In a significant ruling favoring taxpayers, the Income Tax Appellate Tribunal (ITAT), Delhi Bench “A,” has quashed an addition of Rs 58.5 lakh made against Balsons Jewellers, Meerut under Section 69A of the Income Tax Act. The ruling reiterates a crucial legal principle: if cash is properly recorded in audited books, Section 69A has no application.
Background
Balsons Jewellers, a partnership firm engaged in the jewellery business, filed its return for Assessment Year (AY) 2017–18 declaring income of Rs 2,02,420. During scrutiny, the Assessing Officer (AO) questioned a cash deposit of Rs58.5 lakh made during the demonetization period (November 2016), suspecting it to be unexplained money.
Despite furnishing:
Audited financials under Section 44AB
Complete sales/purchase ledgers
Stock registers
VAT returns and assessments
Bank statements and sale bills
…the AO concluded that the cash was unexplained and invoked Section 69A. The CIT(A) upheld this addition.
Assessee’s Argument
The assessee’s counsel strongly contended that:
The cash deposit was from recorded cash sales made in October 2016.
All transactions were documented in audited books.
No discrepancies were found in the books by any authority, including the VAT department.
The addition was based on mere suspicion without concrete evidence.
Legal Standpoint
The Tribunal emphasized that Section 69A applies only when the asset (money) is not recorded in the books of accounts. In this case, the ITAT noted:
“The cash deposits were duly recorded in the audited books. Thus, no addition can be made under Section 69A.”
They relied on key precedents, including:
Rakesh Kumar Babulal Agarwal v. PCIT (Gujarat HC)
Durga Fire Works v. ITO (Delhi ITAT)
Hemant Lohar v. CIT(A) (Mumbai ITAT)
All these decisions hold that once cash is properly accounted for in books, and no fault is found in the audit, Section 69A cannot be triggered.
Tribunal's Verdict
The ITAT concluded:
“Since the cash deposits were recorded in the books, which were audited, the provisions of Section 69A do not apply. The addition of Rs 58.5 lakh is directed to be deleted.”
The appeal was partly allowed, providing relief to the assessee and reinforcing a key tax law interpretation.
Income Tax Case Law balsons Jewellers Versus ITO
Citation-2025 TAXONATION 951 (ITAT-DELHI) (Click here ot read full judgement)
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