“Suspicion, howsoever strong, cannot take the place of evidence”, heldthe Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) deleting the addition of Rs.13.68 crores under Section 69A confirming that PAN of buyer is not required for the cash sales of jewellery before Rs. 2 lakhs threshold.
As per the Rule 114B of the Income Tax Rules, 1962, PAN of the buyer only if the amount of transaction is more than Rs. 2,00,000/-. Therefore AO’s allegation based on assessee knowingly sold jewellery below such threshold based on mere suspicion would not stand, said the tribunal.
A high value cash deposit of Rs.13.68 crores was made by the assessee-respondent, Asal Jewellery during demonetisation period into 3 banks namely Dena bank, PNB and Jaya bank. The amount was high compared to the pre-demonetisation period.
During the AY 2017-18, the total purchases were Rs. 21.14 crore and the sales combinely for September and October 2016 was Rs. 13.74 crore. However, the AO noticed that the bills were Rs. 2 lakh and questioned the genuineness of the cash sales. The officer issued notices to the suppliers but did not receive the replies as per the requirement of the department. Thus, the AO confirmed the addition under Section 69A.
Section 69A reads:
“Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the incomeof the assessee for such financial year.”
The CIT(A), when the appeal was filed by the assessee, deleted the addition where the department before ITAT alleged that the appellate commissioner failed to notice that cash sales made by the assessee were all below Rs. 2,00,000/- in which the assessee is not required to furnish the details of the customer.
The tribunal noted that the AO verified the genuineness of the purchases and when the purchases found to be genuine, consequent sales cannot be made by the Assessee cannot be held to be not genuine only on the suspicion or presumption of the officer.
The bench of Dr. B.R.R.Kumar (Vice president) and Sanjay Kumar (Judicial member) observed that as per the submission of the department that the assessee knowingly sold the jewellery for amount of Rs. 2 lakhs where it need not to furnish details of the customers lacks merit. Since the Rule 114B mandates to record the PAN only if the cash sales exceeds Rs. 2 lakhs, an adverse decision cannot be made against the assessee solely on this reason.
Accordingly, the tribunal upheld the deletion of Rs.13.68 crores under Section 69A and dismissed the appeal of the income tax department.
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The ITO vs Asal J ewellery
CITATION : 2026 TAXSCAN (ITAT) 1252Case Number : ITA No. 549/AHD/2022Date of Judgement : 14 August 2026Coram : B.R.R. KUMARCounsel of Appellant : R.V. Aroon PrasaadCounsel Of Respondent : Aseem Thakkar
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