ITAT deletes Income Tax addition on Jeweller’s demonetization cash deposits backed by sales records:

ITAT deletes Income Tax addition on Jeweller’s demonetization cash deposits backed by sales records Facts of the case Vikas Bhola, the owner of M/s. G.D. Jewellers, deposited Rs. 32,99,208 in cash into two ICICI Bank accounts on November 16, 2016. He explained that this money came from regular business sales and cash-in-hand. To prove his case, he provided monthly records from April to November 2016 and showed that his sales followed the same pattern as the previous year. He noted that his cash levels were naturally higher in October 2016 due to the busy festival season. Issue of the case Was the addition of Rs. 32,99,208/- by the Assessing Officer under Section 68 and Section 115BBE of the Income Tax Act, 1961, regarding unexplained cash deposits during demonetization, legally justified? Decision of the Tribunal The ITAT ruled in favour of the business owner, cancelling the Rs. 32,99,208 tax addition. The Tribunal found the cash deposits justified as legitimate jewellery sales and cash reserves, with documentation showing cash flow consistent with previous years, including a typical October festival increase. Consequently, the court overturned the prior ruling and upheld the appeal.