KENT CABLES PVT LTD,DELHI vs. ASSISTANT COMMISSIONER OF INCOME TAX CEN CIR-7, DELHI

ITA No.1669/DEL/2026 KENT CABLES PVT. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA No.1669/DEL/2026 Assessment Year: 2017-18 KENT CABLES PVT. LIMITED, Vs. ASSISTANT COMMISSIONER OF 35, Netaji Subhash Marg, Darya Ganj, INCOME TAX, Central Circle-7, New Delhi, Delhi 110002. Jhandewalan Extn., PAN No. AAACK0174G New Delhi, Delhi 110055. Appellant Respondent Assessee by Shri S.L. Poddar, Adv. Revenue by Shri Balkrishan Gopal, Sr. DR Date of hearing: 09.07.2026 Pronouncement on 09.09.2026 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. This appeal arises from order dated 06.02.2026, passed by Ld. CIT(A)-24, Delhi, u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”).

1.1 In this case, the Ld. AO, vide order dated 25.12.2019, passed an order u/s 143(3) of the Act, through which, after a detailed finding of fact, an amount of Rs.160,24,414/- was added u/s 68 of the Act r.w.s. 115BBE of the Act. In brief, the finding is that there was an abnormal increase in cash deposits just prior to and during the demonetization period, which was not in conformity with the details and evidences filed

ITA No.1669/DEL/2026 KENT CABLES PVT. LTD. by the assessee. On this basis, the provisions of Section 68 of the Act were invoked and the impugned addition was made.

1.2 The aggrieved assessee approached the Ld. CIT(A) where he could not succeed on the basis of following finding in the impugned order:

“5.1.3 However, upon careful examination of the facts and circumstances of the case, the contentions of the appellant are not found acceptable. The AO has brought on record specific and concrete evidence demonstrating the abnormal and suspicious pattern of cash sales during the demonetization period. The appellant gave contradictory explanations at different stages – first claiming that excess cash was due to fast recovery by sales representatives from rural areas of Bihar and UP, and later changing the stance to claim that new products were launched which became popular. No evidence of any advertising expenses or new product launch was provided despite specific queries. The pattern of cash sales before and after the suspicious period remained consistently low, with the spike occurring only in October 2016 and the first 8 days of November 2016, immediately before demonetization was announced. The claim that sales increased in rural areas of UP and Bihar is contradicted by the fact that the abnormal cash sales were shown in the Jaipur depot and not in Delhi depot which is closer to these areas. The structured nature of 61 sale bills on 08.11.2016 alone, each just below Rs.2 lakhs, clearly indicates manipulation of books of accounts. The AO has rightly rejected the books of accounts u/s 145(3) and the subsequent invocation of section 68 is justified as the assessee has failed to explain the source of huge cash deposits during demonetization period. The reliance placed by the appellant on various case laws in misplaced as those cases dealt with situations where the sales were found to be genuine and supported by proper evidence, which is not the case here. The acceptance of VAT returns by Commercial Taxes Department does not automatically bind the Income Tax authorities when there is specific evidence of manipulation and bogus entries. The AO has given due credit for estimated genuine cash sales of Rs.59,883/- and gross profit of Rs.11,10,803/- already offered to tax, and the balance addition of Rs.1,60,24,414/- is fully justified and sustainable. Accordingly, Ground No.1 stands DISMISSED.”

ITA No.1669/DEL/2026 KENT CABLES PVT. LTD. 1.3 The aggrieved assessee is now before the ITAT with a single ground challenging the action of authorities below in adding the impugned amount u/s 68, r.w.s. 115BBE of the Act.

2.1 The Ld. DR took us through the findings of then Ld. AO and specifically pointed out pages 14 & 15 of the Ld. AO where it has been mentioned that the assessee gave contradictory explanations at various stages. At first it was claimed that the excess cash was deposited due to efficient recovery from rural areas of Bihar and U.P. by the sales

ITA No.1669/DEL/2026 KENT CABLES PVT. LTD. representative of the assessee. It was pointed out that the assessee changed his stance later on to claim that the cash deposits represented enhanced sales due to launch of new products and more efficient marketing. It was pointed out that no evidence of any advertising expenses or details of any new product being launched was provided before the Ld. AO. It was pointed out that if the sales representatives made better collection from rural areas of Bihar and U.P. then why the realizations are reflected in Jaipur depot and not the Delhi depot, which is geographically proximate to those two states. It was also pointed out that some 61 sale bills were recorded on 08.11.2016 alone, each below Rs.2,00,000/-, where details of the persons from whom such amounts were realized, were not produced before the Ld. AO. For this purpose, the Ld. DR took us through the finding on page 16 of the Ld. AO’s order.

ITA No.1669/DEL/2026 KENT CABLES PVT. LTD. excessive cash sales during the period under consideration. For this purpose, we set aside the impugned order and remit this matter back to the file of Ld. AO. We also direct that the assessee would file details of all the debtors etc. realized during this period. Also, the basis of the 61 sale bills booked on 08.11.2016, would need to be presented before the Ld. AO with all underlying evidences. The Ld. AO would be free to conduct any enquiries as deemed fit. Needless to say, ample opportunities would be provided to the assessee for presenting his case.

Order pronounced in the open court on 09.09.2026

Sd/- Sd/- (ANUBHAV SHARMA) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 09.09.2026 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI