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Facts
The assessee, a jeweler, deposited Rs. 52 lacs in cash during the demonetization period. The Assessing Officer (AO) added this amount to the assessee's income on the grounds that the explanation for the source of cash was not satisfactory.
Held
The Tribunal noted that the assessee deals in gold and diamond ornaments and provided stock summaries and VAT returns, which were not revised. The Tribunal found that the assessee had sufficient stock for sale and had successfully explained the source of the deposited cash.
Key Issues
Whether the addition of Rs. 52 lacs on account of unexplained cash deposits during demonetization is justified?
Sections Cited
68, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI
Before: SH. SAKTIJIT DEY & SH. N. K. BILLAIYA
This appeal by the assessee is preferred against the order dated 28.07.2023 by NFAC, Delhi pertaining to A.Y. 2017-18.
The solitary grievance of the assessee is that the CIT(A) confirmed the addition of Rs.52 lacs u/s.68 of the Act r.w.s. 115BBE of the Act.
Briefly stated the facts of the case are that the assessee is a jeweler dealing in Gold ornaments and diamond stud ornaments. The return for the year was electronically filed on 26.10.2017 declaring income of Rs.214300/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee.
As per information available with the department the assessee had deposited cash of Rs.52 lacs during demonetization period of Rs.40.50 lacs in Allahabad Bank and Rs.11.50 lacs in HDFC Bank.
When the assessee was asked to justify the cash deposited during demonetization period the assessee claimed that it has deposited cash from sales during festive and marriage season in the month of October, 2016.
The AO questioned the sales with respect to the sales for the same period in F.Y. 2015-16. The assessee replied that the same period in F.Y. 2015-16 was not suitable for marriages and the assessee could not deposit the entire cash in one go due to crowd of the festive season.
The explanation of the assessee was dismissed by the AO who formed a belief that the assessee failed to explain the cash deposited in the bank account during demonetization period and accordingly made the addition of Rs. 52 lacs.
Assessee carried the matter before the CIT(A) but without any success.
Before us the Counsel for the assessee vehemently stated that looking to the nature of business of the assessee and the turnover during demonetization period it can be seen that the assessee had sufficient source to deposit the cash of Rs. 52 lacs in its bank account.
The Counsel drew our attention to the financials of the assessee and pointed out that the assessee had sufficient stock for sale during the demonetization period.
Per contra the DR strongly supported the findings of the AO.
We have given a thoughtful consideration to the orders of the authorities below. The stock summary for the F.Y. 2016-17 was as under :-
The month wise stock is as under :-
We also find that the VAT returns were not revised in the post demonetization period. We find that the AO has not pointed out a single defect in the audited books of account of the assessee nor it is the case of the AO that the assessee inflated sales to cover up the cash deposited in the bank. The stock summary / detail speak for itself. Considering the facts of the case in totality we are of the considered view that the assessee had successfully explained the source of cash deposited during the demonetization period and such explanation cannot be faulted with. We direct the AO to delete the impugned addition.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 02.01.2024.