JAINSONS AGENCIES,CHANDIGARH vs. ITO, WARD 2(3), CHANDIGARH

O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 26-08-2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 27-12-2019. The sole grievance of the assessee is confirmation of additions of cash deposit during demonetization period for Rs.36.99 Lacs and confirmation of another addition of Rs.6.32 Lacs. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. The assessee being resident firm is stated to be engaged in wholesale and retail trade of readymade garments. Proceedings before lower authorities 2.1 To verify the sources of cash deposits of Rs.87 Lacs during demonetization period, the return of income of the assessee was scrutinized. The assessee made deposits of Rs.60 Lacs on 10-11-2016 anddeposits of Rs.27 Lacs on 11-11-2016. The assessee explained that it had opened two new retail stores at Elante Mall in the month of May, 2016. The cash sales as made in these stores was partly deposited in the bank account and partly retained as cash-in-hand which was evident from the cash book as furnished by the assessee. The cash balance as on 30-09-2016 was Rs.30.82 Lacs. During October, 2016 some outdated stock was liquidated at a heavy. To demonstrate the same, quantitative details was furnished by the assessee. It was accordingly stated that the cash deposits were out of cash sales made by the assessee which were evidenced by its cash book. 2.2 The Ld. AO disbelieved the explanation of the assessee on the ground that it was having opening cash balance of Rs.8.86 Lacs as on 01-06-2016 whereas the assessee was stillwithdrawing cash from the bank which was not convincing. The assessee failed to substantiate his claim for keeping large cash when it was paying interest on unsecured loans. No businessman would keep such huge cash specifically when the banking facilities were available. Therefore, the claim of the assessee was doubted by Ld. AO. It was further observed that the total sales for the year amounted to Rs.93.87 Lacs out of which 49% of the sales happened in the month of October and November, 2016 whichwas not normal. This was in contrast to the fact that the assessee was having normal sales till September, 2016. On these facts, Ld. AO computed average sales of Rs.6.54 Lacs for the months of May to September, 2016. The sale shown in October, 2016 was Rs.41.87 Lacs out of which sales of Rs.6.54 could be accepted and unexplained sales was computed at Rs.35.33 Lacs. The average sale from 01-11-2016 to 08-11-2016 was computed at Rs.1.74 Lacs as against Rs.3.41 Lacs as shown by the assessee and the remaining Rs.1.66 Lacs was held to be unexplained sales. Finally, the aggregate amount of Rs.36.99 Lacs was added back to the income of the assessee as explained sales. 2.3 The second issue that was identified by Ld. AO was that the assessee reduced fixed assets by Rs.6.32 Lacs on sale of various assets but the assessee did not submit any bills to substantiate the same. In the result, the amount of Rs.6.32 Lacs was further added to assessee’s income. 2.4 The Ld. CIT(A) endorsed the findings of Ld. AO against which the assessee is in further appeal before us. Our findings and Adjudication 3. From the facts, it emerges that the assessee being resident firm is stated to be engaged in wholesale and retail trade of readymade garments. During this year, the assessee has opened two new retail outlets and accordingly, the figures of earlier years could not be compared with the figures of this year. Nevertheless, the undisputed position that emerges is that the assessee has furnished cash book as well as quantitative details of stock in support of its sales. The cash book has sufficient balance out of which impugned deposits have been sourced. The books have not been rejected and no defect has been found by Ld. AO in the quantitative details. The cash sales as carried out by the assessee has been offered as sales turnover and adding the same amount again would amount to double taxation which is impermissible. The conclusion of Ld. AO that the sales in October, 2016 would not exceed average sales of previous month is clearly a fallacious assumption. The Ld. AO is also not justified in questioning the withdrawals on the ground that the assessee had sufficient cash-in- hand in the books since Ld. AO could not dictate how the business was to be conducted by the assessee. The Ld. AO has no role to step into the shoes of the businessman to make ssumptions. The only onus of the assessee was to establish the sources of cash deposits and this onus stood discharged by the assessee by furnishing the cash books and quantitative details. On these facts, the impugned addition of Rs.36.99 Lacs could not be sustained in law. We order so.

ASSISTANT REGISTRAR

ITAT CHANDIGARH