Sale/purchase of jewellery increased substantially on 08.11.2016 after announcement of demonetization – ITAT deleted addition u/s 69A
In a recent judgment, the ITAT Delhi Has deleted addition made u/s 69A observing that the sale and purchase of the jewellery was increased substantially after announcement of demonetization on 08.11.2016 at 8 pm as shutters of the jewellers were opened and during the period 8.30 pm to 12.00 am
ABCAUS Case Law Citation:
4288 (2024) (10) abcaus.in ITAT
Case laws relied upon by the Parties:
Principal commissioner of Income Tax v. Cosmat Traders (P) Ltd.
Abhishek Jain Vs Income Tax officer
In the instant case, the assessee had challenged the order passed by the CIT(A), NFAC in treating the amount of cash deposits in the Bank accounts during the demonetization period as unexplained income u/s 69A of the Income Tax Act, 1961 (the Act).
The appellant assessee was a jeweller. The assessee during demonetization period, made large amount cash deposit into the bank account. The case was selected for scrutiny assessment through CASS to verify “cash deposit”
During the course of assessment proceedings, the assessee claimed that the source for the cash depositing during the demonetization period was cash sales of jewellery but due to lack of necessary documentary evidence in support of the claim, the Assessing Officer (AO) treated the cash deposits as unexplained money and made the addition u/s. 69A of the Act.
Before the Tribunal the assessee raised a legal objection stating that the Assessing Officer who passed the assessment order and the AO who issued notice u/s 143(2) were from different wards so the assessment order was without jurisdiction. Whereas the Income Tax Department contended that the assessee had not challenged the jurisdiction of the AO. He has submitted that notice u/s 143(2) was served within time. The assessee had attended the proceedings but never challenged the jurisdiction of the AO within time.
The Tribunal observed that the assessee had not challenged the jurisdiction before the AO within time so this argument was not tenable.
The Tribunal observed that the assessee was engaged in the business of trading of gold, silver and diamond jewelry since last ten years. According to the assessee, the source of the cash deposit in the bank account was the cash sales made during the months of October & November and during the demonetisation period.
The Tribunal further observed that the cash sales made has been included in the sales in the month of October and first week of November was that, Dussehra and Diwali festivals. Accordingly in the month of October there was substantial increase in sales with regard to increase in sale during the above said period after the announcement of the demonetization on 08.11.2016 at 8 pm shutters of the jewellers were opened and during the period 8.30 pm to 12.00 am substantial sales were made by the jewellers.
The Tribunal further found that during the assessment proceedings, copy of the purchase register and sale register item wise and value wise was filed. Further copy of the complete item wise and value wise stock summary of the FY was also filed before the AO and the assessee also filed the copy of the returns. Even the book of accounts had not been rejected by the AO.
The Tribunal observed that in support of his contentions, the assessee had filed the paper book in which he has filed details of the sale and purchase of the jewellery and the same was increased due to the festival occasion because the people may have chosen to purchase the jewellery in cash. Therefore, the assessee had explained the reason of the increase of the cash sale during the year under consideration.
The Tribunal opined that the assessee had discharged the onus and prove the genuineness of the transaction. In view of the above, there was no justification for sustaining addition u/s 69A of the Act.
Accordingly, the Tribunal held that the AO had wrongly made the addition, therefore, the addition made by the AO and confirmed by the CIT(A) was deleted.
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