INCOME TAX OFFICER, , AYAKAR BHAWAN vs. KUDU INDUSTRIES LIMITED, BXXXII

Aforesaid appeal by revenue for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 30-08-2024 in the matter of an assessment framed by Ld. AO u/s 143(3) of the Act on 31.12.2019. The revenue is aggrieved by deletion of addition of Rs.82.16 Lacs as made by Ld. AO in the assessment order. Having heard vehement arguments and upon perusal of case records, the appeal is disoposed- off as under.

During assessment proceedings, it transpired that the assessee deposited cash during demonetization period in it bank accounts and accordingly, the assessee was directed to establish the sources thereof. It was stated by the assessee that it was engaged in manufacturing and trading of knitted cloths and readymade garments. The deposits were stated to be sourced out of cash sales made by the assessee. The cash-in-hand as on 08-11-0216 was Rs.114.05 Lacs which was sourced to make deposits of Rs.105.21 Lacs. 3. However, Ld. AO noted that sales in October, 2015 were much less in comparison to Sales in October, 2016. The cash sales in FY 2016-17 were Rs.176.84 Lacs in comparison to sales of Rs.28.99 Lacs in FY 2015-16. Drawing statistical inferences, Ld. AO alleged that the assessee made fake bills and generated cash to make impugned deposits. The cash-in-hand as on 01-10-2016 was Rs.21.52 Lacs which was to be accepted. The cash sales during 01-11-2016 to 08-11- 2016 were to be accepted to the extent of similar sales made in corresponding period of earlier year. The remaining amount of Rs.82.16 Lacs was added u/s 68 r.w.s. 115BBE and the assessment was framed. 4. The Ld. CIT(A) deleted impugned addition on the ground that the assessee’s accounts were duly audited u/s 44AB and cash deposits were sourced out of accounted sales. The sales were reflected in VAT returns. The assessee furnished details of cash sales, copy of bank statements, sales voucher and various other details. The deposits were duly sourced from cash sales and therefore, no such addition could have been made in the hands of the assessee. Aggrieved, the revenue is in further appeal before us. 5. From the facts, it emerges that the assessee is engaged in business activities. The assessee has made cash sales which are duly reflected in the cash book and offered to tax by way of credit to Profit & Loss Account. The sales are duly reflected in the VAT returns. The books of accounts have duly been audited and no defect has been pointed out in the same. The assessee has sufficient cash balance as on 08-11-2016 to make impugned deposits. The sales have been offered to tax and adding the same again would amount to double addition which is impermissible. In our opinion, Ld. AO has merely drawn statistical inferences to disbelieve the claim of the assessee which could not be held to be justified since no evidence has been brought on record to establish that any of the sale bill was not genuine. Under these circumstances, the adjudication of Ld. CIT(A) could not be faulted with. We order so. 6. The appeal stand dismissed. Order pronounced on 13-03-2025. (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT लेखा सद˟ /ACCOUNTANT MEMBER