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Facts
The assessee, engaged in selling gold jewellery, declared income of Rs. 4,37,570 for A.Y. 2017-18. The Assessing Officer (AO) added Rs. 29,00,000 as unexplained income due to cash deposits during demonetization. The CIT(A) granted partial relief, deleting Rs. 13,82,662 after considering sale confirmations.
Held
The Tribunal noted that the assessee's explanation for cash deposits was based on festive season sales and provided some confirmations, but crucial documents like a stock register were missing. The Tribunal found it necessary to set aside the matter for de-novo consideration by the AO.
Key Issues
Whether the cash deposits made by the assessee during demonetization were adequately explained as sales of gold ornaments, and if not, whether the addition made by the AO and upheld partly by the CIT(A) was justified. Whether the absence of a stock register constitutes a failure to provide essential supporting documents.
Sections Cited
68, 69A
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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI BIJAYANANDA PRUSETH
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 03.10.2024 passed for A.Y. 2017-18. The assessee has raised the following grounds of appeal: 2. “1.1 The order passed by U/s. 250 passed on 30.03.2024 by NFAC, [CIT(a)], Delhi (for short CIT(A)” upholding the addition of Rs.15,17,338/- made by A.O. is wholly illegal, unlawful and against the principles of natural justice.
1 Asst. Year –2017-18 - 2–
1 The ld. CIT(A) has grievously erred in law and or on facts in upholding that the cash deposits to the extent of Rs. 15,17,338/- was unexplained income u/s69A.
2 That the in the facts and circumstances of the ld. CIT(A), ought not to have upheld the addition of Rs. 15,17,338/-.”
The brief facts of the case are that the assessee is an individual and is engaged in the business of selling of Gold jewellery and ornaments and job work income. During the year under consideration, the assessee had declared total income of Rs. 4,37,570/-. The Assessing Officer observed that during the impugned year under consideration, the assessee deposited cash to the tune of Rs. 29,00,000/- in his IDBI Bank account, during the demonetization period on 11.11.2019. The Assessing Officer asked the assessee to prove the source of such cash deposit of Rs. 29,00,000/- during the demonetization period, however, in absence of satisfactory explanation by the assessee, the Assessing Officer made an addition of Rs. 29,00,000/- as unexplained income under Section 68 of the Act.
In appeal Ld. CIT(A) observed that the assessee during the appellate proceedings submitted that during the festive season and more particularly during the Diwali, sale of ornaments increases. During the appellate proceedings, the assessee submitted copy of invoices, copy of VAT returns and confirmation of sale from the parties, to whom the cash sales were made. Accordingly, with respect to parties, from whom the confirmation was received, the Ld. CIT(A) gave relief to the assessee and deleted additions to the extent of Rs. 13,82,662/- out of the total additions made by the Assessing Officer. While allowing the part relief to the assessee the Ld. CIT(A) made the following observations:
“6.2 Asst. Year –2017-18 - 3– submitted copy of invoiced, copy of VAT Return, confirmation of persons to whom cash sale was made. Details of Confirmation of Account (Oct. 2016):- S.N. Name of Person to whom Amount (Rs.) cash sale was made 1 Ajaybhai B. Adesara 2,96,499/- 2 Das Gopalbabu Robin 3,05,998/- 3 Himaben M. Soni 1,90,000/- 4 HiteshP. Soni 1,60,000/- 5 Neetaben H. Soni 1,31,002/- 6 Nikunj Rajeshbhai Soni 2,99,163/- Total Amount 13,82,66/7-
3
In view of the above discussion, it is clear that the appellant has made cash sales of gold ornaments to said parties in month of October 2016. Also jhe said transactions are part of accounts/financials of appellant gets relief of Rs. 13,82,6627- out of Total addition of Rs. 29,00,000/-. Therefore, the appeal of the Appellant is party allowed.” 6.4. 5. The assessee is in appeal before us against the order passed by the Ld. Asst. Year –2017-18 - 4– the impugned assessment year, there was substantial increase in the cash deposits during the demonetization period. Further, the D.R. pointed out that in this year all sales were below Rs. 20,000/-, which was specifically with a view to evade taxes. Further, Ld. D.R. pointed out that the asessee had not deposited a very basic and essential evidence like stock register, for the impugned year under consideration to substantiate whether the assessee had stock in hand from which sale of jewellery / ornaments were in fact made by the assessee which were the source of deposits of cash during the demonetization period.
On going through the rival contentions, we are of the considered view that it is a fit case where the matter may be set-aside to the file of Assessing Officer for de-novo consideration, wherein the assesee would be required to submit the essential documents like stock register and other supporting documents in support of the sale made to various parties for the impugned year under consideration. During the course of arguments, it became evident that while the assessee had contended that it is engaged in the sale of ornaments and gold jewellery, however, even the basic supporting documents like stock register were not submitted before the Tax Authorities for necessary verification. In the result, the matter is set-aside to the file of Assessing Officer, with the aforesaid observations.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced under proviso to Rule 34 of ITAT Rules, 1963 on 06/05/2025 (BIJAYANANDA PRUSETH) JUDICIAL MEMBER Ahmedabad; Dated 06/05/2025 TANMAY, Sr. PSITA No.1261/Srt/2024 Asst. Year –2017-18 - 5–
आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""थ" / The Respondent. संबंिधत आयकर आयु" / Concerned CIT 3. 4. आयकर आयु"(अपील) / The CIT(A)- 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, सूरत / DR, ITAT, Surat गाड" फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.