BALMUKAND GATTANI DCIT CIRCLE 1(1)(1), VADODARA, VADODARA V. RADHIKA DIAMONDS, VADODARA

ITA 1632/AHD/2024

AI Insights

This case involves an appeal by the Deputy Commissioner of Income Tax (DCIT), Circle-1(1)(1), Vadodara against Radhika Diamonds concerning the assessment year 2017-18. The primary issue was the addition of Rs. 1,00,00,000 under section 68 of the Income Tax Act, which the Assessing Officer treated as income from undisclosed sources, citing unusual cash sales just before demonetization. The CIT(A) deleted this addition, leading to the DCIT's appeal. The Tribunal dismissed the appeal, supporting the CIT(A)'s decision, emphasizing that the assessee's business activities and the legitimacy of the cash receipts were not questioned by the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470086 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Other Referred Cases: ACIT v. Radhika Jewellers - ITA 201/Ahd/2023, DCIT v. Damodardas Mohanlal Chokshi - ITA 554/Ahd/2023, CIT vs. Vishal Exports Overseas Ltd. - ITA 2471 of 2009 (Guj), CIT vs Kailash Jewellery House - ITA 613/2020 (Delhi HC), ACIT vs Hirapanna Jewellers- (2021) 189 ITD 608 (Visakapatnam), Sanand Textiles Industries vs. DCIT - ITA 995/Ahd/2014, ITO vs. Rajeshkumar Chhanalal Patel - ITA 2159/Ahd/2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Section: 68; 145(3)

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member The DCIT, Circle-1(1)(1), Vadodara (Appellant) Vs Radhika Diamonds, Vadodara PAN: AANFR5484L (Respondent) Assessee by: Shri Tushar Hemani, Sr. A.R. & Shri Parimalsinh B. Parmar, A.R. Revenue by: Shri Rignesh Das, Sr. D.R. Date of hearing : 16-01-2025 Date of pronouncement : 04-02-2025 आदेश/ORDER PER : SUCHITRA KAMBLE, JUDICIAL MEMBER:- This is an appeal filed against the order dated 18-07- 2024 passed by CIT(A) for assessment year 2017-18. 2. The grounds of appeal are as under:- “i) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in deleting the addition of Rs. 1,00,00,000/- u/s 68 of the Act made by ITA No. 1632/Ahd/2024 Assessment Year 2017-18 I.T.A No. 1632/Ahd/2024 A.Y. 2017-18 Page No. DCIT vs. Radhika Diamonds 2 the AO without appreciating the fact that large cash sales were made just before the demonetization and quantum of cash sales was abruptly on higher side ? ii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,00,00,000/ u/s 68 of the Act without appreciating that the assessee failed to explain any reason for not depositing the cash in hand until the declaration of demonetization. iii) The appellant craves leaves to add modify, amend or alter any grounds of appeal at the time of or before, the hearing of appeal.” 3. The assessee filed return of income on 04-11-2017 showing total income of Rs. 65,790/-. The assessee is engaged in the business of trading and manufacturing of diamond jewelry, loose diamonds and silver in wholesale. After issuing statutory notices, the assessee was called upon to submit the details for which the assessee has submitted a reply stating that the cash deposits was made by the assessee out of day to day regular retail business activity also submitted the chart of cash deposits from 01-04-2016 to 07-11-2016 as well the pending stock sales during the month and purchase during the month along with closing stock details. After going through the said details, the Assessing Officer observed that cash sales was substantially increased during the year and sales of Rs. 81,10,987/- was made in the month of October, 2016 and Rs. 1,08,870/- in the month of Nov, 2016 only out of total of the cash sales of Rs. 85,65,007/- of assessment year 2017-18. The corresponding period of previous year cash sales was Rs. 8,86,210/-. The assessee has shown cash received under the head received I.T.A No. 1632/Ahd/2024 A.Y. 2017-18 Page No. DCIT vs. Radhika Diamonds 3 from customer sales in early/prior month days and Rs. 16,88,476/- and Rs. 2,02,940/- in the month of October and November, 2016 out of which received of Rs. 20,64,840/-. The Assessing Officer made addition of Rs. 1,00,00,000/- u/s. 68 of the Act as treating the cash credit u/s. 68 income from the undisclosed sources and also invoked section 115BBE. 4. Aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. 5. The ld. D.R. submitted that the assessee has deposited cash of Rs. 1,00,00,000/- during demonetization period in this bank account from assessee’s unexplained sources and which was earned in old currency which has been deposited in the bank account during demonetization period. The assessee has not explained properly that there was a receipt of money from conversion of note which was during the sale of two dates which are mentioned in para 12.2. Thus, the ld. D.R. relied upon assessment order. 6. The ld. A.R. submitted that the CIT(A) has partly confirmed the addition to the extent of Rs. 3,65,000/- in respect of cash sales to customer (Snehaben) since such cash in excess of Rs. 2,00,000/- and PAN of that customer was not available with the assessee since the assessee has not filed appeal, the said confirmation/addition remains. Thus, the ld. A.R. submitted that the Assessing Officer did not doubt the business activities carried out by the assessee, opening stock, purchase, sales or closing stock. Beside this, the Assessing Officer has not found any fault in cash book and not rejected books of accounts by invoking section 145(3) of the Act. The I.T.A No. 1632/Ahd/2024 A.Y. 2017-18 Page No. DCIT vs. Radhika Diamonds 4 assessee has given the details of cash components which was generated to the sale during the festival period and also has given the details prior to demonetization and subsequent to demonetization. The ld. A.R. relied upon the following decisions:- ➤ACIT v. Radhika Jewellers - ITA 201/Ahd/2023; ➤DCIT v. Damodardas Mohanlal Chokshi - ITA 554/Ahd/2023; ➤ CIT vs. Vishal Exports Overseas Ltd. - ITA 2471 of 2009 (Guj); ➤CIT vs Kailash Jewellery House - ITA 613/2020 (Delhi HC); ➤ ACIT vs Hirapanna Jewellers- (2021) 189 ITD 608 (Visakapatnam); ➤Sanand Textiles Industries vs. DCIT - ITA 995/Ahd/2014; ➤ ITO vs. Rajeshkumar Chhanalal Patel - ITA 2159/Ahd/2016; 7. We have heard both the parties and perused all the relevant materials available on record. From the perusal of the records, it can be seen that the assessee generated cash on account of business activities and the assessee’s business activities was not doubted at any point of time by the Assessing Officer. The cash receipts were duly recorded in books of accounts including that of cash sales and this was not doubted by the Assessing Officer. Since the opening stock, purchase and closing stock was accepted by the Assessing Officer and in fact the cash flow chart which was given by the assessee along with list of purchases, sales invoices and cash sales during festival period of October and Nov, 2016 has been categorically verified by the CIT(A) and hence there is no need to interfere with the findings of the CIT(A). Thus, the appeal of the revenue is dismissed. I.T.A No. 1632/Ahd/2024 A.Y. 2017-18 Page No. DCIT vs. Radhika Diamonds 5 8. In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 04-02-2025 Sd/- Sd/- (DR. BRR KUMAR) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad : Dated 04/02/2025 आदेश क\u0006 \u0007\bत ल\fप अ\u000fे\fषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "