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Facts
The assessee, engaged in the wholesale gold and bullion business, filed a return for AY 2017-18. The case was selected for scrutiny due to large cash deposits during demonetization and an increase in sales with decreased profitability. The AO disallowed Rs.1,50,583/- as 10% of ornament making charges and added Rs.2,00,000/- under Section 69A for unexplained cash deposits.
Held
The Tribunal found the flat 10% disallowance of ornament making charges excessive, restricting it to Rs.75,000/- as reasonable, considering it a routine business expenditure. Regarding the unexplained cash deposit, while acknowledging the assessee had a sufficient cash balance, the nondisclosure of one deposit and lack of satisfactory explanation led to an adverse inference, but the addition was reduced to Rs.50,000/-.
Key Issues
Disallowance of ornament making charges and addition of unexplained cash deposits during demonetization.
Sections Cited
69A, 143(3)
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(Order pronounced in the open Court on 18/08/2025 )