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Facts
During the demonetization period, the assessee deposited Rs. 2,83,19,000/- cash in bank accounts, claiming it was from regular business sales. The Assessing Officer (AO) noted an abnormal increase in cash sales and deposits, especially in October-November 2016, and concluded these were bogus sales to introduce unaccounted cash, adding Rs. 2,64,19,000/- under Section 68. The CIT(A) subsequently deleted this addition.
Held
The ITAT upheld the CIT(A)'s decision, ruling that a mere change in trading patterns during demonetization is not sufficient to make an addition under Section 68 without rejecting the books of accounts or proving that the sales were not genuine. As the AO failed to identify any defects in the assessee's purchases, stocks, or sales, which were supported by audited accounts and VAT returns, the cash deposits, explained as sales proceeds, could not be taxed again, as it would amount to double taxation.
Key Issues
Whether cash deposits explained as sales proceeds during demonetization can be added under Section 68 when books of accounts are not rejected and VAT returns are filed. Whether a mere change in trading patterns justifies an addition without evidence of bogus sales or lack of inventory.
Sections Cited
143(3), 68, 145(3), 44AB, 133(6)
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Income Tax Appellate Tribunal, LUCKNOW ‘A’ BENCH, LUCKNOW
O R D E R PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the Revenue against the orders of the ld. CIT(A), NFAC wherein the ld. CIT(A) has allowed the appeal of the assessee against the orders of the ld. AO passed under section 143(3) for the A.Y. 2017- 18 on 29.12.2019. The grounds of the appeal are as under: - “1- Ld. CIT (A) has erred in law and facts by not appreciating the pattern of cash sales discussed by the Assessing Officer in detail in his order which shows a substantial jump of 38% of total sales in the month of October, 2016 i.e. the period immediately prior to demonetization in November, 2016. Cash sales before and after this period is negligible.
That the appellant craves leave to add or amend any one or more of the grounds of appeal
as stated above as and when need for doing so may arise.
1. 1. 1. 1. 1. 1. 3. Ld. CIT(A) has erred in law and facts in deleting the addition of 3 Rs. 2,64.19.000/- on account of cash deposits u/s 68 of the Income Tax Act 1961.
4. Ld. CIT(A) has erred in law and facts by not appreciating that u/s 68 the AO is not required to reject the books of accounts. The only requirement is that, if the explanation offered by the assessee is not, in the opinion of the Assessing Officer satisfactory, the sum (cash sales) so credited can be charged to income-tax as the income of the assessee of that previous year.”
Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 2. The facts of the case are that during the demonetization period, the assessee deposited cash of Rs. 2,83,19,000/- in its accounts at Punjab National Bank, YES Bank and HDFC bank. In the course of assessment, the ld. Assessing Officer asked the assessee to furnish details containing the sources of such cash deposits duly supported with documentary evidences. A response was submitted and from the same, the ld. AO deduced that the entire cash deposit of Rs. 2,83,19,000/- was in specified bank notes and had been claimed to be out of sales made by the assessee in the regular course of business. He examined the comparative month-wise cash sales and cash in hand position at the end of the month for the F.Ys. 2015-16 and 2016-17 and observed that the total cash sales during the year 2016-17 had increased by 236.51% and the increase in the total cash sales for the period 1.04.2015 to 8.11.2015, was 22.22%. The ld. AO also noted that the total cash deposits in the bank had increased 39.41% in F.Y. 2016-17 as compared to F.Y. 2015-16, that the total amount of cash deposited in the bank from 1.04.2016 to 8.11.2016 was actually lower in percentage terms by .46% but the total deposit of cash in bank from 9.11.2016 to 31.12.2016 was 326.88% higher than the total cash deposit in bank from 9.11.2015 to 31.12.2015. The ld. AO also compared the total cash sales made during the month of October, 2016 till 8.11.2016 viz a viz, the corresponding period of the immediately previous year and observed a percentage increase of 236% between the total cash sales of F.Y. 2016-17 with the previous year and a 791% increase of cash sales in the corresponding period under reference. From the same, the ld. AO concluded that it was crystal clear that the assessee had deliberately shown abnormal rise of cash sales to accommodate unaccounted cash in their books of accounts. He noted that in the F.Y. 2015-16, out of a turnover of 25.3 Crores, there was cash sale of only Rs. 1.07 Crores and also that during F.Y. 2016-17, prior to September, 2016, no substantial tax sale was found reported, but from September, the cash sales increased and it became abnormally high during October and upto the period pre-demonetization in November, 2016. Thereafter, once demonetization was declared, once again Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 negligible cash sale was reported. The assessee had explained cash deposited into the bank as cash in hand, as sale proceeds of goods in the regular course of business of trading Supadi and Kattha and the fact that the same had duly been disclosed in the VAT returns filed with the State Sales Tax Department on which tax had been deposited. However, the assessee had not submitted any justification or explanation for the abnormal cash sale, just shown prior to demonetization. The ld. AO concluded from the same that there could not be any genuine transaction between parties leading to such abnormal results and pure paper transaction had taken place that could not have entitled the assessee to claim the benefit under law. He pointed out that in the A.Y. 2016-17 only 4% of the assessee’s turnover was in cash and previously such huge cash sales had never been made but in the A.Y. 2017-18, when the turnover was only 5,98,56,167/-, the total cash sales were Rs. 3,62,31,285/- and of this in the month of October 2016 alone, cash sales had been shown at Rs. 1,37,21,025/- which went to prove that bogus sales had been credited in the books of accounts to accommodate unaccounted sales. The ld. AO also pointed out that purchase was an important factor and therefore, the purchase pattern had also been verified from the purchase register that was made available during assessment proceedings. He noted that as per the purchase register, the last purchase had been made on 29.09.2016 of Rs. 7,16,000/- from M/s Shivam Masala and thereafter no purchases were evident in the month of October. Thereafter, between 1.11.2016 and 5.11.2016, total purchases of Rs. 1,55,11,009/- had been made and thus examination of this purchase register revealed that the entire purchases were claimed only to have been made from related concerns, upto the period of demonetization only to make a channel for sales and make good available and on hand for sales. The ld. AO also found that the amounts deposited were transferred to M/s Riddhima Jewellers, Monika Jewellers and others, thus no nexus could be established with purchase and payment to persons as regards the VAT returns. The AO held that these were merely a tool used to create a channel so as to give colour to the unexplained cash deposit.
Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 The ld. AO noted that the assessee had claimed that the sale was out of stock found buried in the damaged structure, he noted that a survey had been conducted on the premises of the assessee on 11.12.2015 wherein the statement of the assessee had been recorded and the assessee had accepted that approximately Rs. 1 Crore worth of stock was found buried under the damaged structure. However, he had not furnished any details of the same and after one year, the same stock had been used to make the sales. For this also, the ld. AO concluded that the assessee had gone to shown bogus sales. He thereafter, placed reliance on the decision of the Hon’ble Supreme Court in the case of Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC) and Sunil Siddharthbhai vs. CIT 156 ITR 507 (SC) as also the case of Mcdowell and Co. reported in 154 ITR 148 (SC) to hold that the income tax authorities were allowed to go behind the transactions and examine whether it was genuine or avoidance of tax through colourable devices which was not permissible. Using the VAT returns filed the assessee prior to demonetization, he calculated the daily sales during the period of 39 days prior to demonetization and arrived at a figure of Rs. 19,00,000/- as the probable sales. Regarding realization of cash from debtor, as the assessee had failed to provide any documentary evidences in spite of availing several opportunities, he refused to allow the same. The ld. AO, thereafter, calculated the cash in hand and worked out that the assessee was not left with any cash over and above the opening cash in hand and therefore, no further benefit could be allowed on this count. He pointed out that despite having so much of cash sales, the assessee had only deposited Rs. 60,000/- in their bank accounts which was against the earlier trends exhibited where the assessee used to deposit cash at regular intervals of substantial amounts. Thus, the contention that assessee had substantial cash in hand was not acceptable and only Rs. 19,00,000/- of the amount of Rs. 2,83,19,000/- was explained. Therefore, he disallowed the balance of Rs. 2,64,19,000/- and added the same back under section 68 of the Income Tax Act.
Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 3. Aggrieved with the said order passed by the ld. AO, the assessee filed an appeal before the NFAC. The ld. CIT(A), NFAC observed that the AO had drawn up a chart without any proper basis and on the basis of imaginary figures of sales and cash in hand to show that the assessee had no cash in hand as on 1.09.2016. On the other hand, the assessee had filed a detailed chart showing cash sales, cash withdrawal from bank, cash deposit in bank, cash incurred against expenses and cash in hand which made out that it had total cash in hand of Rs. 50,29,805/- as on 1.04.2016. Furthermore, the assessee had filed a chart before him which demonstrated that there was sufficient cash in hand for making the deposit in the bank account. The ld. CIT(A) noted that as such the source of the cash deposit was explained by the books of accounts. He also noticed that the assessee had filed the details of purchases and sales and also the VAT returns but the AO had not found non-genuine purchases or sales. He had also not rejected the books of accounts maintained by the assessee which had been audited under section 44AB and also as per the Companies Act. Thereafter, the ld. CIT(A) had recounted that the assessee had placed reliance on the following case laws:- i. Agons Global P. Ltd vs. ACIT to 3746/DEL/2019 wherein the ITAT Delhi had held that a mere addition made on the ground that there was deviation in ratio was not proper. When the assessee had regular cash sales and deposit of cash in the bank account, and if nothing incriminating was found to the contrary, then addition under section 68 of such cash sales would amount to double taxation. ii. Dewas Soya Ltd., Ujjain vs. ITO wherein the ITAT Lucknow Bench had held that the claim of the assessee that such addition led to double taxation was correct because on the one hand, the cost of the sales had been taxed and on the other hand, amounts received from the above parties had also been added under section 68 of the Act. In that case, the assessee had been maintaining a sales register and the stock register on a day-to-day basis Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 containing requisite details for the entire year which had been produced by that assessee during the appellate proceedings also. No mistake had been pointed out by the AO in these records maintained by the assessee. Therefore, since the purchases had been held to be genuine, the corresponding sales by any stretch of imagination could not be termed to be a Hawala transaction. For the aforesaid proposition, the ITAT placed reliance on the judgment of the Mumbai Bench in the case of ITO vs. Surana Traders (2005) 93 TTJ 875.
The ld. CIT(A) noted these arguments and held them to be technically correct because the provisions under section 145(3) had not been specifically invoked in the assessment order. Therefore, only the profit on turnover could be assessed as the amounts spent on genuine purchases had to be allowed. He looked at the additions made by the AO under section 68 of Act and was of the view that the conditions to invoke the provisions of section 68 did not prevail in the said case. He held that once cash deposits in the bank account were explained to have originated from sales, section 68 could not be applied. In this case, the assessee had been asked to prove the genuineness of the huge cash sales and in response, the assessee furnished a comparative charts alongwith the cash book, sales register and VAT returns. But the AO rejected the genuineness of huge sale figures prior to demonetization on the basis of lower sales figures in the previous years. He had not doubted about the books of accounts meticulously maintained by the assessee alongwith the VAT returns and sales figures, he had not rejected the books of accounts and had therefore, not disputed the purchases and sales turnover and when the VAT sales returns figures had been accepted by the other Revenue authority, then there was no room left to doubt the actual sales figure. He, therefore, held that adding back the same sales receipts was a clear act of double taxation not permissible in law and stating this he deleted the addition of Rs. 2,64,19,000/- that was made under section 68 of the Act.
Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 5. The Revenue is aggrieved at this order of the ld. CIT(A) and has accordingly come in appeal before us. Sh. Amit Kumar, Addl CIT DR (hereinafter referred to as the ld. DR) representing the Department pointed out that the ld. CIT(A) had erred in law and facts by not appreciating that under section 68 of the Income Tax Act, the ld. AO was not required to reject books of accounts. The only requirement was that the explanation offered by the assessee was not, in the opinion of the AO, satisfactory and if that was so then the sum credited could be charged to income tax as the income of the assessee for the previous year. The ld. CIT(A) had erred by not appreciating that the pattern of cash sales discussed by the AO in detail in his order showed a substantial jump of 38% of total sales in the month of October, 2016 and up till 8.11.2016 while the cash sale before and after this period were negligible. Thus, the ld. AO had clearly brought out the abnormality of situation and also quoted from decisions of the Hon’ble Supreme Court in the case of Sumati Dayal vs. CIT to show that where such abnormalities existed, the AO would be justified in coming to a conclusion that the apparent was not real. The ld. DR drew our attention to the survey findings in page 11 of the assessment order and to page 12 of the assessment order where the AO had brought out the modus operandi of trading businessmen to introduce black unaccounted money by showing bogus sales of goods traded in during the period just prior to announcement of demonetization, where it had been noted that unprecedented sales had been shown by businessmen during the month of October, 2016 and up till 8th November, 2016. The ld. AO had brought out that this was possible because the VAT returns had not been filed for the month of October, 2016 till the date of declaration of demonetization as the due date for filing of the return was 20th November, 2016. Thus, black money holders had been able to manipulate their sales during the period and had introduced their black money in the garb of bogus sales. The stock which was reduced in order to accommodate the bogus sales, was later sold outside the books of accounts and in order to validate their bogus sales, they even paid VAT which varied 5% to 18% in order to give the Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 colour of genuineness to such transaction. The ld. Addl CIT DR also drew our attention to para 4 of the assessment order on page 13 wherein the AO pointed out that the assessee had been given every opportunity to disclose cash sale to accommodate deposit of such high cash but the assessee had not furnished any reliable documents which could reflect real time sales status, month to month and day to day and had therefore, generated vouchers of cash sales at his will taking advantage of his huge stock and business. But he had not been able to show that the huge cash sale was not irregular and was a part and partial of business. Since, the pattern of cash sales was not in accordance with the pattern exhibited by him over a period of time, the AO was justified in coming to the conclusion that the sales were manipulated. The AO had calculated the actual amount of likely sales on the basis of the assessee’s own trends and determined the amount of cash that was unexplained. He had also computed that the assessee could not have cash in hand as on 1.09.2016 as claimed by him and therefore, had brought sufficient material on record for sustaining the said addition. Accordingly, he prayed that the order of the ld. CIT(A) may kindly be over turned and the additions made by the AO may be upheld.
Responding to the aforesaid arguments, Sh. Swarn Singh, C.A. (hereinafter referred to as the ld. AR) submitted that the assessee was a Private Limited Company engaged in the business of Supari and Kattha. It’s turnover was above the prescribed limit for audit under section 44AB and its accounts had been audited by the Auditor both under the Income Tax Act, 1961 and the Companies Act, 2013. No defects have been found in the said audited accounts by the AO and the books of accounts had been duly accepted by the AO which was evident from his assessment order. The assessee had deposited total cash of Rs. 2,83,19,000/-, on different dates, out of cash available in the cash book. The source of cash deposits was the sale proceeds of trading goods entered in the cash book maintained on a regular basis. The issue of cash deposit had been properly explained by the assessee vide its various submissions that was submitted online. The AO had examined the purchases and sales made by the Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 assessee alongwith the books and vouchers. He had also issued notices under section 133(6) for verification of third-party transactions. Nothing adverse had emerged from these verifications. In the circumstances, there was no reason to make any addition under section 68. The ld. AR pointed to page no. 275 to 276 of his paper book which contained details of reconciliation of stock for the F.Y. 2016-17 prepared as per perpetual inventory method to demonstrate that as on 1st November, 2016, the assessee had a stock of Rs. 2,00,30,281/-; that it had made purchases of Rs. 1,47,72,930/- (the details of which were contained in the relevant VAT returns placed on pages 231 to 236 of the paper book and that the cost of goods sold during November was only Rs. 1,32,75,672/-. It was further submitted that on the 1st of October, the assessee had an opening stock of Rs. 4,40,89,630.13/- (the details of which were contained on pages 224-230 of the PB) and the closing stock of Rs. 2,00,30,281/-. Thus the assessee had sufficient inventory for making the sales that it had made. The ld. AR also invited our attention to page 276 of his paper which contained the details of sales made by the assessee to demonstrate that the GP rate for sales made over the course of the assessment year remained consistent. The ld. AR submitted that all the purchases and sales of the assessee had duly been disclosed to the Department of Commercial Taxes of the Government of Uttar Pradesh and filed copies of VAT returns for the months of April, 2016 till February, 2017. The ld. AR argued that before invoking the provisions of section 68, it was necessary for the AO to reject the book results but in this case the same had not been done. During the course of assessment proceedings, the assessee had submitted the details of opening stock, purchases, sales, closing stock and expenses relating to the trading business and none of these had been refuted by the AO. It was submitted that the ld. CIT(A) had considered that these were fully verifiable and therefore, the genuineness of cash sales were proved. The ld. AR placed reliance on the decision of the Delhi Bench of the ITAT in the case of Satya Pal Shiv Kumar vs. ACIT (2025) 173 taxman.com 317 Delhi, wherein it was submitted that on identical facts, the Hon’ble Bench had held that once opening stock, sales and Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 closing stocks have been duly disclosed by the assessee and the same had been accepted in audit, unless deficiency or inaccuracy in inventories was cited by the AO, the rejection of the assessee’s books only on entry of cash deposits during demonetization period was not justified if the other components of trading results and profit margins had been accepted. The ld. AR also placed reliance on the decision of the ITAT Chennai Bench in the case of Dy. CIT vs. Vishwa and Devji Diamonds P. Ltd. (2025) 171 taxman.com 474 (Chennai-Trib) in which the Bench had held that where the assessee had furnished cash book, sales register, purchase register, bank statements alongwith stock registers for the relevant period and the cash sales made by the assessee had been credited in the books of accounts and where no defect have been pointed in such books of accounts of the assessee, taxing the amount again would amount to double taxation and since the assessee had discharged the burden of proving the source of cash deposited in the bank, the impugned addition was liable to be deleted. The ld. AR also questioned the increase in percentage of cash sales that had been computed by the AO. It was pointed out that the increase in cash sales November and December, 2016 was only 5.06% over cash sales in October, 2016. Thus, the assessee had not inflated its cash sales as alleged by the ld. AO. It was submitted that the Diwali period was the main season of sale of Supari and Kattha (Kirana items) in which the assessee dealt and demonetization on 8.11.2016 was immediately preceded by Diwali period. The AO had made addition without any corroborative evidence in support of undisclosed cash sales and the sales had been recorded in the books of accounts as also in VAT returns submitted e-filing, within due dates. Thus, it was not a case of backdating of sales. The Hon’ble ITAT in the case of Agons Global P. Ltd. vs. ACIT (ITA No. 3741 to 3746/DEL/2019) had held that mere addition made on ground that there was a deviation in ratio, was not sustainable. Where the assessee had regular cash sales and deposit of cash in the bank account and if nothing incriminating was found contrary, then addition under section 68 of such cash sales would amount to double taxation. In the case of J.R. Rice India P. Ltd. vs.
Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 ACIT (2023) 157 taxman.com 337 (Del-Trib), it had been held that where the cash sales had resulted in corresponding stocks being reduced in the stock register and there was no other reason to dispute the fact that the cash deposits in bank account had been sourced out of either cash sales made by the assessee during the demonetization period or cash recoveries made from its customers, prior to demonetization period, the impugned addition made by the AO on account of the same was liable to be deleted. Finally, the assessee placed reliance on the decision of the Hon’ble Supreme Court in the case of CIT vs. Devi Prasad Vishwanath Prasad (1969) 72 ITR 194 wherein the Hon’ble Supreme Court had held that even if a cash credit represented income, it was always open to the assessee to show that it was income from a source which had already been taxed. Since, the assessee had already offered the amount for taxation, therefore, there could not be any question of taxing it again. The ld. AR also invited our attention to two other decisions passed by this Bench in the case of Tack Exim Pvt. Limited vs. Asstt. Commissioner of Income Tax, Kanpur (ITA No. 324/LKW/2024) in which this Bench had held that where the sales had been accepted by the AO, he could not have legally brought to tax the cash deposited in the bank being the balance of sale proceeds as this would tantamount to double taxation and our order in and in the matter of M/s Motor Fab Sales P. Ltd. vs. The DCIT/ACIT wherein it had been held that where the book results declared by the assessee had been accepted without any defect having been pointed out, the AO had proceeded on mere suspicion while treating the sale as bogus and making the impugned addition under section 68 of the Act. Accordingly, it was prayed that the order of the ld. CIT(A) may kindly be confirmed and the appeal of the Revenue be rejected.
We have duly considered the facts and circumstances of the case. We noticed from the assessment order that the ld. AO has proceeded to hold the sales of the assessee to be bogus, primarily on account of the fact that the figures of purchases and sales in the period immediately prior to demonetization were Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 at wide variance with the figures of purchases and sales in the corresponding period of the previous year and also at variance with the figures of the previous months in the present financial year. The AO also noted that the purchases on the basis of which the sales were made were effected from certain sister concerns and that too, only upto the period of demonetization. He could not find any nexus between the purchase and the payment made to the persons from whom the purchase had been made and from the same he came to the conclusion that a channel of purchase and sale was created just to give colour to unexplained cash deposit under the garb of sale and for this the VAT return had been utilized as a tool. In consideration of these findings, we observe that a departure in trading patterns cannot in itself be a ground to make an addition by holding such departure to be bogus. It can at best be a ground for further investigation to determine the reason for such departure and if the assessee is unable to prove that the enhanced figures were genuine, then only could the credits purported to be made on account of such sales be brought to tax under the provisions of section 68. However, before section 68 could be invoked, the AO was obliged to demonstrate with evidence as to why the explanation furnished by the assessee for cash sales in that particular period were not acceptable. Such evidence could be the fact that the assessee did not have the inventory to make the sale that it claimed, or that the assessee had not made corresponding purchases which stood subsequently effected by way of sales. Unless the AO could find sufficient material to disturb the trading results declared by the assessee in the audited accounts, he would not be at liberty to regard the explanation offered by the assessee for the said cash deposits as unexplained. We noticed that in the instant case, the AO had voiced suspicion that the purchases had been shown to have been made from sisters concerns only so as to create a channel of purchase and sales to explain the deposit of money. He comes to this conclusion on account of the fact that he was unable to relate payment for such purchases to the actual purchases made. We again note that the suspicion could only be a starting point for further investigation and Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 the purchase of goods on credit cannot in itself be a ground to reject the genuineness of the purchase. We further note from the assessee’s submission that the AO had issued notices under section 133(6), but could not find anything adverse in this regard. On the contrary, we note from the paper book filed by the assessee that the assessee had inventories amounting to Rs. 4,61,89,436.20/- as on the first day of the accounting year and that the assessee is able to explain an opening stock of worth Rs.4.40.89.630.13/- as on 1st October, 2016 as per the perpetual inventory method, prepared on the basis of its VAT returns filed upto September, 2016, which we note had been filed on 20.10.2016 i.e. before the date of demonetization. In the circumstances, there do not appear to be any reasons to question the sales made by the assessee in the month of October, 2016 were not due till later, out of those stocks or even in November, 2016 out of the residual stocks that remained on 31st October, 2016 and purchases made during the period. The ld. AO has pointed out that there was possibility for manipulation in sales on account of the fact that the VAT returns for the month of October, 2016 but we note that even if that were so, it would not change the nature of the receipt from being realization of sales of stocks that was available unless it could be demonstrated that such sales were not made or that the stock to make such sales was not available. No credence can be given to the AO’s views that such sales were shown only with a view to deposit cash during demonetization and the stocks were later on actually sold outside the books of accounts as no such evidence has been brought on record by the AO to back up this suspicion. We are therefore in agreement with the decision of the ITAT Chennai Bench in the case of Dy. CIT vs. Vishwa and Devji Diamonds P. Ltd. (supra) wherein the ITAT Chennai Bench has held that if no defect could be pointed out in the books of accounts and the cash deposited had been stated to be made out of sales, since the assessee had discharged the burden of proving the source of cash deposited in the bank, the impugned addition was fit to be deleted. We are also in agreement with the decision of the ITAT Delhi Bench in the matter of Satya Pal Shiv Kumar vs. ACIT Khanna Sales (India) Pvt. Ltd. A.Y. 2017-18 (supra) and J.R. Rice India (P.) Limited vs. ACIT where also it has been held that unless the trading results as reflected in the books of accounts were rejected, it was not justified for the AO to add the amount back under section 68. Therefore, following our own order the case of Tack Exim Pvt. Limited vs. Asstt. Commissioner of Income Tax, Kanpur (supra) and M/s Motor Fab Sales P. Ltd. vs. The DCIT/ACIT (supra), we hold that since the AO had failed to point out any defect or discrepancy in the purchases, stocks or sales effected by the assessee, which are duly backed up by the assessee’s own final accounts and VAT returns, the addition of Rs. 2,64,19,000/- only on account of change in trading patterns is not justified. Accordingly, we uphold the order of the ld. CIT(A) and dismiss the appeal of the Revenue.