BHARAT BULLION,AHMEDABAD V. THE ITO, WAD-1(3)(1), AHMEDABAD

ITA 153/AHD/2025

AI Insights

The case involves cross-appeals by Bharat Bullion and the Income Tax Officer (ITO) against the order of the CIT(A) concerning the assessment year 2017-18. The primary issues revolved around the additions made by the AO under sections 68 and 69 of the Income Tax Act, 1961, which were related to unexplained cash deposits and unexplained credits in the assessee's bank accounts. The tribunal examined the evidences and arguments presented by both parties, including the nature of the assessee's business and the impact of demonetization on cash transactions. The tribunal found that the CIT(A) and AO had not adequately substantiated their doubts about the genuineness of the assessee's cash sales and deposits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772682 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT
• Assessee Lawyers: DIVYANG SHAH; MAULIK KANSARA; ARS
• Keywords: Business income; Unexplained cash credit; Income from undisclosed sources; Bogus

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “बी“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD \u0015ी संजय गग\u001a, \u0011ाियक सद\u001b एवं \u0015ी मकरंद वसंत महादेवकर, लेखा सद\u001b क े सम!। ] ] Before Shri Sanjay Garg, Judicial Member And Shri Makarand V. Mahadeokar, Accountant Member 1. आयकर अपील सं /ITA No.153/Ahd/2025 – Asst.Year – 2017-18 2. आयकर अपील सं /ITA No.85/Ahd/2025 – Asst.Year – 2017-18 1. Bharat Bullion 165-Ganchi Ni Pole M.G. Haveli Road Manekchowk Ahmedabad – 380 015 2.The ITO Ward-1(2)(1), Ahmedabad बनाम/ v/s. 1.The ITO Ward-1(2)(1), Ahmedabad 2. Bharat Bullion 165-Ganchi Ni Pole M.G. Haveli Road Manekchowk, Ahmedabad – 380 015 \u000eथायी लेखा सं./PAN: AAPFB 3295 H (अपीलाथ$/ Appellants) (%& यथ$/ Respondents) Assessee by : Shri Divyang Shah & Shri Maulik Kansara, ARs Revenue by : Shri Abhijit, Sr.DR सुनवाई की तारीख/Date of Hearing : 21/08/2025 घोषणा की तारीख /Date of Pronouncement: 28/08/2025 आदेश/O R D E R Per Sanjay Garg, Judicial Member: The captioned are cross-appeals, one by the assessee and the other by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 28/06/2024 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) Printed from counselvise.com ITA Nos.153/Ahd/2025 & 85/Ahd/2025 Bharat Bullion vs. ITO (Cross-appeals) Asst.Year : 2017-18 2 2017-2018. First, we take up assessee’s appeal in ITa No.153/Ahd/2025 for adjudication. ITA No.153/Ahd/2025 for AY 2017-18 2. The assessee, in this appeal, has taken the following grounds: “1. Whether, on facts and in circumstances of the case and in law, Ld.CIT(A) has erred in confirming the addition for cash deposits amounting to Rs.3,36,29,000/- u/s.69 of the Act? 3. Whether, on facts and in circumstances of the case and in law, Ld.CIT(A) has erred in confirming the addition of Rs.57,82,000/- as unexplained credit u/s.68 of the Act?” 3. Ground No.1:- The assessee vide Ground No.1 has agitated against the action of the Ld.CIT(A) in confirming the addition of Rs.3,36,29,000/- made by the Assessing Officer (AO) u/s.68 of the Act on account of cash deposits found in the bank account of the assessee. 4. The assessee during the assessment proceedings explained to the AO that the assessee was engaged in the trading business of Bullion/Gold Bar. That the aforesaid deposits were out of the cash sales made by the assessee during the assessment year under consideration. The AO, however, noted that there were huge cash deposits made by various parties during the demonetization period on account of bogus sales. He also doubted that the assessee had made cash deposits in demonetization currency out of his unaccounted income and treated the cash sales made by the assessee as bogus and made the addition of Rs.14,30,92,500/- into the income of the assessee. However, due to the calculation mistake as pointed out by the assessee, the AO reduced the said addition on account of cash deposits to the extent of approximately Rs.5.43 crores. Printed from counselvise.com ITA Nos.153/Ahd/2025 & 85/Ahd/2025 Bharat Bullion vs. ITO (Cross-appeals) Asst.Year : 2017-18 3 5. In appeal, the Ld.CIT(A) further deleted the addition of Rs.1.49 crores on the ground that the same was deposited during the assessment proceedings and the assessee was not asked for any explanation about the same. The Ld.CIT(A) further confirmed the addition of remaining amount of Rs. 3.94 crores. 6. Being aggrieved by the said order of the Ld.CIT(A), the assessee has come in appeal agitating against the confirmation of addition of Rs.3.94 crores, whereas, the Revenue has come in appeal contesting the action of the ld.CIT(A) in deleting the addition of Rs.1.49 crores out of total addition made by the AO of Rs.5.43crores. 7. We have heard the rival contentions of the parties and perused the material available on record. The assessee categorically has taken a stand that the aforesaid deposits were made out of cash sales made by the assessee. This fact could not be rebutted either by the AO or by the Ld.CIT(A) with any contrary evidence on the file. They have simply doubted the cash sales and cash deposits thereof, without any discussion as to which of the sales was not genuine. The assessee has duly furnished all the details before the lower authorities relating to the purchases made by the assessee/stock-in-trade as well as the deposits made through cheque/banking channel as also the cash sales. The assessee has also on account of furnished the data of the year prior and subsequent to the assessment years under consideration, which for the sake of ready reference, is reproduced hereunder: Sr.No. Assessment Years Total Sales Cash Sales Cash deposited in bank accounts 1. 2016-17 Rs.14,42,77,063/- Rs.9,55,16,687/- Rs.9,45,12,000/- 2. 2017-18 Rs.24,08,89,538/- Rs.4,82,43,079/- Rs.4,85,79,000/- 3. 2018-19 Rs.18,47,25,088/- Rs.2,20,850/- Rs.1,500/- Printed from counselvise.com ITA Nos.153/Ahd/2025 & 85/Ahd/2025 Bharat Bullion vs. ITO (Cross-appeals) Asst.Year : 2017-18 4 7.1. This above referred to data was also furnished by the assessee before the lower authorities. A perusal of the sales data of the assessee would reveal that the assessee during the earlier AY 2016-17 had made total sales of Rs.14.42 crores out of which the cash sales were of Rs.9.55crores against which the assessee had made cash deposits of Rs.9.45crores. In the year under consideration, i.e. 2017-18, the assessee had made total sales of Rs.24.08crores, out of which, cash sales were of Rs.4.82crores only against which the cash deposited was of Rs.4.85crores. Before proceeding further, if we compare to the sales and cash deposits of the assessee in the earlier assessment year with the assessment year under consideration, we find that the total sales of the assessee for the year under consideration have considerably increased from Rs.14.42crores to Rs.24.08crores, whereas, the cash sales/cash deposits have reduced to almost 50% of that have been deposited in the earlier assessment year. Even, further, the Ld.Counsel has demonstrated that out of the total cash sales of Rs.4.82crores, the assessee had made cash deposits of Rs.2.90crores before the start of demonetization period . The AO has not doubted the purchases of the assessee. It is otherwise commonly known that the profit margin on sale of Bullion/Gold bar is very low. Therefore, there was no question of making the addition of the entire sales made by the assessee during the year. From the above data, it is not coming out that the assessee might have been indulged in bogus sales book, especially when the purchases have not been doubted and the cash deposits/cash sales during the year are less than that was made in the immediately preceding assessment year. Though in the immediately subsequent year, i.e. AY 2018-19, the cash sales and cash deposits have considerably reduced, however the same is the after effect of demonetization Printed from counselvise.com ITA Nos.153/Ahd/2025 & 85/Ahd/2025 Bharat Bullion vs. ITO (Cross-appeals) Asst.Year : 2017-18 5 policy as the assessee has preferred to accept the sale consideration through banking channel. However, it is pertinent to mention here that even the total sales with the assessee for the immediately proceeding year AY 2018-19 were at Rs.18.47crores, which in any manner is not less than the average sales of the earlier two assessment years. Therefore, under the circumstances, both the lower authorities are not justified in disputing the sales of the assessee. The addition, in this case, has been made in a mechanical manner without appreciation of the details/information available on record, which in our view, is not sustainable and the same is, accordingly, deleted. 8. Ground No.2:- Vide Ground No.2, the assessee has contested against the confirmation of addition of Rs.57.82 lakhs. 8.1. The brief facts relating to the issue are that a search action was carried out in the case of M/s.Sahil Tradewell Marketing Pvt.Ltd. and during the search action, it was found that the said party has given bogus accommodation entry to one Bharat Bullion. Since the name of the assessee is also Bharat Bullion, therefore, it was held that the assessee had taken the said accommodation entry from the said searched party, Sahil Tradewell Marketing Pvt.Ltd., The assessee, however, has taken a stand from the very beginning that the assessee has not made any transaction with the said M/s. Shahil Tradewell Marketing Pvt.Ltd. controlled by Shri Atul Tyagi and that no entry, whatsoever, either in cash or through banking channel has been received by the assessee from such party. However, both the lower authorities have referred to the bank account entry of Shahil Tradewell Marketing Pvt. Ltd.vide which the aforesaid amount of Rs.57.82 lakhs was transferred list through Banking channel to one Bharat Bullion. However, the Printed from counselvise.com ITA Nos.153/Ahd/2025 & 85/Ahd/2025 Bharat Bullion vs. ITO (Cross-appeals) Asst.Year : 2017-18 6 Ld.Counsel referring to the bank account of the assessee has submitted that the corresponding deposit have not been shown in the bank account of the assessee. He has categorically stated that there was no transfer entry of such an amount in any bank account of the assessee. He has further submitted that the name of Bharat Bullion may be of some other party also, however, which has been taken mistakenly taken as that of the assessee by the lower authorities. In our view, this issue needs to be examined at the end of AO. It is, therefore, directed to the AO will call for the bank records of the assessee as well as the records of the concerned Shahil Tradewell Marketing Pvt.Ltd. verify as to in which account the said amount have been actually transferred and to whom that account belonged. The AO, in this respect, may obtain the information from bank authorities of Shahil Tradewell Marketing Pvt.Ltd. including the PAN Number of the party in whose account the said amount was deposited. . If it is found that the said amount of Rs.57.82crores was transferred and did not belong to the assessee, no addition can be given. 9. In view of the observation made above, the appeal of the assessee is treated as allowed for statistical purposes. 10. Now coming to the appeal of the Revenue in ITA No.85/Ahd/2025 for AY 2017-18. 11. The Revenue, in this appeal, has agitated against the action of the ld.CIT(A) in deleting the addition of Rs.1,49,50,000/-, on account of unexplained cash deposits, out of total addition made by the AO of Rs.5.43crores. Printed from counselvise.com ITA Nos.153/Ahd/2025 & 85/Ahd/2025 Bharat Bullion vs. ITO (Cross-appeals) Asst.Year : 2017-18 7 12. This issue has already been discussed by us while adjudicating ground No.1 of assessee’s appeal, as above. Our findings given above on the identical issue will mutatis mutandis apply herein, and the appeal of the Revenue is, accordingly, dismissed. 13. In the combined result, appeal of the assessee is treated as allowed for statistical purposes, whereas appeal of the Revenue stands dismissed. Order pronounced in the Open Court on 28/08/2025. Sd/- Sd/- (Makarand V. Mahadeokar) Accountant Member ( Sanjay Garg ) Judicial Member अहमदाबाद/Ahmedabad, िदनांक/Dated 28/08/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की %ितिलिप अ&ेिषत/Copy of the Order forwarded to : 1. अपीलाथ' / The Appellant 2. %(थ' / The Respondent. 3. संबंिधत आयकर आयु* / Concerned CIT 4. आयकर आयु* ) अपील ( / The CIT(A)- (NFAC), Delhi 5. िवभागीय %ितिनिध , अिधकरण अपीलीय आयकर , अहमदाबाद /DR,ITAT, Ahmedabad. 6. गाड. फाईल / Guard file. आदेशानुसार/ BY ORDER, स(ािपत %ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (dictation pad is attached with the file)) : 21.8.2025 2. Date on which the typed draft is placed before the Dictating Member. : 24.8.2025/28.8.25 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 25.8.25 7. Date on which the file goes to the Bench Clerk. : 25.8.25 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : Printed from counselvise.com "