ITO, DELHI V. S P JEWELLERS PVT LTD, DELHI

ITA 937/DEL/2025

AI Insights

The case involves an appeal by the Income Tax Officer against the order of the National Faceless Appeal Centre (NFAC), which had reversed the Assessing Officer's decision regarding the treatment of cash deposits made by S.P. Jewellers Pvt. Ltd. during the demonetization period in India. The Assessing Officer had treated a portion of these deposits as unexplained income under Section 115BBE of the Income-tax Act, 1961, amounting to Rs. 3,09,12,925. However, the CIT(A)/NFAC found that the assessee had satisfactorily proved the source of these deposits as legitimate business sales. The Tribunal, while partly allowing the Revenue's appeal, reduced the addition to Rs. 15,00,000, emphasizing that this amount should be assessed under normal provisions and not as unexplained income under Section 115BBE.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772546 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: SMILE Microfinance Ltd. v. ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

"1 ITA No. 937/Del/2025 SP Jewellers P Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 937/Del/2025 Assessment Year: 2017-18 Income Tax Officer, Assessment Unit Vs S.P. Jewellers Pvt. Ltd., C-3-11/2, Janak Puri, New Delhi-110058. PAN: AAHCS 6787 L APPELLANT RESPONDENT Assessee represented by Shri Kamaljit Rai, Adv. Department represented by Shri Rajesh Mahajan, Sr. DR Date of hearing 27.08.2025 Date of pronouncement 27.08.2025 O R D E R PER SATBEER SINGH GODARA, J.M: This Revenue’s appeal for assessment year 2017-18 arises against National Faceless Appeal Centre (NFAC) Delhi’s’ order dated 26.12.2024 [DIN & Order No. ITBA/NFAC/S/250/2024-25/1071581380(1)] in proceedings u/s 143(3) of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’. Heard both the parties. Case file perused. 2. It transpires during the course of hearing that the Revenue/appellant herein is aggrieved against the CIT(A)/NFAC’s findings reversing the Assessing Officer’s action treating the assessee’s cash deposits during demonetization of Rs. 3,09,12,925/- in his assessment order dated 16.12.2019. Printed from counselvise.com 2 ITA No. 937/Del/2025 SP Jewellers P Ltd. 3. It is in this factual backdrop that both the learned representatives reiterate their respective stands against and in support of the impugned addition. There is no dispute between the parties that the assessee is engaged in sale and purchase of jewellery business wherein it had made total cash deposits of Rs. 3,94,50,000/- during demonetization. It appears to have submitted the corresponding details as well as books of account explaining source thereof to regular business sales only prior to and during demonetization. A perusal of the assessment order; and, more particularly, assessing officer’s findings in para 8 onwards reveals that he went on to grant credit of the assessee’s cash in hand as on 1.4.2016 amounting to Rs. 13,42,415/- , average sales of Rs. 41,42,660/- and Rs. 30.52 lakhs cash sales with PAN respectively to add the remaining amount in question of Rs. 3,09,12,925/- as unexplained and liable to be assessed u/s 115BBE of the Act. 4. The assessee appears to have preferred it’s appeal wherein the learned CIT(A)/NFAC has primarily gone by the audited book results to hold that it had satisfactorily discharged its onus in proving source of the foregoing cash deposits as representing jewelerry sales during demonetization. This is what leaves the Revenue aggrieved. 5. We have given our thoughtful consideration to the Revenue and assessee’s respective submissions. Learned counsel submits that not only the assessee has filed all the relevant details but also its corresponding book results have not been disputed or rejected u/s 145(3) of the Act. We put a specific question as to pinpoint the reason of the assessee’s all cash sales; and, that too abnormal increase thereof during demonetization wherein no satisfactory reply has come as it was the factual position before the learned Assessing Officer. Be that as it may, the fact also remains that the assessee’s entire sales pre/during demonetization could not also be Printed from counselvise.com 3 ITA No. 937/Del/2025 SP Jewellers P Ltd. simply brushed aside on mere conjectures and surmises. It is thus deemed appropriate in larger interest of justice that a lump sum addition of Rs. 15 lakhs only would be just and proper in the given facts with a rider that the same shall not be treated as a precedent. Learned CIT(A)’s detailed findings deleting the balance portion of the total impugned addition amounting to Rs. 2,94,12,925/- (supra) do not warrant any interference on our part. Necessary computation shall follow as per law. 6. So far as the assessee’s assessment u/s 115BBE is concerned, the revenue could hardly dispute that hon’ble Madras high court in SMILE Microfinance Ltd. v. ACIT in WP(MD) No. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue that Section 115BBE applies on transactions on or after 01.04.2017 only. The ld. AO is directed to ensure that the assessee shall be assessed under normal provisions qua the above addition of Rs. 15 lakhs (supra). 7. This Revenue’s appeal ITA 937/el/2025 is partly allowed in very terms. Order pronounced in open court on 27.08.2025. Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 27.08.2025. *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "