INCOME TAX OFFICER, WARD-1, SONEPAT, SONEPAT vs. SACHIN SHARMA, SONIPAT

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI Before Sh. Raj Kumar Chauhan, Judicial Member & Smt. Renu Jauhri, Accountant Member ITA No. 7381/Del/2025 : Asstt. Year: 2023-24 Income Tax Officer, Vs Sachin Sharma, Ward-1, Ground & First Floor, Bearing N. Sonipat, Haryana-131001 34, Phase-4, Kundli, Sonipat, Haryana-131001 (APPELLANT) (RESPONDENT) PAN No. JXQPS3558R CO No. 45/Del/2026 : Asstt. Year: 2023-24 Sachin Sharma, Vs Income Tax Officer, Ground & First Floor, Bearing N. 34, Ward-1, Phase-4, Kundli, Sonipat, Sonipat, Haryana-131001 Haryana-131001 (APPELLANT) (RESPONDENT) PAN No. JXQPS3558R Assessee by: Dr. Rakesh Gupta, Adv. & Sh. Deepesh Garg, Adv. Revenue by: Sh. Jitender Kumar, CIT-DR Date of Hearing: 03.06.2026 Date of Pronouncement: 31.08.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal of the Revenue and the CO of the assessee are directed against the order dated 19.09.2025 of ld. CIT(A)/NFAC, Delhi passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the appeal was partly allowed and the addition made vide assessment order dated 20.03.2025 of Rs.23,81,20,168/- as bogus purchases was deleted completely. Further, the addition of

2 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma Rs.7,34,27,579/- as unexplained money u/s 69A r.w.s. 115BBE of the Act was also deleted completely. Further out of addition of Rs.1,18,99,755/- u/s 68 r.w.s. 115BBE of the Act addition of Rs.5,00,000/- was sustained and balance was deleted. By this common order, we propose to dispose of ITA No. 7381/Del/2025 instituted by Revenue along with CO No.45/Del/2026 instituted by the assessee.

3 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma involved in suspicious purchases and accordingly providing accommodation entry on account of bogus purchases. A show- cause notice was issued for proposing variation to the assessee on 14.02.2025 followed by notice u/s 143(2) of the Act dated 19.06.2024 and subsequent notice u/s 142(1) of the Act dated 29.04.2024 and 19.11.2024. It is observed by the AO in the assessment proceedings that out of 161 venders of M/s Baba Metal Company Unit-02, GST registration of 157 vendors were cancelled. It was further observed in view of the finding of Investigation Wing, the purchases made by M/s Baba Metal Company Unit-02 were not found genuine and only paper bills have been supplied to series of purchasers. It is further observed that it was the first year of business of assessee and the assessee has admitted the sale turnover of Rs.66,13,37,291/- which was beyond the acceptance of human reasoning on the basis of preponderance of probability. Hence, the AO proceeded to propose addition of Rs.23,81,20,168/- on account of bogus purchases from M/s Baba Metal Company Unit-02 during the F.Y. 2022-23 by the assessee. While doing so, various evidence produced by the assessee in the form of invoices, e-way bills, vehicle number, date of transportation, dharamkanta receipts, purchase orders etc. were rejected by the AO on the ground that assessee has not furnished copy of stock register, confirmation from M/s Baba Metal Company

4 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma Unit-02, regarding payments, toll gate payments, slips etc. to substantiate the claim of purchases to the tune of Rs.23,81,20,168/- from M/s Baba Metal Company Unit-02. Second addition has been made of Rs.7,34,27,579/- as unexplained credits on account of difference between the total credits appearing in the bank account and turnover admitted by the assessee vide reply dated 24.02.2025. It was observed by the Assessing Officer that the assessee has only furnished reconciliation but not supported it by any documentary evidence. The third addition has been made by the AO on account of unsecured loan of Rs.1,18,99,755/- and added u/s 68 r.w.s. 115BBE of the Act as income from other sources.

5 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma evidences gathered during assessment proceedings, which clearly established that the said entity was engaged in issuing accommodation bills without actual supply of goods. 2. That the Ld. CIT(A) has erred in relying upon the judgment of the Hon’ble Supreme Court in the case of CIT v. Odeon Builders (P.) Ltd. [2019] 110 taxmann.com 64 / 226 Taxman 461, without appreciating that the facts of the present case arc distinguishable, as the suppliers in this case were non-filers/stop filers. 3. That the Ld. CIT(A) has erred in deleting the addition of Rs. 1,13,99,755/- out of the total addition of Rs.1,18,99,755/-made u/s 68 of the Act, without proper verification of the identity, genuineness, and creditworthiness of the lenders, even though the assessee had failed to produce PAN, ITRs, OR bank statements of the concerned creditors and ignoring the fact that none of the lenders have provided any confirmation of loan advancement. 4. That the Ld. CIT(A) has failed to appreciate that the Assessing Officer findings were based on concrete and corroborated material evidence collected during the course of assessment as well as information received from the investigation Wing, and hence the relief of Rs.32,29,47,323/-granted to the assessee is unjustified and liable to be reversed.” 6. The assessee being aggrieved by sustaining addition of Rs.5,00,000/- on account of unsecured loan has filed following grounds in cross objection as under:

“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.5,00,000/- out of the total addition of Rs. 1,18,99,755/- made by Ld. AO on account unsecured loan by treating it as alleged cash credit u/s 68 and taxing the same u/s 115BBE and that too by recording incorrect facts and findings and without observing the principles of natural justice. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition of Rs.5,00,000/- out of the total addition of Rs. 1,18,99,755/- made by Ld. AO on account unsecured loan

6 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma u/s 68/115BBE, is bad in law and against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the. case, assumption of jurisdiction in passing of the impugned assessment order by Ld. AO u/s 143(3)/144B dated 20-03-2025 is illegal, bad in law and nullity in the eyes of law as the mandatory notice u/s 143(2) has not been issued in terms of CBDT instruction dated 23-06- 2017 and in view of judgment Sajal Biswas vs ITO in ITA 1244/Kol./2023, Date of order 26-03-2025. Kolkata ITAT. 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the impugned additions/disallowances made by the Ld. AO in the assessment order dated 20-03-2025, which were made beyond the scope and jurisdiction of limited scrutiny and, therefore, are bad in law.” 7. During argument, the ground No. 2 in cross objection has not been pressed and the same is accordingly dismissed as not pressed.

7 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma of the transaction was rightly rejected as the assessee has failed to furnish copy of stock register, confirmation from M/s Baba Metals Company Unit-2 regarding payments, toll gate payments etc. It is therefore argued that the ld. CIT(A) has wrongly deleted the said addition and has wrongly relied the case of CIT Vs. Odeon Builders Pvt. Ltd. (2019) 110 taxmann.com 64 as the said case was distinguishable on the basis of facts. The ld. AR for the assessee however, submitted that the GST authorities has accepted the purchases from M/s Baba Metals Company Unit-2 while giving the credit of ITC claim of the assessee by passing an order by Deputy Commissioner of Excise and Taxation Department, Sonipat, Haryana. The copy of the said order is placed before us and is claimed to be genuine copy of the order by the assessee and nothing has been submitted on behalf of the Revenue to contradict the said version of the assessee regarding genuineness of the said order. We have noticed that in para No. 2 of the said order u/s 73 of the CGST/HGST/IGST Act, 2017. It is observed as under: “2. The invoices were issued along with E-way Bills and consignment notes from the transporter during which period the supplier's GST registration was valid and active, and payment was made through proper banking channels, evidencing movement of goods. The suppliers had also filed returns during their respective financial period (dispute period). The cancellation/suspension of registration was effected much later and was an administrative act beyond the control and knowledge of the taxpayer. At the time of purchase, there was nothing

8 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma to suggest that the supplier was non-compliant or that his registration would later be cancelled.” 10. It is further argued that the assessee has successfully and sufficiently proved the identity of the parties, creditworthiness of the party and the genuineness of the transaction and the primary onus on the assessee was duly discharged and the AO has failed to bring any evidence/material to contradict the genuineness of the transaction which has been duly proved by placing on record invoice, dharmkarta slip, transport bulty, e- way bill, vehicle number, purchase order, photocopy of truck, driver at M/s Baba Metals Company Unit-2, photocopy of truck with goods at assessee premises reflecting date, time etc. and copy of the RC of the vehicle. Further, the assessee has uploaded each and every invoice with the above documents and photos clearly establishing the physical delivery of goods right from the point of the supplier to the appellant's warehouse.

9 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma documents namely to establish the genuineness of purchases recorded from M/s Baba Metal Company. i. Invoice ii. Dharma kanta slip iii. Transport billty iv. E-Way Bill, vehicle no. v. Purchase order vi. Photo of truck/driver at Baba Metal etc. vii. Photo of truck with goods at appellant’s premises, reflecting date time viii. Copy of RC of Vehicle From the above documents, the appellant has not only been to establish the fact that the purchase was made but also by way of invoice, Dharma kanta slip, Transport billty, E-Way Bill, vehicle no., Photo of truck/driver at Baba Metal, Photo of truck with goods at appellant’s premises, reflecting date time etc., Copy of RC of Vehicle etc. The factum of transport and physical delivery of goods also stands established. It is seen from page 36 to 38 and 45 of the assessment order that such details and evidences were also produced before the AO at the time of assessment. The appellant has also furnished complete inventory of stock of raw material, finished goods and the reconciliation statement regarding the stock with reference to the above and the sales before the AO. The submission of these document is duly acknowledged in the assessment order, as given above and has also been reproduced on a sample basis in the assessment order. The AO has not found any discrepancy in the said statement or the documents except the only point that the invoice and transport bills produced by the appellant does not carry an acknowledgement stamp of the appellant for receipt of goods. 4.1.4 The said objection was raised by the AO in the SCN and has been suitably answered by the appellant stating that it was for the appellant to decide and devise the system for showing the acknowledgement of goods and there was no statutory requirement for providing a stamp of receipt either on the invoice or on the transport bills. The appellant has explained in the submission filed on 15.09.2025 that the receipt of goods was duly entered in the stock register and the acknowledgement stamp of the same was given on the transporter’s copy of transport bill for transporter’s and supplier’s records and there was no need nor any logic for the appellant to put his own stamp on his own copy which was maintained by him for his records. The appellant has correctly maintained that for this simple reason the nonavailability

10 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma of stamp on the transport documents has an obvious explanation and hence, the action of the AO of rejecting the authenticity and evidentiary value of the whole set of documents was totally uncalled for. The appellant also has argued that as long as the quantity and value of the purchases was established and reconciled with the help of purchase order, invoice, e-way bills, dharam kanta documents etc. the AO’s addition was totally unjustified on one single point that the transport bills, which are the copy of the appellant, did not contain the acknowledgement stamp. As against this, the appellant has produced the voluminous documents for each and every consignment i.e. invoice, Dharma kanta slip, Transport billty, E-Way Bill, vehicle no., Photo of truck/driver at Baba Metal, Photo of truck with goods at appellant’s premises, reflecting date time etc., Copy of RC of Vehicle and which have not been found to be unacceptable for any reason by the AO. Through these documents the appellant has clearly and strongly established the fact that the when the goods in question left the premises of the supplier, which dharam kanta was used for weighing the goods, which trucks were used for transport of material, when and which driver carried the goods and when did he deliver the goods at the appellant’s premises. Thus the appellant has through a meticulously and systematically documented complete chain of documents, (whose evidentiary value has not been questioned by the AO, but for one point clarified above) been clearly able to establish the fact that the purchase of material claimed by it was actually purchased from M/s Baba Metal Company and was physically transported and delivered at the premise of the appellant. Through the documents viz. Dharma kanta slip, Transport billty, E-Way Bill, vehicle no., Photo of truck/driver at Baba Metal, Photo of truck with goods at appellant’s premises, reflecting date time etc., Copy of RC of Vehicle, the genuineness or authenticity of which were not controverted by the AO – the appellant has strongly established the fact that the goods were physically dispatched, transported and delivered at the appellant’s site. The entire allegation about bogus purchases and paper invoices on the basis of which the addition has been made falls flat and has no legs to stand upon in view of such voluminous, uncontroverted and clear documents submitted by the appellant. 4.1.5 The AO has also while making the addition emphasized on the fact that in the absence of any retraction statements from Sh. Aman, prop. of M/s Baba Metal Company, the confirmation given by him vide VC dated 03.03.2025 and confirmation dated 06.03.2025 are

11 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma not tenable. The appellant has submitted that in none of the extracted parts of statement of Sh. Aman quoted by the AO in the assessment order, there is anything stated which is prejudicial directly or indirectly to the appellant. There was not even mention of the appellant or any other party in those extracted parts. The extracted part of statement only states that Sh. Aman was unable to recall the name of the parties or the details of the loose handwritten slips which he offered to give later. Thus, there was nothing in the statement of Sh. Aman against the appellant which needed retraction and without which the confirmation of Sh. Aman regarding the genuineness of the purchase by the appellant looses its evidentiary value. The contention of the appellant has merit as the AO has not been able to show anywhere that any statement of Sh. Aman in anyway was prejudicial to the appellant. In fact, in the all three quoted portions of the appellant Sh. Aman has merely stated that he is unable to recall the name of the parties or the details of loose sheet. He has not mentioned anywhere name of any person or vendor, let alone mentioning the name of the appellant. Thus, the AO’s action of rejecting the confirmation on the basis of lack of retraction of Sh. Aman is totally misplaced and uncalled for. Thus, either the original statement of Sh. Aman or lack of retraction thereof has nothing which can lead to drawing of adverse inference regarding the purchase transactions of the appellant with the said party. Also, the reference and reproduction of the handwritten slips on page 28-29 of the assessment order, said to have been found on the mobile phone of Sh. Aman, does not appear to have any connection with the appellant and there is not even a whisper in the assessment order that they are in any way connected to the appellant. Therefore, there is nothing in the said evidence which can be taken against the appellant. 4.1.6 The AO has solely relied on the finding of the Investigation wing for making this addition and has rejected the entire evidence submitted by the appellant. The said finding of the investigation wing is with regards to case of Baba Metal Company and the same cannot be simply transported to the case of the appellant. Such act of drawing inference against the appellant from a proceeding conducted on Baba Metal, without any evidence against the appellant rather on the face of such overwhelming documentary evidences submitted by the appellant is totally unjustified. 4.1.7 The other observation of the AO is that FY 2022- 23 is the first year of business for the Appellant with a

12 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma turnover of Rs.66,13,37,291/- in the first year of business itself. In view of the facts and circumstances of the case, the preponderance of probability goes against appellant’s arguments. Quoting the judgement of the full Bench of Madhya Pradesh High Court in the case of Gulabchand Gamghirmal Vs. Kudilal Govindram Seksaria, 1960 M.P.L.J (F.B) 334 has categorically held that in civil cases preponderance of probability constitutes a sufficient ground for a decision, if the facts and circumstances are such that a reasonable man would draw a particular inference from them. “The reply given by the assessee strongly preponderating against the claim of the assessee that assessee had sales turnover of Rs.66,13,37,291/- in the very first year of business.” The AO’s act of drawing inference on the basis of the fact that the appellant could not have achieved such a turnover in the first year is totally unjustified and devoid of merit. The standard of preponderance of probabilities is applied in a case where direct evidence are lacking. When direct evidence is available, the duty of a quasi- judicial authority is to evaluate the quality and quantity of evidence presented on both sides. The case has to be decided on the basis of evidence that has greater weight or credibility. Where direct evidences are available, there is no question of invoking the principle of preponderance of probability and that too on such shallow and flimsy basis. 4.1.8 In an identical case in CIT v. Odeon Builders (P.) Ltd. [2019] 110 taxmann.com 64/226 Taxman 461, purchases were disallowed based on information gathered by the investigation wing and which was not further verified by the AO as is the case here, the Hon'ble Supreme Court dismissed the SLP of department and held the purchases to be genuine where the assessee substantiated his purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return. In the present case also, the appellant has not only been able to establish the purchase, but also transportation and delivery, confirmation from the supplier through video conference before the AO and also payment through banking channels. 4.1.9 In view of the above, the AO’s disallowance of Rs.23,81,20,168/- towards unsubstantiated claim of purchases is unjustified and is accordingly deleted. Hence, this ground of appeal is allowed.”

13 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma 12. On examining the above finding returned by the ld. CIT(A) with respect to the first addition of Rs.23,81,20,168/- towards bogus purchases, we have noticed that the said finding is based on meticulous examination of the material on record. The precedent relied by ld. CIT(A) i.e. CIT Vs. Odeon Builders Pvt. Ltd. (supra) is squarely applicable to the facts of the case of the assessee because the finding of the ld. CIT(A) is based on correct and legal appreciation of the documentary evidence brought on record by the assessee to prove the genuineness of the transaction. We do not find any reason to interfere with the said finding of the ld. CIT(A) and accordingly confirm the deletion of the addition of Rs.23,81,20,168/- on account of bogus purchases.

14 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma addition of Rs.7,34,27,579/- in para Nos. 4.2.1 to 4.2.4 and decided the same in ground No. 3 and the findings of the ld. CIT(A) are extracted below as under: “4.2.1 Ground No. 3: Vide this ground, the appellant has challenged the addition of Rs.7,34,27,579/- on account of difference between credits appearing in the bank account amounting to Rs.73,47,64,870/- and the turnover reported i.e. Rs.66,13,37,291/-. 4.2.2 It is seen that the AO has issued a show cause proposing to add the said difference between credits appearing in the bank account amounting to Rs.73,47,64,870/- and the turnover reported i.e. Rs.66,13,37,291/- u/s 69A. The very issue of show cause dated 14.02.2025 on the above ground shows lack of understanding of facts and accounting principles on the part of the AO. It appears that the AO has started with the premise that all credit entries in the bank account should be part of the turnover and could not shed the said preoccupation, even after receipt of reply and reconciliation from the appellant. The appellant has furnished the following reconciliation before the AO: S.No. Particulars Amount 1. Capital Account Rs.49,94,000/- 2. Cash Deposited in the Rs.6,00,000/- bank 3. Unsecured loans Rs.78,75,000/- received during the year 4. Received from subsidy Rs.20,00,000/- against machinery 5. Loans & Advances Rs.4,00,000/- (Asset) 6. Reversal from creditors Rs.8,68,006/- 7. Indirect Expenses Rs.4/- 8. Received against Sales Rs.71,37,88,063/- & Advances Total Rs.73,05,25,073/- The said reconciliation was rejected by the AO as seen on page 62 of the assessment order on the ground that the appellant did not highlight the relevant credit entries in the bank account to substantiate his claim of capital account, cash deposited, unsecured loans etc. The AO has not for a moment stated that the appellant did not furnish the bank statement or the reconciliation statement. Once the reconciliation statement and the bank statement were available with the AO, it was

15 ITA No. 7381/Del/2025 ITA No. 7381/Del/2025 CO No. 45/Del/2026 CO No. 45/Del/2026 Sachin Sharma improper on the part of th improper on the part of the AO to have rejected the e AO to have rejected the above above above statement statement statement simply simply simply because because because the the the corresponding corresponding corresponding entries in the bank account were not highlighted by the entries in the bank account were not highlighted by the entries in the bank account were not highlighted by the appellant. Also, the AO has while adding the above appellant. Also, the AO has while adding the above appellant. Also, the AO has while adding the above amount has failed to appreciate that on one hand he is amount has failed to appreciate that on one hand he is amount has failed to appreciate that on one hand he is adding the unsecure adding the unsecured loan shown in the above table at d loan shown in the above table at Rs.78,75,000/- and at the same time adding the same and at the same time adding the same and at the same time adding the same unsecured unsecured unsecured loan loan loan under under under the the the third third third addition addition addition regarding regarding regarding unsecured loan, which is being dealt in detail in the unsecured loan, which is being dealt in detail in the unsecured loan, which is being dealt in detail in the subsequent part of this order while dealing with the subsequent part of this order while dealing with the subsequent part of this order while dealing with the addition relating to unsecured loan. The AO has also ating to unsecured loan. The AO has also ating to unsecured loan. The AO has also stated that with reference to appellant’s claim regarding stated that with reference to appellant’s claim regarding stated that with reference to appellant’s claim regarding claim of GST @ 18% not shown in the turnover, the claim of GST @ 18% not shown in the turnover, the claim of GST @ 18% not shown in the turnover, the appellant appellant appellant did did did not not not furnish furnish furnish the the the conciliation conciliation conciliation between between between turnover, turnover, turnover, receipt receipt receipt and and and GST GST GST collected. collected. collected. The The The above above above contention n n of of of AO AO AO is is is not not not correct correct correct as as as the the the detailed detailed detailed reconciliation, a screenshot of which reproduced below reconciliation, a screenshot of which reproduced below reconciliation, a screenshot of which reproduced below clearly shows that the said reconciliation was provided on clearly shows that the said reconciliation was provided on clearly shows that the said reconciliation was provided on a party-wise basis by the appellant and the total receipt wise basis by the appellant and the total receipt wise basis by the appellant and the total receipt of Rs.71,37,88,063/ of Rs.71,37,88,063/- shown in the table below fully matches with the headwise reconciliation, shown in the matches with the headwise reconciliation, shown in the matches with the headwise reconciliation, shown in the earlier table:

4.2.3 The appellant has also provided a reconciliation 4.2.3 The appellant has also provided a reconciliation 4.2.3 The appellant has also provided a reconciliation between the total entries between the between the total total entries entries made made made in in in the the the books books books i.e. i.e. i.e. Rs.73,05,25,073/- vis-a-vis the credit entries in the bank vis the credit entries in the bank account i.e. Rs.73,47,64,870/ .e. Rs.73,47,64,870/- in the following table in the following table wherein it is clarified that there are three credit entries wherein it is clarified that there are three credit entries wherein it is clarified that there are three credit entries amounting amounting to to Rs.30,00,000/ Rs.30,00,000/-, Rs.2,39,800/- and Rs.10,00,000/- in the bank statement dated 08.07.2022, in the bank statement dated 08.07.2022, in the bank statement dated 08.07.2022,

16 ITA No. 7381/Del/2025 ITA No. 7381/Del/2025 CO No. 45/Del/2026 CO No. 45/Del/2026 Sachin Sharma 12.10.2022 and 04.01.2023, which were actually en 12.10.2022 and 04.01.2023, which were actually entries tries mistakenly debited by the bank and was immediately mistakenly debited by the bank and was immediately mistakenly debited by the bank and was immediately corrected by passing a contra credit entry on the same corrected by passing a contra credit entry on the same corrected by passing a contra credit entry on the same date. Since the entries cancelled each other out, the date. Since the entries cancelled each other out, the date. Since the entries cancelled each other out, the appellant did not consider it for entering in the book of appellant did not consider it for entering in the book of appellant did not consider it for entering in the book of account and hence provided recon account and hence provided reconciliation at the first ciliation at the first instance only for the amount of Rs.73,05,25,073/ instance only for the amount of Rs.73,05,25,073/-. Thus, . Thus, it is seen that the appellant has been able to reconcile it is seen that the appellant has been able to reconcile it is seen that the appellant has been able to reconcile the two amounts i.e. total credits in the bank account the two amounts i.e. total credits in the bank account the two amounts i.e. total credits in the bank account vis-a-vis the turnover shown in the P&L account down to vis the turnover shown in the P&L account down to vis the turnover shown in the P&L account down to the last penny and hence no addition is called for in this penny and hence no addition is called for in this penny and hence no addition is called for in this regard.

4.2.4 In In In view view view of of of the the the above above above discussion discussion discussion and and and the the the reconciliation given by the appellant, this ground of reconciliation given by the appellant, this ground of reconciliation given by the appellant, this ground of appeal is allowed.” ”

17 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma 14. In that regard, the ld. DR has argued that ld. CIT(A) has deleted the said addition which was made by the ld. AO on the basis of sufficient material on record. However, the ld. AR on the other hand, has submitted that the finding of the ld. CIT(A) is based on meticulous examination of the material on record because the ld. CIT(A) has duly considered the detailed reconciliation along with screenshot of the said reconciliation which was provided on a party-wise basis by the appellant and the total receipt of Rs.71,37,88,063/- has been shown in the table contained in para 4.2.2 of the ld. CIT(A)’s order.

18 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma entire addition was required to be sustained and the ld. CIT(A) has committed material illegality by sustaining only Rs.5,00,000/- out of the said addition made u/s 68 as unexplained credits.

19 ITA No. 7381/Del/2025 ITA No. 7381/Del/2025 CO No. 45/Del/2026 CO No. 45/Del/2026 Sachin Sharma the exact state of a the exact state of affairs with reference to the submission ffairs with reference to the submission of documents regarding each of the loan creditors: of documents regarding each of the loan creditors:

4.3.3 So far as the first category of 4 loan creditors is 4.3.3 So far as the first category of 4 loan creditors is 4.3.3 So far as the first category of 4 loan creditors is concerned, the appellant has been able to furnish all the concerned, the appellant has been able to furnish all the concerned, the appellant has been able to furnish all the necessary necessary documents documents required required for for proving proving the creditworthiness, identity and genuineness of the loan creditworthiness, identity and genuineness of the loan creditworthiness, identity and genuineness of the loan transaction. transaction. transaction. The The The bank bank bank statement, statement, statement, PAN, PAN, PAN, Aadhaar, Aadhaar, Aadhaar, confirmation etc. have all been submitted and there is no confirmation etc. have all been submitted and there is no confirmation etc. have all been submitted and there is no reason to disallow the above loan just because the reason to disallow the above loan just because the reason to disallow the above loan just because the compliance to notices u/s 133(6) has not compliance to notices u/s 133(6) has not taken place. The taken place. The appellant has submitted the confirmation signed by each appellant has submitted the confirmation signed by each appellant has submitted the confirmation signed by each of the above parties and therefore, there were no reason of the above parties and therefore, there were no reason of the above parties and therefore, there were no reason

20 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma for the AO to disbelieve the genuineness of loan from these 4 parties. 4.3.4 So far as 5 persons in the next chart are concerned, the appellant has furnished all the documents similar to the earlier category other than ITR and PAN in the case of the first two creditors i.e. Asha and Bhardwaj Bartan Bhandar could not be provided. So far as these two creditors and the creditor mentioned at serial number 5 are concerned i.e. Asha, Bhardwaj Bartan Bhandar and Sarita, a perusal of the ledger accounts shows that the outstanding balance in these three cases are only the opening balance and no fresh loan was taken from the said creditors in the current FY. In view of this, no addition can be made for these three loans in the impugned assessment year and if at all such addition was to be made the same could have been made only in the concerned FY when the loan was accepted from these two persons. In this table two loans taken from Brij Mohan and Munni Devi are pertaining to this FY and for the same reasons as mentioned in para 4.3.3 the AO should not have disallowed the above two loans just because the compliance to notices u/s 133(6) has not taken place. 4.3.5 So far as the last category of loan accepted from Laxmi Devi and Sangeeta Gupta are concerned, the appellant has neither been able to file PAN, aadhar card, bank statement or ITR in the case of these two persons. The only document filed by the appellant is a ledger account of these persons as existing in the books of the appellant. Thus, I agree with the stand of the AO that the appellant has not been able to prove the genuineness, identity and creditworthiness of these loans. Accordingly, out of the total addition of Rs.1,18,99,756/- an addition of Rs.5,00,000/- is sustained and the balance is deleted. Therefore, this ground of appeal is partly allowed.” 19. On careful examination of the said findings returned by the ld. CIT(A), we are of the considered opinion that the said finding of the ld. CIT(A) is based on legally and factually justified appreciation of material facts and meticulous examination of the evidence produced by the assessee. The assessee has discharged the primary onus of proving the unsecured loan to be lawful and justified. Further, the

21 ITA No. 7381/Del/2025 CO No. 45/Del/2026 Sachin Sharma observation of the ld. CIT(A), wherein he sustained the addition of Rs. 5,00,000/- is also apt and apposite and needs no interference as assessee has also failed to show any material illegality or perversity in the same. In view of these facts, we accordingly confirm the finding of the ld. CIT(A) with respect to deleting the third addition and sustaining of Rs.5,00,000/- out of the addition of Rs.1,18,99,755/-. In view of the above discussion, the ground raised by the Revenue in ITA No. 7381/Del/2025 decided against the Revenue and in favor of the assessee.