Case Number: ITA 1026/DEL/2021
Appellant: Neha Jewellers Pvt. Ltd., New Delhi
Respondent: ACIT, Central Circle-14, New Delhi
Assessment Year: 2017-18
Case Filed on: 2021-08-27
Order Type: Final Tribunal Order
Date of Order: 2023-08-09
Pronounced on: 2023-08-09
The case of Neha Jewellers Pvt. Ltd. versus the Assistant Commissioner of Income Tax (ACIT), Central Circle-14, New Delhi, revolves around allegations of bogus purchase entries and unexplained cash deposits during the demonetization period. The appellant, Neha Jewellers Pvt. Ltd., challenged the addition made by the Assessing Officer, arguing that the purchases were genuine and that the cash deposits were from legitimate sales.
The case was heard by the Delhi Bench ‘E’ of the Income Tax Appellate Tribunal (ITAT), with Dr. B. R. R. Kumar, Accountant Member, and Sh. Yogesh Kumar US, Judicial Member, presiding over the proceedings.
The appeals were filed by both the assessee and the Revenue against the orders of the CIT(A)-24, New Delhi, dated 19.11.2019, and CIT(A)-26, New Delhi, dated 26.07.2021. The core issues involved allegations of bogus purchases amounting to Rs. 2,12,31,648/- and unexplained cash deposits of Rs. 4,58,30,000/- during the demonetization period.
The Authorized Representative (AR) for Neha Jewellers Pvt. Ltd. argued that the purchases were genuine and supported by proper documentation, including invoices, payment records, and confirmations from the suppliers. The AR also argued that the cash deposits during the demonetization period were from legitimate sales and provided detailed records of these transactions.
The Senior Departmental Representative (Sr. DR) supported the addition, arguing that the purchases were bogus based on information received from the Investigation Wing and statements from individuals associated with providing accommodation entries. The Sr. DR also argued that the cash deposits during the demonetization period were not adequately explained.
The ITAT reviewed the arguments and evidence presented by both parties. It noted that the Assessing Officer (AO) had reopened the assessment solely based on information from the Investigation Wing and had not provided an opportunity for cross-examination of the individuals who made the statements. The ITAT found that the assessee had submitted substantial evidence to prove the genuineness of the purchases, including ledger accounts, purchase bills, stock records, and bank statements.
The ITAT also considered the explanations provided by the assessee regarding the cash deposits during the demonetization period. The tribunal found that the assessee had maintained proper records of sales and cash transactions, and the cash deposits were consistent with the business activities.
The ITAT concluded that the addition of Rs. 2,12,31,648/- for bogus purchases was not justified as the assessee had provided substantial evidence to prove the genuineness of the transactions. The tribunal also found that the cash deposits during the demonetization period were adequately explained and should not be treated as unexplained income.
Order: The appeals filed by Neha Jewellers Pvt. Ltd. are allowed, and the appeal filed by the Revenue is dismissed.
This case reaffirms the principle that additions based on allegations of bogus purchases and unexplained cash deposits must be substantiated with concrete evidence. It underscores the importance of providing an opportunity for cross-examination and ensuring that assessments are based on thorough and fair investigations.
The judgment serves as a precedent for other taxpayers facing similar allegations. It highlights the necessity for taxpayers to maintain proper documentation and provide credible explanations for their transactions to avoid such disputes and potential disallowances.
This detailed review of the case of Neha Jewellers Pvt. Ltd. vs. ACIT, Central Circle-14, New Delhi, highlights the key aspects of the tribunal’s decision and its implications for other taxpayers.
Neha Jewellers vs. ACIT: Case Filed for Bogus Purchase Entries
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