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Facts
The assessee, a brick kiln business, deposited INR 10,90,000/- cash during the demonetization period (AY 2017-18). The Assessing Officer reopened the case and added INR 8,90,000/- as unexplained income under Section 69A read with Section 115BBE, which was subsequently sustained by the Ld. CIT(A). The assessee contended that the cash originated from recorded cash sales, was supported by a cashbook showing sufficient cash in hand, and the books of accounts were duly maintained, audited, and not rejected by the AO.
Held
The Tribunal held that the Revenue failed to bring any adverse material to controvert the assessee's contention that the cash deposits were from cash sales recorded in the books of accounts. Since the assessee's audited books were not rejected and the sales were accepted, the addition made purely on the basis of suspicion was not justified. The Tribunal directed the Assessing Authority to delete the impugned addition.
Key Issues
Whether cash deposits made during the demonetization period, duly recorded in audited books of accounts and sourced from cash sales, can be added as unexplained income under Section 69A when the books are not rejected and no adverse material is presented by the Revenue.
Sections Cited
Section 69A, Section 115BBE, Section 147, Section 144B, Section 145(3), Section 68, Section 139A, Rule 114B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI “SMC” BENCH: NEW DELHI
Before: SHRI KUL BHARAT
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “SMC” BENCH: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.2564/Del/2024 [Assessment Year : 2017-18] Mangat Ram, vs ITO, Vikas Bhatta Co., BKO Kiwana, Ward -1, Panipat, Haryana-132103. Panipat. PAN-AGIPR2718L APPELLANT RESPONDENT Appellant by Shri Navjot Ahuja, Adv. Respondent by Shri Siddharth B.S.Meena, Sr. DR Date of Hearing 04.09.2024 Date of Pronouncement 11.09.2024
ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee is directed against the order passed by Ld.CIT(A), National Faceless Appeal Centre (“NFAC”), Delhi dated 30.03.2024 for the assessment year 2017-18.
The assessee has raised following grounds of appeal:-
“That the Ld. CIT (A) NFAC erred in law and facts in confirming the addition of Rs. 8,90,000/- made by the AO u/s 69A r.w.s 115BBE on account of cash deposited in bank during demonetization period by not considering the submissions filed and decisions relied on by the appellant in proper perspective, without appreciating the facts of the case and without assigning proper reasons and justification. 2. That having regard to the facts and circumstances of the case, the Ld. CIT (A) NFAC erred in sustaining the addition of Rs.8,90,000/- when the source of cash deposited during demonetization was from cash in hand as on 08.11.2016 originated from cash sales, supported with cashbook which was not challenged / rejected in the order passed by the AO, the Ld.CIT(A) NFAC passed the order
erroneously by drawing his inference on the premise that the cashbook was rejected by the AO. 3. That the Ld. CIT(A) NFAC has erred in law and facts in confirming the order of the AO, when the cash deposited in bank during demonetization was duly recorded in audited books of accounts as cash sales and the AO has also not disturbed the audited book results purchases, sales turnover and closing stock. 4. That the Ld. CIT(A)NFAC erred in law & facts in sustaining the addition made u/s 69A when income from a source which is found to be recorded in books, has already been taxed; once as sales receipt and again as unexplained cash credit which would amount to double taxation. 5. The appellant craves leave to file additional grounds/arguments at the time of hearing.” 3. Facts giving rise to the present appeal are that the assessee filed his return of income, declaring total income of INR 4,25,979/-. Thereafter, the Assessing Officer (“AO”) received information regarding the depositing of cash amounting to INR 10,90,000/-. The case of the assessee was re-opened u/s 147 of the Act and the assessment was framed u/s 147 r.w.s. 144B of the Income Tax Act, 1961 (“the Act”) vide assessment order dated 23.03.2022, the AO made addition of INR 8,90,000/- as income from other sources.
Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, sustained the addition and dismissed the appeal of the assessee.
Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. Page | 2
Apropos to the grounds of appeal, Ld. Counsel for the assessee vehemently argued that the authorities below were not justified in making the addition. As the assessee had demonstrated that the cash deposited by him was out of the cash in hand and the sales made during the year. He submitted that the AO has not rejected the books of accounts. Ld. Counsel for the assessee filed written submissions in this regard. For the sake of clarity, the relevant contents of the written submissions are reproduced as under:-
“The assessee is a Prop. concern engaged in the only business of Brick Kiln namely M/s Vikas Bhatta Co. situated in the rural area of Village Kiwana, Distt. Panipat. The nature of the business of the assessee is manufacturing of bricks. Cash sales and corresponding Cash deposit into assessee's Cash Credit (C/c) a/c No. 6174010000360 with Oriental Bank of Commerce has been a regular feature of the business of the assessee. 2. The assessee had filed its return of income, declaring total income of Rs 4,25,980/- on 02.11.2017.The case of the assessee was taken up for re-assessment to verify the source of cash deposit of Rs 10,90,000/- during demonetization period in his aforesaid C/c account. The AO finalized the case by making an impugned addition of Rs 8,90,000 out of Rs 10,90,000 for the amount deposited in bank during demonetization period as unexplained u/s 69A r.w.s. 115 BBE of the act. 3. Aggrieved against this, the assessee preferred appeal before the Ld.CIT (A), who sustained the addition made by the AO. 4. Aggrieved against the order of Ld.CIT (A), the assessee preferred this appeal before the Hon'ble Income Tax Appellate Tribunal. 5. Hon'ble Sir, respectfully it is submitted before your honour that addition u/s 69A of the Act made by the AO which is sustained by Page | 3
the Ld CIT(A) cannot be made in respect of cash deposits recorded in the books of account. Hon'ble Sir, the provisions of Section 69A of the Act is applicable only where money, bullion, jewellery or valuable article is not recorded in the books of account. 6. The assessee is maintaining regular books of accounts which are duly audited by the Chartered Accountant. During the demonetization period the assessee deposited Specified Bank Notes ("SBN") of Rs 10,90,000/- in C/c A/c No. 6174010000360 with Oriental Bank of Commerce (which is assessee's only business bank a/c) as per detail herein under: Referral Page of Paper Book Sr.No. Date of Amount Which is Which is its Whether Deposit Deposited C/c bank Corresponding Cashbook (in Rs.) account entry in provided to Cashbook AO and CIT(A) 1 10.11.2016 2,00,000 52 58 Yes 2. 15.11.2016 3,00,000 52 58 Ys 3. 17.11.2016 3,50,000 52 58 Yes 4. 15.12.2016 1,00,000 52 59 Yes 5. 17.12.2016 1,40,000 52 59 Yes Total 10,90,000
6.1 Your Honour's kind attention is invited to Page 52 of the PaperBook, which is the assessee's Bank account and also at Pages 58 and 59 of the PaperBook which is the Cashbook.A perusal of these documents would reveal that the cash deposited in bank during demonetization is duly found recorded in cash book. 6.2 The closing balance of Rs 13, 65,737.93 as per bank statement is tallied with the bank balance shown in the ITR and audited Balance sheet as on 31.03.2017 Since the entire C/c Bank a/c of the assessee is duly found recorded in books, so addition made by AO u/s 69A which is sustained by Ld CIT (A) is unjustified. 7. Hon'ble Sir, cash sales and the related deposits into the bank have been consistently aligned with the historical pattern not only for the FY 2016-17 but also for the preceding and succeeding assessment
years. The assessee has filed the entire cash book before both AO as well as CIT (A) evidencing the fact that the assessee has been making cash sales in the entire year and then regularly depositing the cash proceeds in the bank account. It is also not the assessee had deposited the cash only during the demonetization period as the assessee has been regularly depositing cash generated from the cash sales being made. Thus this modus operandi of depositing cash is not only being followed in the relevant assessment year but the same has been done by the assessee in the past years and succeeding years also. It does not matter whether the cash deposited in the earlier years were higher or lower the important fact to consider here is that the cash sales and depositing the corresponding cash to bank are being regularly made by the assessee as per prevailing business practice and the same is part and parcel of the assessee's normal business. 7.1 In this regard your honour's kind attention is invited to Page 82 of Paperbook which is the Comparative table of Cash Sales for the FY 2014-15 to FY 2017-18 and also at Page 83 of Paperbook which is Comparative table of Cash Deposit for the FY 2014-15 to FY 2017- 18 which demonstrates regular and prevailing practice of depositing cash to the bank in earlier assessment years as well as succeeding assessment years. 8. Hon'ble Sir, the entire cash deposits made during the demonetization period, into the C/c bank account were sourced Out of the Closing Cash in hand balance of Rs 12,09,023/- available as of November 8, 2016. This balance is duly recorded in the cash book, as per page 58 of the paper book. 8.1 All relevant documents as requisite by the AO, including the Cash Book, Sales Register, Cash Sale invoices, Cash expense vouchers, Bank statement, Audit Report and Balance sheet for the FY 2016-17 were provided. The accounts of the assessee were not rejected. Book
results were accepted by the AO as well as Ld CIT (A) without disturbing sales, purchases, closing and opening stock, and no discrepancies were found in the Cash Book, which showed cash balance of Rs 12,09,023 as of 08.11.2016. 8.2 Since the cash in hand of Rs 12, 09,023 was available and duly recorded in cash book on 08.11.2016, and when the books of accounts were not rejected u/s 145(3), the presumption drawn by the AO that amount was deposited out of unexplained sources during demonetization is arbitrary and, therefore, there was no justification on the part of the AO to make an addition u/s 69A of the Act for the sum which is found recorded in books. 8.3 Reliance is placed on the judgment pronounced by the Hon'ble Apex Court in the case of Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC), Wherein the Hon'ble Apex Court decided the matter in favour of assessee on the ground that it was clear on the record that the assessee maintained the books of accounts according to the mercantile system and there was sufficient cash balance in its cash books and the books of account of the assessee were not challenged by the Assessing officer. If the entries in the books of accounts are genuine and the balance in cash is matching with the books, it can be said that the assessee has explained the nature and source of such deposit. In the case of Lakshmi Rice Mills v. CIT [1974] 97 ITR 258 (Pat.) Hon'ble Patna High Court held as under. "It is, in my view, a fundamental principle governing the taxation of any undisclosed income or secreted profits that the income or the profits as such must find sufficient explanation at the hands of the assessee. If the balance at hand on the relevant date is sufficient to cover the value of the high denomination notes subsequently demonetized and even more, in the absence of any finding that the books of account of the Page | 6
assessee were not genuine, the source of income is well disclosed and it cannot amount to any secreted profits within the meaning of the law." (Ref. Page 14-19 of J-PB) Reliance is also placed on the judgment pronounced by the Hon'ble members of the Coordinate Bench of the ITAT Delhi Bench 'H', New Delhi, in the case of M/s Shivam Industries v. ACIT (ITA No. 1612/Del/2021 for the Assessment Year 2017-18), pronounced on 27.02.2024. In this decision Hon'ble members held that 'The audited books of accounts of the assessee has not been rejected and the sales of the assessee has not been disturbed, then the Revenue Authorities are precluded from making any addition'. (Ref. Page 20-27 of J-PB) The decisions cited supra suggest that once, the assessing officer accepts the books of a/c & the entries in the books of a/c are matched, there is no case for making the addition as unexplained. 9. Hon'ble Sir, during the Financial year 2016-17, a total of Rs. 22,40,000/- was deposited into the bank. Out of this total, Rs. 13,50,000/- (i.e. Rs. 22,40,000 minus Rs 8,90,000) was accepted by both the AO and the Ld CIT(A) as business turnover for the pre- demonetization and post-demonetization periods, additionally, a partial cash deposit of Rs. 2,00,000/- made on November 10, 2016, during the demonetization period, was also recognized as business turnover. However, the remaining cash deposit of Rs. 8, 90,000/- made during the demonetization period was treated as unexplained, despite there being no adverse findings related to purchases and stock.
i) Pre-demonetization Period- (01.4.2016 to 07.11.2016) a) Cash deposited in Bank Rs 10,90,000 b) Cash deposits accepted by AO and CIT(A) Rs 10,90,000 ii) Post Demonetization Period - (01.01.2017 to 31.03.2017) a) Cash deposited in Bank Rs 60,000 b) Cash deposits accepted by AO and CIT(A) Rs 60,000 iii) During Demonetization Period- (08.11.2016 to 31.12.2016) a) Cash deposited in Bank Rs 10,90,000 b) Partial Cash deposits accepted by AO and CIT(A) Rs2,00,000 9.1 Reliance is placed on the judgment pronounced by the Hon'ble members of the coordinate Bench of the ITAT Delhi Bench 'H', New Delhi, in an identical case, Usmaan Khan v. ITO (ITA No. 1636/Del/2024) for the Assessment Year 2017-18, pronounced on 14.08.2024. The judgement held as follows:- Held: "On Perusal of the order of the Ld CIT(A) reveals that the amount of Rs.6,00,000/- was accepted as the turnover of the assessee and rest amount deposited Specified Bank Notes as unexplained income. The AO has accepted the partial deposits made by the assessee as business turnover and rest as unexplained income without giving any reasons. The AO should have been given the reasons on what material the amount deposited in SBNs was the unexplained income of the assessee when the AO has accepted the amount of Rs 600000/- as his turnover the balance cash of Rs 476000/- in SBNs should have also been accepted the turnover of the assessee. The
assessee has discharged the onus that the transaction of the cash deposit was genuine". (Ref. Page 28-31 of J-PB) 10. Your honour's kind attention is invited to the order passed by the AO. Your honour may kindly observe that nowhere in the order passed by the AO there is any whisper of "Cashbook" by the AO. Thus it appears that cognizance of the cashbook reflecting cash in hand on 08/11/2016 and also the amount deposited in bank during demonetization which is duly found to be recorded in books of accounts was not considered in a proper perspective by the AO as well as Ld CIT(A). Ref. Page 166-176 of PB. 11. Hon'ble Sir, cash deposited in bank during demonetization period amounting to Rs 10,90,000/-(SBN) is duly RECORDED IN BOOKS of accounts; was already shown under Sales of goods in ITR on which tax liability is already discharged AND IF the cash deposits are added under section 69A of the Act that will amount to double taxation Once as sales and again as unexplained money which is against the principles of taxation. 11.1 Reliance is placed on the various judgments on the issue and the gist of a few judgments is reproduced below: CIT vs. Kailash Jewellery House (ITA No. 613/2010): The 1. Hon'ble Delhi High Court pronounced on April 09, 2010, the cash deposited out of sales cannot be treated as income u/s 68 of the Act once the sales are not disputed by the revenue. (Ref Page 32 of J-PB) Ramesh Kochar v. ITO (ITA No. 171/Del/2022): The Delhi 2. ITAT SMC Bench, pronounced on April 26, 2022, that if sales have already been accepted as revenue receipts, they cannot be added again as income. This decision underscores that once a revenue receipt is acknowledged, it should not be subjected to double taxation by reclassifying it as income. Page | 9
(Ref. Page 33-45 of J-PB) Jaspreet Kaur v. ITO (ITA No.13/Del/2024): In a recent 3. ruling dated August 8, 2024, the coordinate bench of ITAT Bench "C", New Delhi addressed a similar matter, adhering to the principle that sales, once recognized as revenue, should not be added again as income. (Ref. Page 46-50 of J-PB) Anantpur Kalpana v. ITO (ITA No. 541/Bang/2021) AY 4. 2017-18: ITAT Bangalore pronounced on December 13, 2021. (Ref. Page 51-58 of J-PB) ACIT, Central Circle- 1, Visakhapatnam v. M/s. 5. Hirapanna Jewellers (ITA No. 253/Vizag/2020) ITAT Visakhapatnam pronounced on May 12, 2021. (Ref. Page 59-76 of J-PB) ITO Vs. M/s Zee Bangles Pvt. Ltd. (ITA No. 6. 815/Mum/2022) ITAT Mumbai pronounced on July 18, 2023 held as follows: Held: "We find the AO has failed to justify in applying section 69A to the case of the assessee when the assessee itself declared the cash sales in its return of income duly recorded in the audited books of accounts maintained by the assesse. Therefore, the CIT(A) has correctly held that provision of Sec. 69A of the Act cannot be applied in respect of cash deposited which have been duly recorded in the books of account and had already been declared income in the return of income filed by the assessee. Therefore, the grounds of appeal of the revenue is dismissed". (Ref. Page 77-87 of J-PB)
Further, the assessee was having only one source of income from brick kiln business which is also accepted by AO as well as CIT(A), and therefore provisions of sec. 115BBE are wrongly applied so as to treat the income of the assessee as income from other sources. 13. In spite of all the above facts and documents on record, Ld AO passed the order by making an impugned addition of Rs 8,90,000 vide Para 5 and Para 6 of the Order. placed at Page 77 of Paperbook for the reasons which in nutshell are as under: 13.1(a) The cash deposits were made in parts instead of a single deposit. 13.1(b) The cash deposit ratio in Nov. & Dec 2016 to whole year cash deposit is higher when compared to preceding year. 13.1(c) The names and addresses of the customers were not mentioned in cash bills. 14. For the sake of convenience, Para 5 of the AO's order is summarized in a tabular format. This table contrasts the findings based on the books and documentary evidence on record with the observations made by the AO. Your honour's kind attention is invited to Page 202 of Paperbook which is comparison of findings. 14.1 A perusal of said comparison would reveal to your honour the following facts a) In arriving at the observations made, the AO escaped the amount of opening cash in hand balance as of September 1, 2016, erroneously treated it at "Zero," while the actual cash balance as of September 1,2016 was Rs 6,14,502/-, as reflected in the Cash Book, is documented in Page 58 of the Paperbook. b) The AO accepted the cash sales reported by the assessee for September and October 2016 in their entirety without pointing any defect in Cashbook, Sales Register and Cash Invoices. Page | 11
c) The Cash expenses, supported by Cash vouchers, were provided to the AO. Despite this, the AO hypothetically estimated expenses amounting to Rs 4,22,655. There is no whisper in the order regarding the utilization of this estimated amount. d) The cash balance of Rs 12,09,023/- as of November 8, 2016, derived from documentary evidence, matches exactly with the amount recorded in the Cash Book. 15. Regarding the deposits made in parts, it was submitted during the assessment proceedings, as detailed in the submission dated March 14, 2022 (refer to Para 13, page 4 of the Reply Book, which is placed at Page 96 of the Paperbook), that the banks were overcrowded with long queues. To ensure the safety of the funds, it was necessary for the assessee to make deposits in installments within the time period permitted by the Competent Authority. 15.1 In this context, reliance is placed on the judgment delivered by the Hon'ble ITAT, Delhi Bench "SMC", New Delhi in the case of Tilak Raj Anand v. ITO (ITA No. 1453/DEL/2021, AY: 2017-18, dated March 17, 2022). (Ref. Page 88-92 of J-PB) 16. As regards current year's cash deposit ratio of 48.66% against 11.52% & 10.52% of preceding and succeeding year respectively which is for the cash deposited in Nov & Dec to the whole year, The below furnished comparative charts would reveal to your honour that during the Financial Year 2016-17 there is an overall percentage decline in both the cash sales and cash deposited in bank when compared to its immediate preceding Financial year 2015-16. The decline of 66.97% in depositing Cash during the period of 1st April 2016 to 8th November 2016 was ultimately got deposited in bank during 9th November 2016 to 31st December 2016. Page | 12
a. Chart showing comparison of Total Sales, Cash Sales and Cash Deposited Particulars FY 2014-15 FY 2015-16 FY 2016-17 Total Sales (A) 64,12,855 93,23,230 95,10,600 Cash Sales(B) 34,95,169 70,88,068 37,63,496 Cash Deposit (C) 23,00,000 40,05,000 22,40,000 % of Cash sales of 54.50 76.03 39.57 Total Sales (B)/(A) % Cash Deposit of 35.87 42.96 23.55 Total Sales (C)/(A) b. Chart showing comparison of cash sales Particulars FY 2015-16 FY 2016-17 % (Increase/ Decrease) Total Cash Sales 70,88,068 37,63,496 -46.90 -74.47 Cash sales between 44,42,067 11,34,079 1st April to 8th November Cash sales between 6,06,453 7,63,492 25.89 9th November to 31st December -47.63 Cash Sales between 20,29,548 10,62,800 1st January to 31st March
a. Chart showing comparison of Cash Deposit. Particulars FY 2016-17 % (Increase/ FY 2015-16 Decrease) -78.79 Total Cash Deposit 40,05,000 22,40,000 Cash Deposit between 18,20,000 10,90,000 -66.97 1st April to 8th November 58.72 Cash Deposit 4,50,000 10,90,000 between 9th November to 31st December -2791.67 Cash Deposit 17,35,000 60,000 between 1st January to 31st March
From above, your honour may kindly observe that during the FY 2016-17, there is an overall decrease in Cash Sales and cash deposits in bank. Reliance is placed on the judgment pronounced by the Co-ordinate Bench of ITAT Delhi in the case of ITO Ward-51(5), Delhi vs. Ramesh Chander Rajput, Delhi on 3 May, 2024 ITA No.1189/Del/2022 (A.Y. 2017-18)
Hon'ble members of the tribunal while dismissing the department appeal has held : "In our considered view merely comparing the sales in cash deposits with the earlier assessment years without bringing on record anything against the assessee for making cash sales and cash deposits, in our considered view, the assessee has explained the source of cash deposits and rightly offered to tax in its books of accounts, therefore, it does not call for separate disallowance. Further, considering the detailed findings of the Ld. CIT(A), we do not see any reason to disturb the same. Accordingly, ground raised by the Revenue is dismissed". (Ref. Page 93-123 of J-PB) 17. As regards not mentioning name and addresses of purchaser on Cash bills, it is submitted that entire cash bills issued during the FY 2016-17 were within the range of Rs 9,500/- to Rs 19,854/-. Entire bills irrespective of cash bills or credit bills; were issued in an ascending Chronological Series. Further, there is no requirement under section 139A r.w. rule 114B to mention the name and identity of the purchasers where the sales do not exceed Rs. 2 lakhs, and in the case of assessee, the cash sale bill never exceeded even Rs 20000/-. No specific defect in books of accounts which were duly audited by Chartered Accountant was noticed by the AO. Books of accounts were not rejected u/s 145(3) by the AO. Book results were duly accepted without disturbing Sales, Purchase, opening and closing stock. Thus the erroneous inference drawn by Ld CIT (A) on the premise that the cashbook was rejected by the AO for the reason that there were no mention of names and addresses of the purchasers on the cash bills is unjustified. 17.1 Reliance is placed on the following judgments which suggests that books cannot be rejected merely for the reason that names and addresses of the purchasers were not mentioned in the cash bills. Page | 14
The Pr. Commissioner of Income Tax, Rohtak v. Rajeev 1. Aggarwal (ITA No. 35/2020), (P&H) pronounced on 15.01.2024 wherein, it was held "That the cash sales, cannot be doubted only on account of the fact, that the name and address of the purchaser had not been mentioned." (Ref. Page 124-128 of J-PB) R.B. Jassaram FatehChand (Sugar Deptt.) v. CIT 2. reported at 75 ITR 33 (Bom.) "Books of account cannot be rejected merely because the addresses of purchasers in cash sales not maintained and supplied on demand by ITO." (Ref Page 129-132 of J-PB) Naresh Dayanand Chandnani, New Delhi vs Acit, Circle- 3. 54(1), New Delhi (ITA No. 5339/Del/2017) ITAT Delhi Bench 'E', New Delhi A.Y.2012-13 Order dtd 25 May, 2018. (Ref. Page 133-143 of J-PB) Golechas Jewels v. ITO ITAT Jaipur ITA No. 600/JP/2023 4. Assessment Year 2017-18 Order Dated 10.04.2024. (Ref. Page 144-175 of J-PB) 18. Thus from above legal and factual position, your honour may kindly observe that since the AO accepted the book results and never invoked the provisions of Section 143(5) in the case of the assessee, thus sustaining the addition of Rs 8,90,000/- by the Ld CIT(A) in view of his erroneous inference drawn on the premise that the cashbook was rejected by the AO is unjustified. PRAYER In view of above submissions, it is humbly prayed to your honour that the addition made by the AO u/s 69A r.w.s. 115BBE which is sustained by Ld CIT (A) is against the law and facts and this addition is therefore prayed to be deleted.”
On the other hand, Ld. Sr. DR for the Revenue opposed these submissions and supported the orders of the authorities below. He submitted that Ld.CIT(A) and the AO has given justification for making the addition.
I have heard Ld. Authorized Representatives of the parties and perused the material available on record and gone through the orders of the authorities below. It is stated by the assessee that the total cash as deposited was amounting to INR 10,90,000/- in the Oriental Bank of Commerce. He submitted that closing balance of INR 13,65,737.93 as per bank statement is tallied with the bank balance shown in the Income Tax Return and audited balance sheet as on 31.03.2017. The entire cash sales by the assessee is duly recorded. It was further contended that the assessee has demonstrated the cash sales for the past years and the addition has been made purely on the basis of presumption. Considering the material placed before me, the Revenue has not brought any adverse material controverting the contention of the assessee that the amount so deposited was out of cash sales. The accounts of the assessee are audited. In my considered view, the Revenue ought to have brought some adverse material against the assessee. Admittedly, it is the case of the assessee that the assessee has made cash sales and books of accounts are audited. The Revenue has not rejected the accounts and sales have been accepted. The Assessing Authority ought to have verified the correctness of the claim of the assessee by verifying the stocks of the assessee if there was no mis-match between the sales and purchases, no addition would be called for. Further when the assessee has claimed to have made sales in cash and has been regularly doing so. Therefore, without bringing any adverse material, the Page | 16
AO ought not to have made addition merely on the basis of suspicion that the amount was deposited in cash by the assessee. In the absence of adverse material, I hereby, direct the Assessing Authority to delete the impugned addition. Grounds raised by the assessee are accordingly, allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 11th September, 2024. Sd/- (KUL BHARAT) JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI