DEEPIKA GARG, E-392, PHASE-VI, FOCAL POINT, LUDHIANA,LUDHIANA vs. INCOME TAX OFFICER, WARD 1(1), LUDHIANA, JAO, THE INCOME TAX OFFICER, WARD 1(5), LUDHIANA, LUDHIANA

That the Ld. CIT(A) has erred in not considering the fact that the cash as deposited in the regular bank account of the assessee is out of the regular books of accounts, which have not been rejected by the Assessing Officer and, thus, sustaining of addition of Rs. 24 lacs is against the facts and circumstances of the case. That the Ld. CIT(A) has failed to appreciate that in the identical facts 6. and circumstances, the addition in the case of family concern in the case ofSh. Arun Kumar Garg in IT A No. 13/Chd/2022 vide order, dated 05.08.2022 has since been deleted and the Ld. CIT(A) has failed to appreciate and follow the judgement of Jurisdictional Chandigarh Bench of the IT AT in the above case.

At the very outset, the Ld. Counsel of the assessee submitted that Ground No.1 is general ground of appeal

The Ld. CIT(A) has held that there is uniform pattern of receipt of cash against the sales made to four parties. It was also held that the sales as made by the appellant are bogus and onus has not been discharged, whereas, the contention of the assessee was that the assessee had sufficient stock of goods sold and there is no bar in making the cash sales. Books of accounts of the assessee have not been rejected.

Against the order of the Ld. CIT(A) the assessee preferred an appeal before us.

During the course of hearing It was argued by the Ld. Counsel of the assessee that complete cash book for financial year 2016-17 had been furnished, confirmed copies of accounts of all the four parties have also been furnished, affidavits from four parties, where they have confirmed such payment of cash to assessee and sales made to them and the ITR copies of four parties, alongwith cash book have been furnished. Thus, the arguments of the assessee by relying upon number of judgments of jurisdictional Punjab & Haryana High Court and Others are that if the addition have been made without pointing out any specific defects in the books of accounts, no addition could be made in the case of assessee. Further, the assessee relied upon on number of case laws where the cash was deposited during demonetization period in the regular bank account of the assessee out of the sale of stocks, then no addition was liable to be made. The assessee relied upon following judgements for the preposition that no addition could be made under such circumstances. i). Judgement of Hon'ble Delhi High Court in the case of PCIT Vs Akshit Kumar in of 2019, reported in 197DTR 121. ii). PCIT vs Agson Global P. Ltd. 134 taxmann.com 256 (Del.HC).

The assessee also relied upon the judgment of Shri Arun Garg Vs ITO, reported in (2023) 146 taxmann.com 10, where, the similar addition was made under same facts and circumstances, the said addition was deleted by the Hon'ble Chandigarh Bench of ITAT.

The Ld. CIT (DR) relied upon the order of Assessing and CIT(A) and further contended that the books of accounts have been manipulated and the nature of transactions appear to be suspicions. The Ld. DR argued that the Ld. CIT (A) has rightly confirmed the addition.

We have gone through the order of Assessing Officer, Appellate order of Ld. CIT(A), arguments of Ld. CIT (DR) and brief synopsis and case laws as cited by the Ld. Counsel. We find that the Assessing Officer has accepted the sales as made by the assessee in the audited books of accounts and no discrepancy have been noticed in day to day maintenance of books of accounts, purchase and sale invoices. The assessee has sufficient stocks to make the sales to 4 parties and all such four parties are being assessed to tax and they have filed the following documents during the course of proceedings before the lower authorities, which had been placed in the paper book at the following pages:- 1. Copy of documents of following related parties:- a. M/s Anant Trading Company i. Confirmed copy of A/c in the books of 46 assessee. ii. 47 Copy of Affidavit confirming cash purchase from assessee. iii. Copy of Income Tax Return for AY 2017-2018 48-50 iv. Copy of daily cash summary. 51-59 b. M/s Sanchay Trading Company i. Confirmed copy of A/c in the books of 60 assessee. Ii 61 Copy of Affidavit confirming cash purchase from assessee. iii. Copy of Income Tax Return for AY 2017-2018 62-64 iv. Copy of daily cash summary. 65-71 c. M/s L.K. Mechanical Works i. Confirmed copy of A/c in the books of 72 assessee. Ii 73 Copy of Affidavit confirming cash purchase from assessee. iii. Copy of Income Tax Return for AY 2017-2018 74-76 iv. Copy of daily cash summary. 77-85 d. M/s Ram & Co..

Thus, when such documentary evidences have been furnished before the lower authorities in the case of abovementioned 4 parties as stated above, such purchases have already been accepted in the cases of four parties and no adverse view has been drawn by the Assessing Officer concerned in their cases. Even the books of accounts of the assessee and all the four parties have been accepted, thus, under such circumstances, the addition as confirmed by the CIT(A), cannot be sustained. The assessee’s reliance on the case of Sh. Arun Garg as cited supra is quite relevant to the facts and circumstances of the case, for which, the following finding is being relied upon:- "Section 68, read with section 69A, of the Income -tax Act, 1961- Cash credit (Bank deposits)- Assessment year 2017-18- During year, assessee receive d cash deposits of certain amount it its housing loan account by respective HUFs of assessee and his two brothers-Assessing Officer noted that it was unexplained cash in demonetized currency and assessee had made fictitious cash in books of account and, thus, made additions on account of same- it was noted that all HUFs had independent identities and they were being assessed to tax and were carrying out their business- They had made cash deposits out of their independent sources and furnished necessary proof for same and, thus, source stood justified- Further, opening stock, purchases, sales and closing stock in hands of assessee was accepted by the Assessing Officer and its books of account was also not rejected- Such entries related to parties in effect stood accepted- Whether, on facts, impugned additions made by the Assessing Officer was unjustified- Held, yes [Para 6.2.0 and 6.2.4] [In favour of assessee]."

Thus, by relying on the above judgement and other case laws as cited by the Ld. Counsel and further since the books of accounts of the assessee as well as of the four parties have not been rejected, the Assessing Officer having already accepted the sales to four parties in the case of the assessee, the addition of Rs. 24 lakhs as confirmed by the CIT (A) cannot be sustained. Accordingly, additions made by the AO and sustained by the Ld. CIT(A) are rejected.

In the result, appeal of the Assessee is partly allowed.