BHAUMIK JEWELLERS PRIVATE LIMITED,AHMEDABAD vs. THE ITO, WARD-1(1)(2), AHMEDABAD
Facts
The assessee, a bullion and jewellery trader, deposited Rs. 10.69 crores in Specified Bank Notes (SBNs) during the demonetization period, claiming these were cash advances received from customers against future sales. The Assessing Officer (AO) treated Rs. 9.65 crores as unexplained cash credits under Section 68, rejecting the books of account due to alleged abnormal cash advances, lack of complete customer details, and suspicious cash balances. The CIT(A) confirmed the addition.
Held
The Tribunal found that the assessee's cash sales and deposits during the demonetization period were not abnormal compared to previous years and that the availability of stock was not disputed. It held that once purchases and stock are accepted, and sales are recorded in books and offered to tax, the entire receipts cannot be treated as unaccounted income under Section 68; only the profit element embedded in such sales can be taxed. Furthermore, a violation of RBI notifications regarding SBNs does not automatically trigger Section 68 of the Income Tax Act as it pertains to regulatory compliance, not unexplained income.
Key Issues
Whether cash deposits made during the demonetization period, explained as sales advances, can be treated as unexplained cash credits under Section 68 of the Income Tax Act, based on suspicion of abnormal sales or violation of RBI notifications, when books of account are audited and stock is not disputed.
Sections Cited
Section 250, Section 143(3), Section 68, Section 115BBE, Section 133(6), Section 145(3), Section 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: Shri Sanjay Garg & Annapurna Gupta
आदेश की "ितिलिप अ#ेिषत/Copy of the Order forwarded to : 1. अपीलाथ$ / The Appellant 2. "%थ$ / The Respondent. 3. संबंिधत आयकर आयु& / Concerned CIT आयकर आयु& अपील 4. ( ) / The CIT(A)- (NFAC), Delhi 5. िवभागीय "ितिनिध आयकर अपीलीय अिधकरण अहमदाबाद/DR,ITAT, Ahmedabad. , , 6. गाड� फाईल / Guard file.
आदेशानुसार/ BY ORDER, स%ािपत "ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad
Date of dictation (word processed by H-JM in his : 2.2.2026 computer) 2. Date on which the typed draft is placed before the : 2.2.2026 Dictating Member. 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating : Member for pronouncement. 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the : 3.,2.26 Sr.P.S./P.S. 7. Date on which the file goes to the Bench Clerk. : 3.2.26 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar : for signature on the order. 10. Date of Despatch of the Order :