Tribunal remands case back to Assessing Officer for factual verification of cash deposits during demonetization period.
In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Lucknow 'A' Bench, has remanded the case of Mallics Jewels back to the Assessing Officer (AO) for a denovo assessment. The case revolves around the addition of Rs. 2.75 crore as unexplained cash credits under Section 68 of the Income Tax Act, 1961, due to cash deposits made during the demonetization period.
The tribunal's decision came after the Revenue challenged the appellate order by the National Faceless Appeal Centre (NFAC), which had previously favored Mallics Jewels. The Revenue argued that the CIT(A) had erred in deleting the addition made by the AO, asserting that Mallics Jewels failed to substantiate the source of the cash deposits.
During the proceedings, the Revenue's representative highlighted discrepancies in the stock details provided by Mallics Jewels for the demonetization period, questioning the genuineness of the reported sales. It was argued that the sales exceeded the stock available, suggesting that the cash deposits might not be genuine sales but an attempt to colour unexplained cash credits.
In defense, Mallics Jewels claimed that they sold "display items" provided by M/s. Gitanjali Jewellery Retail Ltd. during the demonetization period. However, the tribunal found that this claim required further factual verification at the AO level, as it was not adequately supported by materials on record.
Acknowledging the need for thorough verification, the ITAT set aside the impugned order of the CIT(A) and directed the AO to conduct a fresh assessment, providing a reasonable opportunity for Mallics Jewels to substantiate their claims. The tribunal's decision underscores the importance of transparent and verifiable accounting practices, especially in cases involving significant cash transactions during sensitive periods like demonetization.
This ruling serves as a reminder for businesses to maintain comprehensive records and substantiate their claims with adequate documentation to avoid disputes with tax authorities.
Bottom Line:
Income Tax - Addition of Rs.2,75,00,000/- made on account of cash deposit during demonetization period - Dispute regarding unexplained cash credits under Section 68 of the Income Tax Act, 1961 - Matter remanded back to the Assessing Officer for factual verification and denovo assessment.
Statutory provision(s): Income Tax Act, 1961 Section 68
ACIT, Lucknow v. Mallics Jewels, (ITAT)(Lucknow 'A' Bench) : Law Finder Doc Id # 2829082
