INCOME TAX OFFICER, NEW DELHI vs. DELHI FOODSTECH PRIVATE LIMITED, KARAMPURA, NEW DELHI

PER SATBEER SINGH GODARA, JM

This Revenue’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/National
Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1072739640(1), dated
30.01.2025 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Assessee by None
Department by Shri Rajesh Tiwari, Sr. DR
Date of hearing
15.12.2025
Date of pronouncement
15.12.2025
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Case called twice.
None appears at the assessee’s/respondent’s behest. It is accordingly decided ex-parte.
2. Coming to the Revenue’s sole substantive grievance seeking to revive section 68 unexplained cash credits addition of Rs.
6,83,00,000/- representing assessee’s cash deposits during demonetization made in assessment order dated 30th December,
2019, we note that the learned CIT(A)/NFAC’s lower appellate discussion under challenge reversing the same; reads as under:
“5.3
I have perused the assessment order, grounds of appeal and written submission filed by the appellant, remand report submitted by the AO & comments of the appellant carefully. I find from the assessment order that the details called for by the AO were submitted in the month of December, 2019 and very little time was remained with the AO to verify the same. Therefore, the submission was sent to the AO for making inquiry u/s 250(4), if required and to submit the comments. Thus, I find that this is not a case of additional evidence, but the submission of the appellant filed before CIT(A) during appellate proceedings was referred to the AO for verifying the claim made by the appellant. However, I find from the remand report that the AO has not made any inquiry with reference to the claim made by the appellant and reiterated the stand taken by the AO during assessment proceedings. In view of the above facts, the grounds of appeal raised by the appellant are adjudicated in the subsequent paras.

During the course of appellate proceedings, the appellant submitted that During the year cash sale/cash received from debtors of Rs.
1072.47 Lakhs against which assessee has deposited cash of Rs.
772.50 Lakhs in the bank account, out of which Rs. 683.00 Lakhs deposited during the demonetization was disallowed by the Learned
AO. Notably, the cash deposited during demonetization was sourced from the same parties from whom cash was received and deposited both before and after demonetization. The Learned AO has fully accepted cash received during demonetization and post demonetization from same parties and refused to accept cash from same parties with respect to accumulated (SBN) pre demonetization period and deposited during the period 09.11.2016 to 30.12.2016
merely on pretext that same was deposited during demonetization period and hence was suspicious in nature, without any reason or rhymes.

I find from the assessment order that the details called for by the AO were submitted in the month of Dec., 2019 and very little time was remained with the AO to verify the same. Therefore, the submission was sent to the AO for making inquiry u/s 250(4), if required and to submit the comments. Thus, I find that this is not a case of additional evidence, but the submission of the appellant filed before CIT(A) during appellate proceedings was referred to the AO for verifying the claim made by the appellant. However, I find from the remand report that the AO has not made any inquiry with reference to the claim made by the appellant and reiterated the stand taken by the AO during assessment proceedings. Since the AO has failed to do any further inquiry to examine the contentions raised by the appellant, I proceed to decide the grounds of appellant considering the submission filed by the appellant.

I find that the appellant is engaged in trading of milk on wholesale basis. The details turnover of the appellant for the current year and previous years are as under:-

Asstt. Year Turnover
Gross profit
Net Profit
GP Rate
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2017-18
2,49,79,73,60142,10,332
6,43,511
0.17

2016-17
1,65,54,46,06198,78,702
5,24,749
0.60

I further find that the sales upto 08/11/2016 were at Rs.
1,54,14,13,233/-and sale consideration received by cheque till
08/11/2016 was Rs. 1,46,27,77,243/- and the consideration received in cash was Rs. 7,86,35,990/-. The appellant has contended that the cash deposits during demonetization period were made out the cash balance in the books of accounts as on 08/11/2016. Further the appellant has contended that the payment against purchases is made through banking channel but sales to small vendors is made by cash. I also find that the AO had issued notice u/s 133(6) to only 7
parties out of 400 parties to whom sales were made in cash. In response one party had denied to have done the transaction and there was no response by the remaining 6 parties. However, the details submitted by the appellant were not examined by the AO on the ground that the same were furnished at the fag end hence the summons u/s 131 was issued to the director but there was no response. On the contrary the appellant submitted that it had not received the summons and also contended that very short time was given to explain the matter. The AO was given opportunity to examine the matter during remand proceedings, but the AO did not make any further inquiry to verify the genuineness of the contention raised by the appellant and only relied upon the finding given by the AO during assessment proceedings. Thus, I find that the AO has not controverted the contention of the appellant by making the suitable verification or inquiry during remand proceedings. I find that the AO has not doubted the purchases made by the appellant during assessment proceedings or even during remand proceedings. I further find that the AO had not rejected the book results shown by the appellant during assessment proceedings by invoking provisions of section 145(3) of the Act. In the remand report also, the AO has not given any adverse comments about the book results. The AO had not doubted the sales made by the appellant except saying that claim of sale of more milk in festival season cannot be tenable/acceptable if compared with figures of last festival season. In view of the above discussion I find that the books of accounts are audited and the book results shown by the appellant have not rejected by the AO by invoking provisions of section 145(3) but the cash available as on 08/11/2016 is not treated as genuine without proving that the sales are not genuine. Therefore, I find that the addition made by the AO u/s 68 is not justified. Hence, the addition of Rs.6,83,00,000/- made by the AO is hereby deleted and the grounds of appeal raised by the appellant are allowed.”

This is what leaves the Revenue aggrieved.
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Dated: 22nd December, 2025. RK/-