JT. COMMISSIONER OF INCOME TAX (OSD), CENTRAL CIRCLE-1, JODHPUR, JODHPUR vs. SUBH LAXMI COTTON PRIVATE LIMITED, NAGAUR

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. 144 and 145 /Jodh/2025 (Assessment Year 2018-19 to 2019-20) M/s Subh Laxmi Cotton Pvt. Ltd. DCIT, Central Circle-1, Kalani and Co. Chartered Jodhpur. Accountant, 5th Floor, Milestone Building, Gandhinagar Turn, Tonk Road, Jaipur- 302015 PAN No. AASCS5928E ITA No. 217 and 218 /Jodh/2025 (Assessment Year 2018-19 to 2019-20) Jt. CIT (OSD), Central Circle-1, M/s Subh Laxmi Cotton Jodhpur. Pvt. Ltd. Kalani and Co. Chartered Accountant, 5th Floor, Milestone Building, Gandhinagar Turn, Tonk Road, Jaipur- 302015 PAN No. AASCS5928E

Assessee by Shri P.C. Parwal, CA (Virtual) Revenue by Shri Anil Kumar Bharadwaj CIT (Virtually) Date of Hearing 30 / 04 / 2026. Date of Pronouncement 21 / 05 / 2026.

ORDER PER BENCH: These appeals are filed by assessee and the revenue against the order of Commissioner of Income Tax, Appeal, Jaipur-5 [hereinafter

2 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) referred to as the CIT(A)] with respect to the assessment year 2018-19 and 2019-20.

3 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) 3. The revenue has raised the following grounds of appeal:- ITA NO. 217/JODH/2025 (A.Y. 2018-19) 1. (ii) Whether on facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.4,636/- made or account of undisclosed expenditure u/s 68 without appreciating the fact that the assesse has not justified the difference of opening cash book entry of Rs. 90,65,197/- and the peak entry of Rs.90,60,561/- as mentioned in incriminating documents. 2. (iii) The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appellate proceedings 3. (1) Whether on the facts & in the circumstances of the case, the Ld. CIT(A) has erred in giving the telescoping benefit of 3 Rs.2,92,50,428/- and set off from available funds of?.?. 2014-15 to AY 2017-18 by ignoring the facts enumerated by the AO and the material available on recorded. ITA NO. 218/JODH/2025 (A.Y. 2019-20) 1. Whether on the facts & in the circumstances of the case, the Ld. CIT(A) is justified in confirming the addition of Rs. 40,70,400/-only out of addition of Rs. 94,29,600/- made by AO and further giving the telescoping benefit of Rs. 40,70.400/- and allowed to set off from available funds of A. Y. 2014-15 to AY. 2017-18 by ignoring the facts enumerated by the AQ and the material available on recorded? 2. Whether on the facts & in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs. 1,23,12,055/-out of addition of Rs. 1,33,82,669/-made by the AO on account of unaccounted income u/s 68 by ignoring the facts enumerated by the AO and the material available on recorded? 3. The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appellate proceedings 4. These cross appeals filed by assessee and department raised interrelated issues in the grounds of appeals, therefore, these appeals

4 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) were heard together and adjudicated by this consolidated order for the sake of brevity.

5 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) raw cotton, cotton bales and cotton seeds, details of dispatches to be made, purchase rate of raw cotton, details of farmers from whom purchases is to be made, transporters details, position of cash balance, etc are noted by Rajesh Soni, accountant of the company for his memoranda purpose. On analysis of the same the AO noted that certain transactions as appearing in Exhibit 6 do not match with the books of accounts of the assessee company. Accordingly AO issued show cause notice to explain Page Nos. 15, 19, 20, 21, 22, 23, 24, 7, 12A, 128, 14, 28 & 29 of Exhibit 6 with books of accounts. All these papers are scanned and made part of the assessment order at page 3 to 16 where it was proposed to make the addition of the amount noted on these papers. In assessment proceeding the assessee filed the reply as reproduced at para 5.1 to 5.3 page 16 to 28 of the assessment order. In these reply the assessee gave paper wise explanation stating that these papers are written in the hand writing of Shri Rajesh Soni, Cashier of the assessee, where day wise position of stock of raw cotton, cotton bales and cotton seeds, details of dispatches to be made, purchase rate of raw cotton, details of farmers from whom purchases is to be made, transporters details, position of cash balance, etc are noted. These facts were also stated in statement u/s 131 dated 31/01/2019. Again in statement u/s 131 dated 20.05.2019, in

6 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) reply to Q.No.4 with reference to pages 15, 19, 20, 21, 22, & 24 explained that the various amounts noted on these pages is out of the bank withdrawal and the amount received from residence of Shri Bhagwan Kumar Taparia. Thereafter individual explanations of the amount noted on these papers are given. The AO after considering the reply of the assessee at para 5.4 of the order observed that bank withdrawal figures mentioned in the loose slips are verifiable from the bank statement but closing cash balance computed in these slips are not matching with the closing cash balance as per the seized tally accounts. He worked out the day wise difference of the closing balance as per these slips and the closing balance as per cash book at page 31 to 32 of the assessment order. He allowed the set off of the difference in the closing balance as per slips vis-a-vis as per cash book for those days where the slips of consecutive dates were found. He did not accept the contention of the assessee that these loose slips only contain working of reconciliation of cash balance between Bhawani Singh, cashier of S.L Group and Rajesh Kumar Soni, accountant of the assessee in respect of bank withdrawals and amount received from Bhawani Singh by holding that the figures in the loose slips other than bank withdrawals are not verifiable with any supporting evidences. Further the contention that amount of Rs.80 lacs is

7 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) received from Shri Bhagwan Kumar Taparia through Bhawani Singh which was repaid on 18.10.2017 is also not acceptable as no evidence in support of introduction and repayment to Bhagwan Kumar Taparia was produced. Accordingly he treated an amount of Rs. 2,92,50,428/- as undisclosed income of the assessee u/s 68 of the Act.

“Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the

8 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.”

"books or books of account" includes ledgers, day-books, cash books, account-books and other books, whether kept in the written form or as print-outs of data stored in a floppy, disc, tape or any other form of electro-magnetic data storage device" 11. The Ld. AR has submitted that the definition of books of accounts is an inclusive definition. However, notepad, loose papers and diaries which can be easily detached and replaced cannot be termed as books. The AO at page 2 para 5 has also accepted that for money transfer business, assessee has not maintained books of accounts. Therefore, recording in loose sheets, notepads and diaries cannot be regarded as the sum found credited in the books of the assessee for the purpose of section 68. Hence on the basis of the entries in such document/ paper, addition u/s 68 cannot be made. In support he placed reliance on the

9 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) judgment delivered by Jaipur Tribunal in the case of Aruna Sankhla Vs. DCIT ITA No. 484/JP/2016 dated 01.12.2017, Jaipur Tribunal, where the Tribunal vide para no. 7.4 of its order has held as under:- "After considering the rival submissions and the materials available on record, we are of the considered opinion that the seized papers cannot be treated as books of account. Furthermore, only the commission income can be assessed in the hands of the assessee @0.10% on a total of the credits of Rs.91,67,81,272/-. The addition u/s 68 of the Act can be made only if any sum is found credited in the books of the assessee. A book means a collection of sheets of papers bound together with the intention that such binding shall be permanent and papers used are kept collectively in one volume. A book which contains successive entries of items maybe a good memorandum book but until those entries are totaled or balanced or both as the case may be, there is no reckoning and no accounts. A book which merely contains entries of items of which no account is made at any time, is not a "book of account" in a commercial sense. Thus the addition made u/s 68 is not justified. It is noticed that over and above the peak credit, the AO has further made an addition of Rs. 52,40,137/- on account of debtors exceeding the creditors. We have found that the peak determined by the AO is not correct, otherwise also, when once peak amount has been added then no separate addition is required. It seems that the AO has not properly prepared the list of debtors and creditors based on any logic. The Ld. CIT(A) has confirmed the addition of Rs. 52,40,137/- under the Provisions of Section 69B of the Act. This section relates to investment made by the assessee in the acquisition of bullion/jewellery or other valuable articles but it does not

10 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) speak about any investment in debtors. Moreover, Section 69B also stipulates the position where the investment exceeds the amount shown in the books of account. Since the assessee does not maintain any books of account wherein the debtors and creditors are reflected, therefore, this addition has also been wrongly made and upheld u/s 69B of the Act. Hence, in our considered opinion, only commission income has to be determined in this case and nothing more. Accordingly, we reverse the findings of the Ld. CIT(A) and order to delete the entire addition so made. Thus Ground Nos. 3 and 4 of the assessee are allowed.

11 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) slips, if the cash balance as per these slips did not match with the cash balance as per the books of accounts he made the addition which is also confirmed by Ld. CIT(A). In doing so the lower authorities did not properly appreciated the fact that in the process of ginning & pressing of cotton bales, the raw material is raw cotton. Raw cotton is purchased from farmers. The main season of purchase of raw cotton is from September to March. The purchases is made at factory situated at Kharnal whereas the bank account of the applicant is at Nagaur which is at a distance of around 20 Km. Therefore, to manage the purchase during crop season when the bank also remain closed due to holidays, Shri Bhagwan Kumar Taparia provides funds out of his undisclosed income through cashier of the group Shri Bhawani Singh who sits at Nagaur. The amount so received from Shri Bhagwan Kumar Taparia and the amount withdrawn from the bank account of the applicant at Nagaur remains with Shri Bhawani Singh out of which he sent the amount to Shri Rajesh Soni at factory site at Kharnal. On these papers the figure of cash amount noted represents the movement of funds between Shri Bhawani Singh and Shri Rajesh Soni. The amount withdrawn from the bank account of the applicant at Nagaur is verifiable from the amount noted on these papers. In fact these papers are for the period 27.09.2017 to 18.10.2017 and finally on 18.10.2017 there is Nil Balance with reference to the movement of fund between Bhawani Singh and Rajesh Soni. Thus noting on these pages is only intermediary transaction which has no financial implication on the applicant in as much as all purchases made by the applicant are duly recorded in the books of accounts. The funds provided by Shri Bhagwan Kumar Taparia for a temporary period is out of his commodity income which is covered by the funds available with

12 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) him and considered in his hands. The individual explanation for each of the loose slips for which addition is made by the AO and confirmed by Ld. CIT(A) is as under:- Amount as Addition Explanation Page No. Date per paper by AO It is total of two amounts of Rs.28 lacs and Rs.46 lacs noted in a circle (AO para 7.5, pg 10). It is not the closing balance of cash but only the amount received by Rajesh Soni at some point of time. The source of Rs.28 lacs is out of Rs.45 lacs withdrawn by Bhawani Singh from the bank account of the assessee on 26.09.2017 (PB 91) out of which he sent Rs.28 lacs to Rajesh Soni and Rs.17 lacs remained with him. Thereafter, on 27.09.2017 there is a bank withdrawal of Rs.35 lacs (PB 91). Thus, 7 27.09.17 74,00,000 63,90,748 Bhawani Singh was having cash of Rs.52 lacs (17 lacs + 35 lacs). Out of it, he sent Rs.46 Lacs to Rajesh Soni as noted on the paper. Thus, these amounts are not the cash balance with Rajesh Soni, but only the memorandum entry of amount received by him from Bhawani Singh which is verifiable from the amount withdrawn from the bank a/c of the assessee. Hence, the addition made by the AO of Rs.63,90,748/- by comparing the amount on Rs.74 lacs noted on this paper with closing cash balance as per books of Rs. 10,09,252/- be deleted. On this paper (AO para 7.6, pg 11), there is noting of Rs.10 lacs + 66 lacs = 76 lacs (in bag) + 14 lacs (in katta) = 90 lacs - 69 lacs = balance 21 lacs. Infact, these are notings of placement of cash withdrawn of Rs.90 lacs from the bank account on 03.10.17 (PB 92). Out of it, Rs.69 lacs were lying with Bhawani Singh leaving balance of Rs.21 lacs. This amount was given to Rajesh Soni on 03.10.2017 which is verifiable from page 12B. 12A 02.10.17 90,00,000 - This indicates that page 12B on which there is no date, in fact is of 03.10.2017 as accepted by the AO also (AO page 31). On 02.10.2017, the bank was closed on account of Gandhi Jayanti and therefore, cash withdrawn from the bank on 03.10.2017 was noted on the left side corner of the page which is dt. 02.10.2017. Thus, the amount noted on this paper is fully verifiable from the amount withdrawn from the bank a/c. On this paper (AO para 7.6, pg 11), Rajesh Soni has noted the position of cash balance with him. The opening cash balance with him on 03.10.2017 was Rs.1,13,026/-. As per books the opening cash balance was Rs.2,68,136/- Updated of which Rs.1,55,110/- (1,55,380-270) was the cash (AO balance at the retail counter leaving balance of 12B accepted 52,32,580 52,52,134 Rs.1,13,026/- with him. The next figure of it as of Rs.23,96,900/- [(24,58,648 + 5,66267,410 (cheque 03.10.17) purchases))] represent the payment made for purchases in cash up to voucher no. 986 (PB 103-105). The next two figures of Rs.55,00,099/- & Rs.21 lacs represent the amount received from Shri Bhawani Singh out of bank

13 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) withdrawals of Rs.90 lacs (PB 92) made on that date. Thus, noting on this paper only reflect the position of cash balance with Rajesh Soni on 03.10.2017 at a particular point of time and not the cash balance at the close of 03.10.2017 which is further evident from the fact that no such balance is noted as opening balance in the slip dated 04.10.2017. Hence, the addition of Rs.52,52,134/- made by the AO by comparing the amount of Rs.52,32,580/- noted on the paper with the closing cash balance of Rs.1,80,446/- as per books is uncalled for and be deleted. On this paper (AO para 7.6, pg 13) there are certain notings leaving a balance of Rs.10 lacs. Infact, this is a noting as to the balance with Shri Bhawani Singh. The first noting of 47 lacs 40 lacs leaving credit balance of 7 lacs represents the amount given by Bhawani Singh to Rajesh Soni. Thereafter Bhawani Singh withdrawn Rs.90 lacs from the bank of the assessee on 04.10.2017 (PB 92), out of which he gave Rs.73 lacs to Rajesh Soni and thus, he had Rs.80 lacs (73 + 7 excess out of balance of 40) and 14 04.10.17 10,00,000/- - balance Rs.10 lacs (90-80) remained with Bhawani Singh. Thus the amount noted on this paper do not represents the cash balance available with Shri Rajesh Soni. The AO however, compared the amount of Rs.10 lacs as per the paper with closing cash balance as per books of Rs.18,70,683/- and found that the balance in books is more and therefore, did not made any addition by not appreciating that the amount noted on the paper is only a memorandum entry. On this paper (AO para 7, pg 4), the amount of Rs. 1,70,61,940/- noted consist of three amount of Rs.63,50,000 + Rs.1,05,90,000 + Rs.1,21,940. This represents the amount received by Rajesh Soni of Rs.63,50,000/- from Bhawani Singh out of bank withdrawal of Rs.70 lacs made by him on 05.10.2017 at Nagaur (PB 93). Thereafter, Rs.1,05,90,000/- noted on this paper with the date 04.10.2017 (night) represent the cash balance available with him on that date. On this date there is a withdrawal of Rs.90 lacs from the bank account (PB 92). Thereafter amount of Rs.1,21,940/- represent the cash counter sale recorded in the books of accounts (PB 96). The total of these three amounts is 15 05.10.17 1,70,61,940 28,13,647 Rs.1,70,61,940/-. Out of it Rs.58,41,774/- (PB 97-100) is reduced which represent the payment made towards purchases on 05.10.2017 and expenses duly recorded in the books at particular point of time. The paper indicate the cash balance at Rs.1,12,16,630/- whereas the cash balance in the books is Rs.31,50,849/-. Thus, there is difference of Rs.80,65,781/-. This represents the amount received from Shri Bhagwan Kumar Taparia which is subsequently repaid out of the withdrawals from the bank. However, the AO compared the amount of Rs.1,12,16,630/- noted on the paper with closing cash balance of books at Rs.31,50,849/- leaving difference of Rs.80,65,781/-. From this amount he reduced the balance of Rs.52,52,134/- as per the paper dt. 03.10.2017 supra

14 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) and thus, made addition of Rs.28,13,647/-. The addition so made is unwarranted as the amount of Rs.80,65,781/- represent the amount received from Shri Bhagwan Kumar Taparia and it is not the cash balance of the assessee. Hence, the addition made by AO be deleted. On this paper (AO para 7.1, pg 5) there are two debit notings of Rs.135 lacs & 34 lacs and one credit noting of 120 lacs leaving a debit balance of Rs.49 lacs. The amount of Rs.1,35,00,000/- was receivable from Bhawani Singh out of which Rs.1,20,00,000/- was received from him. Infact, on 07-10-2017 there is bank withdrawal of Rs.1,50,00,000/- out of which part amount was utilized in purchases leaving balance of Rs.51,39,878/- on 08-10- 2017 (PB 101 & 102). Out of it Rs.50 lacs remained with Bhawani Singh. This amount along with Rs.85 lacs provided by Shri Bhagwan Kumar Taparia amounting to 19 09.10.17 1,69,00,000 35,44,194 Rs.135 lacs remained with him out of which he sent Rs. 120 lacs to Rajesh Soni leaving a balance of Rs.15 lacs with him. On this date there is bank withdrawal of Rs.34 lacs (PB 93) which also remained with him. Thus, as on 09-10-2017 Rs.49 lacs was lying with Shri Bhawani Singh. The AO compared the balance of Rs.49 lacs with closing balance of Rs. 13,55,806/- to make addition of Rs.35,44,194/- by not appreciating that this difference is due to the amount provided by Shri Bhagwan Kumar Taparia. Thus, these notings do not represent the cash balance of the assessee and therefore, on the basis of such noting the addition made by the AO be deleted. On this paper (AO para 7.3, pg 6) amount of Rs.49 lacs as noted on 09.10.2017 is carried forward out of which Rs.45 lacs was sent to Rajesh Soni. Thereafter, Rs.70 lacs withdrawn from the bank remained with him (PB 93) and Rs.5,000/- was given to him for exchange of torn notes leaving a balance of Rs.74,05,000/- with him. Thus these notings are the cumulative balance lying with 20 10.10.17 70,00,000/- 25,79,876 Bhawani Singh. The AO has compared it with the cash balance as per books of Rs. 12,80,30/- to work out the difference of Rs.61,24,070/-. From this, he reduced the addition of Rs.35,44,194/- made on 09.102.017 and thereby Rs.25,79,876/- was added. It is submitted that these notings do not represent the cash balance of the assessee and therefore, on the basis of such noting, addition made by AO be deleted. On this paper (AO para 7.3, pg 7) amount of Rs.74.05 lacs as noted on 10-10-2017 is carried forward out of which Rs.50 lacs represent amount received by Rajesh Soni. Thereafter, Rs.60 lacs withdrawn from the bank (PB 94) which remained with Bhawani Singh was added and thus, Rs.84,05,000/- remained with Bhawani Singh. 21 11.10.17 5,000 7,25,581 The AO has compared it with the cash balance as per books of Rs.15,55,349/- to work out the difference of Rs.68,49,651/-. From this, he reduced the previous balance of Rs.61,24,070/- and thereby Rs.7,25,581/- was added. It is submitted that these notings do not represent the cash balance of the assessee and therefore, on the basis of such noting, addition made by AO be deleted.

15 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) On this paper (AO para 7.3, pg 8) amount of Rs.84.05 lacs as noted on 11.10.2017 is carried forward out of which Rs.67 lacs was given to Rajesh Soni, leaving a balance of Rs.17,05,000/- with Bhawani Singh. The cash 22 12.10.17 60,00,000 - balance as per books on this date is Rs.17,55,263/- and therefore, no addition is made. However, it is submitted that these notings do not represent the cash balance of the assessee and therefore, no adverse inference is otherwise required to be drawn on the basis of this paper. On this paper (AO para 7.4, pg 9) two amount of Rs. 1.70 crores and Rs.15 lacs are noted. The amount of Rs.1.70 crores represent the bank withdrawal made on 13.10.2017 (PB 94) and Rs.15 lacs represent the earlier balance lying with Bhawani Singh on 12.10.2017. Out of 13.10.14 it Rs.71 lacs was given to Rajesh Soni, leaving a balance 23 & 24 & 15,00,000 - of Rs.44 lacs with him. The cash balance as per books on 14.10.17 this date is Rs.51,77,399/- and therefore, no addition is made. However, it is submitted that these notings do not represent the cash balance of the assessee and therefore, no adverse inference is otherwise required to be drawn on the basis of this paper. On this paper (AO para 7.8, pg 14) amount of Rs.44 lacs as noted on 14.10.2017 is carried forward out of which Rs.38 lacs was given to Rajesh Soni. Thereafter, Rs.1 crores (PB 94) was withdrawn from the bank out of which 25 lacs was given to Rajesh Soni through the driver Amar Chand thus leaving a balance of Rs.81 lacs 28 17.10.17 81,00,000 79,44,248 with him. The AO has compared it with the cash balance as per books of Rs.1,55,752/- to work out the difference of Rs.79,44,248/- and made addition for the same. It is submitted that these notings do not represent the cash balance of the assessee and therefore, on the basis of such noting, addition made by AO be deleted. On this paper (AO para 7.9, pg 15) amount of Rs.81 lacs as noted on 17.10.2017 is carried forward which was given to Rajesh Soni and thus, the balance with Bhawani 29 18.10.17 Nil - Singh became Nil. On this date there is bank withdrawal of Rs.80 lacs (PB 95) which has been paid back to Shri Bhagwan Kumar Taparia against the temporary fund provided by him from time to time.

Thus, it is evident that the noting on these loose slips does not represent the cash balance of the assessee but represent the transaction of cash between Shri Bhawani Singh and Shri Rajesh Soni. Any amount given by Bhawani Singh which is not backed by the bank withdrawal of the assessee is the fund of Shri Bhagwan Kumar Taparia out of his undisclosed income from commodity business. Infact, AO has made substantial addition on account of commodity and interest income in case

16 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) of Shri Bhagwan Kumar Taparia from AY 2014-15 to AY 2018-19. Even as per the order of Ld. CIT(A) in case of Bhagwan Kumar Taparia for Ay 2017-18, he has cash availability of Rs.1,60,89,205/- as on 31.03.2017. Thus, the amount available with Shri Bhagwan Kumar Taparia for providing temporary advance of Rs.80,65,781/- on 05.10.2017 which was subsequently repaid out of the bank withdrawal and temporary advance of Rs.85 lacs given on 09.10.2017, which was subsequently repaid by 18.10.2017 is fully verifiable. Hence, when all the notings on the paper are explained, the addition made by AO and confirmed by Ld. CIT(A) is uncalled for and the same be deleted. 3. Otherwise also the addition worked out by the AO and confirmed by Ld. CIT(A) is incorrect in as much as AO has not allowed the credit of the difference in cash as per these slips vis-a-vis as per the books of accounts on the subsequent date wherever the slips are of not consecutive date by stating that closing and opening balance are not matching with each other and assessee has not explained any specific reason for the same. It is submitted that even if the slips are not of the consecutive date, the addition made on the basis of previous slips ought to be allowed credit for the addition made for the subsequent slips as the amount added as per the previous slips was available with the assessee for utilization in the subsequent slips otherwise it would lead to double taxation. Accordingly even as per the AO the addition would workout at Rs.80,65,781/- calculated as under:-

17 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) Date Closing Closing Incremental Amount Final Balance as Balance as Amount/ added by amount to per Slips per (detrimental AO after consider for taken by AO Book taken amount) setoff peak by AO worked out by AO 27.09.17 74,00,000/- 10,09,252/- 63,90,748/- 63,90,748/- 63,90,748/- 03.10.17 52,32,580/- 1,80,446/- 50,52,134/- 52,52,134/- -- 04.10.17 10,00,000/- 18,70,683/- (8,70,683/-) -- -- 05.10.17 1,12,16,630/- 31,50,849/- 80,65,781/- 28,13,647/- 16,75,033 (80,65,781- (80,65,781- 52,52,134) 63,90,748) 09.10.17 49,00,000/- 13,55,806/- 35,44,194/- 35,44,194/- -- 10.10.17 74,05,000/- 12,80,930/- 61,24,070/- 25,79,876/- -- (61,24,070- 35,44,194) 11.10.17 84,05,000/- 15,55,349/- 68,49,651/- 7,25,581/- -- (68,49,651- 61,24,070) 12.10.17 17,05,000/- 17,55,263/- (50,263/-) -- -- 14.10.17 44,00,000/- 51,77,399/- (7,77,399/-) -- -- 17.10.17 81,00,000/- 1,55,752/- 79,44,248/- 79,44,248/- -- 18.10.17 -- 16,37,335/- (16,37,335/-) -- -- Total 2,92,50,428/- 80,65,781/-

Hence, the addition if any, which could have been made by the AO would be Rs.80,65,781/- and therefore, the addition to the extent of Rs.2,11,84,647/- (2,92,50,428 - 80,65,781) is uncalled for and be deleted. 4. Further the source of Rs.80,65,781/- is the amount received from Bhagwan Taparia through Bhawani Singh out of the income offered by him as evident from his cash flow statement explained above. Hence, no addition on the basis of the above loose slips is called for. 5. The Ld. CIT(A) has however allowed the set off of the amount available on repayment of loan and interest for AY 2014-15 to AY 2017-18, where addition of Rs.3,99,21,285/- was confirmed by him for the alleged accommodation entries and thus, the addition made by the AO was deleted. Against this finding, the department is in appeal. The assessee has challenged the addition confirmed by Ld. CIT(A) in AY 2014-15 to AY 2017-18. The contention of the assessee is that those loans were genuine and they are subsequently repaid. In case the contention of the assessee is not accepted by the Hon'ble ITAT, the set off allowed by Ld. CIT(A) is to be confirmed by dismissing the ground of the department. However, if the contention of the assessee is accepted, then also the

18 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) addition confirmed on the basis of the loose papers is uncalled for as explained above. 15. On the other hand the Ld. DR placed reliance on the impugned order. He contended that the assessee has been given benefit of cash balance and cash withdrawal from the bank by the AO in the assessment order. He pleaded that Ld. CIT(A) is not justified in giving telescopic benefits and setoff from the available funds. He pleaded that the assessment order may be sustained.

19 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) Industries Pvt Limited (2021) 90 ITR 114 Chennai Tribunal vide para 21 of its decision has held as under:- "21. The Income Tax Act, 1961 has defined books and books of accounts u/s.2(124) of the Act, as per which books and books of accounts includes, ledgers, day-books, cash books, account books and other books, whether kept in the written form or as print- outs of data stored in a floppy, disk, tape or any other form of electro-magnetic data storage device. Therefore when books of accounts are clearly defined under the Act, then diary. notebook and retrieved data of computer CPU can be considered as books of accounts or not is a question that needs to be considered. From the definition of 'books' or 'books of accounts', it is abundantly clear that books of accounts means regular books of accounts maintained by the assessee for any previous year to record day to day transactions of its business including ledgers, day-books, cash books, account books and other books. The term other books does not mean to include some dumb documents like diary, notebook or deleted entries of computer CPU. The term other books refers to any other books which are relevant and in consonance with ledgers, day-books, cash books, account books, etc. Therefore, in order to include any other books of accounts maintained by the assessee within the ambit of term 'other books', those books must be relevant in the business of the assessee to keep track of transactions. Hence, other books refers to in the ordinary course of any business of the assessee are stock books maintained in the ordinary course of business to record movement of stocks, books of accounts maintained for recording salary and wages as required under the Wages Act and other statutory books prescribed under any other law. But, it does not include diary,

20 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) notebook and some other dumb documents maintained by any person for any reason. Therefore, in our considered view books refer to under section 68 means, regular books of accounts maintained by an assessee in the ordinary course of business to record its business affairs and also to prepare financial statements for the relevant year. Any other documents, including, loose sheets, dairy, note book and other unconnected documents cannot be considered as books, unless the same is part of books of accounts maintained by the assessee. 17. It is noted that the evidence on the loose sheets does not represent the cash balance of the assessee but represent the transaction of cash between Shri Bhawani Singh and Shri Rajesh Soni and that any amount given by Bhawani Singh which is not backed by the bank withdrawal of the assessee are the fund of Bhagwan Kumar Taparia, out of its undisclosed income from commodity business. Even as per the order of the Ld. CIT(A) in the case of Bhagwan Kumar Taparia for assessment year 2017-18, he has cash availability of Rs. 1,60,89,205/- as on 31.03.2017. Thus, the amount available with Shri Bhagwan Kumar Taparia for providing temporary advance of Rs. 80,65,781/- on 05.10.2017 which was subsequently repaid out of the bank withdrawal and temporary advance of Rs. 85 lacs given on 09.10.2017, which was subsequently repaid by 18.10.2017 is fully verifiable. Thus, all the

21 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) notings on the loose papers stands explain. It is evident that the addition worked out by the AO and confirmed by Ld. CIT(A) is incorrect in as much as AO has not allowed the credit of the cash as per the books of accounts on the subsequent date. We observe that, the slips are not of consecutive dates, balances are not matching with each other although the assessee has not explained any specific reason for the same. In our view, even if the slips are not of the consecutive date, the addition made on the basis of previous slips ought to be allowed credit for the addition made for the subsequent slips as the amount added as per the previous slips was available with the assessee for utilization, otherwise it would lead to double addition, as tabulated as above. Thus, the addition if any, which could have been made by the AO would be Rs. 80,65,781/- and therefore, the addition to be extent of Rs. 2,11,84,647/- (2,92,50,428- 80,65,781) was uncalled for and deserves to be deleted. We find that the source of Rs. 80,65,781/- is the amount received from Bhagwan Taparia through Bhawani Singh out of the income offered by him as evident from his cash flow statement as explained by the appellant assessee in his reply as above. In view of that matter based on the alleged loose slips no addition is called for in the present facts of the case of the assessee.

22 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) 18. Considering the peculiar facts of the case, we are of the considered opinion that the order of the Ld. CIT(A) is perverse to the facts on record and therefore, the addition of Rs. 2,92,50,428/- confirmed by Ld. CIT(A) is deleted. Thus, this first ground of the assessee is allowed and third ground of the department is dismissed.

23 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) addition for short cash can be made. Accordingly, the Ld. CIT(A) has deleted the addition.

24 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) ITA No. 145 and 218/Jodh/2025 (A.Y. 2019-20)

25 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) 26. In ground no. 2, the assessee has challenged confirmation of addition of Rs. 10,70,614/- by applying G.P. @ 8% of the alleged shortage of stock and the department has challenged the deletion of the addition of Rs. 1,23,12,055/- out of addition of Rs. 1,33,82,669/- made by the AO under Section 68 of the Act.

26 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) However, he held that in case of shortage of stock, addition can be made only of the G.P. earned on sale of such short stock. Accordingly, by applying G.P. rate @ 8% on such unaccounted sales treating the shortage of stock and the Ld. CIT(A) has confirmed the addition of Rs. 10,70,614/-.

27 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) from the bank. This was done as assessee received a letter from the bank for verification of stock in September, 2018 for acquiring higher CC limit and this was entered in the stock record on back date on 15.04.2018, without recording any monetary value of such stock in the books of accounts. Subsequent to search this entry was reversed in 31.01.2019 (APB, Pg. 66). The Lower Authorities have not accepted this explanation for the reason that no concrete evidence for the same is found and Shri Rajesh Soni Accountant at the time of search ignored that the increase in the stock has been subsequently reversed after search. From the record it is evident that during the course of search, stock was found short for Rs. 1,33,82,669/-. The claim of the appellant that same occurred due to represents punching error a reason for discrepancy in the shortage of stock cannot be accepted at this stage as alternate claim of the appellant. It is noted that the shortage stock and only addition for the gross profit earned thereon has been accepted by the appellant before the Ld. CIT(A) in the absence of the credible evidence. We, therefore, hold that the Ld. CIT(A) was justified in holding that in the case of the shortage of stock only the G.P. can be added. Accordingly, he has rightly accepted the claim of the appellant assessee of G.P. addition on shortage of the stock.

28 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) 32. Considering the factual matrix of the case, we hold that the Ld. CIT(A) has reasonably adapted the GP @ 8% on the shortage of the stock and thereby confirmed an addition of Rs. 10,70,614/-. We find no reason to interfere in the decision of Ld. CIT(A) in confirmation of Rs. 10,70,614/- and therefore, the Ld. CIT(A)’s decision in confirming an addition of Rs. 10,70,614/- as against the addition of Rs. 1,33,82,669/- is upheld. Thus, this ground no. 2 of the assessee and that of the department are rejected.

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

Sd/- Sd/- (SUDHIR PAREEK) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 21 /05/2026. Pritesh Vaishnav PS

29 ITA No. 144 and 145, 217 and 218/Jodh/2025 (Assessment Year 2018-19 and 2019-20) True copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File

BY ORDER,