Jeweller Gets Relief! ITAT Deletes 5.90 Cr Cash and 60 Lakh Loan Additions

The taxpayer, engaged in the jewellery and bullion business as the proprietor, filed his return declaring Rs. 11.52 lakh income for AY 2017-18.

The Assessing Officer treated Rs. 5.90 crore cash deposits made during the demonetization period as unexplained money under Section 69A, disregarding the assessee’s detailed submissions, books, cash flow statements, VAT returns, and stock registers showing that the deposits were backed by genuine cash sales disclosed in the income tax return. In addition, the AO added Rs. 60 lakh as an unexplained cash credit under Section 68, raising doubts about an unsecured loan even though the lender had confirmed it and the assessee’s books fully disclosed it.

Issue before Tribunal: Whether unsecured loans and cash deposits made during the demonetization period, backed by confirmed sales, stock records, and other documentation, qualify as unexplained income for Sections 69A and 68.

Tribunal Held: The ITAT deleted both additions, holding that the cash deposits stemmed from regular, disclosed cash sales and sufficient stock, and taxing them separately would result in double taxation. On the unsecured loan, the Tribunal found that identity, creditworthiness, and genuineness were fully established, and the subsequent repayment further supported the transaction’s authenticity. The Tribunal also directed that interest under Sections 234B and 234C be computed only on the returned income.

The ITAT therefore, allowed the assessee’s appeal in full, deleting both the Rs. 5.90 crore cash deposit addition and the Rs. 60 lakh unsecured loan addition, and explained how to charge the interest.

To Read Full Judgment, Download PDF Given Below