INCOME TAX OFFICER, KARAULI vs. VISHWANATH & COMPANY, HINDAUN CITY

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHES,JAIPUR. BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER

I.T.A. No. 1649/JPR/2025 Assessment Year: 2017-18

Income Tax Officer Vs. Vishwanath & Company Mashalpur Chungi Naka Ke Station Road, New Mandi, pass Karauli, Rajasthan. Hindaun City 322230 [PAN :- AAAFV8751H (Appellant) (Respondent)

Appellant by Sh. S. L. Poddar, Advocate Respondent by Sh. Abhimanyu Singh Yadav, Addl. CIT Date of Hearing 30.06.2026 Date of Pronouncement 12.08.2026 ORDER Per: Udayan Dasgupta, JM:

This appeal is filed by the revenue against the order of the ld. CIT(A) National Faceless Appeal Centre NFAC (Delhi), passed u/s 250 of the Income Tax Act,1961 ( henceforth the Act )dated 25.09.2025 which has emanated from the order of the National Faceless Assessment Centre, Delhi passed u/s 147 r.w.s 144B of the I. T. Act, 1961 dated 24.03.2022.

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“1. Whether on the facts and circumstances of the case and in the law, the Ld. CIT(A) has erred in not sustaining the addition of Rs. 1,05,62,700 made by the Assessing Officer as unexplained cash deposits under section 69A of the Act, not appreciating the fact that the Assessing Officer had recorded cogent reasons to believe, based on Verifiable information received from ITO (I and CI), Kota, that the source of the cash so deposited remained unaccounted for and unsubstantiated 2. Whether on the facts and circumstances of the case and in the law, the Ld. CIT(A) has erred in treating the assessees post hoc explanations as sufficient to discharge the onus of proof in respect of the voluminous cash deposits WHEREAS (i) the Assessing Officer had furnished evidence of inconsistent statements by the assessee (change of explanation from receipts from debtors to cash sales), and (ii) the assessee failed to produce contemporaneous documentary corroboration such as debtor ITRS. confirmations, HPCL online client register reconciliation, genuine sales bills and purchase invoices despite opportunity and specific requisitions, and (iii) the assessee remained non-compliant both during the assessment proceedings as well as the AOs show cause issued for the verification of additional evidences submitted before the Ld. CIT (A). 3. Whether on the facts and circumstances of the case and in the law, the Ld. CIT(A) has erred in not appreciating the fact that the onus on the assessee to substantiate unusual large cash deposits, is a statutory and evidentiary burden and that the Assessing Officer, on verification of the records and in the remand report, rightly found the cash books, sales register and allied records to be unreliable and indicative of manipulation and such finding is based on material available on record.

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Rs. 7.28 lakhs on a gross turnover of sales of Rs. 19.21 crores. Proceedings u/s 147 was initiated vide notice u/s 148 dated 30/03/3021 ( after necessary sanction from higher authorities), on the ground of cash deposit in bank amounting to Rs. 1.05 crores , on various dates during the period 09.11.2016 to 18.11.2016 ( which was a part the demonetisation period), in response to which return filed, statutory notices issued and the assessee represented in assessment proceedings, except replying to the final SCN containing draft order, which led to the completion of assessment u/s 147/144B, on a total income of Rs.1.12 crores (including an addition of Rs.1.05 crores being the cash deposited in bank during the demo period), where the AO has disputed the volume of SALES during the said period in absence of furnishing the online register maintained by the of HPCL authorities in respect of each client.

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are through proper banking channel, and sales, including cash sales during demonetization period are from out of stock available in hand which is fully supported by vouched purchases from HPCL. The appellant-maintained stock register, cash book etc and has filed its return of income declaring total receipt of Rs.19,21,23,275/- which are audited u/s.44AB. The AO has submitted vide remand report that the appellant's submissions/additional evidence are not tenable on the basis of the observation from the cash book that the assessee had excessively increased the cash sale during period 09.11.2016 to 18.11.2016 with average of 10-12 lakhs as against average sale of Rs. 4-5 lakhs approximately year indicating manipulation of books of accounts. The AO has contended that has also increased the purchase accordingly and has not submitted proper purchase bills; opening cash balance of Rs. 21,79,608/- on 09.11.2016 remains unverified in absence of supporting documents and that cash books and sales register are not in accordance with sales as submitted by the assessee; and that no bills and vouchers of sales are submitted. However, it is noted that the cash sales have been explained and substantiated by the appellant by providing details of sales, cash book, stock register, details of purchases vide banking channels purchase register, sales register etc. The A.O has not pointed out any specific instance of manipulated accounting and has made a general observation in this regard. The A.O has also noted that the appellant had in the course of earlier enquiry assessee claimed

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the cash deposits to be sum received from sundry debtors and subsequently changed its stance to state that the deposits were from sale receipts, which has been refuted by the appellant with supporting evidence in the form of the reply letter to ITO(I&CI) stating that the cash deposits were from cash sales. Hence this cannot be taken as a basis to reach a conclusion, and it is the evidence which must speak for itself. 5.2.4 In this context, it is noted that the appellant is in the business of selling diesel and petrol, a line of business in which cash transactions on a daily basis are the norm. It is also noted that the appellant had maintained proper books of accounts which were duly audited, and filed its ITR for the A.Y 2017-18 wherein total receipts of Rs. 19,21,23,275/- were declared of which the cash deposits during demonetization is at Rs.1,05,62,700/-. It is pertinent to note that during demonetization, petrol pumps/dealers were permitted to accept old currency notes, which could account for the higher cash sales during this period. The opening cash balance on 09.11.2016 reported at Rs.2179608/- is supported by cash book, sales and purchase registers, stock register and bank statements. No specific defect or lacuna have been found in the books of the appellant or in the explanations given by the appellant duly supported by documentary evidence, other than the higher quantum of cash sales during the demonetization period which has been credibly explained. Taking all the above into consideration, I find that as per the material evidence, the cash deposits during demonetization stated to be generated from cash sales are duly

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accounted for and substantiated by supporting evidence and hence cannot be treated as unexplained money u/s 69A. Accordingly, the addition of Rs. 1,05,62,700/- made u/s 69A is deleted and Ground of appeal 2 is allowed.” 5. Now the revenue is in appeal as per the grounds of appeal contained in the memo of appeal. The Ld. DR submitted that the assessee has not been able to substantiate the sales effected during the marked with sales invoices and purchase invoices and has not been able to furnish ITR of debtors and their confirmation and has relied on the assessment order and prayed for sustaining the same. 6. Per contra the Ld.AR of the assessee relied on the Ld. CIT ( A ) order and submitted that evidence of sales and purchase invoices are fully produced and examined in appellate proceedings (and also during remand) and it is the stock register as per HPCL format, which records inward and outward movement of stock of ( MS and HSD )on daily basis and the same has been produced and examined. 6.1 He further submitted that the inward movement of goods as recorded in stock, are all supported by date wise purchase invoice issued by HPCL authorities, payments of which are all evidenced through bank channel. He further submitted that the entire volume of transactions are recorded in regular books of account, duly audited u/s 44AB and the TAR also contains the quantity wise details of goods traded for the year, ( and it is not a case of suppression of sales) , but the increase of sales during the above period was explained by corelation with increase in purchase

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volume, date wise purchase invoice issued by HPCL, which are accepted as genuine, which has consequently resulted in sales and the entire deposit of cash in bank are out of the same sale proceeds. He prayed for sustaining the appellate order.

7.1 Secondly, we also note that the Ld CIT(A) , has given a specific finding that books of accounts supported by purchase register, stock register and bank statements are produced and no specific defects are found and the same are supported by purchase register, stock register and bank statements and all supporting invoices and under such circumstances , there is no reason in this case to draw any adverse conclusion in the matter and we are of the view that book results are to be accepted in the instant case.

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7.2 As such we uphold the order of the Ld CIT (A) and the appeal of the revenue is dismissed being devoid of merits.

Order pronounced on 12.08.2026 under Rule 34(4) of the Income Tax Appellate Tribunal Rules 1963.

Sd/- Sd/- (ANNAPURNA GUPTA) (UDAYAN DAS GUPTA) Accountant Member Judicial Member Dated 13.08.2026 * Ganesh Kumar, Sr. PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.