M/S SL NUTRITIONS PVT. LTD.,NAGAUR vs. DCIT, CENTRAL CIRCLE-1, JODHPUR, JODHPUR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE DR. MITHA LAL MEENA, HON’BLE ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, HON’BLE JUDICIAL MEMBER ITA No. 128 and 129/Jodh/2025 (Assessment Years – 2019-20 and 2020-21) M/s SL Nutritions Pvt. Ltd. DCIT, Central Circle-1, Kalani & Co., Chartered Jodhpur Accountants, 5th Floor, Milestone Building, Gandhinagar Turn, Tonk Road, Jaipur - 302015 PAN No. AAYCS 6415 Q ITA No. 219/Jodh/2025 (Assessment Year – 2019-20) Jt. Commissioner of Income Tax S L Nutritions Pvt. Ltd. (OSD), Central Circle-1, Plot No. 19-20, Transfer Industrial Jodhpur Area RIICO, Basni Road, Nagaur- 341001 PAN No. AAYCS 6415 Q Assessee by Shri P.C. Parwal, CA (Virtual) Shri Anil Kumar Bharadwaj, CIT (Virtual) Revenue by Date of Hearing 28.04.2026. Date of Pronouncement 21.05.2026. ORDER PER BENCH: This appeal by assessee is filed against the order of Ld. Commissioner of Income Tax, Appeal Jaipur-5 [hereinafter referred to CIT(A)] dated 13.12.2024 and 22.01.2025 with respect to Assessment Years 2019-20 and 2020-21.

2 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 2. The appellant has raised following grounds of appeal:

ITA No. 128/Jodh/2025 (Assessment Year: 2019-20)

3 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 be considered as unaccounted sales. He has further erred in confirming the addition of Rs.7,21,478/-by applying g.p. rate of 8% on alleged unaccounted sales. 8. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.52,451/- out of Rs.2,34,167/- made by the AO by treating the date wise difference between the amount noted on the above slips vis-à-vis the cash balance as per books of accounts of Nagaur unit by holding that on 6 days the cash balance in loose slips is in excess by Rs.52,451/- which represent unexplained money of the assessee u/s 69A of the Act by not properly appreciating the explanation of assessee for such amount. 9. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.76,72,733/- u/s 69A of the Act on account of alleged excess stock found in search by not properly appreciating the explanation of assessee.

ITA No. 129/Jodh/2025 (Assessment Year: 2020-21)

ITA No. 219/Jodh/2025 (Assessment Year: 2019-20)

4 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 is deleted is not acceptable with the reason that the Ld. CIT(A) is ignoring the facts enumerated by the AO and the material available on recorded. 4. Whether on the facts & in the circuinstances of the case, the Id. CIT(A) has considered excess cash noted on the loose paper as unexplained money and addition made by the AO of Rs. 52,451/ is confirmed and the balance of Rs. 1.81,436/-(2,34,187- 52.451) is deleted is not acceptable with the reason that the Ld. CIT(A) is ignoring the facts enumerated by the AO and the material available on recorded. 5. Whether on the facts & in the circumstances of the case, the Id. CIT(A) has confirmed the excess stock of Rs.76.72,733/out of Rs.88,68,670 made by the AO and further allowed to setoff of trading addition of Rs.23,50,238/- as confirmed earlier above and deleted the amount of Rs.35,46,175/- (88,68,670-53,22,495) is not acceptable with the reason that the Ld. CIT(A) is ignoring the facts enumerated by the AO and the material available on recorded. 6. Whether on the facts & in the circumstances of the case, the Id. CTT(A) deleted the entire addition of Rs. 10,00,000/-is not acceptable with the reason that the Ld. CIT(A) is ignoring the facts enumerated by the AO and the material available on recorded. 7. The appellant craves leave to add, amend or withdraw any the ground of appeal during the course of appellate proceedings. 3. These appeals of the assessee and the department involve connected issues in the grounds of appeal raised. Therefore, these appeals were heard together and adjudicated by this consolidated order for the sake of brevity. ITA No. 128/Jodh/2025 of the assessee and ITA No. 219/Jodh/2025 of the department are cross appeals with respect to assessment year 2019-20 filed by the assessee and the revenue and, therefore, we are first taking up these two appeals for adjudication.

5 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 5. Briefly the facts of the case as per record are that the appellant and the assessee company was incorporated on 15.05.2017. It was engaged in the business of manufacturing of cotton seed oil. A search u/s 132 was carried out at the business premises of the company on 30.01.2019. The assessee has filed its return of income u/s 139(1) on 16.10.2019, declaring total income of Rs. 07,34,29,590/- where notice u/s 143(2) was issued and served digitally on 18.08.2020. The Ld. AO thereafter, completed the assessment u/s 143(3) by making adition of Rs. 05,06,17,370/-. Aggrieved by the assessment order, assessee went in appeal before the ld. CIT(A).

6 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 addition of Rs. 16,28,760/- by applying G.P rate of 8% on alleged unaccounted sales whereas the department in Ground no. 1 has challenged the decision of Ld. CIT(A) in applying G.P rate of 8% on aforestated unaccounted sale of Rs. 2,03,59,500/- and restricting the addition of Rs. 16,28,760/- by deleting the balanced addition of Rs. 1,87,30,740/- ignoring the facts enumerated by the AO and the material available on record.

6.1 The facts are that during the search action conducted u/s 132 of the Act at the business premises of the assessee group on 30.01.2019, loose papers, chits, documents were found and seized from the residence of Sh. Bhawani Singh vide Exhibit 1 to 6 of Annexure AS. The relevant pages based on which addition is made by the AO are Page no.11, 12, 14, 15, 23 & 30 of Exhibit 1, Page no.18 of Exhibit 2 & Page no.1 to 10, 13, 14 & 18 of Exhibit 3 (PB 55-84), are for the period from 24.12.2018 to 28.01.2019. The notings on these papers are in two parts, that on the upper half of the paper Shri Bhawani Singh has noted the physical availability of the cash balance with him of the various group concern including that of the assessee on day to day basis and on the lower half of the paper he has noted the placement of the said cash in different packets/ drawer/ safe at the factory premises at Nagaur or the amount kept at his residence with the

7 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 description ghar/ghar Bhawani. Statement of Shri Bhawani Singh was recorded u/s 132(4) dated 30/01/2019, on these papers. Initially in reply to Q. No. 29 of the statement (APB Pgs. 163- 165), he stated that amount recorded on these papers is out of books cash sales of the assessee. Thereafter in reply to Q.No.30 (APB Pgs. 165-166), he stated that amount recorded on the upper half of these papers represent the cash balance of different factories/ mills of the group and on the lower half, amount given to the owners or on their instruction to some other person is noted but he is not aware whether such cash represent the out of book sales of various concerns or not. Again in reply to Q. No. 45 (APB Pgs. 174-177), he stated that amount recorded on the upper half is the detail of cash sale of a particular date of the group concerns and the amount recorded on the lower half is the amount of expenditure and amount given to the owners. Thereafter, his statement was again recorded u/s 131 on 15.04.2019 where in reply to Q.No. 6 he stated that these papers relate to various business concerns and after verification from the books he would provide the details as to which transactions are recorded or which are not recorded.

8 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 6.2 In course of assessment proceeding Shri Bhawani Singh filed a detailed affidavit dated 18.08.2021 (APB Pgs. 50-54) where at para 12 of the affidavit he explained these papers as under:-

“पेज सं�या 11, 12, 14, 15, 23 व 30 of Ex-1, Page 18 of Ex-2 व पेज 1 से 10. 13-14 व 18 व 39 of Ex-3 मेरे �वारा �व�भ�न Factories से �ा�त नगद� का �ववरण है यह प�च�या मैने मेरा �हसाब �मलान करने के �लए बनाई थी। इन प�च�य� के उपर� �ह�से म� �व�भ�न Factories से �ा�त रा�श का �ववरण �लखा है तथा �नचले �ह�से म� यह रा�श मेरे पास �कस तरह अथवा �कस जगह जैसे �क पैकेट दराज सेफ घर म� रखा है उसका �ववरण है। इन प�च�य� से मैने �ा�त रा�श व मेरे पास उपल�ध Balance का �मलान �कया है। उपर� �ह�से म� जो सबसे उपर रा�श �लखी गई है वह नागौर Unit का नगद शेष है, जो उसक� रोकड बह� से �मलान होगा। इसी तरह उपर म� जो "p" के सामने रा�श �लखी गई है वह डुकोसी Unit का रोक�डया �काश सायं को घर जाते व�त देकर जाता था। यह डुकोसी Unit का उस �दन का सायं 5 बजे तक का Balance होता था। इसी तरह खरनाल के सामने �लखी गई रा�श उस �दन क� खरनाल Unit के ब�क खाते से Withdraw क� गई रा�श होती है जो खरनाल Unit �क ब�हय� से �मलान हो जायेगी। इसी तरह ऑयल व "D" के सामने �लखी गई रा�श Subh Laxmi Oil Industries व SL Industries (जो �क ब�द हो चु�क है) का Cash Balance है व यह हर �दन क� पच� पर Same Figure है। इसके प�चात जो रा�श "H" के नाम से �लखी गई है वह भगवान कुमार जी तापडीया से स�बि�धत है तथा इसके शेष म� घटत बढत Commodity Transactions से �ा�त देय रा�श से बदलती रहती है। इसी तरह जो एक अि�तम रा�श है वह Sale के सामने �ा�त Advance रा�श है जो Books म� Goods के Dispatch होने पर Cash Sales के नाम से Book होती है। । प�च�य� के �नचले �ह�से म� �लखी गई �व�भन् रा�श उपर� �ह�से से �ा�त रा�श कहां-कहां व �कस तरह के packet/ drawer म� रखी है उसका �ववरण है। यह �ववरण Cash Balance के �मलान करने के �लए म� बनाता था इसी कारण उपर� �ह�से का जोड एवं �नचले �ह�से का जोड समान होता है। य�द �कसी �दन कुछ फक� है तो वह �कसी जगह से �ा�त रा�श

9 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 के �लखने म� या �मलान करने म� गलती के कारण है िजसका �मलान अगले �दन कर �लया जाता है।" 6.3 During the course of assessment proceedings, the AO has examined the amount noted on the loose papers with reference to the books of account of the group concerned and wherever he found any variation treated the same as unrecorded sales being not satisfied with the explanation of the assessee and made the addition for the same. The AO vide para 5.4.1 of the assessment order has accepted that wherever there is a noting of word ‘Kharnal’ it is the amount withdrawn from the bank account of Subh Laxmi Cotton Private Limited and, therefore, the addition, if any, was to be made in the case of Subh Laxmi Cotton Private Limited. The AO has further observed vide para 5.4.2 of the assessment order that where there is a noting of ‘H/Home’ he worked out the date wise incremental/decremental amount and made addition for both the notings by treating them as unaccounted cash sales of the assessee. The AO worked out the incremental amount at Rs. 1,18,71,344/- and decremental amount at Rs. 84,88,156/- and thus, made addition for total of both at Rs. 2,03,59,500/-

6.4 The Ld. CIT(A) vide para 18 to 23 of the order decided the addition of Rs. 2,03,49,500/- made by the AO for unaccounted sales. The Ld. CIT(A) has observed that assessee has hardly had any concrete evidence while filing his return and

10 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 accordingly, this argument of the assessee is rejected. The Ld. CIT(A) has observed that argument of the assessee that only incremental amount should be considered in working of sales instead of both the incremental and decremental amount is also rejected as the noting in the loose papers cannot be said to be cumulative. However, the Ld. CIT(A) has accepted the contentions of the appellant that sales as such cannot be added and, therefore, on the total sales comuted by the AO, the ld. CIT(A) has applied G.P. rate of 8% on the alleged unaccounted sales of Rs. 2,03,59,500/- as against G.P. rate pf 5.64% declared by the assessee and thus, confirmed addition of Rs. 16,28,760/-.

11 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 applying G.P. rate of 8% on the alleged unaccounted sales. In support of the arguments, the Ld. AR has filed a written note which is filed on record.

7.1 It is submitted that noting on the upper half of the loose slips of various dates between 24.12.2018 to 28.01.2019 represent the cash available with Shri Bhawani Singh, the accountant of various concerns of the group. This fact is partially accepted by the AO himself when he accepts that amount of Rs.2,970/- and of Rs.85,900/- represent the cash balance of erstwhile proprietary concern of SL Industries (Proprietor Dharmendra Kumar Maheshwari) and M/s Subh Laxmi Oil Industries (Proprietor Shri Bhagwan Kumar Taparia) which were taken over by the assessee company after its incorporation. The AO has also accepted that amount mentioned against the name Kharnal represent the amount of cash withdrawn from bank of M/s Subh Laxmi Cotton Pvt. Ltd. and lying with Shri Bhawani Singh till it is sent to that concern. Further, the noting on the lower half of the loose slips represents the placement of cash in different packet/safe/location. This is vital evidentiary fact that the total of upper half of the loose slip almost matches with the lower half of the loose slip as per the date wise statement prepared from these loose slips placed at APB Pgs. 100-103.

12 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 7.2 The ld. AR has filed a written note to explain the above factual position and the background under which these loose slips were prepared by Shri Bhawani Singh, and justification of the explanation of the assessee before the AO and the Ld. CIT(A). The relevant part reads as under: -

“Addition of Rs.2,03,59,500/- made by AO but, confirmed by Ld. CIT(A) at Rs.16.28.760/- The AO at para 5.4.2, has considered both the incremental amount and decremental amount under the narration 'H' on the loose paper on different dates as unrecorded sales of the assessee and made addition for the same. The Ld. CIT(A) also held that it represent the unrecorded sales. There is no basis for the same. Infact the amount noted against the narration 'H' represent the cash received by Bhawani Singh from Shri Bhagwan Kumar Taparia. The amount of Rs.48,10,745/- noted on 24.12.2018 (PB 55) represent the amount given by Bhagwan Kumar Taparia to Bhawani Singh. The subsequent increase or decrease in this amount on different dates is due to the further amount given by Bhagwan Kumar Taparia to Bhawani Singh or the amount utilised by Bhawani Singh on account of Bhagwan Kumar Taparia. This is also accepted by the AO when he on the basis of the amount of commodity income noted on Pg.16,17,18 of Exhibit-1 (PB 90-92) has reduced such amount from the amount noted on the slip for making the addition for the reason that such amount have been offered to tax by Shri Bhagwan Kumar Taparia. Thus, when the amount noted against the narration 'H' is accepted by AO as amount received from Bhagwan Kumar Taparia, the remaining incremental/decremental amount noted against the same narration 'H' cannot be considered as unrecorded sale of assessee and therefore the addition of Rs.2,03,59,500/- made by AO is rightly deleted by Ld. CIT(A) but, the addition confirmed by it to the extent of Rs. 16,28,760/- by applying g.p. rate of 8% on the alleged unrecorded sale is without basis, unjustified and unwarranted. Hence, the addition confirmed by Ld. CIT(A) be deleted and the ground of the department be dismissed. It may be noted that in search certain pages marked Page 2, 2A and back side of Page 2, 2A of Exhibit 1 was found from the residence of Bhawani Singh (PB 87-89). On these pages date wise receipt of amount and payment of amount from 01.01.2019 to 24.01.2019 are noted. On the basis of these notings the statement of date wise

13 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 availability of cash of Bhagwan Kumar Taparia with Bhawani Singh is prepared and placed at (PB 85-86). From the same it can be noted that the balance on each day almost matches with the amount noted under the narration "H" in the loose paper. This also proves that the amount noted under narration "H" pertain to Bhagwan Kumar Taparia and not the assessee. This fact is not controverted by the lower authorities. Hence, the addition made by the AO and confirmed by Ld. CIT(A) by applying g.p. rate on such notings in the hands of the assessee by holding that assessee has not filed any concrete evidence that Bhagwan Taparia has accepted and considered these entries in offering the income is unjustified and uncalled for. The lower authorities has considered both the incremental amount and decremental amount on different dates as unrecorded sales ignoring the fact that incremental amount is the amount received from Bhagwan Kumar Taparia and the decremental amount is amount spent/ paid on behalf of Bhagwan Kumar Taparia. Otherwise also when there is a decrease in the amount noted under the narration 'H' how it can be considered as unrecorded sales of the assessee. The total of the decremental amount which is considered as unrecorded sales is Rs.84,88,156/-. Hence, the addition confirmed by Ld. CIT(A) by applying g.p. rate on such amount is otherwise unjustified and uncalled for. The AO has made addition on account of unrecorded sale of assessee on the basis of amount recorded under the narration 'H' at Rs.2,03,59,500/-. It includes decremental amount of Rs.84,88,156/-. Therefore the remaining amount is only Rs.1,18,71,344/-. The Ld. CIT(A) accepted the alternate argument of the assessee that even if it is considered as unrecorded sale, the amount cannot be added but only a reasonable profit margin on the alleged sale can be added. The GP rate of assessee for the year under consideration is 5.64% (8,84,36,645/1,56,79,79,209). The Ld. CIT(A) has however applied g.p. rate of 8% which is without any basis. Hence, even if the finding of Ld. CIT(A) is to be upheld, addition by applying GP rate of 5.64% on alleged unaccounted sale of Rs.1,18,71,344/, should be restricted to Rs.6,69,544/- as against Rs. 16,28,760/- confirmed by him.”

14 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 ignoring the facts enumerated by the AO and the material available on record. The Ld. CIT DR pleaded that the assessment order may be restored.

15 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 when the amount noted against the narration ‘H’ is accepted by the AO as amount received from Bhagwan Kumar Taparia, the remaining incremental and decremental amount noted against the same narration ‘H’ cannot be considered as unrecorded sales of the assessee and accordingly, the addition of Rs. 2,03,59,500/- made by AO has been rightly deleted by Ld. CIT(A). However, the Ld. CIT(A) has confirmed the addition to the extent of Rs. 16,28,760/- by applying G.P. rate of 8% on holding the alleged unrecorded sales by considering the total of the aforesaid cash balance of incremental and decremental amount without any basis is not justified.

9.1 It is noted that in the search, some of the pages were marked Pg. 2 and 2A and back side of the Pg. 2 and 2A of Exhibit 1 found from the residence of Shri Bhawani singh (APB Pg. 87-89) whereon the pages date vise receipts of amount and payments from 01.01.2019 to 24.01.2019 were noted and that based on these noting, the statement of date vise availability of cash of Bhagwan Kumar Taparia with Bhawani Singh was prepared and filed before the authorities below (APB Pg. 85-86) where it can be noted that balance on each day almost matches with the amount noted under the narration ‘H’ in the loose paper. This fact of narration ‘H’ in the loose paper can proves that amount noted pertains to

16 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 Bhagwan Kumar Taparia and not to the assessee company which has not been controverted by the authorities below. Thus, the addition made by the AO and confirmed by Ld. CIT(A) by applying G.P. rate based on such notings in the hands of the assessee is unjustified and uncalled for.

9.2 From the record, it is evident that the Ld. AO has accepted the amount noted against the narration ‘H’ as the amount received from Bhagwan Kumar Taparia and, therefore, the other presumptions of the AO and the Ld. CIT(A) as regards to the remaining incremental and decremental amount noted against the same narration ‘H’ would have to be considered transaction on behalf of Shri Bhagwan Kumar Taparia and it cannot be considered as unrecorded sales of the assessee. In view of that matter, we hold that ld. CIT(A) was justified in deleting the addition of Rs. 2,03,59,500/- made by the AO, however, not justified in applying the G.P. rate of 8% once it is accepted that the amount noted under the narration ‘H’ were the amount received from Bhagwan Kumar Taparia and not the unrecorded sales of the assessee. Accordingly, the amount of Rs. 16,28,760 confirmed by the Ld. CIT(A) by applying G.P. rate of 8% is held to be illegal and unwarranted and as such deleted. Thus, the ground no. 1 of the assessee is allowed and that of the department is dismissed.

17 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 10. Ground no. 7 of the assessee and ground no. 2 of the department are inter- related to each other where the assessee has challenged confirmation of addition of Rs. 91,054/- out of Rs. 90,60,189/- made by the AO and the department has challenged that the Ld. CIT(A) was not justified in considering the excess cash noted on loose slips as explained money and restricting the addition made by the AO of Rs. 89,69,135/- as against Rs. 90,60,189/- and thereby deleting the addition of Rs. 89,65,135/- ignoring the fact enumerated by the AO and material available on record.

10.1 The facts on the issue are that the AO has noted in para 5.4.3 of the assessment order that where there is a noting against the narration ‘P’ that it is the amount of cash of Dukosi Unit of the assessee given by Mr. Prakash Jain, supervisor to Shri Bhawani Singh. The AR submitted that this amount represent the cash balance of Dukosi Unit given at Nagaur unit at around 5 PM everyday by Mr. Prakash Jain to Bhawani Singh. The AO had compared the amount noted on the loose slip against the narration ‘P’ with the cash book of Dukosi Unit and that amount recorded in the cash book was more than the amount noted on the loose papers. The difference of each day worked out at Rs. 90,60,189/- as noted on

18 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 Pages 44-47 of the Assessment Order was considered by the AO as unexplained expenditure and made addition u/s 69C of the Act.

10.2 In appeal, the Ld. CIT(A) has deleted the addition to the extent of Rs. 89,69,135/- and thereby restricting the addition to Rs. 91,054/- based on reconciliation of the cash balance as per the loose slips.

10.3 The Ld. AR for the appellant has submitted that the Ld. CIT(A) was justified in deleting the addition to the extent of Rs. 89,69,135/-. The AR submitted that Shri Prakash Jain handover the daily cash balance of Dukosi Unit at 5 PM to Bhawani Singh and, therefore, the cash which is collected after 5 PM at the factory premises of Dukosi Unit could not be handed over to Bhawani Singh which resulted in the cash balance as per the cash book being more than the amount noted on the loose slips. The AO has not accepted that this explanation of the assessee for the reason that assessee cannot adduce evidence in support of his contentions and, therefore, the difference amount was treated as unaccounted expenditure. Meaning thereby, when the cash balance as per the cash book is worked out more than the amount noted on the loose paper then how the difference can be considered as unexplained expenditure. In view of that matter, we hold that Ld. CIT(A) decision in deleting the addition of Rs. 89,69,135/- is

19 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 justified as having no perversity to the facts on record. Accordingly, the ground no. 2 of the department is dismissed.

20 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 G.P. rate of 8% on alleged unaccounted sales of Rs. 96,18,480/- and the department has challenged deleting the addition of Rs. 82,97,002/-.

12.1 The AO vide para 5.4.4 of the assessment order, considered the second un- named entry in the loose slips as unrecorded income/sales and made addition of Rs. 96,18,480/- by way of adding both incremental and decremental amount as unaccounted income u/s 68 of the Act. The Ld. CIT(A) appeal has applied G.P. rate of 8% on the alleged sales and confirmed addition to the extent of Rs. 7,21,478/-.

12.2 The Ld. AR has submitted that disputed amount of Rs. 96,18,480/- represent the advance amount received from customer which was lying with Shri Bhawani Singh. The supplies to the customer are made on subsequent dates and same are recorded in the books of account of the assessee as cash sales when the goods are delivered and the invoice is raised. The lower authorities have not accepted this explanation only for the reason that it is not supported by any documentary corroborated evidence although while holding so it was ignore that since the amount represents the amount received by various customers but as the name of the customer is not mentioned it is practically impossible to bring on record any documentary evidence. The AR contended that there is a regular cash sale as per cash book duly supported with the affidavit dated 18.08.2021 of Shri

21 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 Bhawani Singh whereby he had clarified that this amount represents the advance received against the sale which is recorded in the books as cash sale when goods are dispatched. The Ld. AR has argued that the content of the affidavit are not controverted by the authorities below. In support, he placed reliance on the judgment of Hon’ble Supreme Court in the case of Mehta Parikh & Co. Vs. CIT 30 ITR 181 at Pg. 187 where it has been observed that the rejection of affidavit filed by the assessee is not justified unless the deponent has either been discredited with regards to the content of the affidavit in cross examination or has failed to produce other supporting evidence when called upon to do so.

12.3 In the present case, is it evident from the record that Shri Bhawani Singh who gave the affidavit was not examined by the AO, on the content of the aforesaid affidavit and that Shri Bhawani Singh has not been discredited by way of cross examination or with the support of any evidence by the department. Therefore, we hold that the impugned order of the Ld. CIT(A) is infirm and perverse to the facts on record in confirming the addition made by the AO. Accordingly, the addition of Rs. 96,18,480/- confirmed by Ld. CIT(A) is deleted. Thus, the ground of department is dismissed and assessee is allowed.

22 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 13. In ground no. 8 of the assessee and ground no. 4 of the department, the assessee has challenged confirmation of addition of Rs. 52,451/- out of Rs. 2,34,167/- and the department has challenged that CIT(A) was wrong in considering the excess cash noted on loose paper as explained money and deleting the addition made by the AO and restricting the addition to Rs. 2,34,167/-.

13.1 In the assessment order, the AO vide para 5.4.5 at Pg. 49 to 53 of the assessment order has held that the first unnamed entry on the loose paper represent the cash balance of Nagaur Unit of the assessee. Accordingly, he compared the amount noted in the loose slip with the cash book of the assessee and the difference between the two of Rs. 2,34,167/- was added to income u/s 69C of the Act.

13.2 In appeal, the Ld. CIT(A) has accepted that out of the 30 dates, on 14 dates there is no difference and that on the other 10 dates cash balance as per loose slips cash is less than the cash balance as per cash book and thus, addition to the extent of Rs. 1,81,736/- was deleted. However, on 6 dates where the cash balance as per loose slips was in excess of cash balance as per cash book, addition was confirmed to the extent of the difference of Rs. 52,451/-.

23 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 13.3 We find that the cash balance as per the loose slips as compared to cash balance as per the cash book was more by Rs. 52,434/- with reference to the loose slips dated 30.12.2018 (Rs. 27,600/-), 01.01.2019 (Rs. 4,524/-). 05.01.2019 (Rs. 510/-), 09.01.2019 (Rs. 10,000/-) and 12.01.2019 (Rs. 9,800/-).

13.4 The AO had added the amount while stating that explanation of the assessee that in the cash books certain expenditure on freight/building repair has been recorded after the amount of cash recorded in the loose slip could not be verified. However, the AR has explained that the appellant has provided the vouchers as mentioned in the order from which such difference pointed out by the AO and the CIT(A) is very well verifiable. In support, the AR has filed copy of the cash book with the relevant date and the corresponding vouchers on record (APB Pg. no. 125-127). It is noted that the Ld. CIT(A) has failed to appreciate the explanation of the assessee with documentary evidence without controverting. We, therefore, hold that the Ld. CIT(A) has failed to consider the factual explanation of the assessee as regards to the difference pointed out in the cash balance by the AO. Accordingly, we delete the addition of Rs. 52,434/-. Thus, ground of appeal of the assessee is allowed and that of department is rejected.

24 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 14. In ground no. 9 of the assessee and ground no. 5 of the department are related to each other where assessee has challenged CIT(A) order in confirming of addition of Rs. 76,72,733/- u/s 69A of the Act on account of alleged excess stock found in search and the department has objected to the decision of the Ld. CIT(A) in confirming the addition of Rs. 76,72,733/- out of Rs. 88,68,670/- made by the AO on account of excess stock and further allowed to setoff of trading addition of Rs. 23,50,238/- as confirmed earlier above and deleted the amount of Rs. 35,46,175/- ignoring the facts enumerated by the AO and the material available on record.

14.1 The facts as per record are that during the course of search, physical verification was carried out at the Dukosi Unit and Nagaur Refinery Unit of the assessee. The stock at Dukosi Unit was valued at Rs. 5,70,00,392/- (APB Pgs. 183- 184), Nagaur milling unit at Rs. 5,62,10,780/- and that at Nagaur refinery Unit at Rs. 3,21,33,700/- (APB Pg. no. 185). Thus, the total stock was valued at Rs. 14,53,44,872/-. The search parity has worked out the difference between the physical stock and the book stock at Rs. 1,28,93,314/- tabulated hereunder:

Name of the concern Stock as per physical Stock as per Books Difference verification M/s S.L. Nutritions Pvt. Rs.5,70,00,392/- Rs.5,04,94,977/- Rs.65,05,415/- Ltd.

25 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21

Items Stock as per Stock as per Difference Rate (per Difference physical books Kg.) verification Cotton 3,27,900 Kg. 1,42,950 Kg. (+)1,84,950 Kg. @24.78 Rs.45,83,061 Cake Cotton 19,66,900 Kg. 18,88,500 Kg. (+)78,301 Kg. @23.05 Rs.18,04,838 Seeds Excess stock found Rs.63,87,899

14.2 In course of assessment proceeding, assessee explained that it maintains day to day stock record of cotton seed purchased and cotton cake/oil produced. It was explained that in Dukosi Unit 849 bags (398+451) were purchased on 29.01.2019 but the same was not recorded in the stock register. After considering the same the excess stock at Dukosi Unit would work out at Rs. 24,81,071/-. The AR further explained that at Nagaur Unit the search party took the stock of bleaching clay, caustic, bardana, boiler fire agent, gum, spring roll, phosphoric acid, TBHQ, citric acid, fatty acid and soap raw material at Rs. 11,95,937/- whereas such consumable items are booked as expenditure as and when purchased. The assessee reworked out the excess stock at Rs. 76,14,825/- (APB pg. 167) and explained that such difference in the total inventory of Rs. 14,53,44,872/- is negligible which is due to discrepancy in stock taking and should be ignored. The AO had accepted the excess stock at Dukosi Unit amounting to Rs.

26 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 24,81,071/- and that excess stock worked out with search party at Nagaur party at Rs. 63,87,899/- and thus made addition or Rs. 88,68,970/- u/s 69A of the Act by holding that when the stock was physically verified in presence of the director, the claim of discrepancy in stock taking is not acceptable.

14.3 The Ld. CIT(A) vide para 5.8 page no. 26-27 has accepted that consumables of Rs. 11,95,937/- cannot be considered as part of stock as the same is recorded as expenditure as and when it is purchased by the assessee. Accordingly, the Ld. CIT(A) has determined the excess stock at Rs. 76,72,733/- (88,68,970-11,95,937). The Ld. CIT(A) has further allowed set off of addition of Rs. 23,50,238/- (16,28,760+7,21,478) confirmed by him in the earlier grounds and thus, confirmed the addition on account of excess stock to the extent of Rs. 53,22,495/- (76,72,733-23,50,238).

14.4 We have heard both the sides on this issue of excess stock. There is no dispute as to the fact that assessee maintains day to day stock register. In the course of assessment proceedings, assessee has furnished a statement indicating the quantity and the value of stock as per search party vis-à-vis as per books of accounts and the difference between the two values of stock (APB pg. 186). The Ld. AR argued that the ld. CIT(A) has incorrectly considered the excess stock at Rs.

27 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 76,72,733/- and thereby confirming the addition to the extent of Rs. 53,22,495/- which was to be reduced to Rs. 57,908/-. The Ld. Counsel for the assessee has submitted that at the time of the search, there was huge stock of goods which is physically found and that it was humanly impossible to weight all bags in one day. Accordingly, the search party with the assistance of the staff of the assessee noted the number of bags/bundles and determined the value of stock. In such working, some items of stock are found excess and some items are found short. The total difference found at Rs. 76,14,825/- in the total inventory of Rs. 14,53,44,872/- as valued by the department which constitute only 5.24% of the total value of inventory which is very negligible and, therefore, the difference worked out should be ignored and the addition confirmed by the Ld. CIT(A) deserves to be deleted.

14.5 It is noted that huge stock of goods amounting to Rs 14,53,44,782/- was valued by the department on physical stock taken during the course conducted at the business premises of the assesse. We appreciate the contention of the AR that it is not humanly possible to weigh all the bags of goods of multiple items in one day and quantify to value the huge stock of total inventory of Rs. 14,53,44,872/- in one day by the search party with the assistance of the staff of

28 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 the assessee by noting the no. of bags/bundles with average weight of such bags and bundles and thereby determining the value of stock. In our view, there has been space in valuing the physical stock quantity in the manner, it has been done during the course of search action by taking changed value of the items of the inventory during the physical verification of the stock of the appellant company. However, no discrepancy pointed out in the stock found by the search team. The valuation of the inventory of the physical stock alleging that in the absence of any specific credible evidence brought on record by the assessee without rebutting the book inventory, the valuation done by the department is not absolute though it was done in the presence of the appellant company.

14.6 Considering the human behaviour/nature, where the whole day the appellant staff was engaged with the search team while taking average weight and value of items of the stock, the benefit of doubt/error is deserves to be given to the appellant company. Accordingly, it would just fair and reasonable that the total difference of Rs. 76,14,825/- in the stock inventory as per the department is constituting 5.25% of the total value of the inventory of Rs. 14,53,44,872/-, is therefore restricted to 2% which works out to Rs. 29,06,897/-. We accordingly restrict the addition of Rs. 76,14,825/- confirmed by Ld. CIT(A) to Rs. 29,06,897/-.

29 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 Thus, this ground of assessee is partly allowed and the ground of department is dismissed.

30 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 addition vide para 6.5 Pg. no. 28-29 holding that construction was in respect of the godown of the assessee and that assessee did not brought any evidence to prove that source of this expenditure was met by Mr. Bhagwan Kumar Taparia. Admittedly, from the statement of Shri Punaram, it is evident that the amount was incurred on the construction of the residence of Shri Bhagwan Kumar Taparia and thus, expenditure cannot be incurred for the construction for the godown of the assessee.

16.1 In our view, the observation of the lower authorities without rebuttal to the reply of the assessee and reply of Shri Punaram to question no. 15, where it has been specifically stated that the material was purchased for the construction work of two storied house of Shri Bhagwan Kumar Taparia and, therefore, addition confirmed by Ld. CIT(A) in the hands of other assessee is perverse to the facts on record.

16.2 It is noted from the record that the source of the payment has been out of the cash in hand available with Shri Bhagwan Kumar Taparia as evident from his cash flow statement (APB Pg. 104), where he has shown an opening cash balance as on 01.04.2018 at Rs. 1,84,98,260/- after considering the income offered for tax tax in Assessment Year 2019-20 and cash found in search of Rs. 2,35,92,690/- he

31 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 was still left with cash of Rs. 62,44,730/-. Thus, the cash balance available with Shri Bhagwan Kumar Taparia was sufficient to cover the amount of Rs. 11,35,000/- spent by Shri Bhagwan Kumar Taparia for construction of his residential house. Thus the source of the payment of disputed amount of Rs. 11,35,000/- stands explained. Accordingly, the ground no. 2 of the assessee is allowed.

16.3 The department challenged deletion of lump sum addition of Rs. 10,00,000/- made by the AO based on the loose slips as per Annexure AS exhibit 1-2 from the residence of Shri Bhawani Singh for the assessment year under consideration. The Ld. CIT(A) has deleted the addition by observing that the AO has already made addition on the basis of the entries noted in these specific loose papers. We find that the AO has not identified any specific entry. The AO has simply made a lumpsum addition which has no basis. Relying on the decision of Hon’ble ITAT Jaipur Bench in case of Madan lal Gupta for assessment year 2017- 18 vide order dated 09.02.2020 wherein it has been held that addition made on the basis of lumpsum surrender made on the seized paper without finding any income is unjustified. Accordingly, we find no reason to interfere the decision of

32 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 Ld. CIT(A) in deleting the addition of Rs. 10,00,000/- made by the AO on lumpsum basis. Thus, the ground no. 6 of the department is dismissed.

17.1 We find that the authority below have not disputed physical cash found in the cash balance as per the books of account of the different concerned as per the following table:

Premises from where Physical cash found Cash balance as per Difference cash found books on 29.01.2019 Factory premises of 5,65,985/- 6,56,600/- (90,615) Subh Laxmi Soap Industries at Dukosi Factory premises of 1,06,500/- 1,36,976/- (30,476) Subh Laxmi Soap Industries at Dukosi Factory Premises of S. 30,03,270 25,71,591/- 4,31,679 L. Nutrition Pvt. Ltd. at Nagaur Factory Premises of 12,51,642 19,80,865/- (7,29,223) Subh Laxmi Cotton Pvt Ltd. at Kharnal Total 49,27,397/- 53,46,032/- (4,18,635)

33 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 17.2 From the aforesaid table it can be seen that taking together all the concerns the cash balance as per the books of assessee is more than the cash physically found and, therefore, addition made by the AO and confirmed by the Ld. CIT(A) is unjustified. Accordingly, the addition of Rs. 3,41,064/- made u/s 69 of the Act is deleted. Thus, the ground no. 3 of the assessee is allowed.

ITA No. 129/Jodh/2025

34 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 19.1 During the course of scrutiny assessment for the year under consideration, the AO has observed that there was a minor downfall in G.P. rate as compared to the previous year and the assessee was required to give reason for the downfall in G.P. rate with justification of valuation method of opening and closing stock with quantitative tally of stock register. In reply the assessee has submitted that in total, the gross profit of the company increased and there was increase in N.P. rate from 2.82% of the previous year to 3.70% in the current year. The AO being not satisfied with the explanation furnished by the assesse, has rejected the books of account of the assessee by applying provisions of Section 145(3) and made trading addition of Rs. 3,44,01,083/- by applying G.P. rate of 18.33% on the declared sales less declared gross profit. In appeal, the Ld. CIT(A) after considering the written submissions of the appellant assessee has granted substantial relief by observing vide para 4.6 interalia as under:

“On perusal of the overall facts I noted that on the one hand in assessment proceeding the appellant has not filed the complete justification of the various observations made by the AO. On the other hand the assesse is found to be maintained day to day stock register wherein no defect was pointed out by the AO. In appeal hearing the AO has again filed the explanation on various observations. On going through the ledgers filed it is seen that many expense are paid in cash. The appellant in appeal proceeding also has not filed complete bills and vouchers to justify the cash payment. In these facts I find that the appellant has rightly rejected the books of accounts by applying the provision of section 145(3).

35 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 After rejection of the books of accounts the AO applied g.p. rate of 18.33% as declared in the last year. The appellant has pointed out mistake in working of the g.p. rate and stated that the manufacturing expenses and production for wages are not considered in determining the gap. rate. If the same is considered the g.p. rate for the year is better as compared to the last year. On perusal of the financial statement and working, the claim of the appellant is found correct. The g.p. rate should be considered after considering the manufacturing and wages for production. On this basis, the correct G.P. rate works out to 6.22% as against the g.p. rate of 5.43% declared in the last year. There is no downfall in the g.p. rate, rather there is increase in the g.p. rate. I further noted that the net profit rate is also increased during the year. The various cases referred by the appellant also support the case of the assessee that no trading addition is justified when g.p. rate is better as compared to last year. Considering this fact, I find that the trading addition made by the AO by applying g.p. rate is unjustified as the same is better in this year and wrongly compared with incorrect g.p. rate. However the fact remains that there are certain defects in the books of accounts which has not been properly explained. Accordingly, I find that it would be reasonable if the trading addition is sustained to the extent of Rs. 10,00,000/- on account of various defects to cover possible lockage of income. The balance addition of Rs.3,34,10,083/- made by the AO is hereby deleted. In the result, this ground of appeal is partly allowed.”

36 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 has not properly explained, without pointing out any such specific defect, the rejection of books of account and lumpsum addition of Rs. 10,00,000/- confirmed by Ld. CIT(A) to cover possible leakage of income is unjustified and uncalled for. Accordingly, he pleaded that rejection of the books of account and addition of Rs. 10,00,000/- confirmed by Ld. CIT may be deleted.

“The Hon'ble ITAT in case of HabibKhan V. ACIT ITA No.415/JP/2013 dated 29-08-2018 for A.Y. 2008-09 held that once books is rejected, the income should be estimated considering the past history of the case. In the present case the g.p. and n.p. rate declared by the assessee is better as compared to last year and therefore the result declared by the assessee be accepted. Reliance is also placed on the following decisions: CIT vs. Allied Gems Corporation ITA No.794/JP/11 order dt.15.12.2017 The Hon'ble ITAT at para 5 of its order held as under: - "We have considered the rival submissions Assessing Officer rejected the books of account by invoking the provisions of section well as relevant material on record. The 145(3). The issue of rejection of books of accounts is involved in the cross objection filed by the assessee, therefore, we deal with this issue while deciding the cross objection. Once, the books of accounts are rejected by the AO the only course of action left to the AO is to assess the income of the assessee on the basis of best judgment and GP rate is considered as proper and reasonable basis and guidance for the best judgment. Once,

37 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 the books result are rejected the Assessing Officer cannot proceed to make an addition to the income offered by the assessee as per books result. However, the AO in the case of the assessee instead of applying the GP rate made on addition@ 25% of the purchases to the book results. This act of the Assessing officer itself contradicts the decision of rejecting the books of accounts and books result." CIT Vs. Vaibhav Gems Ltd. (2014) 112 DTR 84 dt. 21.08.2014 (Raj) While the past history becomes the relevant basis but if the AO wishes to tinker with the basis of past records, then some flaw has to be found by the AO in making some addition. Tribunal has come to a conclusion that in the immediate past assessment year, the Tribunal itself has applied G.P. rate of 2.60% whereas in the present year under consideration, the G.P. rate has been declared at 4.85%. AO was unable to point out as to what are the distinguishing features in between the two assessment years. No substantial question of law arises. CIT Vs. Sh. Sindhuja Foods Pvt. Ltd. (2008) 16 DTR 278 dt.24.10.2008(Raj.) (HC) Where assessee's books of accounts are rejected as it has shown bogus purchases but gross sales figure is not disputed and the CIT(A) and Tribunal applied the g.p. rate of last year for making the best judgment assessment, it cannot be said that any material evidence has not been considered or any irrelevant consideration has been taken into account by the Tribunal in reducing the additions made by AO. CIT Vs. Inani Marbles Pvt Ltd. 316 ITR 125 (Raj.) (HC) In this case, AO rejected the books of accounts, invoked section 145 & made assessment by applying G.P. rate of 15% on the sales disclosed by assessee. Tribunal held that in the absence of any change in factual position normally the profit rate declared & accepted in preceding year, constitutes a good basis for working out the gross profit. Accordingly, it applied G.P. rate declared & accepted at 2.51% in earlier year. Hon'ble High Court held that as the G.P. rate of 2.51% was applied in A.Y. 99-00 & that having been upheld by the Tribunal, the order of the Tribunal for A.Y. 00-01 was justified. Kansara Bearings P. Ltd Vs. ACIT 270 ITR 235 (Raj) It was held that the last year's profits declared by assessee is the best guide for application of profit rate and when the GP shown in the last year was better and AO has not given any comparable case for higher GP then his action to make the trading addition cannot be approved.”

38 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 22. The Ld. DR supported the assessment order.

39 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 recast G.P. rate statement, the gross profit rate has increased to 6.22% as compared to 5.43% declared in the preceding assessment year vide para 4.6 page 9 of the impugned order. The Ld. CIT(A) has held that appellant assessee had maintained day to day stock register where no defect was found by the AO but many expenses were paid in cash and the assessee has not filed complete bills and vouchers to justify the cash payments. Therefore, the Ld. CIT(A) has upheld the rejection of books of account u/s 145(3) of the Act. However, the Ld. CIT(A) after considering the fact that the correct G.P. rate for the assessment year under consideration has been 6.22% as against the G.P. rate of 5.43% declared for the preceding assessment year. Accordingly, the Ld. CIT(A) has held that trading addition made by the AO was unjustified for the reason that certain facts in the books of account have not been properly explained regarding the cash expenses, the Ld. CIT(A) has confirmed lumpsum trading addition of Rs. 10,00,000/- without mentioning any specific expenditure or pointing out any specific discrepancy with reference to any bill or vouchers debited as an expenditure in the books of account.

40 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 25. In our view, once the G.P. rate is considered as proper and reasonable the lumpsum addition of Rs. 10,00,000/- confirmed by Ld. CIT(A) to cover possible leakage of income is unjustified.

41 ITA Nos. 128, 129 & 219/Jodh/2025 Asst. Years: 2019-20 & 2020-21 27. In the above view, we accept the grievance of the assessee as genuine and as such the lumpsum adhoc trading addition of Rs. 10,00,000/- on estimate basis confirmed by Ld. CIT(A) is deleted. Thus, the ground of appeal of the assessee is allowed.

Order pronounced in the open court on 21/05/2026.

Sd/- Sd/- (SUDHIR PAREEK) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 21/05/2026. Nimisha Sr. PS True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File BY ORDER,