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2025 Supreme(Online)(ITAT) 3764
INCOME TAX APPELLATE TRIBUNAL (COCHIN BENCH)
INTURI RAMA RAO, AM, SONJOY SARMA, JM
ACIT, Corporate Circle-1(1), Kochi – Appellant
Versus
M/s. A. Geeri Pai Gold & Diamonds – Respondent
ITA No. 940/Coch/2022 | C.O.No. 04/Coch/2023
For the Appellants/Petitioners: Smt. Veni Raj, CIT-DR
For the Respondents: Shri Gopi K, CA
The tribunal emphasized the importance of verifying transaction authenticity and adherence to legal requirements in tax assessments regarding cash deposits.
Headnote:The Income Tax Appellate Tribunal considered the appeal from the Revenue regarding the assessment of unexplained cash deposits made during demonetization as per Section 115BBE of the Income Tax Act, 1961. The assessee's explanation of cash deposits from sales was scrutinized, revealing substantial doubts regarding the genuineness of reported sales and the authenticity of records. The court framed the issue of whether the CIT(A)'s findings justified the deletion of income additions based on unverified claims. The Tribunal found errors in the lower court's findings, restored matters for re-evaluation, and partially allowed the appeal for statistical purposes.
| Table of Content |
|---|
| 1. facts of case and tax assessment process. (Para 2 , 3) |
| 2. identification of key issues and decision reasoning. (Para 4 , 5) |
| 3. arguments presented for and against the tax assessment. (Para 6 , 7) |
| 4. court observations on evidentiary discrepancies and implications. (Para 8 , 9) |
| 5. final ruling and outcome of the proceedings. (Para 10 , 11) |
O R D E R
Per: Inturi Rama Rao, AM This appeal filed by the Revenue and the cross objection filed by the assessee are directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 25.08.2022 for Assessment Year (AY) 2017-18.
2. Brief facts of the case are that assessee is a partnership firm, engaged in the business of manufacture and retail trade of gold, diamond jewellery and silver articles. The return of income for the A.Y.2017-18 was filed on 30/10/2017 disclosing loss of Rs.4,13,30,105/-. Against the said return of income, the assessment was completed by the ACIT, Non-Corp Circle-1(1), Kochi (for short, 'AO')at a total income of Rs. 5,56,02,000/-. While doing so, the AO brought to tax the cash deposits made in specified bank notes (SBNs) made on 11/11/2016 of Rs. 1,50,00,000/-; on 12/11/2016 of Rs. 1,68,52,000/- and on 13/11/2016 of Rs. 2,37,50,000/-, totalling to Rs.5,56,02,000/- as unexplained money, disbelieving the explanation of the assessee that cash deposits were made out of sale proceeds of gold and other jewelery items. While rejecting the explanation of the assessee, the AO made the following observations:-
“1. The inventory of gold jewellery available with the assessee is 120 to 130 kgs on an average and the sales made on 08.12016 was
13 kgs which is only 10% of the inventory.
2. As stated in para II, the assessee is showing substantial purchases of old gold jewellery which is not verifiable by the Statutory Auditors themselves.
3. The authenticity of the inward and outward vouchers for the old gold is doubtful in view of the affirmations given by the gold smiths. TMEN
4. There is huge variance in the amount of old gold said to be issued to the gold smiths according to their statements and as per the records of the assessee.
5. The purpose of these voucher books is self serving, since the signatures of the recipient and the supplier in these vouchers are not genuine.
6. The possibility of the book adjustments of a small quantity of 13 kgs of stock to suit the purported sales on 08.11.2016 is thus very high and cannot be ruled out in order to make the total inventory position as genuine.
7. Only the total inventory has been presented by the assessee to the Bank and the Bank is not concerned about the micro details like quantity given to Goldsmiths, quantity received as old gold and quantity available with the Hall marking Firms.
8. As stated earlier, the sales of gold jewellery to 401 different individuals on one single day and each sales being below Rs. 2 lakh is against all human probability.
9. The genuineness of the sales invoices is highly disputable, because there is no verifiable information on these invoices and the signatures adhere to certain patterns.
10. The contention of the assessee that though there is a spurt in sales, all the purchasers chose to buy jewellery below Rs.
1,95,000/- is very hard to believe.
11. Assuming but not accepting that the sales were genuine, the logical conclusion is that the value of the invoices were kept below Rs. 2,00,000/- so that the identity of the buyer need not be revealed and the assessee is not under obligation to collect their PANS.”
3. The substantial purchase of gold jewellery by the assessee is not verifiable and the authenticity of inward and outward vouchers prepared, were doubted in view of the denial of Goldsmiths. Sales of gold jewellery to 401 different individuals on one single day and each sales being below Rs.2 lack is also doubted by the AO. According to the AO, it is impossible that each sale is below Rs. 2 lakh and the identity of the buyers is not revealed. Based on the above observations
