 of the Act. It is observed that, e g adopted both by the AO & Ld. C same as earlier AY 2017-18. Even parties were common. Thus, followi rded while deciding Ground Nos
Y. 2017-18, we hold that the impugn payment of cash loans was unsust deleted. These grounds are thus al
5 to 19 are noted to be relating t xcess wastage of gold of Rs.36,19, gold ornaments into fine gold. After authorities and considering the riv issue involved in this ground is sa sessee’s appeal for AY 2019-20. rein, we direct the AO to delete ground of the assessee.
0 to 26 are against the Ld. CIT n made by the AO on account of e of old gold ornaments purchased f to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
nst the addition ayment of cash except variation
CIT(A) to justify the arguments ng our reasons
. 9 to 13 of ned addition on tainable and is lowed.
to the addition
,83,792/- upon r going through al submissions, ame as Ground
Following our the impugned
T(A)’s action of excess wastage from customers into fine gold. Briefly st marketing and sale of assessee, through its b either receive money o jewellery exchanged. Th assessed by the respe same in their billing consolidated & reflected the search action revea customers are thereaft checked; stones, wax, same is melted to first gold. In the course of charge of melting this o he would maintain quan before and after the ref excel sheets were found his control purposes. Up there were date wise de including the stone we received from the old noted to have prepared
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 129 ::

tated, the assessee is engaged in t gold jewellery through its retail sh ranches, purchases old gold from c or purchase new jewellery in lieu o he value of such old gold jewellery ctive manager of each branch, w software application and later on d in their tally accounts. According t led that, these old gold ornaments p ter sent to the corporate office, w beads and enamel are removed obtain ‘kachha gold’ which is then r search, it was gathered that, Mr old gold jewellery received in the bra ntity wise details of the old and fine fining process. During the course of d from the e-mail of Mr. Stanley wh pon verification of these sheets, it w etails of old gold received from diffe eight, melting loss, net weight an gold purchased at various branch the summary of month wise old go to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
the business of howrooms. The customers, who of the old gold y is noted to be ho records the n the same is to the Revenue, purchased from where they are and, then the refined into fine r Stanley is in- anches and that e gold received search, several hich he kept for was noted that, erent branches, nd pure weight hes. The AO is old sheets from these email attachmen assessment order. The summary of wastage as under:
Period
Rec Wt.
Stock
FY
18-19
73,68,938
1,02,836
FY
19-20
68,49,438
1,11,086
29.1 The AO observed for FYs 2019-20 & 202
claimed wastage of 13. 2020-21 respectively. T excess wastage claime asked to explain the s detailed response, whic
14 of the assessment o alia were that, the infe of some branches and melting data, the alle assessee showed that,
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 130 ::

nts, which has been set out at ereafter the AO has worked out s per the email attachment, which is Gross
Stone
Mlt.Loss
Nt.Wt.
P
72,66,102
25,872
20,557
72,19,673
6
67,38,352
36,526
17,111
66,83,285
5
that, the actual wastage as per em
20-21 was only 12% whereas the 36% and 15.17% in the books for The AO accordingly is noted to have ed as per accounts at Rs.62,99,3
same, the assessee is noted to ha ch the AO has extensively extracted order. The objections raised by the rence was being drawn by compari d therefore without the complete egation of excess wastage was u in the same excel sheets, the melti to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
Page 6 of the the year-wise s noted to be as Pure Gold
Wastage
(Gross to Pure)
63,62,349
12%
59,03,808
12%
mail attachment e assessee had FYs 2019-20 &
worked out the 6,957/-. When ave furnished a d at Pages 7 to assessee inter ing partial data purchase and unjustified. The ing loss for FYs

2015-16 to 2018-19 w whereas the actual lo branches as per books submitted that the incre because the assessee during FYs 2019-20 &
exchanged old gold je goldsmith and therefor jewellery in these locat melting was done locall is noted to have reject the AO, it was Mr. Sta processing and that the the wastage loss worke actual state of affairs.
that, certain old gold o locally and that accordi the corporate office und to have referred to th
Shanmughanathan in observed that, the as objections with credible
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 131 ::

worked out in the range of 12.44
ss based on the complete data was in the range of 10.28% to 1
ease in wastage in comparison to ea had opened new branches at se
& 2020-21 which were in mofuss wellery were melted and manufac re not only the purity content o tions were comparatively lower but y, it yielded higher melting loss. Th ed the submissions of the assessee anley alone, who was in charge o e data maintained by him was com ed out by him in the excel sheets r
The AO also rejected the assesse ornaments at certain locations were ing to him, this entire exercise was der the supervision of Mr. Stanley. T he statements of Shri Somasunda support of his observations. Th sessee has not been able to su data. With these observations, the to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
4% to 13.35%
across all the 12.16%. It was arlier years was everal locations sil area where ctured by local f the old gold t also since the he AO however, e. According to of the old gold mplete and thus represented the ee’s submission e being melted s centralized at The AO is noted aram and Shri he AO further pplement their
AO is noted to have added excess was show cause notice. Agg noted to have preferre have confirmed the orde
“12.4
I have appellant and the appellant accepts same depending towards new pur
Head Office for considered and different from ow gold. The total o wherein such old weight of semi-p considered at 1%
loss, in para 7 ab was obvious at 8
the appellant and branches establis
2% damage loss damage loss app reasonable stand weight loss + a totalling to 11.4%
When the damag appellant that on making the addit with the addition loss of 2.98% dis
29.2 Heard both the p impugned addition has retrieved from the e-ma the assessee has claime old gold ornaments purc
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 132 ::

stage loss of Rs.62,99,36,957/- as c grieved by the order of the AO, t ed appeal before the Ld. CIT(A) w er of the AO by holding as under:
perused the assessment order, submis e additional submissions made. As is the s old gold from customers, determine the on their purity and reduces the same from chases. All the said old gold so purchased conversion into pure gold, and this it maintained by Sri Stanley in his e-ma wn gold / non-moving stock also convert ld gold purchased from customers is sent d gold contains some physical impurities precious stones. The loss on such stone
% while determining the new gold conver bove. Apart from this, the purity loss from 8.4%. Since the gold is old and is not man d was purchased from customers, particula shed during the year in moffusil stations, an s on purity is allowed. As a whole, the p pearing in the Stanely Sheet at 12.38% is dard of damage loss (8.4% on purity +
another 2% on old gold purchases from %), against the claim made by the appellan ge loss claimed is apparently high, the nly a portion of the seized material was tion, is not tenable. Therefore, no interfere made by the AO on this count and the ex sallowed by the Assessing Officer is confirm parties. It is noticed that, the AO f s placed exclusive reliance on th ail of Mr. Stanley, basis which he h ed excess melting loss in relation to chased from customers into fine gol to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
computed in his the assessee is who is noted to ssions of the practice, the value of the m the final bill d was sent to em of stock ail sheets is ted into pure t for melting, s, apart from e weight was rsion damage
22ct to 24ct nufactured by arly from new nother rate of percentage of s close to the 1% on stone m customers, nt at 15.36%.
claim of the adopted for ence is made xcess damage ed.
for making this he excel sheet has alleged that o conversion of ld to the extent of 2.98% and 2.75%
assessee is noted to hav reliance placed by the assessee, this sheet wa and not for any statuto and that the notings in Before dwelling into th
Section 132(4A) of the in the possession or con be presumed that suc contents of such docu presumption set out in onus lays on the assess
29.3 In the case before e-mail of Mr. Stanley a answers, if any, given b is observed that, in his
Act, no specific question noted to have been co enquiries and the relev the Act dated 30-07-202
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 133 ::

in FYs 2019-20 & 2020-21 res ve disputed the veracity of this exce lower authorities on the same. Ac as prepared by Mr. Stanley for his i ory or accounting or financial repo n this excel sheet was incomplete e facts, it is necessary to remind
Act provides that, where any docu ntrol of any person in the course of ch document belongs to such pe ument is true. It is settled in Section 132(4A) of the Act is rebu ee to substantiate the same with co e us, the impugned excel sheet was and therefore it is first necessary t by Mr. Stanley in connection with th statements which were recorded u/
n was raised in this context. Rather onfronted with this document in th vant portion of his statement record
21 is observed to be as follows:- to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
spectively. The el sheet and the ccording to the nternal records orting purposes and unreliable.
ourselves that, uments is found f search, it may erson and the law that, this uttable and the ogent evidence.
found from the to examine the is document. It /s 132(4) of the r, Mr. Stanley is he post search ded u/s 131 of “Q.2
On verific
2701@ouflook.co and silver were f of OG-Dec-19 tak this statement).
explanation regar
A.2 I have gone t outs of monthly
Lakshmi is assist there will be sep
Jewellery Mart Pr old gold received sheets are the da column computer computer print o details of orname from the gross w weight of the or recorded in thes testing report rec the purity sheets.
29.4 Though the Ld. CI to support the order of answer, we find that which would suggest th loss in the books of acco
Mr. Stanley is noted prepared by Smt. Laks wise details of old gold gross weight, stone wei weight, which was base to us, this answer does
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 134 ::

cation of the email account used om), month wise excel sheets named OG, found and downloaded. I am showing you ken from the email attachment (given as A Please go through these sheets and rding the nature of entries in these sheets.
through the print outs shown to me. These old gold sheets prepared under my supe ting me in preparing these sheets. In the arate work sheets for all the branches of rivate Limited. In these sheets, the date w d from branches are entered. The date s ates on which the branches received the o r weight and the value column are entere outs given by Shri. Somu. In the column ents which were not melted are entered weight. The details of stone weight, melt rnaments, purity and the pure gold wei e sheets. The purity is entered as per t ceived and the weight of pure gold is worke
.”
IT, DR has placed reliance on the ab the lower authorities, but on carefu there is nothing incriminating con hat the assessee had claimed exce ounts in comparison to what was ac to have simply stated that thes shmi under his supervision and it c received by them from branches an ght, melting loss, net weight, purity ed on testing reports and purity she not appear to suggest that what w to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
by (Stanley
, Purity, Fine the printouts
Annexure 1 of d offer your are the print rvision. Smt.
excel sheets,
M/s. Lalithaa wise details of shown in the old gold. The ed as per the "stock", the and reduced ting loss, Net ght are also the details of ed out as per bove statement ul reading of his ntained therein essive wastage ctually incurred.
e sheets were contained date- nd the details of y and pure gold eets. According was being noted in this excel sheet was given in para infra. Mor inferred by the supervis melting of old gold orna submission that, it is n these notings were m error/mistakes or that the physical receipt v
Stanley does indeed sug a supervisor for his inte to him for melting and excel sheet would refle wastage loss, for the re
29.5 Be that as it may this impugned issue, it excel sheet vis-à-vis the us the summary details sheet, the wastage los accounts. After analyz details as under:-

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 135 ::

sacrosanct and complete for the d reover, the answer only contained th sor Mr. Stanley from the testing rep aments into fine gold. There is force not necessary that the testing repo made were final or that it did there may have been some diver vis-à-vis the testing reports. The ggest that these sheets were being ernal control over the old gold orna d it is not necessary that his obser ect the true and complete picture asons noted infra.
y, in order to unearth the correct fa t is relevant to also examine the c e books of accounts. The Ld. AR ha s of the quantity of old gold reporte ss shown therein in comparison to ing the same, we have tabulated to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
etailed reasons he observations orts concerning in the Ld. AR’s rts basis which d not contain gence between answer of Mr.
maintained by aments allotted rvations in this e of the actual acts concerning contents of this s placed before ed on this excel o the books of d the relevant

AY
As per as Quantity o gold process
2016-17
53,08,30
2017-18
62,42,37
2018-19
72,57,08
2019-20
73,51,51
2020-21
82,42,94
2021-22
46,90,63
29.6 From the above, ornaments processed u quantity of old gold or were materially differen processed as per the b being supervised by Mr thus find force in the su incomplete and thus co undertake valid compa accounts. This particula assessee’s submissions assumption that proces
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 136 ::

sessee’s books
As per Stanley f old sed
%
of wastage
Quantity of old processed
08
10.28%
49,47,678
76
10.97%
57,63,016
86
10.66%
76,91,090
16
12.16%
72,66,102
42
15.36%
67,68,351
39
15.17%
38,47,077
it is first observed that, the quanti nder the supervision of Mr. Stanley naments processed as per the boo nt. It is observed that, the total quan books was much higher than the q r. Stanley, as is evident from the ta ubmission of the assessee that this e ould not have been taken as a just arison with the wastage shown in r contemporaneous fact also lends c s that the AO had acted und ssing of the entire old gold orname to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
’s excel sheet gold %
of wastage
13%
13%
13%
12%
12%
12%
ties of old gold y and the total oks of accounts ntity of old gold quantity of gold able above. We excel sheet was tifiable basis to n the books of credence to the er the wrong ents was being solely supervised by M through the details of assessee during the imp that these new showr explained to us that, tr these showrooms at all feasible and thus, com ornaments melted and/
Having regard to the a the excel sheet of Mr.
books of accounts, the e
Mr. Stanley was incomp
29.7 It is also observed sheets maintained by M in the impugned AYs 2
2016-17 to 2019-20. T that the data maintain showed materially highe the assessee in those y disputed by the Reven have not made any ad
2016-17 to 2019-20. I
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 137 ::

Mr. Stanley. The Ld. AR Shri Anan the new showrooms which were pugned AYs 2020-21 & 2021-22 and rooms were located in mofussil ransporting the old gold ornaments l times to the corporate office was mmonly, the manager would get
/or processed locally through the lo apparent difference in the quantitie
Stanley and the quantities proces explanation of the assessee that the plete, is found to have merit.
d that, the difference in wastage lo r. Stanley and the books of account
2020-21 and 2021-22, but also in he analysis undertaken in the abov ned by Mr. Stanley for AYs 2016- er wastage loss than what was actua years. We find that, this material fac ue and for that reason, the Reven ddition on this impugned issue in a If the contents of this sheet is to to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
d also took us opened by the d it is observed areas. It was s exchanged at not practically these old gold ocal goldsmiths.
es appearing in sed as per the e excel sheet of ss between the ts, was not only the earlier AYs ve table reveals
17 to 2019-20
ally incurred by ct has not been nue is found to any of the AYs be treated as sacrosanct, then it wou wastage losses and ther
2016-17 to 2019-20. illogical. In that view of 2019-20 found in this e books, raises serious do case made out by the A have reduced the profits by the assessee in thos not do so. We find this a selective reliance on po to make selective additi for. According to us, th the veracity of this exce sheet to be unreliable.
29.8 Further, as noted books incurred in AYs years. The Ld. AR exp explained that, these ne of old gold ornaments e than the quality of old located in metro cities
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 138 ::

uld appear that the assessee has reby declared higher notional taxabl
We find such a proposition to b f the matter, this data concerning A excel sheet, in light of the wastage oubt on the veracity on the same. H
AO is taken at its face value, then t s by the excess wastage loss report se AYs 2016-17 to 2019-20. The A approach of the AO to be inherently ortions of the excel sheet which suit ions in specific years, was unjustifie his self-contradicting action of the el sheet and we thus hold the noting d from the above table, the wasta
2020-21 & 2021-22 was higher t plained to us the reasons for the ew showrooms being in mofussil are exchanged by customers was comp d gold ornaments exchanged at t
. The Ld. AR further submitted th to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
reported lower le profits in AYs e unlikely and AYs 2016-17 to e shown in the However, if the he AO ought to ed in the books
AO however did y flawed and his ted his purpose ed and uncalled
AO discredited gs on this excel age loss as per han the earlier same. It was eas, the quality paratively lower the showrooms hat, due to the COVID-19 scenario, wh practical to get the ol moving them inter-stat was required to make d by local goldsmiths, w corroborate his submiss
AYs had genuinely occu the search action which assessee as well as the any excess stock of gold vis-à-vis the physical st instance of suppressed according to the Ld. AR loss reflected in the boo foregoing submissions &
the assessee, their ex wastage loss shown i comparison to earlier ye be plausible.
29.9 In view of the ab sufficiently demonstrate the possession of Mr.
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 139 ::

ich prevailed during this period, it w d gold ornaments processed loca te or inter towns / cities. However do with the lower quality of process which yielded higher wastage lo sion that the higher wastage loss in urred, the Ld. AR also brought to o h was conducted across all the sho eir corporate office, did not result in d or any discrepancy in the inventor tock. The Revenue also was unable sales made by the assessee. This R, supported the assessee’s case tha oks of accounts was accurate. Havin
& surrounding circumstances put to xplanation regarding the veracity n the impugned AYs 2020-21 an ears, on the given facts before us, i bove, we find that the assessee ha e that the contents of the excel sh
Stanley was incomplete and unr to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
was found to be lly rather than r, the assessee sing undertaken ss. To further n the impugned our notice that, owrooms of the n unearthing of ry as per books to unearth any s material fact, at, the wastage g regard to the o our notice by of the higher nd 2021-22 in is also found to as been able to eet found from reliable. In our considered view theref account of excess wasta was unjustified. The AO addition of Rs.62,99,36
assessee.
30. Ground Nos. 27
relating to the Ld. CIT
Rs.1,07,67,376/- in rela is noted that, except va the AO & Ld. CIT(A) to 2017-18. Both the pa involved across AYs 20
and conclusions record assessee’s appeal in A.
found in the material therefore the impugne unmatched entries bet from the premises of M therefore allow these g addition made in AY 202
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 140 ::

fore, the impugned addition made age loss on the basis of such unrelia
O is accordingly directed to delete
6,957/- and hence, we allow these
7 to 33 raised in this appeal ar
(A)’s action of taxing the gross pr ation to the unmatched transaction ariation in figures, the reasoning ad o justify this addition is verbatim rties also argued this impugned
17-18 to 2021-22 together. Followi ded in while deciding Ground Nos
Y. 2017-18, we accordingly hold th seized from the premises was ed addition of gross profit made ween the assessee’s books and t
MJPL is held to unjustified on facts rounds and direct the AO to delete
20-21. to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
by the AO on able document, e the impugned grounds of the re noted to be rofit element of ns with MJPL. It dopted both by same as in AY issue which is ng our reasons s. 21 to 27 of hat, the entries unreliable and on account of he data seized and in law. We e the impugned

4 to 36 are noted to be against th
AO’s order of making addition of Rs.
nted interest payments made to v s as noted that, in the course of se a sheet, stated to be trial balance cls’ was found in ‘atp1920’ data his trial balance, there was an outs ved by the assessee from various pa e loans, rates of interest was ment the interest paid on such loans in 07,096/- and Rs.45,74,07,096/- an f unexplained expenditure u/s 69C o ed for AYs 2020-21 & 2021-22 re s noted to have submitted that, the n that the impugned sheet was a tr acted from a corrupted software in w of the assessee group had been mix cted in the name of the assessee, w that these are unaccounted loans o nted out that, there was no details
0 & 2020-21 found in these sheets a n assumption that because inter to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
he action of Ld.
13,52,07,096/- various parties.
earch, a server e as on 31-05- abase. The AO standing loan of arties as on 31- tioned. The AO
FYs 2019-20 &
nd proposed to of the Act in his spectively. The e AO was under rial balance and which the loans xed up and was hich led the AO of the assessee.
of any interest and instead the rest rates are mentioned against these by the assessee. The as on surmise, without a addition be made. The submissions and adde expenditure u/s 69C of 31.1 Aggrieved by the in appeal. On appeal, was no material showin the Ld. CIT(A), the fact interest was found men had paid interest. The L
AO. Being aggrieved by in appeal before us.
31.2 At the time of he the submission made b on our records. Per co lower authorities.
31.3 Having gone thro examination of the fact the impugned addition
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 142 ::

e loans, the interest would have act ssessee submitted that, this assump any evidence and therefore urged e AO however, is found to have ed the impugned sum by way o the Act.
order of the AO, the assessee car the Ld. CIT(A) though acknowledg g actual payments in these years b that, the loan carried interest and ntioned would necessarily mean tha
Ld. CIT(A) thus confirmed the additio y the order of the Ld. CIT(A), the a earing, the Ld. AR for the assessee efore the lower authorities, which w ntra, the Ld. CIT DR supported th ugh the submissions of both the pa ts & circumstances of the case, it is based on a sheet titled ‘closetb to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
tually been paid ption was based that no such rejected these of unexplained ried the matter ged that, there but according to that the rate of at the assessee on made by the assessee is now had reiterated was also placed e action of the arties and upon is noticed that, bcls’ which was extracted from an SQL going through the same balance(s) of several p observed that, the nam percentage in their titl
Akka A/c 12%’ whose
Similarly, there was an Rs.5,00,000/-. We find were there, whose bala this sheet prima facie do balance(s). It is also no out of which, in twenty word ‘cash’ or ‘loan’ or ‘
the word ‘loan’ is appe suggestion that these lo are noted to be names and corresponding bala alone basis, there are mentioned correspondin any unaccounted loan tr
31.4 It is noticed that, reflected loans availed b
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 143 ::

database found during the course o e, it is noted that, this sheet reflect parties as on 31-03-2019 and 31- mes of these parties were mentioned e(s). For instance, there was acco balance as on 31-05-2019 was R account ‘SC Bothra A/c – 15%’ who that, in the like manner, several ances aggregated to Rs.210.66 cror oes not bring out the nature of thes oticed that, there are twenty-nine ( y four (24) line items, there is no ‘interest’. In five (5) instances, it is aring in the name of the account oans are unaccounted for. Simply p of parties with percentages menti nces. Hence, if this sheet is consid e only several names of parties ng to it, but there is no indication th ransactions of the assessee.
the AO first assumed that, these ac by the assessee. The second assum to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
of search. Upon ed amount(s) /
-05-2019. It is d with a certain ount name ‘Viji
Rs.35,00,000/-.
ose balance was other accounts res. Reading of se amount(s) or (29) line items, mention of the observed that, but there is no put, the entries oned against it dered on stand- and amounts hat these reflect ccount balances mption drawn by the AO was that, the interests on these loan were unaccounted for a would have continued t had actually paid the in the names of the accou have made the impugn to have acknowledged t impugned addition, wh possible conclusion, wit the assessee.
31.5 In light of the ab these assumptions mad observed that, the shee
2019, which according assessee. According to account balances, which and next he assumed t on such loans. We find fact that certain percent five (5) names have m suggest that these may ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 144 ::

e percentages mentioned therein s. The third assumption was that, and the fourth assumption was tha through the next two years and tha terest on the same, at the rates me unt(s). With these assumptions, the ed addition. We find that, the Ld. C these assumptions made by the AO hich according to the Ld. CIT(A), hout anything contrary being broug ove, we find it fit to first examine de by the AO. From the above narr et(s) in question were dated 31-03- g to the Revenue, were trial ba o AO, these trial balances inter h he assumed to be loans availed b the percentages mentioned to be ra that both these assumptions to be tages are mentioned against these n ention of the word ‘loan’ in them, y be loans, but it only gives rise to to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
were rates of all these loans at, these loans t, the assessee entioned beside
AO is noted to CIT(A) is noted for making the was the only ht on record by the veracity of ated facts, it is -2019 & 31-05- alances of the alia contained by the assessee ates of interest e plausible. The names and that does appear to o suspicion and there was no evidence unaccounted loans ava contested the veracity note that the AO was n lenders from whom, ac loans. The Revenue has show that, in fact cash
The persons to whom particulars were also n could have been allege which could have been but mere suspicion alo were taken in cash on w
31.6 The third assumpt unaccounted for. It is n to the assessee, the lat the data was corrupted
According to the asses mixed-up due to malw details. We are conscio of the Act that the cont the assessee is presume
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 145 ::

brought on record to show that the ailed by the assessee. When the of the contents of the impugned not able to bring on record the exac ccording to him, the assessee had s not filed before us any document loans were taken and interest paym m allegedly interest was paid, the not ascertained, verified and exam ed that these entries may have bee a cause for further verification and one cannot be a ground to hold th which interest was also paid.
tion made by the AO was that, all th oticed that, when the AO had confr tter had first denied the same by s and suffered from malware and he ssee, the data contained in this s ware and thus did not reflect the us of the presumption set out in S ents of any material seized from th ed to be true qua the assessee. It i to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
se entries were assessee has document, we ct details of the d availed these t or material to ment was made.
eir details and ined. Hence, it en loan(s) and, d investigation, hat these loans hese loans were ronted this data submitting that ence unreliable.
heet had been true & correct
Section 132(4A) e possession of is however also well settled in law that As already noted earlier that these entries were made by the AO. We fin with ample evidence. Th these parties were th
Kumar/Managing Direct
The assessee also show in the books of accou
Group.
31.7 The Ld. AR first br value related to ‘Anbu’
while deciding Ground N held to be unreliable. W loans which was obtain duly recorded in the bo cash loans involved. Th passed in the matters discussed in the preced find force in the conten database and the infe having regard to our fin
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 146 ::

this presumption is not absolute bu r, the contents of the sheet did not unaccounted for. Rather, this was nd that the assessee has rebutted t he assessee is noted to have shown hose who had advanced monies tor in his individual capacity and no ed that, majority of these account(s nts of other assessees belonging rought to our notice that the single account, which, for the reasons alre
No. 9 to 13 in Paras 8.14 to 8.28 a We have already taken note of th ned from Anbu was through bankin ooks of accounts and that there was his was also corroborated by the or s of Anbu, which we have alrea ding paragraphs. Having regard to ntion of the assessee that the entrie rence drawn by the AO was unr ndings rendered while deciding Grou to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ut is rebuttable.
per se suggest an assumption this assumption n that, many of to Shri Kiran t the assessee.
s) was reflected to the Lalitha largest account eady discussed, bove, has been e fact that the ng channel and s no element of rder of the IBS ady elaborately the same, we es found in this reliable. Hence, und No. 9 to 13

for AY 2017-18 above, from Shri Anbu, the q
Rs.32.16 crores does n
Rs.59.26 crores made parties, amount to th reasons, is held to be ex
31.8 The Ld. AR therea balance of Rs.9 crores explained to us that M whom the assessee wo assessee has already d
MJPL duly recorded in t such balance be alleged
Ground Nos. 21 to 27
transactions with MJPL recorded in the books a transactions with this s simply assume that all loan(s) of the assessee.
31.9 Having gone thro assumption being ma
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 147 ::

when the assessee had not availed question of paying unaccounted ca ot arise at all. Hence, out of the to on account of unaccounted intere e extent of Rs.32.16 crores, for x-facie unsustainable.
after brought to our notice the pur s appearing in the name of ‘Sur
Mr. Suresh Katri was the director ould regularly purchase gold items demonstrated that it had a runnin the books of accounts and therefore d as loan or to be unaccounted for.
for AY 2017-18, we have already comprised of regular purchases w and that there was no unaccounted supplier. Accordingly, we find it to these entries represented interes ough the above details, we thus ade by the AO that all these to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
any cash loans ash interest of otal addition of est payment to r the aforesaid rported account resh Katri’. He of MJPL, from s and that the g account with e, neither could
While deciding y held that the which were duly cash or bullion o be unsafe to st bearing cash note that, this notings were unaccounted loan(s) is of the assessee that, th up is found to be plaus regard to the foregoing believe this claim of the Revenue to prove that these notings represe assessee on which un year(s). It is however o most of these loans w didn’t make any attemp and enquire regarding identify the unaccounted
31.10
It is also ma action also did not re investment which would in excess of Rs.200 c assessee. There is also could have possibly pa year. According to u corroborative material
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 148 ::

held to be factually erroneous. Also e entries in this database was corru sible, in light of the above discusse g, in our considered opinion, if the e assessee to be correct, then the o the entries in the database was ge ented unaccounted cash loan(s) nexplained interest was paid in t bserved that, in spite of the assesse ere accounted in the books of acc pt to reconcile the facts or summo the exact nature & source of th d loans.
aterial to mention at this juncture t eveal any such unaccounted cas d justify such huge quantum of una crores as alleged to have been a o no source identified out of which aid unexplained interest running in us therefore, in absence of the to show that these account entri to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
o, the assertion upted or mixed- d facts. Having
Revenue didn’t onus lay on the enuine and that taken by the he subsequent ee showing that counts, the AO on the assessee hese loan(s) or that, the search h or asset or accounted loans availed by the h the assessee nto crores each ere being any es represented unexplained loan transa made by the AO holding
31.11
We agree w the opinion that, these then the AO was requir from whom these unac the impugned interest p a borrower. The AO is n assessee had borrowed name(s) mentioned in that case, the AO oug confronted them regard material on record to ev cash and that the asses loan(s), particularly wh were forming part of th attempt is found to hav two instances of Shri A been able to prove the c
31.12
For the abov corroborated this third a ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 149 ::

actions of the assessee, this particu g so, is held to be unjustified.
with the Ld. AR Shri Anand that, if e accounts represented unaccount red to bring on record the details o counted cash loans were availed o paid. In any loan transaction, there noted to have assumed from these e these amounts in cash. Hence, as these accounts ought to be that o ht to have unearthed the details ding these loans and should have vidence to show that, these loans w ssee did subsequently pay them int hen the assessee had asserted th he books of accounts. However, no ve been made by the AO. Rather,
Anbu and Shri Katri, it is the asses contrary.
ve reasons, in our considered view, assumption with some relevant mat to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ular assumption the AO was of ed borrowings, of the lender(s) r to whom was is a lender and entries that, the a corollary, the of lender(s). In of the lenders, brought some were obtained in terest on these hat these loans o such effort or we find that in ssee which has the AO had not terial/evidence, and therefore it was u balances represented un
31.13
We now tak was that, the assessee cash, in FYs 2019-20 &
trial balances were dat understood to contain transactions for a com such accounts as assets if the details of loans corresponding expenses same trial balance. The these loans were actua cash interest was being which was unearthed b cash interest paid on s
He pointed out that, th two sheets extracted b
DR, even he was unab the account(s) of expen from the database. This corroborated by the fa
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 150 ::

unsafe for the AO to assume that naccounted loan transactions of the ke up the last assumption made by would have actually paid interest on & 2020-21. As noted in the foregoing ted 31-03-2019 & 31-05-2019. A all debits and credits which includ pany over a certain period, includi s, expenses, liabilities, and revenue are found mentioned in trial bala s of interest payments would also Ld. AR Shri Anand has rightly poin ally received and were unaccounted paid out of the books, then the sam by the Revenue, would also contain such loans as on 31-03-2019 and/o here was no such detail or evidenc y the Revenue. When enquired fro le to show us any details of cash i nses(s) in this so-called trial balan s averment of the assessee is foun act that, no addition on account to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
these account assessee.
y the AO which n these loans in g, the so-called trial balance is de all business ing the sum of es. Accordingly, ance, then the be there in the nted out that, if d for, and that me trial balance n the details of or 31-05-2019. ce found in this om the Ld. CIT, interest paid in ce(s) extracted nd to be further of unexplained interest payment was sheet(s) dated 31-03
acknowledged by the lo cash interest payment f been assumed from the 03-2019. 31.14
In view of t trial balance(s) dated 3
contain any details of in they related to, and th assessee had paid inte assume that the assess in the subsequent years
31.15
It is well se findings on suspicions, evidence at all or on va on suspicion, conjecture has not been able to d extracted from databas of cash interest paymen also the relevant year
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 151 ::

made in the AY 2019-20 to whi
3-2019 pertained to. Moreover, ower authorities that there is no dir for FYs 2019-20 & 2020-21 and tha e entries in these sheets dated 31- the above, we thus note that, when
31-03-2019 relied upon by the AO nterest paid for the relevant year-en here was also no indication or evi erest in subsequent years, then it ee had actually paid interest in cash s to justify the impugned addition.
ettled that the Revenue authorities conjunctures or surmises nor shou ague considerations partly on evide es or surmises. In the case before u emonstrate any material except un e, which does not contain any refer nts not only for the years impugned to which this sheet pertains to. Ac to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ich one of the it has been rect evidence of at the same has -05-2019 & 31- n the purported
O itself did not nding for which dence that the was unsafe to h to the lenders cannot base its uld it act on no ence and partly us, the Revenue nverified sheets rence or details d before us but ccording to us, mere mention of loan payment of interest is n against the assessee. A not come to the rescue the document consider payment of interest on been validly raised by addition made by the A whatsoever.
31.16
It is notice extrapolation done by outstanding as on 31- assessee ought to have and thus extrapolated unexplained interest assumption has no valid unearthed or any trial b show that the assessee the relevant periods FY made by the AO cannot notice the assessmen subsequent AY 2022-23
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 152 ::

n(s) on this trial balance without not a good evidence and do not rais
Also, the presumption u/s 132(4A) o of the Revenue for the reason that red on stand-alone basis does no n loan. Accordingly, no presumpti the AO in this regard. Rather, we
AO is in the realm of speculation wit d that the impugned addition was y the AO. Since the loans were -03-2019 & 31-05-2019, the AO paid interest on such loans for the the interest rates to arrive at th payment. According to us, this d basis. Unless there was any mate balance found in the course of searc e had actually paid the impugned
Y 2019-20 & 2020-21, this particula t be countenanced. The Ld. AR also nt order passed in assessee’s
3 u/s 143(3) of the Act wherein no s to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
t any proof of se any estoppel of the Act does the contents of ot suggest any ion could have e find that the thout any basis s based on an e found to be assumed that next two years he quantum of s extrapolation rial or evidence ch, which would interest during ar extrapolation brought to our own case for uch addition on account of unexplained assessee that, going by been paid in AY 2022-2
in that year. This conte case that, the AO him assumption and extrapo any material which sug
2021-22 and therefore ought to be extrapolate if such assumption is h made in the years pr extrapolation exercise unreasonable and witho
31.17
In this rega
Court in Dhakeswari laying down principles r under Section 23(3) of held that, the ITO is pleadings, and he is accepted as evidence in entitled to make a pure to any evidence or any ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 153 ::

interest payment was made. We y the AO’s assumption, the interest
23 also, but the AO didn’t make any mporaneous fact lends credence to mself was not sure regarding the olation exercise. It is not a case that ggested that these loans had been in terms of his own logic, the int ed to AY 2022-23 and so on as well held to be tenable, then additions ior to this trial balance. Accordin cannot be validated as the same out any sanction of law.
ard, we refer to the decision of the Cotton Mills Ltd. v. CIT [1954]
regarding estimation that while mak the Income Tax Act 1922. The Hon not fettered by technical rules of entitled to act on material which n a Court of law, but at the same guess and make an assessment wi y material at all. There must be so to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
agree with the t ought to have y such addition the assessee’s extent of his t, the AO found n repaid by AY terest payment
. Not only that, s could also be ng to us, such is far-fetched, e Hon'ble Apex
] 26 ITR 775
ing assessment
’ble Apex Court f evidence and h may not be time, he is not thout reference omething more than bare suspicion to 1922 Act. The Hon'ble A and Tribunal in estimati on any material but ac was a fit case for the e
Article 136 of the Const
31.18
We find the Hon’ble Delhi High Cou
Ltd (229 Taxman 254
search action had unea the details loans availed to have assumed that loans and thus made ad
69C of the Act. On app the entries found to be the assessee has repaid the rate of interest to assumptions, the Tribun
“…We find that t left hand side of t paper, only one amounts without is the inference o entries ignoring '
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 154 ::
4) to be of relevance. In the decided arthed certain details, which accord d for purchase of property in cash. T the assessee would have paid in ddition on account of unexplained e peal, this Tribunal noted that the AO that of receipt of loan, and he also d the loan along with the interest an be 20%. Deleting the addition m nal held as under:- he Assessing Officer has considered the e the paper which is totaled to 22,40,000/-.
e name Paliwal is written and there ar any narration. The total of amounts is 22
of the Assessing Officer that the assessee i
00'/'000' (2/3 zeros). It seems that in 22, to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
n 23(3) of the d that both ITO essee didn’t act and therefore it me Court under the decision of evelopers Pvt d case also, the ing to AO, was The AO is noted terest on such expenditure u/s O had assumed o assumed that nd he presumed made on these entries at the On this loose e dates and 2,40,000/-. It s making the ,40,000/-, he increased '00' (
Assessing Officer paper there is no Officer further pr with the interest made the additio interest. The lea repayment of loa available with the reduced the inte
However, after c sides, we find tha the Assessing Off amounts without
. The first pres
22,40,000/- but noting is relating is that the loan w assessment year the repayment of On these series running into cror
271D & 271E. Hi papers nor any course of assessm on record is cont
Gupta and not th recorded in which (iii) he surrender his hands as well unaccounted tran the group concer facts, if Revenue papers is with re was upon the Re did nothing excep addition and levie
….In these years
Officer that unac taken. However, enough to hold
Moreover, in the presumptions tha no such noting o
ITAT as well as H
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 155 ::

2 zeros) and made it 22,40,00,000/-.
r, the entry is for receipt of loan, though such narration except date and amount. T resumes that the assessee has repaid th and he presumed the rate of interest to on in respect of such alleged repayment arned CIT(A) has deleted the addition wi an on the ground that since loan amou e assessee out of which this repayment w erest. Thus, the addition is partly sustai onsidering the entire facts and arguments at the entire addition is based upon the pr ficer. On the loose papers, there is noting any narration. The total of such amount is sumption by the Assessing Officer is th
22,40,00,000/-.The second presumption to loan taken by the assessee. The third was repaid during the accounting year re r under consideration. The fourth presum f the loan was along with interest at the of presumptions, he not only made hu res of Rupees but also levied penalties un s finding is neither based upon the noting corroborative evidence brought on recor ment proceedings. On the other hand, mate trary, i.e., (i) the papers were found from he assessee, (ii) statement of Shri Yoges h he stated that these were unaccounted red the income from such unaccounted tr as in the hands of group concern, (iv) the nsactions as surrendered by Shri Yogesh G ns has been accepted by the Revenue. In v wanted to take the view that the noting egard to loan taken by the assessee, then evenue to establish so. However, the Asse pt to make series of presumptions and th ed the penalty on the basis of his presumpt also, at the most, it can be the doubt of t ccounted transactions are in the nature the doubt or suspicion of the Assessing O that the assessee had taken loan/depo years under appeal, the Assessing Officer at there was repayment of loan in cash tho on the loose paper. In our opinion, the f
Hon'ble Juri ictional High Court in AY 2000

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
As per the in the loose
The Assessing he loan along be 20%. He of loan with ith regard to nt itself was was made, he ned by him.
s of both the resumption of of dates and s 22,40,000/- hat it is not n is that the presumption levant to the mption is that rate of 20%.
uge additions nder Sections on the loose d during the erial available m Shri Yogesh h Gupta was transactions, ansactions in income from Gupta and all view of these on the loose n the burden essing Officer hen made the tions….
the Assessing of the loan
Officer is not osit in cash.
made further ough there is inding of the 0-01 to 2003-

04 would be squ hold that when it deposit, the ques was repaid during material on recor
31.19
On appeal b that neither was there admitting to any unacco or particulars of person corroborate such an ass upheld the order of this “7. The Tribunal which was record that Yogesh Gup loan transaction noticeable that e
Assessing Officer received against
Tribunal noticing the course of se
Assessing Officer was paid in cash addition made wa
8. The Tribunal in by this Court in C
304 and 305 of substantial surren was made to the that there were was put to him a details of the per the officers were It is further reco been taken in ca cause for furthe
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 156 ::

arely applicable to the years under appea t is not established that the assessee had t stion of further presumption that such loa g the year under consideration was without rd.
by the Revenue, the Hon’ble High C any statement of the key person o ounted loan transactions nor was th n from whom loan was availed or a sumption. The Hon’ble High Court is Tribunal by holding as under :- has also referred to the statement of Yo ded during the course of search and it w ta had never accepted or agreed that the in cash or there was payment of in even in the assessment order, the reply q r refers to real estate transactions and ad certain commitments for purchase of pro the statement made by Yogesh Gupta on earch came to the conclusion that the fin that there were loan transactions in cash was merely an assumption. Even on the q as on mere assumption.
n the impugned order has referred to the CIT v. Home Developers (P.) Ltd. [IT Appe
2012, dated 23-5-2012]. The said order nder was made during the course of searc e statement of Yogesh Gupta wherein he h unaccounted for transactions in cash, but about the details of the writer or the reci rson, who had received the said amounts.
duly satisfied with the investigation and th rded that the allegation that loans/deposit ash was a mere suspicion, which could er verification and investigation, but me to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
l. We further taken loan or an or deposit t any basis or Court observed of the assessee here any details any material to s noted to have ogesh Gupta, was observed ere were any nterest. It is uoted by the dvances/loans operties. The n oath during ndings of the h and interest quantum, the order passed eal Nos. 301, records that ch. Reference had accepted t no question pient i.e. the At that time, he surrender.
ts must have have been a ere suspicion cannot be a grou
The findings of th
9. We also notice or material to sh was made. The details and partic
10. The findings several factual a Assessing Officer contrary to facts,
31.20
The above present before us. The show that these entries loans were availed or never accepted or agre interest in the years imp solely hinges on assum given rise to suspicion clearly not sufficient to any independent fact or 31.21
In this reg observations of the Hon
Shah & Co. (248 ITR circumstances, the assu
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 157 ::

und to hold that loan/deposits were rece he Tribunal were not perverse.
that the Revenue has not filed before us a how that in fact loan was taken and inter persons to whom allegedly interest wa culars were not ascertained, verified and ex of the Tribunal are factual. The reason aspects and four different assumptions d r. The said findings are not shown to be evidence or material.”
decision is found to be applicabl e AO has not brought on record a s were cash loans or the persons fro details of interest payment. Even eed that these were cash loans on pugned before us. Rather, the case ptions drawn from these entries, w n but according to us, such suspic justify the impugned addition, with r evidence or material linking the sa gard, we also gainfully refer to n’ble Bombay High Court in the case
R 350) wherein on somewhat sim umption drawn by the AO on the ba to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
"3. It is well-settl and seizure opera to determine th generally based o latitude is requir when relevant d mean that the A basis by adoptin matter, A3, A4 an found by the Trib outgoing cash tr turnover. Moreov months. However included for a pe circumstances, th that the addition finding of the Tri law arises. Hence
31.22
We also ref
Tribunal at Ahemdabad
No. 401 & 3188/Ahd/
whether the AO was jus on-monies on receipt of two purchases admitt question in favour of misplaced suspicion bas deleted the extrapolated

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 158 ::

rch and the extrapolation exercise c ed that in cases where material is detected ations are carried out, the Assessing Office e undisclosed income. In such cases a on estimates. In matters of estimation som red to be shown to the Assessing Officer ocuments are not forthcoming. However,
Assessing Officer can arrive at any figure ng an arbitrary method of calculation. In nd A6 nowhere records the turnover of the bunal and yet on the wrong basis of the i ransactions, the Assessing Officer has ar ver, the peak investment was Rs. 40,14,8
r, there is no material seized to justify any eriod earlier to the said period of three mo he Tribunal has recorded a finding of fact of Rs. 3.40 crores was totally unjustified bunal is based on the facts. No substantia e, the appeal is dismissed."
fer to the decision of the coordinate in the case of Savaliya Buildcon
/2014) dated 30-4-2019 wherein stified in making extrapolation exer f sale of all the flats on the basis o ing to payment of on-monies.
the assessee, the Tribunal held sed only on surmises without any d addition, by observing as under:- to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
carried out was d after search er is required additions are me amount of r, particularly
, it does not without any the present e assessee as incoming and rrived at the 806 for three y figure to be onths. In the and has held d. The entire al question of e bench of this n v. DCIT (ITA n the issue was rcise estimating f statements of Answering the that it was a proof and thus

“8.2 The stateme controversy. It i purchasers allege
Lakhs in aggrega copy of the statem examination of th authorities desp overwhelming fac being so, the acti party to crucify principles of natu adjudication proc affected party is cannot be simpl natural justice ha legitimate expect person making a traverse the ass propriety while guaranteed right.
has indispensible as well as the C underscored in K host of other de loaded against th has not adduced records of the as are unable to sub power in a mann most adverse to From its submiss demonstrated tha witnesses against its witness for tangible material the absence of a examination offe cognizance of, a Therefore, we fi directing the AO receipt in respect statement. Once reckoning, the ed flats would crumb
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 159 ::

ent of two purchasers is the bedrock for is an admitted position that the statem edly claiming to have paid cash money te, were obtained behind the back of the a ment was not provided to the assessee at he purchasers were also not provided by ite several requests made by the ass cts remain unrebutted on behalf of the R on of the AO in placing reliance upon state the assessee is clearly in negation o ural justice which is supposed to be guiding cess. Needless to say, the appropriate oppo not a gift but an absolute and salutary y bypassed. The infringement of basic as thus vitiated the order of the AO to t tation of the assessee to seek cross exam dverse comments against the assessee to sertions cannot be shunned in sub-versio weighing an issue. The right to fair h
. Every person affected by the statement o right to know the evidence used against
CIT (A) has violated this cardinal principle
Kishanchand Chellaram v. CIT 125 ITR 7
ecisions. Apart from a bald statement o he assessee which was never confronted, any material which could expose the fals ssessee despite drastic action of search. T bscribe to the view taken by the AO for ex ner most beneficial to the Revenue and the assessee in total disregard of fairness sions before lower authorities, the assesse at it has repeatedly asked for cross exami t him. The department was thus duty boun cross examination more particularly wh is shown to be available to implicate the ny corroborating evidence and in the abse ered, the statement of third party cann as it will apparently lead to miscarriag nd total justification in the action of the to delete the estimated additions towards t of flats sold on the basis of some unveri such statements of the purchasers are difice of estimated additions towards sale ble down.

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
r additions in ments of two of Rs. 14.10
assessee. The all. The cross the Revenue sessee. Such Revenue. This ement of third of overriding g factor in an ortunity to an y right which principles of he core. The mination of a o enable it to on of judicial hearing is a of third party him. The AO e as squarely
713 (SC) and f third party the Revenue sehood in the Therefore, we xercise of the consequently in its action.
ee has clearly nation of the nd to produce en no other assessee. In ence of cross not be taken e of justice.
e CIT (A) in unaccounted fied and bald taken out of of residential

stimated cash receipts on-money of sale sis of statement of two purchasers without arly falls in the realm of conjunctures and riven by misplaced suspicion, the AO has p money in respect of each of the residential is a mere ipse dixit which is not objective atory evidence. It is only elementary accounted money cannot be made only on The order of the AO in making additions arly arbitrary and unsustainable in law. It i e authorities cannot base its findings on surmises nor should it act on no evidence tions partly on evidence and partly o surmises. The Revenue could not dem unsupported statements of two persons. Su out any proof towards its assertions are not raise any estoppel against the assesse e by the AO is in the realm of speculation r. Hence, we decline to interfere with the as appeal of the Revenue is concerned."
the decisions (supra) and having we accordingly hold that, the imp on unverifiable and unsubstantiate evidence regarding actual payment same is held to be unsustainable.
ssessee and direct the AO to delete to 41 of the appeal are noted to labour charges to the extent of Rs.
itha Jewellery Manufacturing Pvt oted are that, the assessee provides
M/s AJMPL for manufacturing gold to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
e of all flats t any tangible d surmises. It presumed the flat sold. The ely justifiable to say that n the basis of of Rs. 3.28
is well settled n suspicions, e at all or on on suspicion, onstrate any uch unverified e not a good ee. Therefore, n without any order of the regard to the pugned addition ed assumptions t of interest to We thus allow e the impugned be against the 16,33,38,625/-
Ltd [in short s pure gold and ornaments and the making charges ar issued and received bac
During the course of s was conducted at the p data pertaining to rece their Anicalans (Jiliba s data found from the ass
20, AJMPL had recorded weight) from the asse books of the assessee of fine gold (gross weig in Anicalans (Jiliba s
36,92,429.808 grams o opposed to 51,70,588.0
books of the assessee t total mismatch found fo
F.Y
Issued as per assessee’s tally
2019-20
5473001.128 gm
2020-21
5170588.071 gm
32.1 Based on the a actually manufactured as opposed to the meta therefore the assessee
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 161 ::

re paid on per gram basis. The de ck are independently recorded by bo earch upon the assessee, a conseq premises of M/s AJMPL wherefrom t ipt of metal and issue of ornament software). Upon comparison with t sessee’s premises, it was noticed th d receipt of 9456869.000 grams of f ssee for processing, whereas the showed that they had issued 5473
ght) to AJMPL. Likewise, in FY 2020- software) suggested that AJMPL of fine gold (gross weight) from th
071 grams of fine gold (pure weight to have been issued to AJMPL for FY or the two financial years is tabulated r y
Receipt as per Anicalans software of AJMPL
D ms
9456869.000 gms
(-) 398386
ms
3692429.808 gms
1478158.26
bove mismatch, the AO inferred t lesser weight of gold ornaments fo al shown to have been issued by th had paid excess manufacturing cha to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
etails of metals oth the parties.
quential search the quantitative ts was found in he quantitative hat in FY 2019- fine gold (gross entries in the 001.128 grams
-21, the entries had received he assessee, as t) shown in the Y 2020-21. The d as under:
Difference
8.872 gms
63 gms hat AJMPL had or the assessee e assessee and arges to AJMPL.

The AO accordingly wor
AYs 2020-21 & 2021-22
Rs.1,69,39,693/- [1478
u/s 69C of the Act. The have actually got this AJMPL, manufactured charges would have be noted to have worked o and thus he accord expenditure for labour
Rs.35/gm] & Rs.5,17,3
21 & 2021-22 respective noted as under:-
“10.2) The entir assessee with M delineated as par mentioned in the the actual weigh
Manufacturing P accounted in the issued less fine g that the assesse making gold orna thus received fr
Jewellery Manufa from M/s Asita Je of the assessee t on the statement upon, is to say th have been solely
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 162 ::

rked out the excess payments mad
2 at Rs.2,39,03,214/- [3983868.872
8158.263 X Rs.6/gm] respectively w e AO thereafter assumed that, the a remaining gold, which was not act from other labour/karigars to een paid separately outside the bo ut the average making charges at R ingly made further addition of r charges at Rs.13,94,35,411/- [3
5,539/- [1478158.263 X Rs.35/gm ely. The relevant observations made re facts relating to the gamut of transac
M/s Asita Jewellery Manufacturing Pvt Lt rt of the show cause notice issued to the e show cause notice there exists discrepa ht of gold received and issued by M/s As Pvt Ltd as per Anicalan Software and tally account. The fact that the assessee old to M/s Asita Jewellery Manufacturing P e had issued fine gold to other karigars/
aments or purchase of gold ornaments and rom the said karigars/vendors other tha acturing Pvt Ltd were showed as orname ewellery Manufacturing Pvt Ltd. Further, th to the show cause issued that reliance has t recorded from some of the employees can he least untenable for the reason that the re y based on the actual findings observed b to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
de to AJMPL for 2 X Rs.6/gm] &
which he added assessee would tually issued to whom making oks. The AO is Rs.35 per gram, f unaccounted
3983868.872 X m] in AYs 2020- e by the AO are ctions of the td has been assessee. As ancy between sita Jewellery the weight company has vt Ltd proves
/ vendors for the products an M/s Asita ents received he submission s been placed nnot be relied eplies elicited based on the analysis of the Manufacturing Pv to be stated here has not been put such. It is obviou without supportiv scrutiny. Hence th
10.3) In the light based on the dis by the assessee t of the excess we
3983868.872 gm
Rs.2,39,03,214/- adoption of rate o
10.4) As discusse gold ornaments
Manufacturing P received from M/
therefore that th transaction to th ornaments requir the average ma other manufactur and treating the details brought o works out to Rs under section 69
3983868.872 x R
- which is as belo
……
10.5) Since the substantiated and assessment is pr show-cause notic sum of Rs.2,39,0
brought to tax as of the same havi assessee for this ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 163 ::

software used by the entity M/s Asi vt Ltd during the course of the search proc ein that the submission of the assessee i t forth as to be mannered and factual ina us that the assessee has not done so and a ve documents and evidences would not stan he reply of the assessee is not acceptable.
t of the facts stated in the show-cause notic cussions made herein, the manufacturing to M/s Asita Jewellery Manufacturing Pvt L eight of metal receipts shown in the tally ms for the financial year 2019-20 is wo
(i.e. 3983868.872 x Rs.6 - The work of Rs.6/- is furnished herein below) ed in the show-cause notice the assessee from Karigars/vendors other than M/s As Private Limited and showed them as /s Asita Jewellery Manufacturing Private he element of payments embedded in re he other vendors/karigars for getting th red to be worked out. The same is being nufacturing cost of new gold ornaments rers and apply the same on the above ex cost as unexplained expenditure by the a on record in this regard show that the A .35. Adopting the same, the unexplained
9C of the Act works out to Rs.13,94,3
Rs.35 - The workings for the adoption of ra ow).
submissions of the assessee are found d corroborated with credible acceptable ev roceeded to be completed on the lines pro ce and for the discussions made herein. A 03,214/- and Rs.13,94,35,411/- (Rs.16,33
s income which has escaped the assessmen ing been not recorded in the books of acc assessment year.”

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ita Jewellery ceedings. It is n this regard accuracies as a mere denial nd the test of ce issued and charges paid
Ltd in respect y accounts of orked out at kings for the has received sita Jewellery having been Limited. It is espect of the he new gold by reckoning s charged by xcess weights assessee. The Average rate d expenditure
35,411/- (i.e.
ate of Rs. 35/
d to be not vidences, the oposed in the Accordingly, a 3,38,625/-) is nt on account counts of the 32.2 Being aggrieved b the matter in appeal be the assessee is in appea
32.3 The Ld. AR Shri A made on incorrect unde with infirmities and in addition was the detai
(Jiliba software) mainta maintained in this Anic been newly introduced internal control of certa that this Anicalans sof onset of COVID-19
experimentation, but si
COVID, its use was ke financial reporting purpo maintaining the details figures in their regular course of the same sear tally system fully recon the assessee. He acco
Anicalans (Jiliba softwa
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 164 ::

by the above order of the AO, the a efore the Ld. CIT(A) who confirmed al before us.
Anand submitted that, the impugne erstanding of facts and that the sam consistencies. He pointed that th ls of quantitative entries found in ained by AJMPL. He submitted th calans software was incomplete as by AJMPL in their systems which wa in sections of production. He brough ftware was introduced by AJMPL o pandemic as part of internal nce it suffered from operational dis ept limited and was not meant fo oses. He explained that AJMPL had of receipt & issue of gold and the tally system as well, which was als rch and that, the quantitative entrie nciled with the details found from t rdingly contended that, the entrie re) was not reliable, particularly w to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ssessee carried the same. Now ed addition was me was fraught e basis of the n the Anicalans at, the entries the same had as only for their ht to our notice only during the administrative ruptions during r accounting &
ordinarily been eir quantitative so found in the es found in their the premises of s found in the hen AJMPL had itself denied its content of the assessee with th and that there was no m
32.4 Shri Anand furthe disputed the correctnes and had provided their the onus lay on the necessary corroborative paid to AJMPL was exce conducted upon the ass stock movement regist payment of labour ch reliance on unverified corroboration or cross justice and cannot be th
32.5 Shri Anand furthe to AJMPL u/s 69C of th that, the expenses we through banking chann also showed that AJMP income. He accordingly
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 165 ::

ts and had reconciled the entries as heir books of accounts maintained mismatch found.
er pointed out that, when AJMPL t s of the entries made in Anicalans ( stock registers and tally accounts to Revenue to cross-examine AJMP e evidence to prove their claim that essive. He further submitted that, th sessee also did not reveal any disc ter, inventory register etc. or an harges. The assessee thus conte d internal software (Anigalan)
-examination, violates the princip he basis for addition.
er submitted that the disallowance o he Act was also legally untenable.
re duly recorded in the books of nel after deducting TDS and payme
PL had paid taxes at the normal argued that, there was no element to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
s per the books in tally system themselves had (Jiliba software) o prove it, then
L and provide labour charges he search action crepancy in the y unaccounted nded that the data, without ples of natural of charges paid
He pointed out accounts, paid ent of GST. He rates on such of unexplained expenditure which was invoke rigors of Sectio excess payment could n of the Act. With regard labour charges paid to o based purely on surm deleted.
32.6 Per contra, the Ld lower authorities. The L
(Jiliba software) at inconsistencies in the q behalf of the assessee account of excess labou
32.7 Heard both the pa find it relevant to put th be engaged in the bus assessee follows a syste gold ornaments. The a bullion dealers or receiv sent for manufacture to placed the copy of the ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 166 ::

not found recorded in the books n 69C of the Act. According to hi not therefore have been legally disa d to the further addition on account other karigars, he submitted that, th mises and conjectures and thus d d. CIT, DR vehemently supported th
Ld. DR contended that, the data fou the premises of AJMPL clea uantities of metal actually processe and thus the AO had rightly ma r charges paid by the assessee.
arties. Before we advert to the impu he facts in proper context. The asses siness of marketing & sale of gold ematic and documented process in assessee is noted to procure gol ves gold from melting old gold jew o job workers including AJMPL. The contract entered into with AJMPL a to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
of accounts to m, the alleged allowed u/s 69C of unexplained his addition was deserves to be he action of the nd in Anicalans arly evidenced ed by AJMPL on de addition on ugned issue, we ssee is noted to jewellery. The manufacture of d bullion from ellery, which is e assessee has at Pages 1317

to 1319 of Paper Boo purchased, movement dispute. It is noticed th alloys for which the job of the gold issued to AJ are found placed at Pag gold is then issued to o
M/s Bhavya Jewellers, w the finished product is noted to be maintain premises to the job wo which forms part of the located across Souther inventory movement, p etc. maintained by the a discrepancy therein wa stamped, signed and invoices on the assesse assessee company duly
Loss Account. Once the liability entries get capt to the job worker as an ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 167 ::

ok. It is observed that, the details of gold issued for manufacture e hat, the gold issued to AJMPL is onl b worker charges paid was Rs.6/gra
JMPL, out of the stock available with ges 1320 to 1340 of the Paper B other job-workers for further proces who manufactures gold ornaments a received back by the assessee. T ning the complete stock moveme rker/s and then the final receipt of eir inventory and is sold through th n states. It is observed that, the s purchases, corresponding sales, clo assessee have not been disputed by as found in the course of search.
accepted challans, the job-worke ee for completed and delivered job w records in its books of account thro e invoices are recorded in books, th tured by the system which is follow nd when due. The assessee is foun to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
of gold bullion etc. are not in ly for mixing of am. The details h the assessee,
Book. The said ssing, mainly to and then finally
The assessee is ent from their gold jewellery, heir showrooms stock registers, osing inventory y the AO and no Based on the er then raises work which the ough its Profit &
he expense and wed by payment nd to have paid the job-work charges th
TDS. AJMPL is noted to also duly discharged by 32.8 We therefore obs duly supported by mate the Revenue’s case tha actually carrying out job case relates to the quan
According to the Reve
5473001.128 gms. & 5
AJMPL for processing in Anicalans (Jiliba softwa
3692429.808 gms. qu processing. This mismat
Revenue. The AO is no AJMPL paid qua this expenditure and secon separately processed o incurrence of further lab
32.9 It is therefore not was the entries found
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 168 ::

hrough banking channel after deduc have charged GST on all their invo the assessee.
serve that the job-work charges pa erial evidences, as discussed above t AJMPL is a bogus or shell entity o b work for the assessee. The dispute ntum of job carried out by AJMPL fo enue, though the books of assess
5170588.071 gms. quantity of gold n FYs 2019-20 & 2020-21, but the e are) of AJMPL shows that 94568
antity of gold was received by tch is noted to have been viewed ad oted to have first held that, the lab mismatched quantity represente dly, this mismatched quantity wo outside the books, which would ha bour charges paid to outside karigar ticed that, the foundation of the imp in Anicalans (Jiliba) software, whos to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
cting applicable oices which was aid to AJMPL is e. It is also not or that it is not e in the present or the assessee.
see shows that d was issued to entries found in 69.000 gms &
the AJMPL for dversely by the bour charges to ed unexplained ould have been ave resulted in rs.
pugned addition se veracity has been objected to by the been maintaining the c the job worker/s and t found & seized during t pointed out by the Rev provided their comple accounts system along
Pages 1341 to 1375
reconcile with the stock
These contemporaneou disputed the veracity software from their prem statement of the key pe correctness of the e
Accordingly, in our con substantiate the veracit the premises of AJM particularly when the co in the course of same reconciled with the book
32.10
The impugn well. If the entries fou
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 169 ::

e assessee. As observed above, th complete stock movement from the hen the final receipt of gold jewell the course of search, and there is venue therein. We also note that, A ete stock movement maintained g with confirmations, which are fo of Paper Book, and the same is k movement recorded in the books o us evidences thus shows that AJ of the entries found in the An mises. The Revenue has not brough ersons of AJMPL in which they have a entries maintained in the Anica nsidered view, the onus lay on th ty of the entries found in Anicalans
PL with some independent tang ontemporaneous entries found in th search suggested the contrary, an ks of the assessee.
ned issue can be looked at from an nd in Anicalans software is to be to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
e assessee has eir premises to ery, which was no discrepancy
AJMPL has also in their tally ound placed at s noted to fully of the assessee.
MPL itself has nicalans (Jiliba) t on record any admitted to the lans software.
he Revenue to s software from gible material, eir tally system d which in fact nother angle as assumed to be true, then there are sev the first question whic processing was actually gold issued. We find th material or evidence w getting the gold proces karigar. It is also not th was being processed ou any unaccounted purch in regular stock of the a to AJMPL in their books through other karigars.
by any direct eviden movement, delivery cha
32.11
The next qu rationale for the assess outside the books, as processing formed part the Revenue’s case that gold of the assessee. T inventory movement et unexplained purchases
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 170 ::

veral questions which begs answer.
h arises is that, if the gold issued y lower, then to whom was the rem hat, the Revenue has not brought which would show that the assesse sed outside the books from some o he case of the Revenue that the alle utside the books, and not from AJM ases. Hence, as per the AO’s logic, assessee, which though shown to ha s, was actually not issued to AJMPL
This allegation, according to us, is nce and is rather dispelled by allans etc. maintained by the assess uestion which begs an answer is, ee to get its regular gold surreptitio admittedly the inventory of gold of their books. At the cost of repe t the mismatched entries represente
The Revenue has not disputed the tc. of the assessee nor any addition have been made. Hence, it is unc to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
In such a case, d to AJMPL for maining excess on record any ee was actually other jeweller /
eged gold which MPL, was out of , the gold lying ave been issued
L but processed s not supported the inventory ee.
was there any ously processed so issued for etition, it is not ed unaccounted stock register, n on account of clear as to why the assessee would pay their regular gold bul movement and corresp accounts.
32.12
The Ld. AR charging competitive pr to other labour/karigars average making charge
Rs.6/gm. Accordingly, assessee pay Rs.35/gm unknown local karigars, job-worker, charges onl
32.13
We further record the details or ide this mismatched quantit into several crores paid in the mind of the A investigate the same assessee. Rather, the impugned addition, driv
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 171 ::

y labour charges outside the books llion, when the purchases, inven ponding sales, all are recorded in R Shri Anand also pointed out tha rice for the job work done by them s. The AO himself is noted to have es at Rs.35/gm and also noted that we are unable to fathom as to w outside the books to get the gold
, when AJMPL, who is an establishe y Rs.6/gm from the assessee.
find that the Revenue has also n entity of the so-called karigars who ties and to whom were the labour c
. If the mismatch in entries gave ri
O, then he was required to furt and gather some cogent evidenc
AO is noted to have straightaw ven by misplaced suspicion, that th to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
s for processing ntory itself, its n the books of at, AJMPL was m in comparison worked out the AJMPL charges why would the processed from ed and reputed not brought on had processed charges running ise to suspicion her probe and ce against the way made the e assessee had incurred excess labour action of the AO cannot
32.14
There is ye facts set out above and evidently discernible th of 18% of the invoice available at Pages 148
job worker was also filin their income. If the alle was a case where the as and receive back the sa
GST of 18% and the pa on the excess paymen quantities job-worked f higher rate than what appeal to any prudent allegation of the Reven to AJMPL is found to be basis.
32.15
It is also no place, agree to receive
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 172 ::

charges only on the basis of conte be countenanced.
et another interesting aspect. On d the material seized in the course at, the payments to AJMPL was su e value. Further, from the financ
81 to 1514 of Paper Book, it is n ng its tax returns and paying due in egation of the AO is assumed to b ssessee would pay excess labour ch ame in cash. For this, the assessee yee was discharging additional inco nts, and further in order to get th from other karigars, the assessee
AJMPL charges. This foregoing an t person. Hence, in our considere ue that, the assessee paid excess e against human probabilities, havi ot clear to us as to why would AJM higher labour charges from the ass to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
emplation. Such perusal of the of search, it is bjected to GST cials of AJMPL, noted that, this ncome taxes on be true, then it harges to AJMPL e was incurring ome-tax of 33%
he mismatched was paying a nalogy will not ed opinion, the labour charges ng no rationale
MPL, in the first sessee and pay equivalent amount bac and AJMPL are indepen reputed and full-fledged of gold jewellery items what is actually due to their labour, and also a According to us therefo assessee in doing so. H assessee that the assu addition on account o infirmities.
32.16
Further, the misplaced suspicion is assumption of facts, p noticed that the entrie quantity of 9456869.00
5473001.128 gms. wa
Hence, as per the AO quantity but higher qua by his logic, the labour the contrary it was lowe also not be a case that ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 173 ::

k in cash. It is not in dispute that ndent entities and further, AJMPL is d company engaged in the business
. Hence, by receiving higher labou o it, AJMPL is essentially paying hig additional income-tax on such highe ore, there is no benefit for AJMPL fo
Hence, this aspect also reinforces t mption drawn by the AO to make f unexplained labour charges wa e non-application of mind by th s also found to be corroborated particularly, for the relevant AY s in the Anicalans software showe
00 gms. was processed by AJMPL, s shown to have been issued by O’s analogy, the assessee had no ntity of gold to AJMPL for processing r charges paid to AJMPL was not ex er than the commensurate value. Li t the mismatched quantity was pro to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
t, the assessee s noted to be a of manufacture ur charges than gher PF/ESI for er receipts etc.
or assisting the the case of the e the impugned s fraught with e AO and his by his wrong
2020-21. It is ed that, higher
, whereas only the assessee.
ot issued lower g. Hence, going xcessive but on kewise, it could cessed through other karigars. Rather, quantity than what w consideration. If that b excess labour charges
AY 2020-21 was clearly of fact. Likewise, the ad charges paid to outside lower quantity was issu that, the lower aut misinterpreted the facts shows that the impugne pitched assessment, in record.
32.17
The above quantities was actually shown in the books of a the differential quantity
Revenue that the assess there was any excess p this excess quantity wa
Undisputedly, the book quantitative details an ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 174 ::

as per the software, AJMPL had pr was shown in the assessee’s bo be so, then firstly, the disallowance paid to AJMPL amounting to Rs.2,3
y erroneous and based on mistaken ddition of Rs.13,94,35,411/- on acc e karigars was also untenable, as e ued and processed by AJMPL itself thorities had completely misun s and acted on non-application of m ed addition was made with a mindse gross ignorance of the relevant fac analysis raised another question issued to AJMPL in AY 2020-21 t accounts, then wherefrom did the as y of gold bullion. There is no case m see had indulged in unaccounted pu physical gold found in the course of as otherwise sold outside the book ks of the assessee has not been re d inventory movement along wit to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
rocessed higher ooks for lower e on account of 39,03,214/- for n understanding count of labour excess and not f. We thus find nderstood and mind. This also et to frame high cts available on that if higher than what was ssessee receive made out by the urchases or that f search or that ks of accounts.
ejected and the th the opening balance, purchases, sale
AO. All these factors th entries found in Anicalan
32.18
Lastly, we n contents of their Anica expenses incurred by A relevant FY 2019-20 a COVID-19 and that th explained that, this soft of job-work performe manufacturing process financial reporting purpo
AJMPL was maintaining in their tally system as and the same reconc therefore force in the s not brought on record a tally during the course in contrast to the ent impugned entries being to corroborate the sam light of the above discu
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 175 ::

es and closing balance have been a us lends credence to the assessee’
ns software was not reliable.
note that, AJMPL had also unequivoc lans software. It is observed from AJMPL that this software was insta and by the end of the year, there his software was in trial stage.
tware was maintained in respect of c ed within their premises and n and hence, it could not be used fo oses. We have already taken note o the quantity movement of receipt well, which was also seized in the c iles with the books of the asses submission of the assessee that, th any material to show as to why the e of search at AJMPL’s premises was ries found in Anicalans software.
third party material, the onus lay o e with some independent material, ussed evidences and factors brough to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
accepted by the ’s case that the cally denied the m the details of lled during the e was onset of It was further certain sections not the entire r statutory and of the fact that,
& issue of gold ourse of search ssee. There is he Revenue has entries found in to be rejected,
Moreover, the on the Revenue
, particularly in ht on record by the assessee rebutting t able to dispel the allega therefore we find that Anicalans software.
32.19
We have a that the presumption se the searched person. H possession of AJMPL presumed to be true o extended to the assess brought on record link discussed above, we ar
Anicalans software are demonstrate that there regard. Moreover, the entries were found ha show that the entries ac
32.20
Hence, in lig that the impugned addi with AJMPL was unsusta
AO is directed to delete
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 176 ::

the same. It is noticed that the asse ation of the Revenue with sufficient t it was unsafe to rely on the en lready held in the preceding para et out in Section 132(4A) of the Act ence, the contents of the material s viz., entries in Anicalans softwa only qua AJMPL. The said presump see, unless there is other corrobo king the same to the assessee. F re of the considered view that, the unreliable and that the assessee ha e was no unaccounted labour charg searched person from whose po s also submitted contemporaneou ctually reconciled fully with the asse ght of the above discussions, we a tion made on account of unaccount ainable both on facts and in law an the same. These grounds are there to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
essee has been t evidences and ntries found in agraphs earlier, t is only against seized from the re could have ption cannot be orative material
From the facts e entries in the as been able to es paid, in this ossession these s evidences to ssee.
ccordingly hold ed transactions d therefore the fore allowed.

ITA No.680/Chny/20
33. We now take up t for AY 2021-22. 34. Ground Nos. 1
assessee has inter al material found in the co unabated assessment. T the time of hearing, assessment and therefo grounds are therefore d
35. Ground No. 4
Rs.87,66,675/- made by the mail attachment submissions, it is observ adopted both by the AO same as in AY 2016-17
while deciding Ground we hold that the additi law. We therefore direc
AY 2021-22. These grou
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 177 ::

025 for AY 2021-22
the assessee’s appeal in ITA No.68
to 3 are noted to be general ia contended that in absence o ourse of search, no addition was pe
The Ld. AR for the assessee fairly that the relevant AY 2021-22
ore these grounds have no legs to s ismissed.
to 8 of the appeal relates to t y way of unaccounted cash receipts of Mr. Stanley. After conside ved that, except variation in figures
O & Ld. CIT(A) to justify this addit
7.Following our reasons and conclu
Nos. 4 to 8 of assessee’s appeal in on of Rs.87,66,675/-is untenable o ct the AO to delete the impugned ad unds are accordingly allowed.

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
0/Chny/2025
in nature. The f incriminating rmissible in the pointed out, at is an abated stand on. These he addition of found noted in ring the rival s, the reasoning ion is verbatim usions recorded n A.Y. 2016-17, on facts and in ddition made in 36. Ground Nos. 9 to account of excess wasta of existing gold orname of the lower authoritie observed that the issue to 23 of assessee’s ap drawn therein, we dire allow this ground of the 37. Ground Nos. 14
excess wastage loss of ornaments purchases f sheet(s) downloaded fr the rival submissions noticed that the impug was involved in Groun
Following our conclusio the assessee.
38. The sole grievan assessee relates to th retained by the Ld. CIT on 31-03-2021. Briefly
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 178 ::

o 13 are found to be against the ad age of gold of Rs.27,58,29,025/- u ents into fine gold. After going thro es and considering the rival sub involved in this ground is same as ppeal for AY 2019-20. Following o ect the AO to delete the impugne assessee.
to 20 relate to the addition made f Rs.42,18,19,429/- upon conversi rom customers into fine gold base rom the email of Mr. Stanley. Afte and the findings of the lower au ned issue involved in these ground d Nos. 20 to 26 for the precedin n drawn in A.Y. 2020-21, we allow nce raised in Ground Nos. 21
he addition to the extent of Rs.
(A) on account of valuation of the c y noted, the AO in the assessm to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ddition made on pon conversion ough the orders bmissions, it is Ground No. 19
our conclusions d addition and e on account of ion of old gold ed on the excel er consideration uthorities, it is ds are same as g AY 2020-21. w this ground of to 28 by the 10,42,97,645/- closing stock as ment order had observed that, the asse was lower than the o according to him was between the branches questioned the basis of show cause elaborated valued the closing stoc average cost (‘WAC’) wh valuing the closing stoc assessee for valuation in as discernable from the Stock
As per Asse
Qty
Rat
Gold
Ornaments
39,21,271
4,15
Stock with Gold
Smith
9,33,319
4,11
Bullion
37,401
4,44
Old Gold
1,09,237
4,11
Total
50,01,228
38.1 The AO is noted t stock on the above WA why addition of Rs.10
restatement of opening
22. The assessee is no dated 16-12-2022 in wh defects and infirmities
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 179 ::

ssee had valued the closing stock a opening stock value or purchase done by distorting the values of to reduce the actual cost. The A valuation followed by the assessee the manner in which the assessee ck. The AO accordingly worked ou hich should have been adopted by t k and found that the rates actually n the financials was lower. The com assessment order is noted to be as ssee’s Financials
WAC as computed by AO te
Amount
Rate
Amount
50
16,27,37,89,116
4,376
17,15,79,43,292
10
3,83,59,40,657
4,331
4,04,20,57,775
40
16,60,59,201
4,896
18,31,27,430
10
44,98,64,354
4,331
47,30,88,616
20,72,47,53,327

21,85,62,17,113
to have accordingly reworked the v
AC and thereafter show caused the 0,26,91,458/- being the net varia
& closing stock should not be mad oted to have furnished its explanat hich the assessee inter alia pointed in the method of valuation adopted to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
t a value which e value, which stock transfers
AO accordingly e. The AO in his ought to have t the weighted he assessee for adopted by the parative details follows:
O
Difference
Amount
2
88,41,54,176
5
20,61,17,118
1,70,68,229
2,41,24,262
3
1,13,14,63,786
value of closing assessee as to ation upon the de in AY 2021- tion vide letter out the factual d by the AO in the show cause. The as between the branches w was no distortion in the showed that, the weigh books was higher than therefore the initial prem of valuation was also submitted that, the clos cost or Net Realizable
Accounting Standard–2, of India and also the IC assessee had placed on 03-2021 which was low accordingly submitted t valued at NRV and in th valuation of closing st warranted. The AO how the assessee and made stock as set out in the AO, the assessee is no CIT(A).
ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 180 ::

sessee also demonstrated that, the were at the weighted average cost e value of transfers whatsoever. The hted average cost of the closing in the value of opening stock & purch mise stated by the AO for doubting incorrect. The assessee further is sing inventory was valued at the we
Value, whichever is lower, in ac
, issued by the Institute of Charter
CDS – II notified by the CBDT. It is n n record, the details of NRV ascerta wer than the weighted average cost hat, the closing stock as on 31-03- hat view of the matter, there was n tock and thus no addition on th wever, is noted to have rejected the e the addition on account of valua show cause notice. Aggrieved by t oted to have preferred an appeal to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
stock transfers and that there e assessee also nventory as per hases value and the correctness noted to have eighted average ccordance with ed Accountants noticed that the ained as on 31- t. The assessee
-2021 had been no defect in the is ground was submissions of ation of closing he order of the before the Ld.

s noted to have analyzed the subm e observations made by the AO wh that several of the observations ma d the method of valuation adopted
T(A) is noted to have principally e AO’s valuation exercise was that ock at the WAC; instead of the WAC or NRV, whichever is lower. T he net realizable value of gold bu han the weighted average cost as a sing inventory was to be valued at N
AO. The Ld. CIT(A) thus rejected the AO holding it to be in violation down in AS – 2 issued by ICAI as ereafter himself is noted to have re closing stock. In respect of the valu h and gold ornaments, which the AO
- and Rs.4,376/- respectively, the ed that, the NRV as on 31-03-202
ccording to the Ld. CIT(A), the NRV
Rs.4,162/- as opposed to the NRV to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
missions of the hile issuing the ade therein was by the AO was held that, the he had simply well accepted
The Ld. CIT(A) ullion and gold ppearing in the NRV and not the d the valuation of the accepted well as ICDS –
e-examined the ue of old gold /
O had valued at e Ld. CIT(A) is 21 was actually
V as per market
V of Rs.4,110/- estimated by the ass
Rs.4,162/- to value th respect of the closing b
WAC of bullion as per b
Ld. CIT(A) was of the market rate for 24k go and not the NRV of Rs.4
is found to have accord gold as under:-
Item of gold
Qty
N
Gold
Ornament
3921271
41
Stock with Goldsmith
933319
41
Bullion
37401
45
Old gold
109237
41

sessee, and therefore he adopte he gold ornaments as on 31.03. balance of gold bullion, Ld. CIT(A) books of Rs.4,896/- was higher than considered view that, the correct old as appearing in public domain w
4,440/- estimated by the assessee.
dingly re-worked the calculation of a RV
Rate adopted in Financials
Value as per
Financials
Value as NRV
162
4150
16273274650
16320329
162
4110
3835941090
3884473
521
4440
166060440
1690899
162
4110
448964070
4546443

20724240250
20828537
ove calculation, the Ld. CIT(A) uphe uation of closing stock to th deleted the balance addition made d that, the Revenue has not dispu
) to the extent of the addition delet ng aggrieved by the addition retain ore us.

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
d the rate of 2021. Even in noted that, the n the NRV. The t NRV was the was Rs.4,521/-
The Ld. CIT(A) all items of the per
Difference
9902
4,70,55,252
3678
4,85,32,588
921
30,29,481
394
56,80,324
7895
10,42,97,645
eld the addition he extent of e by the AO in uted the above ed by him. The ned by the Ld.

ITA Nos.675
(AYs 201
M/s. Lalithaa
:: 183 ::

parties. It is settled that, the reco of inventory is the lower of Cost or e CBDT in the Income Computation fied the manner of valuation of inve easurement is noted to be as under omputation and Disclosure Standard shall b ntories, except:
ress arising under 'construction contra service contract which is dealt with by Disclosure Standard on construction contra ress which is dealt with by other Income tandard; ntures and other financial instruments held dealt with by the Income Computation an urities; ventories of livestock, agriculture and for s and gases to the extent that they are mea ares, which can be used only in conne set and their use is expected to be irregu cordance with the Income Computation an gible fixed assets.
shall be valued at cost, or net realis wer.”

to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ognized method r Net Realizable and Disclosure entories, whose r:- be applied for ct' including the Income acts;
Computation d as stock-in- nd Disclosure est products, asured at net ection with a ular, shall be nd Disclosure sable value,

e of decision of Hon’ble Supreme Co v. CIT (77 ITR 533) wherein it sing stock at cost or market value and acceptable method of valuation pressed by the Hon’ble Apex Court nts India Ltd. (188 ITR 44)
CIT (240 ITR 355).
the above decisions (supra), and m pplicable in the impugned AY, we fi to value its closing inventory at t ever is lower.
principle is not being disputed b ue in dispute is with regard to the for the purposes of valuation ed that, the CBDT has also broad ted for ascertaining the net realizab alue hall be written down to net realisable value
Where 'items of inventory' relating to the s ar purposes or end uses and are produced a ographical area and cannot be practicab other items in that product line, such inve to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ourt in the case was held that, e, whichever is n. Same view is in the cases of ) and United more particularly ind that, it was the cost or net by the parties.
“net realizable of the closing dly set out the ble value, which e on an item- same product and marketed bly evaluated entories shall be grouped toge aggregate basis.
20. Net realisabl available at the t shall also take in held. The estimat cost directly relat to the extent that day of the previo

ether and written down to net realisable e value shall be based on the most relia time of valuation. The estimates of net rea to consideration the purpose for which the tes shall take into consideration fluctuation ting to events occurring after the end of p t such events confirm the conditions existin us year.
t is observed that, the NRV has bee available at the time of valuation taken into account the purpose uations directly relating to events ent which confirms the conditions en note of the above, we now reve se. We first take up the manner of a nts. The Ld. AR brought to our n d the NRV based on prevailing mar ge rate of Rs.4,110/- actually realiz k us through the relevant docume e on that date at their showrooms, d
44 to 1652 of the Paper book. T s noted to have simply adopted t to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
value on an able evidence alisable value e inventory is ns of price or previous year ng on the last en based on the and that such for which the occurring after existing at the ert back to the ascertaining the otice that, the rket prices with zed as on 31st entation for the details of which The Ld. CIT(A), the rate being displayed for gold on t
Association – Madras as and accordingly estima through these details, w assessee to be more ap the reason that the asse on the closing day i.
evidences available in f selling rate of the asse
March 2021 was Rs.4,1
the assessee was justif the assessee’s method techniques notified in I setups, the cost of the i the saleable value of margin. For the aforesa made by the Ld. CIT(A gold, stock lying with go

he website of The Jewellers and D s on 31-03-2021 to be reference ra ated NRV of the gold ornaments we find the estimation exercise und ppropriate and reliable as that of the essee had dealt in similar items of g e. 31st March and there are co form of sale invoices, which shows essee’s manufactured gold orname
10/-. In our considered view, the ba fiable as it was based on reliable e dology is found to be supported
ICDS-II wherein it has been stated nventory can also be determined by the inventory, the appropriate pe aid reasons, we accordingly hold tha
A) on account of upward estimation old smith and gold ornaments was u me to the issue regarding the mo the NRV of the gold bullion. The t to our notice that the official rate to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
Diamonds Trade ate for 22k gold
. Having gone dertaken by the e Ld. CIT(A) for gold ornaments ntemporaneous s that the basic ents as on 31st asis adopted by evidences. Also, by one of the d that, in retail y reducing from rcentage gross at, the addition n of NRV of old unjustified.
ost appropriate
Ld. AR, on the notified by the Government as on 31st
Rs.44,190/-. Accordingl regard to the aforesaid of Rs.4,440/- estimated was conservative and c
Hence, we hold that the as undertaken by the interference and that th valuation and in that vi relation thereto, is held

March 2021, viz., Gold 10 gms 999
y, the NRV per gm works out to Rs.
value, we are of the considered view d by the assessee to be NRV of th commensurate with the official gov e valuation of the closing inventory assessee being reasonable did no he Ld. CIT(A) had in fact overstated iew of the matter, the impugned ad to be unsustainable.
ture, it is also relevant to take note e Apex Court in the case of Chainru wherein it was held that, the valua eated as a source of profits. The C osing stock is based on the ‘princip charge of the goods unsold during in its judgment opined that “it is a t that “arises out of the valuation its arising or accrual is where th unsold stock at the close of an acc the process of determining the tra to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
9 was valued at 4419/-. Having w that, the rate eir gold bullion vernment rate.
y of gold bullion ot warrant any d the inventory ddition made in e of the findings up Sampatram ation of closing
Court observed le of balancing’
the year. The a misconception of the closing he valuation is counting period ading results of that period, and can i profits.”This position of in the case of CIT v. D

n nosense be regarded as the “s law was reaffirmed by the Hon’ble ynavision Ltd (348 ITR 380).
bserved that, the closing as per the financials for the year- stock for 01-04-2021 and thus an ock would stand subsumed in the v ucceeding year and thus overall this t is noted that, the income-tax asse
3 has been processed u/s.143(1) disturbed the valuation of opening taxable profits by the equivalent s ed AY before us. Accordingly, w any infirmity in the value of openi n of doubting the correctness of v
03-2021 is contradictory and errone method adopted by the assessee f onsistent in the subsequent year a uted the valuation of closing stock s been brought to our attention for the next AY 2023-24 has been to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
ource” of such Supreme Court inventory of -ending 31-03- ny alteration in valuation of the entire exercise essment for the of the Act, in stock and has sum, which he when the AO’s ng stock as on aluation of the eous. It is also for valuation of as well and the k as on 31-03- that even the completed u/s 143(3) on 30-03-2025
and closing stock have valuations were made.
that, the method of consistently followed, w not be tinkered with wit

and in this assessment also the va e been accepted and that no alte
These facts strengthens the case o valuation adopted by them, wh was appropriate and reasonable an thout reasonable cause.
ve reasons, we accordingly direct th
2,97,645/- sustained by the Ld. CIT tock. These grounds are thus allowe to 35 raised in this appeal are aga ssing the gross profit margin of Rs.
hed transactions with MJPL. It is not reasoning adopted both by the AO verbatim same as in AY 2017-18. B ned issue which is involved across A owing our reasons and conclusion
Nos. 21 to 27 of assessee’s appeal in red view that, the entries found i ises was unreliable and therefore made on account of unmatched e to 680/Chny/2025
16-17 to 2021-22) a Jewellery Mart Ltd.
lues of opening eration to their of the assessee ich was being nd thus should he AO to delete
T(A) in relation ed.
ainst to the Ld.
58,63,415/- on ted that, except
& Ld. CIT(A) to Both the parties
AYs 2017-18 to ns recorded in n A.Y. 2017-18, in the material the impugned entries between the assessee’s books a unsustainable We there delete the impugned ad