BASANT RAI HUKAM CHAND JAIN PRIVATE LIMITED,DELHI vs. INCOME TAX OFFICER, WARD 4(2), DELHI

1 ITA No. 4915/Del/2025 Basant Rai Hukum Chand Jain

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘C’ NEW DELHI) BEFORE YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 4915/DEL/2025 (A.Y. 2017-18) Basant Rai Hukam Chand Jain Vs Income Tax Officer private Limited. 1/302, 19 Rajpura Ward 4(2), Delhi Road, Civil Lines, Delhi PAN: AAACB5541L Appellant Respondent Assessee by Ms. Chinu Bhasin, Adv Revenue by Sh. Dayainder Singh Sidhu, CIT DR Date of Hearing 05/03/2026 Date of Pronouncement 24/04/2026 ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Assessee against the order of Ld.

Commissioner of Income Tax (Appeals/ National Faceless Appeal Centre

(‘Ld. CIT(A)/NFAC’ for short), New Delhi dated 17/06/2025 for the

Assessment Year 2017-18.

for Assessment Year 2017-18 declaring total income of Rs. 7,48,680/-.

The case was selected for scrutiny for following two reasons:

i. Abnormal increase in cash deposits during demonetization period as compared to pre-demonetization period. ii. Opening WDV of fixed assets as per ITR of current year is greater than closing WDV of fixed assets as per ITR of preceding year.

2 ITA No. 4915/Del/2025 Basant Rai Hukum Chand Jain

Assessment proceedings have been initiated against the Assessee and the

assessment order came to be passed u/s 143(3) of the Income Tax Act,

1961 ('Act' for short) and an assessment order came to be passed on

23/12/2019 by making an addition of Rs. 50,60,000/- u/s 68 of the Act

on account of unexplained cash credit. Aggrieved by the assessment

order dated 23/12/2019, Assessee preferred an Appeal before the Ld.

CIT(A). The Ld. CIT(A) vide order dated 17/06/2025, dismissed the

Appeal of the Assessee. As against the order of the Ld. CIT(A), Assessee

preferred captioned Appeal.

addition has been made by the A.O. which has been confirmed by the Ld.

CIT(A) based on wrong appreciation and erroneous appreciation

exemption of facts. The Ld. Counsel has also taken us through the

reasons for selecting the case for scrutiny and also made detailed written

submissions on each and every point. The Ld. Counsel further

submitted that the books of accounts of the Assessee have not been

rejected, there were no abrupt sales and the increase of sale was due to

festival of Diwali and Dhanteras which was on 30th October 2016 and

28th October 2016 respectively. Further contended that the cash

deposits made in the disputed period was in line with the cash sales

made in the preceding year. Further contended that there was no

3 ITA No. 4915/Del/2025 Basant Rai Hukum Chand Jain

mismatch in the VAT Returns with the ITR and the A.O. made the

addition due to erroneous appreciation of factswhich has been upheld by

the Ld. CIT(A) without verifying the material on record. Thus, sought for

allowing the Appeal.

submission which placed on recordand Assessee is reproduced

hereunder:-

Brief Facts: As mentioned in the order of the AO and that of the Ld. CIT[A]: Grounds taken by the appellant are general in nature and/or consequential which are strongly opposed in view of the detailed discussions in the order of AO/Ld. CIT(A) and further following submissions. The Hon'ble Supreme Court has dismissed an SLP as withdrawn by the assessee in the case of Sanjay Kapur Vs ACIT /2022] 138 taxmann.com 207 [SC/ order dated 16.03.2022. In this case there was cash deposit of Rs. 11.40 in bank account during demonetization. Though the said entry was reflected in the return of income yet not supporting evidences were available to prove source of such deposit. In Writ Petition Hon'ble High Court was of the view that there was reason to believe that income otherwise chargeable to tax had escaped assessment and upheld the reassessment proceedings. The Hon'ble P&H High Court in the case of Kavita Chandra Vs CIT in ITA 421 of 2016 [O&M] order dated 07.03.2017, has confirmed order of the ITAT when the deposits in Bank were made after a gap of two-three instances of withdrawals and taking the totality of facts and circumstances of the case, the Tribunal concurred with the findings recorded by the CIT(A) that the withdrawals were for the purpose of business and not available for redeposit. Further, the withdrawals were re-deposited after a gap of two or three months which was not probable. Thus, the assessee was not able to link the cash withdrawn from the bank with the cash deposit.

4 ITA No. 4915/Del/2025 Basant Rai Hukum Chand Jain

Consequently, the finding of the CIT(A) with regard to treating the cash deposit of Rs. 14,20,212/- as unexplained income of the assessee was upheld by the Tribunal. The Hon'ble High Court of Orissa in the case of Pankaj Gupta Vs PCIT order dated 03.12.2024, (2025) 174 taxmann.com 747 [Orissa/ held that when explanation offered by assessee was no explanation at all and nature or source of acquisition of money was not explained, AO rightly termed it a unexplained money. Hon'ble Apex Court, as also dismissed SLP against this decision of Hon'ble Orissa High Court. [Whether an addition u/s 68 is permissible without rejecting books of account u/s 145[32] In reply to the argument that once audited books of accounts are accepted as such no addition is permissible or in other words addition u/s 68 can not be made without rejecting books of account or that section 68 does not apply to a sum already disclosed as income. My counter argument is that it is not correct and not acceptable because section 68 is outside the Chapter-IVD [Sections 28 to 44 DB) of the Income Tax Act, 1961 which is related to the computation of total income with regard to 'Profits and Gains of Business or Profession'. Rejection of books of account comes under section 145[3] and section 145[1] which specifically provides that it is for computation of income under the heads "Profits and Gains of Business and Profession" or "Income from Other Sources". Whereas an addition u/s 68 or 69A is made under a deeming provision and not as an addition under the head business or profession. Hence section 145[3] i.e. rejection of books of accounts is not necessary in this case. So this argument of the appellant is liable to be rejected by the Hon'ble Bench.

(ओम �काश Om Parkash) Addl. Commissioner of Income Tax, (Sr. DR) C-Bench, ITAT, New Delhi

The Ld. Departmental Representative relying on the orders of the Lower

Authorities sought for dismissal of the Appeal.

5 ITA No. 4915/Del/2025 Basant Rai Hukum Chand Jain

on record.The only addition involved in the present Appeal is of Rs.

50,60,000/- made by the A.O. on account of unexplained cash receipt

under Section 68 of the Act. The Assessee was carrying the business of

manufacturing and trading (wholesale as well as retail)jewellery and

ornaments. During the year under consideration, the Assessee declared

income of Rs. 7,48,683/- which comprises of only business income and

the Assessee declared turnover of Rs. 2,79,91,491/-. The case of the

Assessee was selected for the scrutiny for the reason that the Assessee

deposited cash of Rs. 50,60,000/- during demonization period. The Ld.

A.O. while making the addition has disputed the source of cash

deposited. It is the case of the Assessee that the source of the cash

deposited are sales on Diwali and Dhanteras, which has been turned

down by the A.O. and the same has been confirmed by the Ld. CIT(A). It

is found that during the Assessment Year 2016-17, the cash deposited

was in-line with the cash sales in the preceding years compared to the

relevant year. In the Assessment Year 2016-17, the cash sales was Rs.

77,62,163/- and cash deposit was Rs. 77,59,000/- and in the year under

consideration, the cash sales was Rs. 54,34,523/- and the cash deposit

was Rs. 50,60,000/-. Admittedly the books of accounts of the Assessee

have not been rejected. The A.O. committed error by treating portion of

6 ITA No. 4915/Del/2025 Basant Rai Hukum Chand Jain

sales as unexplained without rejecting the books of account which is

contrary to the settled principal of law. The Hon'ble High Court of Delhi

in the case of CIT vs. Kailash Jwelllery House in Appeal No. ITA

613/2010 reported in (2010) 4 TMI 1070, held as under:-

“In the facts of above case cash of Rs.24,58,400/- was deposited in bank account. The Assessing Officer made the addition on the ground that nexus of such depositwas not establish with any source of income. The assessee claimed that it was duly recorded in the books on account of cash sales and was considered in the Profit and Loss Account. The Assessing Officer had verified the stock and cash position as per books and had accepted the same. Complete books of account and cash book was submitted to the Assessing Officer and no discrepancy was pointed out. On this basis CIT(A) deleted the addition. Tribunal also observed that it is not in dispute that sum of Rs.24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the assessee in its return. Therefore, cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same. The Hon'ble High Court dismissed the appeal filed by the Department.”

cash sales with supporting documents such as stock register, VAT

Return, sales invoices, cash book, bank statement, month wise detail of

sale, comparative chart etc. However, ignoring those documents, the

A.O. has doubted the sales and made addition without rejecting the

books of account which cannot be sustained. In view of the above, we

find merit in the grounds of Appeal of the Assessee. Accordingly,

7 ITA No. 4915/Del/2025 Basant Rai Hukum Chand Jain

addition of Rs. 50,60,000/- made by the A.O. under Section 68 of the Act

which has been confirmed by the Ld. CIT(A) is hereby deleted.

Order pronounced in the open court on 24th April, 2026

(MANISH AGARWAL) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- .04.2026 Reshma Naheed, Sr.P.S Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT, NEW DELHI 1. Date of dictation of Tribunal order 20/04/2026 21/04/2026 2. Date on which typed draft order is placed before the dictating Member 21/04/2026 3 Date on which typed draft order is placed before the other Member (in the case of DB) 4. Date on which the approved draft order comes to P.S/Sr.P.S 5. Date on which the fair Order is placed before the dictating Member for sign 6. Date on which the fair Order is placed before the other Member for sign ( in the case of DB) 7. Date on which the Order comes back to P.S./Sr.P.S for uploading on ITAT website 8. Date of uploading, if not, reason for not uploading 9. Date on which the file goes to the Bench Clerk 10. Date on which order goes for Photostat 11. Date on which order goes for endorsement 12. Date on which the file goes to the Superintendent/O.S. for checking 13. Date on which the file goes to the Assistant Registrar for signature on the order 14. Date on which the file goes to dispatch section for dispatch the Tribunal Order 15. Date of dispatch of order 16. Date on which file goes to Record Room after dispatch the order