M/S META JEWEL KRAFTS,JAIPUR vs. ITO, WARD-6(2), JAIPUR, JAIPUR
Income Tax Appellate Tribunal, JAIPUR BENCH “SMC”, JAIPUR
Before: Dr. S. SEETHALAKSHMI & SHRI GAGAN GOYALMeta Jewel Krafts, Shop No. 115, Mall 21, C-17, Bhagwan Das Road, C-Scheme, Jaipur 302 001 PAN No. AAJFM 5731D
PER GAGAN GOYAL, A.M:
This appeal by the assessee is directed against the order of the NFAC, Delhi dated 29.05.2025 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’).
The assessee has raised the following grounds of appeal:
1. The Ld. CIT (A), NFAC has erred on facts and in law in confirming the addition of Rs. 36, 00,000/- u/s. 69A of IT Act by treating the cash deposit during the demonetization period as undisclosed income of the assessee by not accepting the 2
contention of assessee that the same is out of the cash sales duly recorded in the books of accounts which has been offered for tax, thus resulting into double taxation.
The Ld. CIT(A), NFAC has erred on facts and in law in not deciding the ground relating to taxing the alleged unexplained cash deposit in the bank account u/s. 115BBE @ 60% instead of taxing the same @ 30% by ignoring that section 115BBE substituted by Taxation Laws (Second Amendment Act), 2016 which received the assent of President on 15.12.2016 and made applicable from 01.04.2017 is applicable to any transaction from 01.04.2017 onwards and not to any transaction prior to 01.04.2017 as held by Hon'ble Madras High Court in case of SMILE 2. The brief facts of the case is that during assessment proceedings AO noted that during the demonetization period assessee had deposited cash of Rs.36,00,000/- in the bank account maintained with Allahabad Bank & HDFC Bank. After considering the details furnished by the assessee tabulated at Pg 2 & 3 of the assessment order, AO observed that cash deposit during the demonetization is much higher than the cash deposit during the same period in previous year. Further there is substantial increase in cash sales i.e. of 89.44 % for the period 01.04.2016 to 08.11.2016 as compared to 01.04.2015 to 08.11.2015. Assessee claimed that cash sales have significantly increased in the month of September & October due to peak demand of jewellery in festive season of Diwali and each customer as tradition purchases gold/silver in small or higher value generally in cash. However this explanation is not acceptable since, (i) Sales invoices produced by the assessee do not contain details of purchaser, i.e. name, address, contact number, etc. thus the genuineness of sales cannot be ascertained. (ii) Assessee failed to furnish any documentary evidence in support of transportation of jewellery during purchase or any evidence in respect of freight payment to the transporter. (iii) Assessee failed to establish any nexus as to why he was keeping such huge amount of cash without depositing the same to its current account.(iv) There is an enormous increase in cash sales during Oct., 2016 as compared to Oct., 2015. Similarly the closing cash in hand as on Oct., 2016 has increased manifold as compared to Oct., 2015 without any genuine reason. (v) The assessee has failed to furnish its quarterly VAT return. Accordingly AO invoked the provisions of section 145(3) of the Act and made addition of Rs. 36, 00,000/- u/s 69A of the Act.
The Ld. CIT (A), NFAC confirmed the addition made by AO by holding that the various judicial precedents relied by the assessee are distinguishable on facts. In the present case, the genuineness of sales itself is in serious doubt. He relied on the decision of Hon’ble Supreme Court in case of Sumati Dayal Vs. CIT, CIT Vs. Durga Prasad More, Mcdowell & Co. Ltd. vs. CTO and the decisions of ITAT, Delhi Bench in case of Harsh Win Chaddha vs. DCIT to held that circumstances and preponderance of probabilities is against the assessee. Accordingly it is held that the appellant failed to discharge its onus of proving the genuineness of the cash deposits. The explanation furnished is merely self-serving and is not supported by credible, third-party or circumstantial evidence. Hence the addition made by the AO is confirmed.
We have heard both the parties and considered the material available on record as also the case laws relied upon from perusal of the documents placed in the paper book we find that immediate source of cash deposit of Rs. 36, 00,000/- during the demonetization period is verifiable from the cash book. From the cash book (PB 31-41) we note that generation of cash is mainly from the sales made between 28.10.2016 to 05.11.2016 which is between Dhanteras to Diwali and after Diwali. As per the cash book the assessee was having cash balance of Rs.39,73,024/- as on 09.11.2016 (PB 38) out of which cash of Rs.36,00,000/- (18,00,000+8,50,000+9,50,000) was deposited in the bank account on 11.11.2016. The summarized position of cash sales, credit sales, total sales & cash deposits made during the year as compared to the last year is as under:-
Particulars
A.Y.
2017-18
(Amount in Rs.)
A.Y. 2016-17
(Amount in Rs.)
Increase in %
Cash Sales
1,08,00,163
79,80,840
35.33%
Credit Sales
2,45,52,344
1,83,67,934
33.67%
Total Sales
3,53,52,507
2,63,48,774
34.17%
Cash Deposit
98,41,800
72,50,000
35.75%
Cash
Deposit to Cash Sales Ratio
91.13%
90.84%
-
Cash Sales to Total
Sales Ratio
30.54%
30.29%
-
Thus cash sales have increased by 35.33% and the cash deposit in the bank account also increased by 35.75% as compared to the last year. Therefore, the various observations made by Ld. CIT (A) on preponderance of probabilities fall flat. We also agree with the Ld. AR of the assessee that various observations made by the AO are incorrect and on surmises and conjectures as explained in the written synopsis filed before us which we are not reproducing for the sake of brevity. In any case we find that AO has accepted the sales. The sales are credited to P/L A/c. Hence, taxing the cash deposit in the bank account which is out of such sales has resulted into double taxation which cannot be approved in view of the 5
We also note that the Ld. CIT (A), NFAC has not stated how the cases relied by the assessee are distinguishable on facts. Rather the cases which are relied upon by Ld. CIT (A) on preponderance of probabilities are in favour of the assessee as from the facts of the case it can be noted that the cash balance has increased due to the sales made on the occasion of Diwali and it is a known fact that on this occasion the person purchases the jewellery. Hence the addition of Rs.36 lacs made by AO u/s 69A of the Act and confirmed by Ld. CIT (A) is deleted. Thus this ground is allowed.
In view of the decision given in respect of ground no.1, ground no.2 of the assessee becomes academic. Hence the same is dismissed as infructuous.
In the result, the appeal of the assessee is allowed with above directions.
The Order is pronounced in the open court on 15th Day of September 2025. (Dr. S. SEETHALAKSHMI)
ACCOUNTANT MEMBER
Jaipur, िदनांक/Dated: 15/09/2025
Copy of the Order forwarded to:
1. अपीलाथ /The Appellant ,
2. ितवादी/ The Respondent.
3. आयकर आयु CIT
4. िवभागीय ितिनिध, आय.अपी.अिध., Sr.DR., ITAT,
5. गाड फाइल/Guard file.
BY ORDER,
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(Asstt.