ACIT CIRCLE-1(1), RAJKOT, RAJKOT vs. GRENIC TILES PRIVATE LIMITED, WANKANER

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट । In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member आयकर अपील सं./ITA No. 450/Rjt/2026 [ �नधा�रण वष�/Assessment Year: 2018-19 ] Assistant Commissioner of Grenic Tiles Private Limited Income-tax, Circle- 1(1), Rajkot S.No.81, 8-A National Vs. Room No.502, Aayakar Bhavan, Highway At Jambudiya Race Course Ring Road, Rajkot (Bhayati) Wankaner, Rajkot 360 001 Gujarat-363622 �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAECG3765D (अपीलाथ�/Assessee) (��यथ�/Respondent) Assessee by : R. K. Doshi, Ld. AR Respondent by : Shri Arbind Kumar Mishra, Ld. Sr. DR Date of Hearing : 01/07/2026 Date of Pronouncement : 11/08/2026 :: ORDER :: Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the Revenue, pertaining to assessment year (AY) 2018-19, is directed against the order under section 250 of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the National Faceless Appeal Centre (NAC) Delhi/Commissioner of Income-tax (Appeals) [in short ‘NFAC/Ld.CIT(A)’], dated 13.01.2026, which in turn arises out of an assessment order passed by the Assessing Officer u/s 147 read with section 144B of the Act, dated 14.03.2023. 2. The grounds of appeal raised by the Revenue are as follows:

ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited 1. The Ld. CIT(A) erred in law and on facts in deleting the addition of Rs.1,05,23,738/- despite the assessee failing to prove the genuineness of the transaction u/s 68 of the Act. 2. Any other ground that the Revenue may raise before or during the proceedings before the Hon'ble ITAT. 3. It is, therefore, prayed that the order of the CIT(A) be set aside and that of the assessing officer be restored to the above extent.

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited 18, which was subsequently issued in form of cheque. Therefore, assessing officer noted that the cash of Rs. 15,23,738/- deposited during the F.Y. 2017- 18 in the bank accounts maintained by Shri Haresh Vajubhai Sojitra(Prop. of M/s Shree Hari Enterprises) belongs to the assessee- company. 4. The assessing officer also noticed that as per further information available, it was observed that cash deposits and withdrawals were made in the bank accounts of Ram Trading Co. (Prop. Ashish V Solanki). Further, it was seen that Ashish V Solanki has been filing his return of income regularly, however, the income returned does not match with profile of cash transactions of deposits and withdrawals from the bank accounts of Shri Ashish V Solanki Prop. Ram Trading Co. On further verification, it was found that he was working for Bharat Ishwarbhai Bhatiya and Bharat Ishwarbhai Bhatiya is running the Shroff/Angadiya business. Further, Bharat Ishwarbhai Bhatiya was using bank accounts of Ashish V Solanki for deposit of cash in lieu of commission. Further investigation of his bank account transactions revealed that he has received the assessee company's unaccounted cash and subsequently the assessee- company's cash was transferred to the assessee -company through cheque vice versa. As per data available cash amounting to Rs. 90,00,000/- has been deposited in the bank account of Shri Ashish V Solanki Prop. Ram Trading Co. by the assessee- company during the F.Y. 2017-18, which was subsequently issued in the form of cheque. Therefore, the cash of Rs. 90,00,000/- deposited during the F.Y. 2017-18 in the bank accounts maintained by Shri Ashish V Solanki Prop. Ram Trading Co. belongs to the assessee company.

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited 5. Based on the above facts, the assessing officer noticed that the assessee- company is one of the beneficiaries, who have obtained accommodation entries of Rs. 15,23,738/- and Rs. 90,00,000/- as received cheque in lieu of by depositing unaccounted cash during the F.Y. 2017-18. 6. For the above reasons, the case of the assessee- company was re-opened u/s 147 of the Act and notice u/s 148 was issued on 31.03.2022. In response to this, notice, the assessee -company has filed return of income (ROI) on 15.04.2022 declaring total income of Rs 23,38,350/-. The notice u/s 143(2) of the Act was issued on 23.09.2022. During the re-assessment proceedings, the assessee has filed reply on 29.10.2022 with objection regarding the re-opening of the assessment u/s 147 of the Act and also requested to provide copy of relevant documents. The objection of the assessee has disposed of on 28.11.2022 and also provide relevant pages of the recorded statements u/s 132(4)/131(1A) of the Act of Shri Haresh Vajubhai Sojitra (Shree Hari Enterprise) and Shri Ashish Vijaybhai Solanki (Ram Trading Company). Thereafter, notice u/s 142(1) of the Act was issued to the assessee on 01.02.2023 with request to provide required details and documents. 7. In response to this notice, the assessee has filed reply on 16.02.2023 with copy of computation of income and copy of audit report with financial statements. In his reply, the assessee has again objected proceedings u/s 147 of the Act. The objection of the assessee has already disposed of by the jurisdictional assessing officer on 31.03.2022 by passing order u/s 148A(d) of the Act and for this vide AO letter dated 28.11.2022. Thereafter, show cause notice was issued to the assessee on 03.03.2023. In response to this notice, the assessee company has filed reply on 06.03.2023 with copy of bank account

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited statement, copy of account statement of Omkara trading company and GRAC Enterprises and copy of audit report. In reply, the assessee has again request to provide relevant documents, which has been provided to the assessee as per letter dated 28.11.2022. Further, the assessee has stated that " the cheques received through Shri Ram trading company and Shree Hari Enterprises are duly credited in their books and deposited in their bank accounts. During the assessment proceedings, the assessee submitted first reply before the assessing officer, which is reproduced below: “We had sold goods to M/s Omkar Trading Co aggregating to Rs 64,06,120/- in FY 2016-17. The said amount of Rs 64,06,120/- was outstanding receivable from the said party as on 31.3.2017. Against the said opening balance outstanding in respect of sales made in FY 2016-17, we have received Cheques aggregating to Rs 40,00,000/- during FY 2017-18 from Ram Trading Co. and Rs. 10,00,000/- from Shri Hari Enterprise. The said receipts of cheque are credited in the account of M/s Omkar Trading Co, against the opening receivable. We had sold goods to M/s Grace Enterprise aggregating to Rs. 54,82,400/- in FY 2016-17. The said amount of Rs. 54,92,400/- was outstanding receivable from the said party as on 31.3.2017. Against the said opening balance outstanding to respect of sales made in FY 2016-17, we have received Cheques aggregating to Rs. 50,00,000/- during FY 2017-18 from Ram Trading Co. The said receipts of cheque are credited in the account of M/s Grace Enterprise, against the opening receivable from the said party. The sales in respect of which amounts are received through Ram Trading Co and Shree Hari Enterprise are included in our sales for FY 2016-17 and already offered to tax in our Income Tax Return for AY 2017-18." 8. In response to the other notice of the assessing officer, the assessee also submitted detailed reply before assessing officer, which has not been brought on record by the assessing officer in the assessment order, however, ld.CIT(A) reproduced, the said reply filed by the assessee before the assessing officer, vide page no. 41 of the order of ld.CIT(A). Such detailed reply filed by assessee on 06.03.2023, before the assessing officer, is reproduced below:

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited “1. You have initiated the assessment proceeding without providing us the information available with your office and without providing copy of relevant documents, evidence and details based on which you have alleged the transaction of Rs. 15,23,738 with Shree Hari Enterprise Prop. Haresh Vajubhai Sojitra and transaction of Rs.90,00,000 with M/s. Ram Trading Co were our accommodation entries. Without verification of the details, without providing us copy of relevant documents, evidence along with necessary details and copy of Statement recorded of the persons on whose information you have relied, your proposed addition is bad in law and facts. No such addition can be made without providing us the details of transactions alleged to be our income, opportunity to cross examine the person on whose statement you are relying. 2. We had requested following details vide our letter dated 16.02.2023 Acknowledgement No 957820391160223.  Copy of relevant documents, evidence and date wise transaction as alleged by you.  Details of date wise alleged transactions of cash receipts by Shree Hari Enterprise and Ram Trading Co alleged to be paid by us.  Details of person from whom the cash was received by Shree Hari Enterprise and Ram Trading Co. with evidence.  We Further we request you that after receipt of the above details and documents, kindly provide us an opportunity to cross examine the persons based on whose statement you are relying. However, you have not provided above details so far, so as to enable us to respond to your notice. We once again request you to provide us above requested details and documents to respond to your notice: 3. Without prejudice, we submit following details requested by you. 4. Please find attached herewith bank statement at Annexure A and Annexure-B. 5. The cheques received through Shri Ram Trading Co and Shree Hari Enterprise are duly credited in our books and deposited in our bank account as detailed below:  We had sold goods to M/s Omkar Trading Co aggregating to Rs 64,06,120 in FY 2016-17. The said amount of Rs 64,06,120 was outstanding receivable from the said party as on 31.3.2017. Against the said opening balance outstanding in respect of sales made in FY 2016-17, we have received Cheques aggregating to Rs 40,00,000 during FY 2017-18 from Ram Trading Co. and Rs 10,00,000 from Shri Hari Enterprise. The said receipts of cheque are credited in the account of M/s Omkar Trading Co, against the opening receivable.  Please find attached herewith the copy of account of Omkar Trading Co for the FY 2016-17 and FY 2017-18 at Annexure C & C1 where in the cheques received from Ram Trading Co and Shree Hari Enterprise are duly credited.  We had sold goods to M/s Grace Enterprise aggregating to Rs 54,82,400 in FY 2016-17. The said amount of Rs 54,92,400 was outstanding receivable from the said party as on 31.3.2017. Against the said opening balance outstanding in respect of sales made in FY 2016-17, we have received Cheques aggregating to Rs. 50,00,000 during FY 2017-18 from Ram Trading Co. The said receipts of cheque are credited in the account of M/s Grace Enterprise, against the opening receivable from the said party. Please find attached herewith the copy of account of

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited Grace Enterprise for the FY 2016-17 and FY 2017-18 at Annexure D & D1 where in the cheques received from Ram Trading Co are duly credited.The Audit Report for FY 2016-17 is attached herewith at Annexure -E wherein amount receivable from Omkar Trading Co and Grace Enterprise as on 31.3.2017 is duly reported at Rs 64,06,120 and Rs 54,92,400 respectively under Sundry Debtors on 31.03.2017 of the Audited Balance Sheet. The sales in respect of which amounts are received through Ram Trading Co and Shree Hari Enterprise are included in our sales for FY 2016-17 and already offered to tax in our Income Tax Return for AY 2017-18. As we have already considered the amount received from Ram Trading Co. and Shri Hari Enterprise in our books of accounts and sales in respect to which the amount is received is offered to tax in our Income Tax Return, no further addition can be made to the return income. 6. Without prejudice to the above submission, we would like to further submit that except for the statement of third party which assessing officer might have obtained during the search proceedings and subsequently, no other evidences are there to prove that we have entered into any cash transaction with said party. All purchase and sales are fully recorded in the books of accounts and the same have been verified and satisfied by assessing officer that we have no other purchase or sales which are not recorded in the books. The details of turnover, Gross profit and Net Profit Ratio as per tax Audit report found as under. Particulars Α.Υ.2018-19 Α.Υ.2017-18 Α.Υ.2016-17 Turnover 11,64,72,614 10,18,45,479 10,76,11,606 Gross Profit 1,97,63,641 2,24,48,955 2,56,27,436 Gross Profit Ratio 16.19% 22.04% 23.81% [%] Net Profit 4,82,645 4,98,783 13,72,021 Net Profit Ratio (%) 0.49% 0.41% 1.27%

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited 9. Reference is invited to the Judgement of Hon'ble Gujarat High Court in the case of CIT v. Samir Synthetics Mills [2010] 326 ITR 410 (Gujarat) where in Hon'ble Gujarat High Court held that, the addition was justified on account of suppression of sale consideration but only to the extent of profit. Similar stand was taken by jurisdictional high court in the case of CIT vs. Gurubachhansingh J. Juneja [2008] 171 Taxman 406 (Guj)”. 9. However, the assessing officer rejected the above replies of the assessee and held that during the re-assessment proceedings, the assessee- company had not furnished valid explanation regarding above entries of Rs. 15,23,738/- and Rs. 90,00,000/-,respectively, as received cheque in lieu of by depositing unaccounted cash during the F.Y. 2017-18, with supporting documents. Therefore, total amount of above entries of Rs. 1,05,23,738/- (Rs. 15,23,738 + Rs. 90,00,000) was added in the assessee -company's income for the A.Y. 2018- 19, u/s 68 of the Act r.w.s. 115BBE of the Act. 10. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld.CIT(A), who has deleted the addition made by the assessing officer. The ld.CIT(A) observed that it is abundantly clear that amount of Rs.15,23,738/- was received by the assessee through Cheques from Shri Hari Enterprises (Prop. Shri Harish Vajubhai Sojitra) and Rs.90,00,000/- from Ram Trading Company (Prop. Shri Ashish V. Solanki). The submission of the assessee was that this was collection from Sundry Debtors whom sales were made in earlier years which was made through these Angadiyas. The assessee submitted following copy of accounts of Omkara Trading Company and Grace Enterprises. These accounts reproduced below:

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited 2017-18 filed by the assessee, during the assessment proceedings, vide its response dated 16.02.2023 that the debit balances of these parties were matching with the balance shown in the accounts of these parties filed during the assessment proceedings. 12. About the statements relied by the assessing officer, the ld.CIT(A) noted that Shri Ashish V. Solanki had stated in his statement recorded on 16/17.12.2020 by the ADIT (Inv.)-2, Rajkot that he was running two Proprietary concerns namely Ramdut Agency and Ram Trading Company. He further, submitted that he has opened the Bank accounts of these concerns on advice of Shri Bharatbhai Ishwerbhai Bhatiya and the bank accounts were used under the direction of Shri Bharatbhai Ishwerbhai Bhatiya. He accepted in reply to the question no. 32 of the statement that money was being deposited at different places of India and after deducting commission. He was making payments through cash withdrawals/RTGS to the parties. Further, Shri Bharatbhai Ishwerbhai Bhatiya in his statement dated 21.12.2020 recorded by the ADIT(Inv.)-2, Rajkot stated that he was doing 'Shroff Business' for commission along with Shri Ashish V. Solanki whom he was giving salary. Shri Harish Vajubhai Sojitra in his statement dated 05.08.2021 and 21.12.2021 recorded by Income Tax Officer (Inv.), Rajkot stated that he was proprietor of Shri Hari Enterprise where he was working as Shroff and he used to deposit cash of different Ceramic Units of Morbi in his bank account which was given to the parties after deducting commission. In the submission filed during the appellate proceedings it has been submitted that some customers sent them payments through Angadiyas and the payments are duly recorded. The assessee submitted that the cheque received from Ram Trading Company and Shri Hari Enterprises were duly credited against the opening debit balance in case of

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited Grace Enterprises and M/s Omkar Trading Company (copy of accounts of these parties have been reproduced in Para 5.2.2 of this order CIT(A)’s order). 13. Before, the ld.CIT(A) the assessee submitted that his business was of Tile Manufacturing and the Bank accounts, audit report, copy of account of concern parties was duly filed before the assessing officer and the assessing officer has not considered the submissions. The assessing officer has not accepted the version of the assessee of selling Goods to M/s Omkar Trading Company and M/s Grace Enterprise and receiving cheques on their behalf on the ground that the assessee- company had not furnished relevant details and documents. However, Ld.CIT(A) found that the assessee had furnished details in this regard vide his reply dated 06.03.2023 wherein it was submitted as follows before the assessing officer:

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited 14. Therefore, Ld. CIT (A) noticed that the aforesaid documentary evidences submitted by the assessee before the assessing officer have not been considered and also, no further, documents were called for/required from the assessee after its reply dated 06.03.2023.The assessing officer further, relied on the statements of Shri Harish Vajubhai Sojitra, Ashish V. Solanki and Bharat Ishwarbhai Bhatiya and held that the assessee -company received cheque from M/s Ram Trading Company and M/s Shri Hari Enterprise in lieu of cash given to them. The assessee has submitted that there is no evidence that the cash was given by it. The ld.CIT(A) also gone through the statements and find that there is no clarity as to whether the assessee paid/deposited cash in their accounts or the debtor parties deposited the money. 15. The ld.CIT(A) also noticed that during the assessment proceedings, the assessee demanded the opportunity of cross examination, however, the assessing officer did not provide the opportunity of cross-examination. The assessee relied on the various case laws including Hon'ble Supreme Court decision in case of Anand Timber Industries vs CCE (62 taxmann.com 3) where it was held that the reliance on third party evidence without cross examination renders the order void ab-initio. The ld.CIT(A) noted that the assessee had requested vide reply dated 29.10.2022 that cross examination of the persons whose statements were being relied upon be provided to him. The ld.CIT(A) found that the assessing officer has given the assessee copies of the statements but has not made any observation regarding the request of cross examination. 16. The assessee, further submitted that as the sales were already recorded and have not been disputed by the assessing officer. Thus, without admitting/assuming that the cash received was handed over by the assessee to

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited the Shroff it cannot be treated as unexplained cash credit u/s 68 of the Act.The assessee also relied on the decision of Hon'ble Gujarat High Court in case of CIT vs. President Industries [2002) (258 ITR 654) wherein it was held that: "The amounts of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represent the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realization of excess over the cost incurred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that the investment by way of incurring cost in acquiring goods which have been sold has been made by the assessee and that has also not been disclosed, the question whether entire sum of undisclosed sales proceeds can be treated as income, answers by itself in the negative.As a result, no question of law arose out of the Tribunal's appellate order." In view of above facts, the ld.CIT(A) held that there is no conclusive evidence to hold that the money received through cheque from M/s Hari Enterprises and Ram Trading Company was on account of cash given by the assessee or the debtor parties deposited the money. Further, the assessing officer has not rebutted the explanation of the assessee which is based on his books of accounts. Therefore, the additions of Rs.15,23,738 and Rs.90,00,000/- were deleted by ld.CIT(A).

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited 19. On the other hand, the Ld. Counsel for the assessee submitted that the entire documents and evidences including, reasons recorded by AO, Statement of assessee and the audited books of accounts and the Paper-book which were filed before this Tribunal, were available before the assessing officer, and assessing officer had examined all these details and documents. The assessing officer have examined the reasons recorded , Statement of assessee and the audited books of accounts and the Paper-book and the evidences submitted by the assessee during the assessment proceedings. There is no additional evidences available now, which can be examined by the assessing officer, therefore, based on the same facts and the documents available before the assessing officer, the assessing officer should not be given further opportunity to re-examine the evidences again which were already examined by him u/s. 143(3) of the Act during the assessment proceedings. The ld.Counsel further contended that ld.CIT(A) past reasoned and speaking order, which should be upheld. 20. We have carefully considered the facts of the case, the submission of the Learned Counsel for the assessee and ld DR for the Revenue and evidences on record. We do not find merit in the arguments advanced by learned DR for the revenue to the effect that matter may be restored back to the file of the assessing officer for examination of figures and documents, again, which were already examined by the assessing officer. We have also considered the contention of the learned Counsel for the assessee, on this issue. On examination of the assessment record, it is evident that the documents and evidences relied upon by the assessee before the Tribunal, including the books of account, statement of the assessee and other supporting documents, were already furnished before the Assessing Officer during the course of assessment proceedings under

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited section 143(3) of the Act. The said material was thus not additional evidence within the meaning of Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. The assessment record further demonstrates that the Assessing Officer had adequate opportunity to examine and verify the aforesaid material. No fresh document or evidence, requiring factual verification by the Assessing Officer, has been brought on record before the Tribunal. In these circumstances, where the entire material necessary for adjudication is already available on record and has been subjected to examination by the Assessing Officer, a remand merely for re-examination of the very same material would not advance the cause of justice and second inning should not be given to the assessing officer to examine the same material. A second opportunity to the Assessing Officer to undertake a fresh investigation on the same set of facts should not be given and hence, we reject the contention of the learned DR for the Revenue.

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited It is not disputed that Shri Ram Trading Company and Hari Enterprise are working as shroff. The assessee had sold goods to Omkar Trading Co. aggregating to Rs. 64,06,120/- in FY 2016-17. The said amount of Rs. 64,06,120 was outstanding receivable from the said party as on 31.3.2016. Against the said opening balance outstanding in respect of sales made in FY 2016-17, the assessee received cheques aggregating to Rs. 40,00,000/- during FY 2017-18 from Shi Ram Trading Co. and Rs. 10,00,000 from Shri Hari Enterprise. The said receipts of cheques received from Shri Ram Trading Co. and Shri Hari Enterprise on behalf of and under the instruction of Omkar Trading Co, are credited against the opening balance due from Omkar Trading Co. Similarly, the assessee had sold goods to Grace Enterprise, aggregating to Rs 54,82,400/- in FY 2016-17. The said amount of Rs. 54,82,400/- was outstanding receivable from the said party, as on 31.3.2016. Against the said opening balance outstanding in respect of sales made in FY 2016-17, the assessee received cheques aggregating to Rs. 50,00,000/- during FY 2017-18 from Shi Ram Trading Co. The said receipts of cheques received from Shri Ram Trading Co on behalf of and under the instruction of Grace Enterprise are credited against the opening balance due from Omkar Trading Co. The Copy of account of Omkar Trading Co. for the FY 2016-17 and FY 2017-18 where in the cheques received from Ram Trading Co, and Shree Hari Enterprise are duly credited was submitted to the A.O by way of Annexure B 1, B2, C1, C2. The copy of account of Grace Enterprise for the FY 2016-17 and FY 2017-18 where in the cheques received from Ram Trading Co, are duly credited was submitted to the assessing officer. The Audit Report for FY 2016-17, wherein amount receivable from Omkar Trading Co, and Grace Enterprise as on 31.3.2017 is duly reported at Rs. 64,06,120/- and Rs. 54,92,400/- respectively

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited under Sundry Debtors on 31.03.2017 of the Audited Balance Sheet, which was duly submitted to the assessing officer, vide Annexure D. 22. The assessing officer has rejected the above explanation submitted to him stating that "The assessee Company's statement is not acceptable that the Company had sold goods to M/s Omkar Trading Company and M/s Grace Enterprise during the FY 2016-17 and received cheques during FY 2017-18 from Ram Trading Company and Shree Hari Enterprise against above sale of goods. Because, in this regard, the assessee- company has not furnished relevant details and documents."

However, we note that assessee had furnished ledger copy of the Omkar Trading Company and Grace Enterprise for FY 2016-17 and FY 2017-18 wherein sales transaction and receipt of cheque are duly reflected. The Audit Report for FY 2016-17 with schedules was also furnished. Under the schedule of Sundry Debtors, the amount due from Omkar Trading Co and Grace Enterprise is duly reflected. The sales register for FY 2016-17 is furnished. The assessment of AY 2017-18, being the year in which sales were made to Omkar & Grace was finalized u/s 143(3) of the Act, wherein, based on the above documents and books of accounts, the assessing officer has accepted the sales made to Omkar Trading Company and Grace Enterprise as well as outstanding balance due from the said parties. The assessee had discharged his onus to prove the transaction. If the assessing officer was not satisfied with the explanation, he was duty bound to investigate the matter further. Instead, he solely relied on the statement of Shroff and disbelieved the explanation of assessee without giving any cogent reason. The assessee had filed details requested by the assessing officer from time to time and if assessing officer was not satisfied about the evidences produced, he should have made further inquiry. He could have called for further details. He could have issued notice u/s 133(6) of the Act to Omkar Trading Company and Grace Enterprise.

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited However, he did not opt to make any further inquiry or issue notice u/s 133(6) of the Act even though he has sufficient time to do so, during the assessment proceedings. 23. The learned Counsel also submitted that the assessing officer has solely relied upon the information available with Department that Shri Ram Trading Company and Hari Enterprise have cash in their bank account belongs to the assessee- company and duly returned to the assessee by issue of cheque from their respective bank accounts. There is no confirmation or evidence from Ram & Hari that the cash was given to them by assessee. There is no evidence or confirmation by Ram & Hari that the assessee was involved in cash transaction. The bank accounts of the assessee were submitted before the assessing officer, vide Annexure K1 K2. The cheques received from Ram and Hari are deposited in the bank account. There is no cash withdrawal from the bank before or after the deposit of cheque received from Hari & Ram. The assessing officer has not brought on record any evidence to show that the assessee was engaged in doing any unaccounted business. 24. During the assessment proceedings, the assessee requested, the assessing officer, to provide them an opportunity to cross examine the persons based on whose statement the assessing officer relied and made addition. The assessing officer did not provide statement of Ram Trading Co. Enterprises and Hari based on which the assessment order was framed. The assessing officer did not provide opportunity to cross examine the parties on whose statement he has relied. 25. We also find that assessing officer has not brought on record any evidence to show that assessee had made any sales which is not recorded in the

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited books. The assessing officer has not brought on record details or evidences of parties to whom alleged unaccounted sales were made. The assessing officer has not disputed purchases made by assessee. It is not the case of the assessing officer that there was any unaccounted purchase. Without disturbing the purchase, the assessing officer cannot allege that there were unaccounted sales. The assessee has been filing VAT/GST returns which are duly reconciled with the books of account and VAT/GST department has not reported any discrepancies in the sales reported in VAT/GST returns. The Assessing Officer had not brought any corroborative material on record to prove that such sales were made and 'on-money' was received by the assessee outside the books of account. The Assessing Officer had not identified/examined any buyer to whom the alleged sales were affected. Mere statement of searched person was not sufficient to prove that the assessee had indulged in such a transaction. Moreover, the Statement recorded on back of the assessee, cannot be used against the assessee without affording opportunity to the assessee to cross examine the person whose statement has been relied upon by the assessing officer. No addition can be made only on the basis of statements of the third party without providing the opportunity of cross-examination of the person when specifically asked by the assessee. Therefore, we note that the inference of the Assessing Officer that the assessee has received 'on-money' was merely based on suspicion and surmises and there was no material whatsoever to support the conclusion of the Assessing Officer that the assessee had in fact received any 'on-money'. We note that except for the “statement of third party” which assessing officer might have obtained during the search proceedings and subsequently, no other evidences are there to prove that assessee had entered into any cash transaction with said party. All purchase and sales are fully

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ITA No. 450/Rjt/2026 [ AY 2018-19] ACIT Vs. Grenic Tiles Private Limited recorded in the books of accounts and the same have been verified and satisfied by assessing officer. Based on this factual position, we do not find any error in the conclusion reached by the learned CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid addition. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 26. In the result, appeal filed by the revenue is a dismissed. Order is pronounced in the open Court on 11/08/2026.

Sd/- Sd/- [Shri Sonjoy Sarma] [Dr. Arjun Lal Saini] �याियक सद�य/Judicial Member लेखा सद�य/Accountant Member //True Copy// राजकोट/Rajkot िदनांक/Date: 11/08/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Rajkot 6. Guard File By order

Private Secretary ITAT, Rajkot

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