INCOME TAX OFFICER WARD 6 1 MOHALI, MOHALI vs. GARG JEWELLERS, ARYA COLLEGE ROAD KHARAR MOHAL

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHANDIGARH PHYSICAL HEARING BEFORE HON’BLE SHRI LALIET KUMAR, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No.25/CHANDI/2024 (िनधा�रणवष� / Assessment Year: 2017-18) ITO Ward 6(1) M/s Garg Jewellers Livestock Complex, Sector – 68 बनाम/ Vs. Arya College Road, Kharar Mohali, Punjab – 160062 Mohali, Punjab – 140301 �ायीलेखासं./जीआइआरसं./PAN/GIR No. AARFM-6551-H (अपीलाथ�/Appellant) (��थ� / Respondent) : अपीलाथ�कीओरसे/ Appellant by : Sh. Parikshit Aggarwal (CA) - Ld. AR ��थ�कीओरसे/Respondent by : Sh. Vivek Vardhan (Addl.CIT) - Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 22-07-2026 घोषणाकीतारीख /Date of Pronouncement 03-08-2026 : आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC, [CIT(A)] dated 23.11.2023 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 30.12.2019. The sole issue that arises for our consideration is addition of Rs.149 Lacs as made by Ld. AO on account of cash deposits. Having heard rival submissions and upon perusal of case

records, the appeal is disposed-off as under. The assessee-firm is stated to be engaged in jewellery business. 2. The assessee deposited cash of Rs.87.65 Lacs in its two bank accounts during 01.04.2016 to 08.11.2016 whereas it deposited cash of Rs.161 Lacs from 09.11.2016 to 30.12.2016 during demonetization period. To verify the same, the assessee was required to furnish supporting documents. The assessee furnished month-wise sales, month-wise closing cash-in-hand for this year as well as for preceding year. The assessee stated that cash deposited during demonetization period was sourced out of cash sales and available cash-in-hand in the regular books of accounts. The Ld. AO rejected assessee’s explanation on the ground that out of total sales of Rs.2.61 Crores, the sales of Rs.1.41 Crores were shown in the month of October, 2016 only. Further, average sales prior to October, 2016 were Rs.6 Lacs approx. which abruptly rose to Rs.159.11 Lacs during the period from 01.10.2016 to 08.11.2016. The sale list was furnished by the assessee at fag-end and therefore, the same could not be verified. Most of these bills were cash sales only and without identification of the buyers. When the assessee was having sufficient cash-in-hand, there was no necessity to make cash withdrawals. It was, therefore, alleged that the assessee manipulated its cash book. Finally, Ld. AO granted benefit of average sales of Rs.6 Lacs per month for October, 2016 and computed probable cash balance of Rs.11.99 Lacs at the time of deposits. The remaining cash deposits out of Rs.161 Lacs i.e., Rs.149 Lacs was added as unexplained income of the assessee u/s 69A.

of an entity where there is consistency in monthly sales throughout the year. But in the present case, when sale of assessee was very fluctuating every year and more-so when peak season of the assessee was there during the period in dispute, the method applied by Ld. AO to compare sales of the preceding period of same year was not correct and he should have compared it with earlier year’s sales. There was marginal increase in sales by 5% which was quite usual. Further, the assessee deposited cash in 3 consecutive days immediately after the announcement of demonetization. If sales were not carried out in the period prior to the demonization then the same would have been deposited in parts throughout the period of demonetization. Therefore, the action of Ld. AO in estimating the sale was not logical and justifiable. Reference was made to the decision of Hon’ble Punjab & Haryana High Court in the case of Shiv Charan Dass vs. CIT (126 ITR 263) as well as the decision of Hon’ble Delhi High Court in the case of CIT vs. Kulwant Rai (291 ITR 36) holding that the explanation rendered by the appellant cannot be rejected without pointing out any defect in it. 4. The Ld. CIT(A) also concurred that assessee’s books were not rejected u/s 145(3) and the reported sales stood accepted by Ld. AO. The cash sales were duly accounted for in the regular books and tax was paid on profit element. The entire sales were also reported in VAT return which was not doubted by the VAT authorities. The Ld. AO, while disputing the genuineness of the sales claimed by the assessee, accepted the books and sales reported therein. The impugned addition,

in such a case, would amount to double taxation which is impermissible in law. Mere fact that sales bills did not bear the complete address and particulars of customers could not jeopardize the claim of the assessee on the absence of any concrete evidence as brought on record by Ld. AO. Lastly, Ld. AO was empowered to invoke the provisions of Sec. 69A only in a case where the assessee found to be the owner of money or bullion and the same is not entered in the books of the assessee. In the present case, the cash sales were duly accounted for by the assessee in its books of accounts. Therefore, the provisions of Sec.69A could not be invoked to the facts of the case. Further, Ld. AO could not place reliance on the circumstantial evidence which is only conjectures and surmises and the said approach of the AO was devoid of merit and deserves to be rejected. The AO disbelieved the explanation of the assessee on mere presumptions without bringing on record any corroborative material to support its allegation. Finally, the impugned addition was deleted against which the revenue is in further appeal before us. 5. From the facts, it emerges that the assessee-firm is engaged in jewellery business and the business trend reflected sudden spurt in the sales on 08.11.2016 at the time of announcement of demonetization. It also emerges that the assessee has maintained proper books of accounts and reflected substantial sales of Rs.2.61 Crores which include cash sales of Rs.1.61 Crores. The sales turnover form part of assessee’s regular books of accounts and no dispute has been raised by VAT authorities on the sales turnover of the assessee. As per extant

law, assessee’s books of account are duly audited and the assessee has maintained quantitative records of traded items. During the course of assessment proceedings, the assessee furnished copies of relevant sales invoices. The assessee’s documents were rejected by Ld. AO who has gone by the presumption that the sales in this year could not deviate from the past trends of the business. This line of presumption is clearly a fallacious one since this year was abnormal year when this line of business reflected higher cash sales during demonetization period. Pertinently, the books have not been rejected and no defect has been found in the documentary evidences as furnished by the assessee in support of its sales turnover. The purchases made by the assessee have not been doubted. No actual case of non-genuine sales or inflated sales has been quoted by Ld. AO. The partial cash deposits have been added as undisclosed income merely on the basis of ratio and proportion which cannot be sustained in law. It is trite law that no addition could be made merely on presumption, suspicion, conjectures or surmises. The assessee duly discharged its onus by furnishing plethora of documents. The available cash-in-hand in audited books as on 08.11.2016 was sufficient enough to make impugned deposits in the bank accounts. The sales receipts were already offered to tax and adding the same again would amount to double addition which is impermissible. On these facts, no fault could be found in the adjudication of Ld. CIT(A). By endorsing the findings of Ld. CIT(A), we dismiss the present appeal.

-Sd- -Sd- (LALIET KUMAR) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AS Dated: 03-08-2026 आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

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