DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, VADODARA, VADODARA vs. P GOLD PRIVATE LIMITED, DAHOD

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 2374/Ahd/2025 (िनधा�रण वष� / Assessment Year : 2017-18) बनाम Deputy Commissioner of P Gold Pvt. Ltd. / C/o. Maneklal, Nr. Desai Income Tax, Vs. Central Circle-1, Wada Dahod, Gujarat- Vadodara 389151 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAGCP3335A (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Mehul K. Patel, Advocate ��यथ� क� ओर से/Respondent by : Shri Ashok Kumar Suthar, Sr. DR

Date of Hearing 16/04/2026 Date of Pronouncement 13/07/2026 (आदेश)/ORDER Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the Revenue against the order dated 23.09.2025 passed by the Learned Commissioner of Income Tax (Appeals)-12, Ahmedabad [hereinafter referred to as “the CIT(A)”] for the assessment year 2017-18, whereby the Ld. CIT(A) has deleted the addition of Rs.1,32,56,500/- made by the Assessing Officer under section 69A of the Income Tax Act, 1961.

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“(i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,32,56,000/- being unexplained money u/s 69A of the Act without appreciating that addition was made on account of absence of supporting evidences of cash sale and after considering the assessee's previous sale pattern and cash deposit trend. (ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,32,56,000/- u/s 69A without appreciating that almost entire year's sales was made during 17 days prior to demonetization and therefore not found to stand the test of human probabilities i.e. preponderance of probabilities which is applicable for Income Tax proceedings. (iii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,32,56,000/- u/s 69A and accepting the assessee's unexplained money as cash sale without appreciating that sample sales bills of the assessee lack details of purchasers such as PAN, Address etc. and other evidences & facts brought by the Assessing Officer on record in the assessment order. (iv) The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.”

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Officer observed that no such cash deposits were found in the bank accounts during the remaining period of the financial year. The Assessing Officer further observed that the bank account analysis showed only few credit entries and that there were no normal cash deposits during the year except the deposits during the demonetisation period. On being asked to explain in this respect, the assessee filed a reply on 13.12.2019 and claimed that it had made cash sales of Rs.1,31,71,785/- between 23.10.2016 and 08.11.2016 and that the impugned deposits represented sale proceeds. The Assessing Officer, however, did not accept the said explanation. The Assessing Officer observed that as per the return of income, the assessee had shown total sales / gross receipts of Rs.1,30,41,371/- for the whole year and, therefore, according to him, the assessee had shown almost the entire year’s sales in a span of about 17 days and no business activity was shown during the remaining part of the year. The Assessing Officer also examined the sale bills produced by the assessee and noted that the description of the items in the bills was stated only as “new gold ornaments” or “Fine Gold”. He further noted that there were no further details of ornaments, no labour charges or other particulars, and that in most of the bills only the name of the customer was mentioned without complete details such as PAN, address or any other identifying particulars. The Assessing Officer, therefore, concluded that the bills were fabricated, incomplete and doubtful. He further held that the explanation of the assessee was stage-managed and that the assessee had tried to route unexplained cash in the garb of business sales. The Assessing Officer, therefore, invoked the provisions of section 69A of the Act and held that the assessee had been found to be the owner of money appearing in the bank accounts, but had failed to offer any acceptable and cogent explanation regarding the nature and source of

ITA No.2374/Ahd/2025 [DCIT vs. - 4 – P Gold Pvt. Ltd.] A.Y. 2017-18

the same. He therefore, treated the entire sum of Rs.1,32,56,500/- deposited in the bank accounts during the demonetisation period as unexplained income under section 69A of the Act and added the same to the total income of the assessee. The income was taxed under section 115BBE and penalty proceedings under section 271AAC were also initiated.

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section 44AB of the Act; that day-to-day stock records were maintained; that all purchases and sales were supported by bills; that payments for purchases were made through account payee cheques, and that the Assessing Officer had not found any defect in the books of account, stock book, purchase register or the quantitative records. It was also submitted that the Assessing Officer had not invoked section 145(3) of the Act for rejection of books of account. The assessee also contended that the impugned sales were reflected in the audited profit and loss account and that the profit arising therefrom had already been offered to tax.it was also contended before the Ld. CIT(A) that the assessee was regularly filing VAT returns and the sales shown by the assessee, including the cash sales in question, had not been disputed by the VAT authorities. The assessee also explained that the absence of PAN in the sale bills could not be viewed adversely because the individual cash sales were below the prescribed monetary limit of Rs.2,00,000/-, for which quoting of PAN was not mandatory. The assessee, therefore, contended that once the receipts stood duly recorded in the books and stood offered to tax as business turnover, the same could not again be taxed as unexplained income.

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been pointed out by the Assessing Officer in the stock register, purchases or quantitative details and that the books of account had not been rejected under section 145(3) of the Act. The Ld. CIT(A) further observed that it remained a matter of record that the assessee had accounted the cash sales transaction in its books of account and had offered the same for taxation while filing the return of income. The Ld. CIT(A) observed that once sales are recorded in the books of account and corresponding purchases were not doubted. He, therefore, held that such sales cannot added as unexplained income. The Ld. CIT(A) further observed that the Assessing Officer had not found any discrepancy in the purchase register, stock register with invoices, or in the ledger accounts, and had not brought any material on record to show that the entries in the books were false or backdated. The Ld. CIT(A) accordingly held that the Assessing Officer was not justified in treating the impugned cash deposits as unexplained money under section 69A of the Act and directed deletion of the addition of Rs.1,32,56,500/-. Aggrieved by the said relief granted by the Ld. CIT(A), the Revenue is in appeal before us.

6.1 We have heard the rival contentions of the Ld. Representatives of the parties and have also gone through the record. The grievance of the Revenue, as is evident from the grounds of appeal, is that the Ld. CIT(A) has failed to appreciate that the assessee had shown almost the whole year’s sales during a short period immediately before demonetisation, that the sale bills lacked complete details of the purchasers, and that the explanation offered by the assessee did not satisfy the test of human probabilities. On the other hand, the case of the assessee is that the cash deposits were fully recorded in the books of account, were duly supported by corresponding stock and sales records,

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were part of the disclosed turnover, and that the Assessing Officer had not rejected the books of account nor pointed out any defect in the quantitative tally of purchases and sales. It is not in dispute that the assessee had produced the audited books of account, cash book, sales bills, purchase register, stock register, bank statements and cash reconciliation before the authorities below. The case of the Revenue is not that the assessee did not maintain books of account. The case of the Revenue also is not that corresponding purchases were bogus or that the stock position did not permit the assessee to effect the impugned sales. The Assessing Officer, despite making serious observations against the assessee, has not pointed out any discrepancy in the quantitative stock records, purchase register or the audited books of account. Even the books of account have not been rejected under section 145(3) of the Act.

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of sales during particular periods of the year was also observed in the earlier assessment years. Moreover, the Ld. CIT(A) has recorded that the assessee had produced purchase register, stock register along with invoices and that no discrepancies were found therein. It is not the case of the Assessing Officer that the goods allegedly sold were not available with the assessee. In our considered view, the Ld. CIT(A) has appreciated the facts in the right perspective. The addition made by the Assessing Officer was based predominantly on surmises and suspicion, whereas the documentary evidence maintained by the assessee in the regular course of business remained unrebutted.

This Order pronounced on 13/07/2026 under Rule 34(4) of the ITAT Rules Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 13/07/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad