Demonetisation Special: Cash deposit by jewellers during demonetisation already considered as sales cannot be further treated as unexplained

 

 

There are various instances where in addition wa dene by the AO during the course of assessment proceeding by treating the amount of cash deposited in bank as either unexplained money or unexplained credit. The same was taxed u/s 115BBE.

Here is an interesting issue on similar type of assessment which may be relevant during appeal processing at CIT (A) or ITAT.

 

This is the cae before ITAT, Visakhapatnam as under :

M/S Hirapanna Jewellers

 (I.T.A.No.253/Viz/2020)

 

Let us have a short overview of the case: 

Assesee was in the business of jewellery trading and had deposited Rs 5.72 Crores into the bank on 8/11/2016, the day demonetisation was announced as cash sales and cash advances.

The assessee had duly explained the source as sales, produced the sale bills, admitted the same as revenue receipt and the movement of stock.

 AO during the survey proceedings, noticed that the cash deposit was not in line with the regular cash deposits in the regular course of business and the names of the parties to whom sales were made, their addresses, etc were not available.So the AO added the cash  deposit as unexplained cash credit.

Assessee pointed out that the AO had accepted the sales and the books of accounts of the assessee and so this is a case of double taxation- sales as well as unexplained credit.

 

On totality of the facts of the case,  Vishakapatnam ITAT held as below:

Once the AO accepts the books of accounts, no addition can be made in this case.

In spite of the survey, the AO did not notice any defect in sale and stock and so, routine observation of suspicious nature such as making sales of 270 bills in the span of 4 hours, non availability of KYC documents for sales, non writing of tag of the jewellery to the sale bills, non-availability of CCTV footage for huge rush of public etc are not a cause for any suspicion.

Appeal of the revenue was dismissed

 

Case referred for present judgment : Akshit Kumar, [2021] 124 taxmann. com 123 (Delhi HC)