ITAT removes ₹ 1 Cr Adding according to Section 68

Dcit Vs Radhika Diamonds (Itat Ahmedabad)

Appeal Tribunal of Income Tax (ITAT) Akhmedabad rejected the appeal against the income against the Order of the Commissioner for Income Tax (CIT) (CIT), which deleted the addition of 1,00,00 000 made by the estimation servant (AO) in accordance with the section 68 of the 2017-1 RAT. AO made a supplement by processing a cash deposit of 1,00,00 000 during the period of demonstration as an incomprehensible income from undisclosed sources, causing section 115bbe. The main statement of the AO was that the appraiser who was engaged in wholesale trade and production of diamond jewelry, bulk diamonds and silver showed a significant increase in cash sales immediately before the demonetization in October and November 2016, which was much higher than the relevant period. AO also questioned the failure to comply with the accumulation of the accumulated money in the Demonetization Declaration.

However, CIT (a) allowed the appraiser – the decision that the income has appealed before ITAT. The experienced representative of the department (DR) argued that the monetary deposit during the demonetization was from incomprehensible sources and represented the old currency earned but not disclosed to demonitization. The experienced authorized representative (AR) opposed the evaluator, stating that Cit (a) has already confirmed the addition of 3.65 000 ₹, related to a specific cash sales where the customer’s PAN was not available and the evaluator did not apply to this partial confirmation. More importantly, AR emphasized that the assessment officer did not doubt the main business activities of the appraiser, including the opening of shares, purchases, sale or closure of shares. In addition, AO has found no differences at the cash desk and does not reject books of accounts in accordance with Section 145 (3) of the Law. The appraiser provided details of the funds received from sales during the festival period and both before and after demonetization. Ar relied on several court precedents that support their case, when properly fixed sales of funds were not considered as incomprehensible income.

Hearing both sides and examining the records, ITAT supported CIT (a). The tribunal noted that the appraiser generated cash because of his regular business activity, which was never questioned by the assessment official. It is fundamentally important that cash receipts, including sales, were duly recorded in the books of the valuation accounts, and this fact was not controversial AO. Since AO has adopted the introductory shares, purchases and closure of shares, and CIT (A) specifically checked the cash schedule provided by the appraiser, as well as the support of invoices and details of cash sales during the relevant festival period, ITAT did not find the reason to intervene in CIT results (A). So ITAT rejected the appeal of income, concluding that adding 1,00,00 000 in accordance with Section 68 was not justified, since the sale of cash was taken into account and business activity was considered real.

Full text of the order of itat Ahmedabad

This is an appeal filed against the order of 18-072024, accepted by CIT (a) per year of the 2017-18 rating year.

2. The grounds of the appeal are as under:-

“I) or for facts and in the circumstances of the case and law, Ld. Cit (a) was justified by the removal AO, without assessing the fact that large sales of cash were made before the demonetization and the quantum of sales of cash was sharply on the larger side?

ii) or by facts and by circumstances Case and legislation, LD. Cit (a) was justified in removing the addition of Rs. 1,00,00 000/ U/ S 68 of the Law without assessing that the appraiser did not explain any The reason not to hand over cash in the declaration of demonitization.

iii) the appellant desires the leaves to add a change, make changes or change any reasons of appeal during or earlier, Listening to the appeal. “

3. The appraiser has submitted income 04-11-2017, showing the total income of Rs. 65 790/-. The appraiser is engaged in the case of trade and production of diamond jewelry, free diamonds and silver in wholesale trade. After issuing the legislative messages, the appraiser was called to submit data for which the appraiser filed a response stating that monetary deposits were made by the appraiser daily in regular retail trade, also submitted a chart of monetary deposits from 01-04-2016 to 07-11-2016. After viewing these details, the assessment officer noted that the sale of funds increased significantly during the year and the sale of Rs. 81,10,987/- was made in October 2016 and Rs. 1,08,870/- in November 2016 only from the total amount of cash in the amount of Rs. 85,65,007/- year of estimation 2017-18. The corresponding period of sales of cash in the previous year was Rs. 8,86,210/-. The appraiser showed that cash received from the guidance received from customer sales at the beginning/previous months and Rs. 16,88,476/- and Rs. 2,02,940/- in October and November 2016 of which were obtained from Rs. 20,64,840/-. The assessment officer supplemented Rs. 1,00,00 000/- U/S. 68 of the Law as the interpretation of cash loans U/s. 68 income from undisclosed sources, and also referred to Section 115bbe.

. CIT (a) allowed to challenge the appraiser.

5. LD. D -g stated that the appraiser deposited cash in Rs. 1,00,00 000/- during the period of demonetization in this bank account from the incomprehensible sources of the appraiser, which were earned in the old currency, which was deposited in the bank account during the period of demonitization. The appraiser did not properly explain that the money was received from the conversion of the note, which was mentioned during the sale of two dates mentioned in paragraph 12.2. Thus LD. The doctor relied on the assessment order.

6. L.D. AR argued that Cit (a) partially confirmed the supplement to the degree of Rs. 3.65 000/- for sales of cash to the client (Snehaben), since such cash exceeds Rs. 2,00 000/- and Pan of this client was not available with the appraiser, since the appraiser did not appeal, the said confirmation/supplement remains. Thus LD. AR stated that the assessment employee has no doubt about the business, which is carried out by the appraiser, opening of shares, buying, selling or closing the shares. In addition, the assessment officer found no guilt in the money book, not rejected the book of accounts, referring to Section 145 (3) of the Law. The appraiser provided details of the cash components that were created for sale during the festival period and provided details for demonetization and after demonetization. Ld. AR relied on the following decisions:-

> Acit v. Radhika Jewlers – ITA 201/AHD/2023;

> Dcit v. Damodardas Mohanlal Choksshi – ITA 554/AHD/2023;

> Cit Vs. Vishal Exports Abroad LLC – ITA 2471 2009 (GUJ);

> Cit against Kailash Jewlelery House – ITA 613/2020 (Delhi HC);

> Acit VS Hirapanna Jewelers- (2021) 189 ITD 608 (Visacapatna);

> Sanand Textiles Industries v. DCIT – ITA 995/AHD/2014;

> Ito vs. Rajeshkumar Chhanal Patel – ITA 2159/AHD/2016;

7. We have heard both the parties and considered all the relevant materials available on the record. In view of the records, it can be seen that the appraiser generated cash at the expense of business activities, and the business activity of the appraiser did not doubt at any point in time of the appraiser. Cash receipts were duly recorded in account books, including cash sales, and this did not doubt the appraisal service. Since the opening of the stock, the purchase and closure of the action were accepted by the assessment officer, and in fact the cash schedule provided by the evaluator together with the procurement list, invoices and sales of cash during the festival period of October and November 2016 have been strictly verified by CIT (A) and, and, and, from them, and, and, Thus, the income appeal is deviated.

8. As a result, the appeal of income is rejected.

Order spoken in open court 04-02-2025