DEPUTY COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE-04, NEW DELHI vs. RELIANCE RITU KUMAR PVT. LTD.(EARLIER KNOWN AS RITIKA PVT. LTD.), NEW DELHI

PER MANISH AGARWAL, AM : The captioned appeals are arising from the respective orders of the Ld. Commissioner of Income Tax (Appeals)-23, New Delhi [“Ld.CIT(A)”] for respective assessment orders passed by the Assessing Officer [“AO”] as tabulated hereunder:

Sr.
Nos.
ITA Nos.
CIT(A)
Order dated
Assessment
Order dated
Assessment Order under section 1-2
ITA No.2696/Del/2023 &
C.O.-37/Del/2024
[AY 2014-15]
31.07.2023
08.04.2021
153A r.w.s 143(3) of the Income Tax
Act, 1961. 3-4
ITA No.2748/Del/2023 &
C.O.No.-38/Del/2024
[AY 2015-16]
-do-
-do-
-do-

ITA No.2696/Del/2023 & Others
5-6
ITA No.2279/Del/2023 &
C.O.No.-31/Del/2024
[AY 2016-17]
16.05.2023
-do-
-do-
7. [AY 2017-18]
28.08.2023
-do-
-do-
8
[AY 2017-18]
-do-
-do-
-do-
9
[AY 2018-19]
24.11.2023
08.04.2021
-do-
10
[AY 2018-19]
24.11.2023
-do-
-do-
11-12
& C.O.44/Del/2024
[AY 2013-14]
17.11.2023
-do-
-do-
13-14
& C.O.-45/Del/2024
[AY 2014-15]
-do-
-do-
-do-
15-16
& C.O.-46/Del/2024
[AY 2015-16]
-do-
-do-
-do-

ITA No.2696/Del/2023 & Others
ITA No.2279/Del/2023 [Assessment Year 2016-17]
4. Brief facts of the case are that the assessee is a company, engaged in the business of manufacturing and retailing of designer garments, both pre-designed and customized garments. The return of income for the year under appeal was filed u/s 139(1) of the Act on 17.10.2016, declaring total income at INR 1,74,24,900/-. A search and seizure action u/s 132 of the Act was carried out by the Department on Ritika Private Limited Group (“RPL”) and its associates on 29.05.2018 and the business premises of the assessee company were covered under search. During the course of search, books of accounts and other particulars of job work parties namely, M/s Shama Enterprises, M/s Om Enterprises, M/s ADR
Enterprises, M/s ASV Enterprises, M/s BD Fashion and M/s Stitch
Lab were found from the possession of assessee company.
Statements of the Directors of the assessee company and the job workers and certain employees were recorded wherein reference was also made to the books of accounts so found at the premises of assessee company pertaining to job workers. The AO alleged that proprietor of these firms are also the employees of assessee to whom salaries were paid besides, job work charges were also booked in their names with the intention to inflate expenditure and reduce tax liabilities. The AO discussed the statements and inquiries carried out in respect of these job workers in the assessment order and concluded that these job worker parties are bogus entities in whose names assessee booked bogus expenditure in the shape job charges and accordingly, job charges paid at INR
14,68,33,866/- to these parties was held as bogus and addition of the same was made in the hands of the assessee as bogus job

ITA No.2696/Del/2023 & Others workers charge claimed and total income of the assessee was assessed at INR 16,42,58,770/-.

ITA No.2696/Del/2023 & Others were actually receiving salary in their salary account from the assessee for supervising work which has been admitted on oath by them as the only amount received by them and, without prejudice, only amount of Rs. 21,19,200/- could have been deleted by the Ld.
CIT(A) and not the entire amount of Rs. 14,68,33,866/-.
5. The Ld. CIT(A) has erred in disregarding the fact that the only transaction in the bank account of the job work contractors is the transfer of amounts as job work charges which were withdrawn just after deposit with the signed blank cheques handed over to them by the proprietors of the job work contractors in the current account which clearly establishes that these job contractors are not engaged in any regular business activity.
6. The Ld. CIT(A) has erred in holding that the additional evidences and the remand report established the genuineness of the claim of job work charges whereas neither the additional evidence nor the remand report countered the conclusion that the Job workers are merely paid employees additionally lending their names to the assessee.
7. The Ld. CIT(A) has erred in disregarding the fact that the assessee has not provided any conclusive evidence like PAN card or Adhar card to support its contention that the 51 common employeses of the assessee and the Job workers as alleged by the Department were actually different persons with established identities.
8. The appellant craves to add, amend any/all the grounds of appeal before or during the hearing of the appeal.”

ITA No.2696/Del/2023 & Others
4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the additions made under Section 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search.

ITA No.2696/Del/2023 & Others of survey/search relating to these job workers and placed reliance on the same.

ITA No.2696/Del/2023 & Others evidences submitted by the assessee though in the Remand Report,
AO has seriously objected to these additional evidences. He thus submits that the deletion made by Ld.CIT(A) deserves to be restored. He prayed accordingly.

ITA No.2696/Del/2023 & Others workers, labour supervisors are provided the services in the shape of job contractors who manage and control these skill labours and get the job work done from these labours.

ITA No.2696/Del/2023 & Others i.
Sharma Enterprises ii.
OM Enterprises iii.
ADR Enterprises iv.
AVS Enterprises v.
BD Fashion vi.
BD Enterprises vii.
RS Enterprises viii.
Stich Lab

i. That, the assessee is engaged in the business of manufacturing and marketing of various ready-made garments and the assessee has over the years established a niche for itself in the fashion industry.

ii. The employee base of the company includes lower base staff comprising of Office boy/Field Boy. Stores Keeper, store managers etc.
who are on payroll of the company.

iii. However, the garments manufactured by the assessee involve intricate craftmanship and tailoring which is performed by various job workers specializing in various skills and involving extensive manual labour and without whom sale and volume of production done by the company and consequent sale affected by the company would not have been possible.

iv.
That, the assessee operates two units located in Gurugram and Kolkata where garments are primarily manufactured, packed and dispatched to its own stores and to franchisee stores. The assessee company employs job workers who perform various manufacturing and tailoring works assigned to them.

v. In Gurugram, the assessee company has employed 4 such head job workers, namely- ADR Enterprises (Proprietor: Ilyas Khan), ASV
Enterprises
(Properietor:
Vijay
Oratap
Singh).
Om
Enterprises
(Proprietor: Ram Murti Yadav) and Shama Enterprises (Proprietor:
Mohd. Ayub). whereas in Kolkata, there is only one such job worker namely: M/s Stitch Lab (Proprietor Mohabbat Molla).

vi.
Further, the assessee also explained the flow of activities undertaken by the Job workers and the manner of payments made to them.

ITA No.2696/Del/2023 & Others vii.
It was also explained that since majority of these job workers were manual skilled workers belonging to disadvantaged and uneducated sections of the society, the assessee had volunteered to undertake statutory compliances and extend full assistance to ensure that such job workers are in compliance with respective laws.

viii.
The assessee further submitted the details of salary and wages paid by various job work contractors to their employees (PB Pg.
392), copy of Acknowledgement of ITR along with audited financial statements of the respective job work contractors (PB Pg.393-404) and attendance sheet of employees of the job work contractors on the date of search i.e. 29.05.2018 (PB Pg. 405-447). Also, the lot wise process chart showing various processes carried out on a lot is placed at PB
Pg.465-472. 7. All these facts, documents and volume of production and quantum of turnover at which the assessee operates substantiate the fact that the assessee has engaged the services of job workers for manufacturing of the garments.

i. There is no consistent pattern of salary receipt by these employees from these job work parties i.e. in first few months, these employees receive salary from one job work party and then suddenly start receiving salary from any other job work party.

ii. In many of the cases same employee had received payment more than once in single month in same bank account.

iii. In many of the cases same employee had received payment from more than one in house job work party in same month.

iv. In many of the cases same employee had received payment from RPL as well as from in house job work party.

ITA No.2696/Del/2023 & Others
ITA No.2696/Del/2023 & Others
ITA No.2696/Del/2023 & Others
ITA No.2696/Del/2023 & Others
11. As regards the each observation of the AO, the assessee explained that:

A.
In many of the cases same employee had received payment from RPL as well as from in house job work party. as per the list prepared by AO and annexed in Assessment Order at Page 42-48

i. In this regard, it is submitted that there are no common employees either between the job worker parties or between the job worker parties and assessee company and the observations of the Ld. AO are simply based on the names of the employees.

ii. The assessee has further submitted a comparative analysis of the database of employees of the assessee company as well as the employees of job workers. Such comparative analysis is placed at PB
Pg. 486-501. iii.
It is evident from the above-mentioned comparative analysis that though some of the employees share common names, however, they are different persons working under different employers.

iv.
In order to substantiate the different identities of the different persons having common name, the assessee has referred to their unique information in the form of ESI and PF Codes, employee codes,

ITA No.2696/Del/2023 & Others
Father's name, designation, department, address, date of joining date of leaving and date of birth as is evident from comparative chart placed at PB Pg.602-760. v. Thus, the observation of the AO that the same employee had received payments from the assessee as well as job work party is malafide and based on incorrect appreciation of facts .

B.
There is no consistent pattern of salary receipt by these employees from these job work parties Le. in first few months, these employees receive salary from one job work party and then suddenly start receiving salary from any other job work party.

i. In this regard, it was submitted that, the workers/labourers/karigars working under job workers work on rotation basis le they keep on shifting from one job worker to other depending upon the requirement of job work assignment they are engaged in as per their skills.

ii. However, it is relevant to highlight here that at no point of time they were engaged simultaneously with two different job workers or paid multiple times for the same job work.

C.
In many of the cases same employee had received payment more than once in single month in same bank account.

i. In this regard, it was submitted that the transactions highlighted by the AO at Page 42-47 of the Assessment Order pertain to demonetisation period.

ii. During the demonetization period, it was not possible for the job workers to pay their workers/labourers/karigars in cash due to liquidity/cash crunches in the market.

iii.
However, taking into consideration the fact that the workers/labourers/karigars are day to day earners and not all of them maintain bank account, the only option available with the job workers was to credit their salary/wages in bank account of their friends who were having bank accounts at that time.

iv.
This sort of transactions were made post demonetisation as well but only for a limited duration of 3-4 months until the bank account of such workers/labourers/karigars could be opened.

v. It was only due to this reason that the bank account of some of job workers/workers/labourers/karigars reflected multiple credits from different concerns in the same month.

ITA No.2696/Del/2023 & Others vi.
However, no such pattern of credits was observed pre demonetisation which itself justifies the explanation furnished by the assessee.

vii.
Further, the assessee has submitted a sheet containing details of the respective employees, period of salary and employer who has credited those funds in the bank accounts of the persons pointed out by the AO at page 48 of the assessment order. The supporting evidences have also been filed by the assessee as additional evidences which are placed at PB Pg. 474-569

viii
Relevant extracts of salary register of respective employer /job workers have also been submitted by the assessee depicting the recording of salary in their books.

ix. Thus, from the above mentioned explanation and documents furnished by the assessee, it is aptly clear that there is no case of booking of multiple salary expenditure.

ITA No.2696/Del/2023 & Others
16. During the course of remand proceedings, the Id. AO also called upon and recorded the statement of the following labourers working with job contractors. A copy of their statements is placed at below mentioned pages:

i.
Md. Yusuf Ali (copy enclosed at PB pg. no. 752-760) ii.
Jamshed Alam (copy enclosed at PB pg. no. 735-744) iii.
Md. Salam (copy enclosed at PB pg. no. 745-751)

i.
At the time of demonetization some of the workers/labourers/karigars employeed under job workers did not have any bank account in their name and because of said reason they had requested to deposit the salary in the bank accounts of friends or kin from the work place.

ii. Job workers namely ADR Enterprises, Shama Enterprises, ASV
Enterprises and OM Enterprises were independent concerns working for the assessee company on job work basis.

iii.
Workers/labourers/karigars employed under these job workers used to draw salary in cash before demonetization and through cheque in their respective bank account post demonetization.

iv.
The Workers/labourens/karigars had worked for ADR
Enterprises, Shama Enterprises, ASV Enterprises and OM Enterprises at different points of time depending upon the requirement of the work on rotation basis. But have never worked under more than one employer (job worker) at same point of time.

ITA No.2696/Del/2023 & Others proceedings. A copy of statements recorded by the AO is placed at PB Pg.
179-284. 20. Thereafter, the assessee has also submitted detailed written submissions explaining the job work expenses claimed by the assessee. A copy of such written submissions is placed at PB Pg.788-987. 21. The Ld. CIT(A) after considering the detailed submissions, remand report, rejoinder and the plethora of documents furnished by the assessee in regard to the job work expenses and its viability as regards the business profile of the assessee is concerned deleted the disallowance of Rs. 14,68,33,866/- made by the AO by holding as under:

ITA No.2696/Del/2023 & Others ii. In order to perform these complex tasks involving intricate craftmanship and tailoring, job workers have been engaged by the assessee who have further employed labourers to perform different tasks as required.

iii.
These job workers are provided with the raw material on which the job work is performed by these job work parties and final product is delivered to the assessee for ultimate sale in the market.

iv.
The business profile as well as the process flow of the assessee has not been doubted by the AO. No discrepancy has been pointed out by the AO with respect to the quantitative details of material purchased, issued to the job workers, goods received back from job workers after job work, the finished garments dispatched to the stores and the products finally sold to the customers.

v. Moreover, the AO has cherry picked certain portions of the statement of the job workers to portray a malafide and inappropriate picture that these job workers were employees of the assessee. It is submitted that none of the job workers have admitted booking of any bogus expenses by them in the name of salary/wages in their books of accounts. It has nowhere been claimed/stated by them that the workers/karigars/laborers working under the job workers are employees of the appellant company, Infact they have admitted the following facts in their statements:

Sh. Mohabat Molla (proprietor Stitch Lab), has categorically explained the following facts in his statement dated 29.05.2018 (PB Pg. 170-176) under section 131 of the Act:

a) That he is the proprietor of Stitch Lab which is a registered concern. (question no. 2 at page no. 172 of the paper book) b)
That he is working for appellant company as job worker engaged in cutting and stitching job. (question no. 3 at page no. 172
of the paper book) c)
That the job work was carried out through the workers/labourers/karigars working under him. (question no. 3 at page no. 172 of the paper book) d) That he has given the complete details of number of workers/labourers/karigars working under different profiles in his proprietorship concern. (question no. 6 at page no. 174 of the paper book) e) That he has given the detail of salaries/wages being given to these workers/labourers/karigars under his proprietorship concern.
(question no. 7 at page no. 174 of the paper book)

ITA No.2696/Del/2023 & Others
Sh. Ilyas Khan (proprietor ADR Enterprises), has categorically explained the following facts in his statement dated 06.10.2018(PB Pg.
129-139) under section 131 of the Act a)
That he is the proprietor of ADR Enterprises under which he provides manpower in the form of tailors and helpers to the assessee company and also supervises their work. (question no. 10 at page no. 132-133 of the paper book) b) As regard to the day to day operations of his proprietorship concern he has explained that the workers/laborers/karigars of his concern provides stitching, weaving and embroidery services to the assessee company which is being supervised by him. Further, as regards the rate of compensation to his workers/laborers/karigars, he has stated that the same is being decided by the staff of the assessee company. (question no. 13 at page no. 133-134 of the paper book) c)
He has given the complete details of number of workers/labourers/karigars working under different profiles in his proprietorship concern. Further, as regard the appointment of these employees, he has explained that they are being appointed through advertisements and use of personal contacts and the appointment work is personally looked into by him. He also explained that the quantum/number of employees is dependent on the work pressure involved. (question no.18-19 at page no. 135 of the paper book) d) That he has given the detail of salaries/wages being given to these workers/labourers/karigars under his proprietorship concern.
(question no. 20 at page no. 135 of the paper book) e) Lastly, he has also given details of total number of workers/labourers/karigars in his concern as well as in the other job worker proprietorship concern. (question no. 27 at page no. 138
of the paper book)

Sh. Ram Murti Yadav (proprietor Om Enterprises), has categorically explained following facts in his statement dated 06.10.2018(PB
Pg.140-162) under section 131 of the Act a) He has been engaged in providing workers/laborers/karigars from past 7-8 years to the assessee company for job work. (question no. 4 at page no. 141 of the paper book) b) His proprietorship concern Om Enterprises was incorporated in year 2011 and since then he has been working under the said concern. (question no. 7 at page no. 144 of the paper book)

ITA No.2696/Del/2023 & Others c) He has given detail of total number of workers/laborers/karigars working at the premises of the assessee company at 121 Pace City,
Gurgaon under different job workers including Om Enterprises,
Shama Enterprises and RS Enterprises. (question no. 15 at page no.
150 of the paper book) d) He has also explained the different employee codes used for different workers/laborers/karigars working under different job workers. (question no. 16 at page no. 150-151 of the paper book) e) The employees on the payroll of the appellant company were not engaged in the job work process. (question no. 16 at page no. 151 of the paper book) f) He has acknowledged that the database and other documents pertaining to his employees as well as the employees of the appellant company are being maintained at personnel department of the appellant company. (question no. 19 at page no. 152-153 of the paper book) g) Lastly, he has also given detail of rate of salary/wages given to each category of workers/laborers/karigars working under his concern as well as the other job work concerns. (question no. 19 at page no. 152-153 of the paper book)

Sh. Mohd. Ayub (proprietor Shama Enterprises), has categorically explained the following facts in his statement dated 06.10.2018(PB
Pg.112-128) under section 131 of the Act:

a) He has acknowledged that he is working for the assessee company under his proprietorship concern Shama Enterprises which has an employee base of around 180 persons (question no. 20 at page no. 121 of the paper book) b) He has explained that the attendance, salary, ESI and PF etc.
details pertaining to 180 workers working under him are being maintained at 121 Pace City, Gurgaon. For the purpose of distribution of salary he sits with RP Yadav of the assessee company and disburses the payments into the bank account of respective workers. (question no. 20 at page no. 121 of the paper book) c)
He has acknowledged that the total number of workers/labourers/karigars working under Shama Enterprises,
ADR Enterprises, ASV Enterprises and Om Enterprises at the premises of the appellant company is 550. (question no. 21 at page no. 121 of the paper book)

ITA No.2696/Del/2023 & Others d)
He has stated that the attendance record of the workers/labourers/karigars working under Shama Enterprises as well as other job workers is maintained through biometrics machine by employees of appellant company. (question no. 29 at page no.
124 of the paper book) e) Lastly, he has also given detail of rate of salary/wages given to each category of workers/laborers/karigars working under his concern as well as the other job work concerns. (question no. 32 at page no. 125 of the paper book)

Sh. Vijay Pratap Singh (proprietor ASV Enterprises), has categorically explained the following facts in his statement dated 06.10.2018(PB
Pg.817-828) under section 131 of the Act a) He has been engaged in providing workers/laborers/karigars from past 7-8 years to the assessee company for job work. (question no. 7 of page 819-820 of paperbook) b) The salary payments of labour provide by him to the appellant is made from the current account of his proprietorship concem. The cheque book, pass book and net banking detail are with RP Yadav.
His mobile is registered with the bank and he receives SMS from bank time to time with respect to the transactions. (question no. 10 of page 821 of paperbook) c) He has given detail of total number of workers/laborers/karigars working under his proprietorship concern ASV Enterprises and rate at which salaries and overtime allowance are given to the different category of labour including helper, tailors and checkers. (question no. 11 of page 821-822 of paperbook) d) He has explained that before demonetization, he used to the go to bank with staff of the appellant company for cash withdrawal from the bank account of his proprietorship concern, for the purpose of making payment to the labour, however post demonetization bank accounts of the laborers under ASV Enterprises were opened and now salary payments were directly to these bank account of laborers from his current account. (question no. 19 of page 825 of paperbook) vi.
Thus, upon reading the statements in entirety, it is to be noticed that none of the parties have denied rendering of job work services to the assessee. Thus, AO has gone wrong in misinterpreting the statements by picking only a certain portion of the statement. It is a settled law that cherry picking of data is not permissible. Reliance is placed on the following judicial pronouncement in this regard

ITA No.2696/Del/2023 & Others
 RELIANCE
INDUSTRIES
LIMITED
VERSUS
SECURITIES
AND EXCHANGE BOARD OF INDIA & ORS., 2022 (8) TMI 423-SUPREME
COURT, Dated: -5-8-2022

"The aforesaid principle is often referred to as the 'Cherrypicking principle. 58. In the case at hand, SEBI could not have claimed privilege over certain parts of the documents and to the same time, agreeing to disclose some part. Such selective disclosure cannot be countenanced in law as it clearly amounts to cherrypicking."

vii. It is an undisputed fact that the manufacturing activity was not possible without the engagement of job workers.

viii. Also, the assessee has submitted ample evidences to substantiate the genuineness of job work charges paid to the job workers.

ix. The Ld. AO had only doubted the job work expenses on the observations which have been duly rebutted by the assessee by furnishing ample additional evidences and explanations during the course of remand proceedings.

x. Infact, the AO himself has also verified the additional evidences and explanations furnished by the assessee.

xi. Moreover, before sending the remand report, the AO had made independent enquiries by issuing summons to few of the employees of job work parties and recorded their statements which supported the explanations given by the assessee and nothing adverse was observed in the their statements.

xii. It was only after thorough verification that the remand report was issued by the AO wherein no adverse inference was drawn regarding any of the documents or explanations furnished by the assessee. Infact, the AO has duly acknowledged each and every evidence filed by the assessee to rebut the key observations which formed the basis for disallowance of expenses.

xiii. Reliance is placed on the following judicial pronouncement wherein a similar disallowance was made by the AO of job work expenses which was deleted by the Hon'ble Delhi Tribunal in the case of ORIENT CRAFT
LTD., VERSUS DCIT, CENTRAL CIRCLE-II, GURGAON, VICE VERSA, 2021
(10) TMI 154ITAT DELHI, Dated. September 24, 2021. Relevant extract of the judgement is as under "22. In fact following pleadings and documentary evidences were filed to Ld. A.O. during the course of assessment proceeding, which establish the genuineness of the M/s Sai Exports and job work carried out by the said firm for the appellant company.

ITA No.2696/Del/2023 & Others
PB 157-179, 606-634 is the Copy of income tax return, computation of income, Audited Balance sheet, Profit & Loss account and Tax audit report for A.Y. 2013-14 of the job worker M/s Sai Exports

PB 234-255 are the copies of statements of Mr. Mohinder Kumar
Garg, and Mr. Rajiv Poddar recorded during the survey which establish that job work was being done by Mis Sal Exports

PB 598-605 is the copy of letter dated 01.12.2017 filed by the assessee to Ld. A.O. explaining in great details about the job work expenses incurred and paid to M/s Sai Exports

PB 635-657 is the Sample copy of Muster roll of all the employees employed by the firms for 2 months for all the respective years under consideration.

PB 658-740 is the Sample copy of Salary sheet for 2 months of the year under consideration of payment of wages on sample basis.

PB 741-771 is the Sample copy of Bonus register maintained as per requirement of "The payment of Bonus Act' showing actual payment proof of bonus to employees.

PB 772-777 is the Sample copy of Leave register maintained as per legal requirement.

PB 778-795 is the copy of Month wise PF/ESI deduction and deposit along with sample copy of 2 months challans for each year along with ledger account of PF.

PB 800 is the Copy of Licence for registration u/s 6 of the Factory
Act and approval of factory building plan.

PB 807 is the copy of Pollution certificate from Noida Authorities.

PB 826-845 is the copy of Rent Agreement along with complete ledger account of Rent for all the years under consideration.

PB 846-857 is the copy of Sample copy of electricity bills in the name of Landlord M/s Grandways Electronics Pvt. Ltd along with ledger account of electricity all respective years.

PB 858-865 Copy of invoices raised by M/s Sai Export for the job work charges in the name of the appellant company.

PB 866-892 is the Copy of complete Bank statement along with complete bank book for all respective years.

ITA No.2696/Del/2023 & Others
PB 893-900 is the copy of ledger account of M/s Sai Exports together with copy of bank book showing that the payments were made through account payee cheques, TDS deducted.

PB 901 is the copy of TDS returns showing the names of the job workers and copies of Form No. 26AS.

PB 906-907 & 902-905 is the copy of ledger account of M/s Sai
Exports in the books of assessee's company & vice versa, which shows that job work activities done by the said job worker during the year under appeal.

PB 879-892 is the copy of bank book of M/s Sai Export in the books of appellant to show that payment has been made through account payee cheque for fabrication charges paid to the said job worker.

PB 1307-1337 is the Copy of income tax return, computation of income, Audited Balance sheet, Profit & Loss account and Tax audit report for A.Y. 2012-13 of the job worker M/s Sai Exports, which are already enclosed in the paper book for A.Y. 2012-13 in assessee's own case.

PB 4730-4755 is the Copy of income tax return, computation of income, Audited Balance sheet, Profit & Loss account and Tax audit report for A.Y. 2011-12 of the job worker M/s Sai Exports, which are already enclosed in the paper book for A.Y. 2011-12 in assessee's own case.

PB 4756-4757 is the copy acknowledgment of return and computation of income for A.Y. 2010-11 of the job worker M/s Sai
Export, which is already enclosed in the paper book for A.Y. 2011-12
in assessee's own case.

ITA No.2696/Del/2023 & Others workers. Similarly paper book page 778 to 795 is the copy of month wise PF and ESI deduction and deposit and sample copy of two months challan of each year along with ledger account of PF, other evidences of the paper book at pages 800 to 807,826-845, 846-857,
858-865, 866-892, 893-900, 901, 906-907, 902-905, 879-892,
1307-1337, 4730-4755 are of M/s Sai Export and filed the return of income of prior years. All these evidences clearly establish that genuineness of job work charges incurred by the assessee company through M/s Sai Export and therefore the disallowance made in the assessment order and confirmed by CIT (A) is not sustainable even on merit. The adverse observations made by the A.O. in the assessment order have been met by the assessee one by one and paper pages 2969 to 2972 and we have taken ourselves to these adverse observations and response of the assessee and we agree with the Ld. Counsel for the assessee that the adverse observations made by the A.O. are not of substance and misplaced on facts.

ITA No.2696/Del/2023 & Others
20. In order to make verification of these facts, we ask the assessee to file year-wise chart of gross profit earned and total payments made to these parties which were disallowed by the AO.
On perusal of the said chart, we find that despite of claiming these job work expenses, the assessee has been able to maintain the gross profit level in parity with the preceding Assessment years. We also ask the assessee to file the copies of financial statements with respect to the job charge claimed and it is seen that AO has disallowed majority of the job charge expenses claimed by the assessee in all these years and for the year under consideration i.e.
AY 2016-017, as against total fabrication charges claimed at INR
39,42,75,527/- and job work payments of INR 14,88,33,866/- were disallowed by the AO which is around 9.83% of the total turnover.
Ld.CIT(A) while deleting the addition made, had given his findings on all the issues raised by AO and rebutted by the assessee which are in para 15 to 40 of the appellate order. The said observations of Ld. CIT(A) are reproduced as under:-

ITA No.2696/Del/2023 & Others company. The AO is of the belief that the books of accounts are actually controlled and manipulated and bank accounts of these concerns are controlled by the employees of the appellant company so as to obtain undue benefit. The said belief of the AO is mainly based on the fact that books of accounts of the job work concerns were found to be maintained at the factory premises of the appellant company and also the job workers in their respective statements recorded during the course of survey on their registered premises have admitted to have received salary from the appellant company.
16. On perusal of the observations of the AO, there are some important aspects in order to evaluate the genuineness of job work charges, on which the AO is silent in the assessment order. It is noticed that the AO at one place has doubted the utilization of cash being withdrawn from the bank account of the job workers, however, on the other hand there is no adverse remark doubting the presence of in-house job workers and their team of workers/laborers/karigars on the factory premises of the appellant company at the time of search. Why the team of workers/laborers/karigars of job workers was present on the factory premise of the appellant company, when job work receipts of job workers was later withdrawn in the cash and handed over to the appellant company and nothing was paid to workers/laborers/karigars.
The AO has also not addressed to the situation that if the cash withdrawn from the bank account of the job worker was misused/mis- utilized and there is no doubt regarding the services being rendered by the workers/laborers/karigars to the job workers, then how the workers/laborers/karigars employed under job workers who were executing the job work of cutting, weaving, embroidery, tailoring, stitching etc, were compensated/remunerated.
17. Accordingly, I find it relevant to first look into basic facts of the case relating to search and seizure operation, profile of the appellant company, manufacturing process of the appellant company and role of job workers along with their team of workers in the said process, before coming on to the observations of the AO in the assessment order.
18. In this regard, it is noticed that appellant company is engaged in the business of manufacturing and selling of readymade garments under the brand "Ritu Kumar". The factory premises/manufacturing units of the appellant company situated at 280 Udyog Vihar, Phase-2, Gurgaon and 260 Udyog Vihar, Phase-1, Gurgaon were covered in search action under section 132 of the Act. Further, another manufacturing unit of the appellant company in Kolkata having address 138, Bela Ghat,
Bellaghata Road, Kolkata, was covered in survey action under section 133A of the Act. The manufacturing activity carried out by the appellant company on these factory premises was observed by the search/survey team of officers with respect to which there is no adverse remark in the assessment order, accordingly it can be said that the manufacturing of readymade garments on the factory premise of the appellant is not in ITA No.2696/Del/2023 & Others doubt. The purchases made by the appellant company, other manufacturing expenses incurred in this regard and the corresponding sales are also not in doubt by the AO in the assessment order.
19. The AO's doubt in the assessment order only revolves around the job work charges paid by the appellant company. Here, it is relevant to look in the aspect, whether the job workers and their team of workers/karigars with respect to whom these job work charges are claimed by the appellant, were actually present at the factory premises of the appellant company at the time of search action. In this regard, it is noticed that there is no observation/allegation of the AO in the entire assessment order that the said job workers or the teams working under them were not present at the factory premise of the appellant company during the course of search action. Also it is noticed that even in the statements of the job workers, there is no query challenging the presence of the job workers or team of karigars/workers under them on the date of the search at the factory premise of the appellant. Further, the appellant has substantiated the presence of the job workers and the workers/karigars/labourers working under them by submitting copy of attendance sheet of employees of the job workers on date of search le.29.05.2018 before the AO. The AO in the assessment order has nowhere. doubted the said attendance sheet submitted by the appellant.
This proves that the presence of job workers and their team of karigars/workers at the time of search is not in question.
20. It is also noticed that no discrepancy has been pointed out by the AD or the investigation wing with respect to the quantitative details of material purchased, issued to the job workers, goods received back from job workers after job work, the finished garments dispatched to the stores and the products finally sold to the customers. There is not even a whisper of discrepancy/manipulation of records with respect to any of these limbs of the manufacturing process.
21. Now, another question that arises here is whether the manufacturing activity carried out by the appellant was otherwise possible had the company not engaged the alleged job workers for the respective job works carried out by them. The AO in this regard has not doubted the explanation of the appellant that the garment manufacturing activity carried out by it on these factory premises involves craftsmanship and tailoring which is performed in house by various job workers and artisans specializing in various skills and involving extensive manual labour who are basically semi-literate/uneducated tailors and craftmen.
In order to substantiate various job work activities carried out by different jobworkers on the different lot of garments manufactured, the appellant company had submitted a sheet containing detail of job work carried out by different job workers on the different lots of garments under manufacturing. The said data submitted by the appellant is not in doubt in the assessment order.

ITA No.2696/Del/2023 & Others
22. Further, in order to substantiate the job work activity by the job workers the appellant had submitted copy of invoices raised by different job workers along with the detail of lots in which job worked goods were received from the job workers as additional evidences. The sald additional evidences submitted by the appellant were verified by the AD and no adverse remark or any discrepancy in this regard has been pointed out by the AO in the remand report dated 15.02.2023. 23. The appellant has claimed that employees on its payroll are not involved in the core manufacturing activities such cutting, weaving, embroidery, tailoring, stitching etc., such works are assigned to the job workers only.
In this regard it is relevant to quote an extract of submission of the appellant that "employees on the payroll of the assessee company includes employees such as accountants, finance executives/managers,
IT executives/managers, data entry operators, textile designers, garment designers, brand managers, sampling and product development executives and managers, sampling dept workers, creative artists, khaka makers, pattern masters, CAD operators, bespoke executives, production merchandisers, production co-ordinators, production managers, retail merchandiers, business development analysts & managers, marketing executives, ecommerce executives, alteration workers, quality checkers, finishing and packing workers, raw material store room personnels, finished goods store personnels, office boy, field runners, retall executives & managers in showrooms, etc. who are not involved in the job work process of the retail garments traded by the assessee company."
24. It is not the case of the AO where the assessee is alleged to have employed its team of karigars/workers on its payroll claiming them to be engaged in the manufacturing acitivites of cutting, weaving, embroidery, tailoring, stitching etc of garments and simultaneously also engaged job workers for the same work. regard, it is further noted from the question no. 16 of the statement of Ram Murti Yadav (proprietor Om
Enterprises), wherein he has categorically stated that the employees on the payroll of the appellant company were not engaged in the job work process. Meaning thereby, the role of job workers and their team of karigars/workers under them in manufacturing of readymade garments/job work activities such as cutting, weaving, embroidery, tailoring, stitching etc cannot be questioned.
25. Now, another question that arises here is when the role of job workers and their team of karigars/workers in manufacturing of readymade garments/job work activities is established then how were they compensated/remunerated.
26. In order to substantiate the job work charges paid to job workers the appellant had submitted copy of bills raised by the job workers which includes description of job worked garments, their style number, quantity and the rate of jobwork. Further, the appellant has also ITA No.2696/Del/2023 & Others submitted copy of ledger account of these job workers in its books of channel after deduction of TDS. The appellant has also submitted copy of bank statements of the job workers evidencing the job work charges being paid by it. These evidences were submitted as additional evidences which have been verified by the AO during the remand proceedings and no adverse inference has been drawn in this regard by the AO in the remand report.
27. With respect to the team of karigars/workers/labourers working under job workers as their employees, the appellant has submitted copy of month wise register of these karigars/workers/labourers. On perusal of the said registers, it is noticed that each entry salary/wages along with blometric attendance records of In the salary/wages register have been duly signed by the karigars/workers/labourers acknowledging the salary/wages received by them. The appellant has submitted that the salary/wages to the karigars/workers/labourers employed under the job workers were paid in cash before demonetization and after demonetization the said payments were made directly in the bank accounts of karigars/workers/labourers. The said contention has been further supported by the copy of cash books maintained in the books of accounts of the job workers. The appellant has also submitted chart containing details of contributors made to various funds namely EST, provident fund and Labour Welfare Fund alongwith the banking transaction number/ID and date of deposit. These documents/details are submitted in the form of additional evidences under Rule 46A, which have been verified by the AO during the remand proceedings and no adverse Inference has been drawn in this regard by the AO in the remand report. The AO has verified the genuineness of the salary/wages paid by job workers to the karigars/workers/labourers employed under them by recording statement of two of such karigars/workers/labourers during the remand proceedings namely
Jamshed Alam S/o Alimuddin Ansari and Mohd. Salam S/o Mohd.
Mujeeb. The statements recorded by the AO were annexed with the remand report. In these statements Jamshed Alam and Mohd. Salam have stated that they were employed under job workers Shama
Enterprises, Om Enterprises, ADR Enterprises and ASV Enterprises at different point of times. It has also been stated that these job work concerns used to work for the appellant company. Further, it has been stated by them that before demonetization they had received salary in cash and post demonetization they had opened their bank account with HDFC Bank and started receiving salary in the same.
28. In view of the above, analysis of the facts, it can be concluded that the appellant has substantiated the genuineness of job work charges paid by it to the job workers and further the utilization of the said job work receipts by the job workers in making salary/wages payments to their team of karigars/workers/labourers employed under them.

ITA No.2696/Del/2023 & Others
29. Now, coming on to the statements of the job workers relied upon by the AO in the assessment order, it is noticed that AO has cherry picked certain portions of the statements of the job workers and utilized the same to portray a picture in the assessment order that the job workers are mainly employees of the appellant company and the job work charges paid to them are not genuine. He has simply quoted only those portions of statements where these job workers have stated that they used to receive/draw salary from the appellant company, books of accounts/bank accounts are being operated through employees of the appellant company. However, he has not considered the same in entirety. The portion of statements quoted by the AO in the assessment order cannot be read in isolation, there are certain other portions of the statements which has not been considered by the AO.
30. On perusal of these statements it is noticed that the job workers have nowhere denied job work services rendered by them to the appellant company under their proprietorship concerns. These lob workers were well aware of the number of karigars/workers/labourers employed under them as well as the other job workers working at the factory premises of the appellant company. They were also aware of the amount of salary being given to them and how the same is disbursed. In fact one of the job workers Sh. Mohd. Ayub (proprietor Shama
Enterprises), has categorically stated at question no.20 of his statement that he used to sit with RP. Yadav of the assessee company and disburses the payments into the bank account of respective workers which proves the employment of karigars/workers/labourers under the job workers as well as the genuineness of the salary payments being made to them. Another job worker Sh. Ram Murti Yadav (proprietor Om
Enterprises), in his statement has explained different employee codes used for different workers/laborers/karigars working under different job workers and also stated that the employees on the payroll of the appellant company were not engaged in the job work process which proves the role of job workers in the manufacturing process and services being rendered by them. Another job worker Sh. Ilyas Khan (proprietor
ADR
Enterprises) has admitted in his statement that workers/laborers/karigars are being appointed through advertisements and use of personal contacts and the appointment work is personally looked into by him. He also stated that the quantum/number of employees is dependent on the work pressure involved. This proves that the appointment/employment of workers/laborers/karigars was under their control. It is relevant to note here that these are same statements which have been relied upon by the AO in the assessment order and he has not doubted these portion of the statements.
31. Considering the statements in entirety, it is noticed that since these job workers have been working for the appellant company/RPL group from past many years and Initially, at the time when they started their professional carrier with the RPL group, they used to work as the employees of the RPL group. However, as the time passed by and they

ITA No.2696/Del/2023 & Others gained work experience in the RPL group they incorporated their own proprietorship concerns on the suggestion of the management of the RPL group. Since, these job workers belonging to disadvantaged and uneducated section are exclusively working for the appellant company, even after the incorporation of their proprietorship concerns, whatever profit/gain they make out of job work services under the said concerns, they withdraw the same as fixed amount on monthly basis and accordingly, consider the same as salary being drawn by them from the company. However, at the same time, the fact that they are aware of the number of workers/laborers/karigars employed under them, work being assigned to them and the salary being drawn by them and other facts emerging out of the statements of the job worker as noted above, cannot be ignored.
32. This view further draws strength from the statements workers/laborers/karigars of the job workers recorded during the course of verification of from of additional evidences by the AO in remand proceedings which has not been doubted by the AO himself in the remand report and also the statements given by the job workers themselves during the course of reassessment proceedings in the case of Kalamkari Designs Pvt. Ltd. for the AY 2012-13, wherein the actual services render by these job work concerns through their team of workers/laborers/karigars has been confirmed and the contents of these statements have not been doubted by the AO.
33. As regards the allegation that the job workers were not aware of how their books of accounts are maintained, it is noticed from the statements of the job workers recorded at the time of survey on their premises
(which has also been relied upon by the AO in the assessment order) as well as their statements recorded during the course of reassessment proceedings in the case of Kalamkari Designs Pvt Ltd. (as quoted by the AO in the reassessment order), the job workers were well aware of the fact that their books of accounts are being maintained at the factory premises of the appellant company with the help/support of staff of the appellant company and further the books are subject to audit by their
Auditor, CA Alok Periwal.
34. As far as the maintenance of books of accounts, statutory compliances and operation of their bank accounts are concerned, I agree with the contention of the appellant that these job workers are not educated/skilled/technically qualified enough to handle these things on their own, accordingly they rely on the help and support extended to them by the employees of the appellant company. Further, finding of books of accounts of the job workers at the factory premises of the appellant company cannot be taken as the adverse material more so when it has been the case that job workers were exclusively working for the appellant company only and that to at the premises of the appellant company.

ITA No.2696/Del/2023 & Others
35. Further, It is noticed that the AO has portrayed a picture that the books of accounts and bank accounts since not in control of these job workers, the same are being manipulated to the benefit of the appellant company.
However, it is noticed that he has not quoted even a single instance of such alleged manipulation. Having access to complete books accounts of the job workers, the AO either in the assessment order or in the remand report has not pointed out even a single expenditure/claim in the books of accounts of these job workers which is not admissible or not genuine, so as to doubt the job work charges given by the appellant company to these job workers. There is not even a single instance of mishandling/misuse of cash withdrawn from the bank accounts of the job workers.
36. It has further been alleged by the AO that the bank accounts of these proprietorship concerns are controlled by the employees of the appellant company who make payments in the name of job work charges to these concerns and subsequently withdraw the said funds from these bank accounts in cash and the said cash withdrawn is handed over to the management of the appellant company. In this regard, it is noticed that the allegation of withdrawal of cash from the current account of job work concerns and handing over the same to the management of the appellant company is merely the apprehension of the AO in the assessment order which is not supported by any documentary evidence or any incriminating material found during the course of search.. It is noticed that there is no admission of any person on record including staff of the appellant company, job workers and karigars/workers/labourers employed under them, confirming the said apprehension of the AO. Simply because the cash withdrawal from the current accounts of the job workers were made with the help/support of staff of the appellant company, the same cannot be interpreted to mean that the cash withdrawn was handed over to the management of the appellant company. It has been explained by the appellant that its staff was providing technical support to the job workers in maintenance of their books of accounts, making legal compliances and handling their bank accounts, since, the job workers were not educated enough to handle these things on their own. In this regard, it is noticed that the AO in the assessment order has simply turned his blind eye towards the fact that the cash withdrawals were utilized for the payment of salary/wages to the team of karigars/workers/labourers employed under job workers. In this regard, the role of the job workers and the team of karigars/workers/labourers in the garments manufacturing process have already been analyzed in the preceding paras. A collective reading of bank statement of the job workers, cash books and the salary/wages register/ sheets proves that the cash withdrawals were mainly utilized by the job workers for the purpose of making salary/wages payments. The apprehension of the AO in the assessment order further gets negated by the statement on oath given by the Jamshed Alam and Mohd. Salam during the remand proceedings, wherein they have confirmed there employment under the job workers

ITA No.2696/Del/2023 & Others and the salary received by them in cash prior to demonetization period.
The contents of the statements recorded have not been doubted by the AO in the remand report.
37. The observations of the AO with respect to double booking of expenses on account of common employees between job workers and appellant company, employees drawing salary from multiple employers and payment to same person by multiple employers at the same time, made at page no.42 to 50 of the assessment order have been rebutted by the appellant in the additional evidences and the contentions of the appellant stands verified by the AO in the remand report. In the remand report there is no adverse remark of the AO with respect to the submissions and evidences filed by the appellant in this regard.
Accordingly, the said observations of the AO is no more a basis to draw adverse inference against the appellant so as to doubt the genuineness of the job work expenses claimed by it.
38. The AO in the assessment order has also doubted the post demonetization opening of bank accounts in the name of workers/laborers/karigars employed under job workers with the HDFC
Bank on the instruction of RPL group. He has alleged that with money transferred via net banking from job work parties current account to these newly opened bank account showing them as wages/salaries, however, the amount in cash was either withdrawn within a same day or within a short span of time. In this regard, it is noticed that the AO has not brought any corroborative material on record to support his observation. It is again the apprehension of the AO that the money transferred to the bank accounts of the workers/laborers/karigars from the bank account of job workers was misused by the management of the appellant company. The said apprehension of the AO has no legs to stand upon in absence of any evidence on record that the said bank accounts opened post demonetization in the name of workers/laborers/karigars were also managed/operated by the staff of the appellant company. There is no evidence on record of withdrawal of cash from these accounts and handing over the same to the management of the appellant company. There is no statement of any of these account holders admitting misuse/mis-utilization of funds in their bank account.
39. The funds transferred to these bank accounts as salary/wages by the job workers simply cannot be doubted on the basis of immediate withdrawals out of these bank accounts. In this regard, the AO has failed to appreciate that these bank accounts pertains to workers/laborers/karigars who draws very small amount of salary/wages ranging from 5000 to 10000 pm and immediate withdrawals after receipt of salary/wages is a common phenomenon so as to meet their daily needs/day to day expenses. There is no allegation/evidence of operating of these bank accounts by the appellant company's staff for the benefit of company. These

ITA No.2696/Del/2023 & Others workers/laborers/karigars employed under jobworkers are themselves operating these accounts. The genuineness of funds credited to these accounts further gets substantiated from the statement of two of such workers/laborers/karigars namely Jamshed Alam and Mohd. Salam recorded during the remand proceedings by the AC, wherein they have admitted having received salaries in cash prior to demonetization and in cheque/banking transfer post demonetization, Infact payment of salary/wages in cash during period prior to demonetization and thereafter in cheque proves/confirms the very existence/employment of the workers/laborers/karigars under job workers. Had It been a case that no actual workers/laborers/karigars was employed under the job workers cash withdrawal were made from the bank accounts job workers in the name of bogus salary wages expense, post demonetization, opening of bank accounts in the name of the workers/laborers/karigars would not have been possible.
40. In view of above observations, it can be concluded that there is no doubt regarding the job work services rendered by the job workers and their respective team of workers/laborers/karigars employed under them to the appellant company on its factory premises. The job workers are compensated in the form of job work charges which is further utilized by the job workers to pay off salaries/wages/ESI/PF/LWF workers/laborers/karigars working under them. The AO in the remand report has verified the supporting evidences submitted by the appellant in this regard and has not drawn any adverse inference with respect to the genuineness of these payments. The plethora of documentary evidences filed by the appellant, various statements of Job worker and labourers available on record which were recorded at different stages and independent verifications being made by the AO in this regard during the remand proceedings, substantiates the genuineness of the job work expenses incurred by the appellant. Hence, the disallowance of job work expense made by the AO is hereby deleted.”

ITA No.2696/Del/2023 & Others
24. The Hon'ble Delhi Tribunal in the case of Orient Craft Ltd. Vs
DCIT dt. 24.9.2021 reported in 2021 (10) TMI 154 under similar circumstances where the said party was also engaged in same line of business after considering the details filed made following observations:
26. It is seen from the evidences placed before us and relied upon by Ld.
Counsel for the assessee that the job worker M/s Sai Export has raised invoice and payment have been made through account payee cheques and tax having been deducted at source and documents at page 598 to 907 of the paper book establish the existence of the job worker and the job work carried out by M/s Sai Exports. We have also seen the statement of Mr. Mohinder Kumar Garg and Sh. Rajiv
Poddar placed at page234 to 255 of the paper book, which also establish the job work done by M/s Sai Export. We have also referred to sample copy of muster roll of the all the employees, employed by the job worker for two months for all the years involved and so have we seen salary sheet for two months on sample basis, on account of payment of wages Similarly pages 741 to 771 is the sample copy of bonus register showing actual payment proof of bonus to the employees of job workers and paper book page 772 to 777 is the sample copy of Leave register of the employee of the job workers. Similarly paper book page 778 to 795 is the copy of month wise PF and ESI deduction and deposit and sample copy of two months challan of each year along with ledger account of PF, other evidences of the paper book at pages 800 to 807,826-845, 846-857,
858-865, 866-892, 893-900, 901, 906-907, 902-905, 879-892,
1307-1337, 4730-4755 are of M/s Sai Export and filed the retum of income of prior years. All these evidences clearly establish that genuineness of job work charges incurred by the assessee company through M/s Sai Export and therefore the disallowance made in the assessment order and confirmed by CIT (A) is not sustainable even on merit. The adverse observations made by the A.O. in the assessment order have been met by the assessee one by one and paper pages 2969 to 2972 and we have taken ourselves to these adverse observations and response of the assessee and we agree with the Ld. Counsel for the assessee that the adverse observations made by the A.O. are not of substance and misplaced on facts.

ITA No.2696/Del/2023 & Others by the assessee& considered by us are clearly establishing the genuineness of the job work expenses incurred in relation to M/s Sai
Exports. In the face of above mentioned direct documentary evidences, how can the so called circumstantial evidences be relied.
Documentary evidences filed by the assessee before the lower authorities which have been referred by CIT(A) at page 60 of his appeal order to which reference has also been made in the written submissions filed by the assessee and to which our attention was drawn clearly establish & mentioned by us above that job work expense claimed by the assessee to have been paid to Mis Sai
Exports are quite genuine and established in the result, the grounds of appeal in the appeal of the assessee are allowed& the addition of ₹ 1,29,01,751/- is hereby deleted."

ITA No.2696/Del/2023 & Others independently and the services rendered by them are inevitable for the business of the assessee and before us, the revenue has failed to bring on record any further evidence/ material to rebut these details filed by the assessee. The ld. CIT DR support the observations and finding given by the AO in the assessment order which as stated above, are controverted by the assessee by placing on record overwhelming evidences and material based on which ld.
CIT(A) has deleted the disallowance. It is further seen that Ld.CIT(A) has dealt with every aspect and deleted the additions/disallowances made by the AO and before us, the Revenue has failed to controvert such findings of ld. CIT(A) by placing on record any contrary material or providing any details to hold that the observations made by Ld.CIT(A) are not correct or perversed.

ITA No.3053/Del/2023 [Assessment Year 2017-18]
29. Now we take appeal of the assessee in ITA
No.3053/Del/2023 for Assessment Year 2017-18. ITA No.2696/Del/2023 & Others
30. Brief facts of the case are that a search and seizure operation was carried out on the business premises of the M/s. Ritika Pvt.
Ltd. on 29.05.2018. Thereafter, the case of the assessee was centralized in terms of the order passed u/s 127 of the Act dated
11.09.2019 passed by Ld. Pr. CIT, Kolkata. The assessee has originally filed return of income, declared total income at NIL and in response to notice u/s 153A dated 03.02.2020, the return of income was filed on 26.02.2020, declaring NIL income. Thereafter, the notices were issued from time to time and submissions were given by the assessee. The assessee is engaged in the business of manufacturing and retailing of designer garments. During the year under appeal, the assessee has declared loss from the business activity which was claimed as carry forward to subsequent
Assessment years. The AO after considering the submissions made, completed the assessment at a total income of INR 19,60,52,160/- by making disallowance of bogus job charges of INR 17,10,52,156/- and further made the addition of INR 2.50 crores being the amount cash deposited in bank Specified Bank notes (SBN) during demonetization period.

ITA No.2696/Del/2023 & Others
1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.

(ii)
That the abovesaid addition has been confirmed rejecting the detailed submissions and explanations brought on record by the assessee explaining source of cash deposited by the assessee.

ITA No.2696/Del/2023 & Others
8. On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the assessee has been maintaining proper books of accounts and cash sales have been made out of the purchases which have not been doubted and rejected by the AO.

(ii) That the addition has been confirmed despite the fact that the above action of the AD has resulted into double taxation of the same amount in the hands of the assessee.

(ii) That the CIT(A) has erred in confirming the addition without appreciating the fact that the income which has already been declared in return cannot be deemed to be undisclsoed income as per Section 68 of the Act and therefore Section 115BBE is not applicable in this case.

ITA No.2696/Del/2023 & Others
15. That the appellant craves leave to add, amend or alter any of the grounds of appeal.”

ITA No.2696/Del/2023 & Others the sole basis for alleging that cash deposited during demonetization was not the explained money. Ld.AR submits that assessee is maintaining ERP system and a copy of which is still under seizure with the Department since the date of search wherein both the purchases and sales alongwith supporting bills and invoices are available however, no effort was made by the AO for making verification of the claim made by the assessee of cash sales.
It is further submitted by Ld.AR that starting from the purchase of raw material till production of garments, lots were given and after manufacturing Bar Codes are assigned. With the help of these bar codes, stock at each sales outlet is duly controlled and recorded by the assessee company. All these details were available in the accounting software under seizure with the Department. Further, no defect whatsoever was pointed out by the AO in the stock register maintained by the assessee. Ld. AR of the assessee further submits that month-wise details of sales and purchase and cash sales and cash deposit during the previous year and during the year under appeal upto the date of demonetization, copy of VAT returns and service tax returns and every possible details such as details of cash sales were submitted before the AO. The AO has failed to point out any error in the details so submitted by the assessee. It is the submissions of the assessee that no soon the demonetization was announced by the Hon’ble Prime Minster, there was unprecedented surge in customer footfall at all the retail outlets of the assessee as the public was keen to utilize their old currency notes for high-end goods. For the smooth handling of the crowd at such late hours, it was advised to the retail counters to generate bills manually. With respect to the mail dt. 18.11.2016 & 19.11.0216, it is submitted by ITA No.2696/Del/2023 & Others
Ld.AR that immediately after demonetization stores managers were asked to deposit the cash in bank with RBI mandated guidelines and further they were advised to provide the cash position in the opening hours of 09.11.2016 to control and manage the cash available at each branch and there was nothing unnatural in giving these type of instructions. It is further submitted by the assessee that in the month of November, 2016, total sales were of INR
4,40,98,566/- which was consistent with the sales of corresponding period of preceding year where cash sales of INR 4,96,69,527/- was declared. Ld. AR further submits that cash sales made on 08.11.2016 was duly backed by the stock available with the assessee and he submits that there was no shortage of stock vis-a- vis sales made and no defect whatsoever was pointed out by the AO in the stock available with the assessee. Ld.AR further submits that AO has not invoked the provision of section 145(3) and trading results declared were accepted. As per Ld.AR, G.P rate declared in AY 2017-18 was of 43.81% on the turnover of INR 172.26 crores as against G.P. rate of 45.08% on the turnover of 151.48 crores in immediately preceding year and the AO has not doubted such profit rate. It is further submitted by Ld.AR that cash sales made which was claimed as the source of cash deposits during demonetization, was accepted and profit declared on cash sales was also assessed as such. Therefore treating the said cash deposit as unexplained is double taxation of an income firstly, by accepting profits on cash sales and secondly, by making addition of such sales as unexplained cash u/s 68 of the Act. Ld.AR also placed reliance on the various judgements which are part of written submissions. The submission so filed is reproduced as below:

ITA No.2696/Del/2023 & Others
“AO has not rejected the books of accounts AND Cash deposits made from regular sale in business cannot be doubted when the sale is not doubted-
17. At the outset, the assessee has placed the reliance on the judgement of Hon'ble Delhi High Court in the case of CIT v. Kailash Jewellery House in Appeal No. ITA 613/2010, 2010 (4) TMI 1070, Dated April 09, 2010 to held that stock position as well as the cash position as per the books of the assessee had been duly accepted by the Assessing Officer and no any discrepancy had been pointed out by the AO books of accounts.
18. Further reliance in this regard is being on the following judicial pronouncements passed in passed in consonance of above judgement of Hon'ble Delhi High Court-
*
ITAT Delhi in the case of DCIT. V. Subhash Chand Gupta 2023 (5)
TMI 1110, dated- May 25, 2023 wherein it was held that the sales cannot be added u/s 68 unless they are proved as bogus on the basis of some reliable evidences.
*
ITAT Delhi in the case of M/S Godwin Tourism Pvt. Ltd. V. DCIT
2024 (8) TMI 1173, dated-August 21, 2024, held that 19. Considered the rival submissions and material placed on record, we observed that the assessee has submitted cash book in the Paper Book wherein assessee has received share application money on various dates and received the same by way of cash on verification of the cash book submitted before us. We observed that on various dates, the assessee has maintained sufficient cash which are out of share application money and some bank withdrawals and it is substantiated that sufficient source of cash available with the assessee to make the bank deposit of Rs. 8 facs.
After considering the facts on record, we observed that assessee has sufficient cash in hands to make above said dash deposit.
Accordingly, additions made by the Assessing Officer is deleted.
*
In the case of ITO V. M/s J.K. Wood India Pvt Ltd, 2024 (1)
TMI 1262, dated 03.01.2024, Hon'ble ITAT Delhi held that-
14. We have given thoughtful consideration to the factual matrix discussed hereinabove. The undisputed fact is that there is not even a whisper of any defect, error or infirmity in the books of account maintained by the assessee which were audited both under the Companies Act and under the income tax Act. The books of account have been maintained in the regular course of business and cash deposits in the books of account are duly reflected in the books of account.
15. Sales made by the assessee and shown in the regular books of account have been accepted as such by VAT authorities while framing the VAT assessment. The assessee was having sufficient stock in hand for making the impugned sales during the demonetization period and it is not the case of the Assessing Officer

ITA No.2696/Del/2023 & Others that the assessee has shown bogus purchases to show bogus sales to cover up cash deposited during the demonetization period"
*
In the case of JCIT V. M/s Pari Agencies Pvt Ltd. ITA No.
2006/DEL/2023 dated 14.12.2023, Hon'ble ITAT Delhi held that-
11. Nowhere in the assessment order the Assessing Officer has mentioned that after inflating the alleged cash sales the assessee has frequently revised its VAT returns. It is not the case of the Assessing Officer that the assessee has shown alleged cash sales without having sufficient stock in hand during that period. Not a single instance of defect is pointed out in the audited books of account.
The entire assessment is based on assumptions/presumptions, surmises and conjecturers de hors of the facts on record.
*
Further reliance in this regard is being placed on the Judgment of ITAT Visakhapatnam in the case of ACIT, CC 1 Visakhapatnam V. M/S
Hirapanna Jewellers And (Vice-Versa), 2021 (5) TMI 447, dated: 12-5-2021
held as under:
9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the cash receipts represent the rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock represent the sales which the assessee has to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition uls
68 or tax the same us 1158BE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash
Jewellery House (Supra) and the Hon'ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. (supra). Hence, we do not see any reason to interfere with the order of the Ld CITIA) and the same is upheld.”
*
ITAT Delhi in the case of M/S. Fine Gujaranwala Jewellers V. ITO,
2023 (3) TMI 1196-ITAT Delhi, dated March 27, 2023, where Hon'ble
Tribunal observed that where assessee has filed its submiss evidence on record, then it is the duty of AD to act fairly as a reasonable person and examine the fact of the case submissions and placed in the light evidence available and should not come to a conclusion on the basis of surmises and conjectures Tribunal further held that AO without rejecting the books of accounts cannot come to a conclusion that sales are not genuine, relevant finding are as under-
"When the assessee gives any reply or submission or any documents to the Assessing Officer, it is duty of the Assessing Officer to examine the same in the light of the available evidence. In the present case the Assessing and the id CIT(A) have concluded the findings on the bases of conjectures and surmises. The Assessing Officer has to establish the link between the evidence collected by him and the addition to be made. The ITA No.2696/Del/2023 & Others entire case has to be dependent on the Rule of evidence, the assessee in this case explained the source of bank deposits are from cash sales. The Assessing Officer proceeded to disbelieve the explanation of the assessee on the presumption basis without bringing the corroborative maternal on record The Assessing Officer is required to act fairly as reasonable person and not arbitrarily capriciously. The assessment should have been made based on the adequate material and it should stand on its own leg. The Assessing Officer without examining any parties to whom the goods are sold by the assessee, came to conclusion that the sales are not genuine without even rejecting the books of account which is in our opinion is erroneous"
 Further the above decision of the coordinate bench has been followed by ITAT Mumbai in case of SANJAY SUMERMAL SONI VERSUS
INCOME TAX WARD 2 (2), THANE, 2023 (9) TMI 378-ITAT MUMBAI, dated 28.08.2023. 19. Further reliance is being placed on following judicial pronouncements-
*
PCIT VS AGSON GLOBAL PVT LTD [2022] 134 TAXMANN.COM 256
(DELHI) HIGH COURT OF DELHI
*
[2023]
TAXMANN.COM 624 (AHEMDABAD ITAT)
*
SANJAY SUMERMAL SONI VERSUS INCOME TAX WARD 2 (2),
THANE 2023 (9) TMI 378-ITAT MUMBAI
*
RAKESH MALHOTRA VERSUS ITO, WARD-36 (4), CIVIC CENTRE,
NEW DELHI 2024 (5) TMI 1239-ITAT DELHI Dated:-17-5-2024
*
ACIT, CENTRAL CIRCLE-14, NEW DELHI VERSUS DELHI SPOT
BULLION TRADING CO. PVT. LTD. 2024 (5) TMI 95-ITAT DELHI Dated:-23-
4-2024
*
DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1,
COIMBATORE VERSUS MIS DAR PARADISE PVT. LTD. 2024 2024 (8) TMI
741-ITAT CHENNAI Dated: 21-3-2024
*
FASHION ZONE VERSUS THE JCIT WARD III (2), LUDHIANA 2024
(5) TMI 641-ITAT CHANDIGARH Dated: 20-3-2024
*
SUKHDEV KUMAR SOOD PRO. M/S SOOD BROTHERS VERSUS
DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1 (1), RAIPUR 2024 (9)
TMI 250 - ITAT RAIPUR Dated:-13-2-2024
*
BHARAT BHUSHAN GANDHI VERSUS INCOME TAX OFFICER,
WARD 51 (5), DELHI 2024 TMI 1073-ITAT DELHI Dated:-4-1-2024
*
DCIT CIRCLE 4 (2) NEW DELHI VERSUS BAWA JEWELLERS PVT.
LTD. KIRTI NAGAR, WEST, NEW DELHI. 2023 (7) TMI 494-ITAT DELHI
Dated:-9-6-2023
20. In view of the above facts and judicial pronouncement, it is submitted that assessee during the course of assessment proceedings duly explained the source of cash deposit was out of the cash balance available in hand

ITA No.2696/Del/2023 & Others and such cash is generated out of the cash sale made in the regular course of business of assessee.
It is also submitted the Ld.AO has not rejected the books of accounts prepared by the assessee.
21. For the year under consideration, the assessee has maintained proper books of accounts duly audited by Chartered Accountants. Copy of Audited Financial Statements along with Tax Audit Report have been annexed at PB pg no. 12-86. 22. The said Books of Accounts have not been rejected by the AO using the power confined to it u/s 145 of the Act. Moreover, no discrepancy has been pointed out by him in books of accounts, thus accepting the financial statements prepared on that basis. It is also submitted that the assessee had been regularly maintaining its stock register and all the transactions regarding purchases and sales including cash sales are duly recorded.
It is further submitted that AO has not pointed any discrepancy in stock in hand and purchases made by the assessee.
23 The following documents were submitted by the assessee before the id.
AO in the said regard- a) Month wise details of sales and purchases, placed at PB Pg. 495
b) Month wise cash sales and cash deposits from 01.04.2015 to 31.03.2016, placed at PB Pg. 496
c) Month wise cash sales and cash deposits from 01.04.2016 to 31.03.2017, placed at PB Pg. 497
d) Details of cash sales during AY 2016-17 to 2018-19, placed at PB Pg.
490. e) VAT Returns and Service tax returns, placed at PB Pg. 1087-1754
f) Detailed invoice-wise and Outlet-wise cash sales made by assessee company, placed at PB Pg. 501-533
24. It is also pertinent to mention here that AO has duly accepted the stock position as well as the cash position as per the books of the assessee and no any discrepancy had been pointed out by the AO in the books of accounts. The Ld. AO has not raised any specific query wir.t purchases or pin pointed any defect in the evidences/explanations furnished by the assessee. Further, the purchases made by the assessee during the year under consideration were made through proper banking channels.
25. Accordingly, when no adverse inference has been drawn by the Ld. AO in respect of purchases and when these purchases had been duly accepted by him, then the sales made by the assessee out of such purchases cannot be doubted.
Addition of cash deposits made from cash sales which has been already offered for the tax will lead to double taxation which is not permissible in the eyes of law-

ITA No.2696/Del/2023 & Others
26. It is pertinent to mention that taxing the cash deposits which are made from the sales which has been already offered for the tax during the year will lead to double taxation first as sale and secondly as cash deposits made out of such sale which is not permissible in the law.
27. Reliance is being placed on the judgement of ITAT Mumbai in the case of MIS MANGAL ROYAL JEWELS PVT LTD. VERSUS ACIT-CC-1 (3),
MUMBAI AND DY. CIT-CC 4 (3), CENTRAL RANGE-4, MUMBAI VERSUS
MIS MANGAL ROYAL JEWELS PVT LTD. Wherein honourable ITAT has held that -
29. The CIT(A) has considered the details of sales, the stock register and the consistency of the turnover. The assessee has submitted the details of cash sales/receipts and party wise details of sales above and below Rs 2 lakhs were submitted. Further the Ld AR demonstrated the sample Tax Invoice below Rs. 2 lakhs in the demonetization period and the invoice contains, name and address etc. and the Ld AR referred to the details of deposits made out of the cash sales and the assessee has been consistently maintaining the stock of Rs. 21. 10 crs for the FY 2015-16 and for FY 2016-17 it was maintained at Rs. 17 69crs as per the audited financial statements, further the cash sales are part of the stocks maintained by the assessee which is not disputed.
Since the cash sales proceeds/receipts received from the customers are reflected in the Audited Profit & Loss account as income/receipts and again if the cash deposits are added under section 68 of the Act, it will amount to double taxation once as sales and again as unexplained cash credit which is against the principles of taxation The AO has not pointed out any specific adversity but made a generalize additions covering the demonization period, cash deposits and RTGS credits without considering the factual aspects and primary evidences. The AO has failed to make further enquiries on the information filed and the assessee has discharged the initial burden placed by submitting the information and details. We find that the Assessing Officer has not disputed on the quantity of stocks maintained in the register, and stock valuation in the Audited financial statements and also the turnover reflected by way of cash sales and bank credits. The assessing officer has accepted the sales and corresponding nexus with the purchases and closing stock of goods. We find the CIT(A) has dealt on the facts provisions of law, submissions and judicial decisions and has passed a conclusive and reasoned order
Accordingly, we do not find any infirmity in the order of the CIT(A) on the disputed issues and uphold the same and dismiss the grounds of appeal of the revenue.
28. Further reliance is being placed on following judicial pronouncements-
*
ANANTPUR KALPANA VERSUS ITO, WARD-1, KOPPAL 2021
(12) TMI 599-ITAT BANGALORE

ITA No.2696/Del/2023 & Others
*
CHIRAGBHAI S. GADHIYA VERSUS I.T.O., WARD-3 (2) (6),
SURAT. 2023 (7) TMI 1280-ITAT SURAT
*
DCIT, CIRCLE-2 (1) (1), MUMBAI VERSUS MIS. KUNDAN
JEWELLERS PVT LTD 2023 (6) TMI 477-ITAT MUMBAI
*
M/S. RAMA HYGIENIC PRODUCTS PVT. LTD. VERSUS ACIT,
CC-14, DELHI AND (VICE-VERSA) 2023 (10) TMI 202-ITAT DELHI
Dated: -27-9-2023
*
2024 (5) TMI 641-ITAT CHANDIGARH FASHION ZONE
VERSUS THE JCIT WARD III (2), LUDHIANA Dated: 20-3-2024
*
RAKESH MALHOTRA VERSUS ITO, WARD-36 (4), CIVIC
CENTRE, NEW DELHI 2024 (5) TMI 1239-ITAT DELHI Dated: 17-5-
2024
*
ACIT, CENTRAL CIRCLE-14, NEW DELHI VERSUS DELHI
SPOT BULLION TRADING CO. PVT. LTD. 2024 (6) TMI 95-ITAT
DELHI Dated: 23-4-2024
*
ITO, Ward-50 (1), Kolkata Versus Joydeb Kundu LT.A. No.
8/Kol/2021 Dated:-16-5-2023 ITAT Mumbai
*
Dy. Commissioner of Income Tax Circle-3 (1) Visakhapatnam
Versus
Sri
Sriram
Manchukonda and (Vice-Versa)
I.T.A.No.37/Viz/2021, Cross Objection No. 34/Viz/2021 (Arising out of L.T.A.No.37/Viz/2021) Dated: 08-09-2021 ITAT Visakhapatnam
*
Atish Singla, New Delhi vs Ito, Ward-43(7), New Delhi, ITA.No.
1185/Del./2021, Dated: 06.04.2022 ITAT Delhi.
AO cannot reject the explanation offered by the assessee without bringing any clinching evidence on record,
29. It is also relevant to mention here that no other corroborative evidence has been confronted to the assessee by the Ld. AO suggesting any sales made outside his books of accounts.
30. In this regard a reference needs to be made to the provisions of section 68 of the Act. In terms of the said provisions, where any sum it found credited in the books of the assessee, the primary onus is on the assessee to offer bonafide explanations with regard to the sum so credited in the present case under consideration, the assessee submitted a detailed explanation along with relevant explanatory proof that the cash deposits made in the bank account represents the available cash in hand and cash sales made by the assessee during the year under consideration. Accordingly, it can be said that assessee has successfully discharged his primary onus and has duly substantiated the sales made by the assessee and explained the amount in credits appearing in the books of accounts.
31. In view of the above facts there is absolutely no reason for the rejection of the explanation and documentary evidences filed by him on whims and fancies unless something contrary has been brought on record by the Ld. AO. Reliance is placed on the following judicial

ITA No.2696/Del/2023 & Others pronouncements, wherein it has been held that once assessee has explained the nature and source of cash credits, AO need the examine the explanation on the basis of evidence available on records. AO cannot reject explanation offered by assessee without any corroborative evidence.
*
M/S. FINE GUJARANWALA JEWELLERS VERSUS INCOME
TAX OFFICER, WARD: 51 (3) NEW DELHI, 2023 (3) TMI 1196 ITAT
DELHI, Dated.- March 27, 2023
*
COMMR. OF INCOME TAX VERSUS M/S LOVELY EXPORTS
(PVT) LTD, 2008 (1) TMI 575-SC ORDER, Dated: January 11, 2008
*
PRINCIPAL COMMISSIONER OF INCOME TAX-4 VERSUS MIS
HIMACHAL FIBRES LTD., 2018 (3) TMI 672-DELHI HIGH COURT,
Dated: February 28, 2018
*
THE INCOME TAX OFFICER, WARD-1 & 20-1 & TPS,
SHIVAMOGGA, VERSUS MIS. MANASA MEDICALS, 2022 (11) TMI
74-ITAT BANGALORE, Dated: October 31, 2022
*
SAI PETROLEUM VERSUS PRINCIPAL COMMISSIONER OF INCOME-TAX-1, SURAT, 2023 (3) TMI 1312-ITAT SURAT, Dated:
March 17, 2023
*
MR. ATISH SINGLA VERSUS THE INCOME TAX OFFICER,
WARD-43 (7), NEW DELHI., 2022 (4) TMI 451-ITAT DELHI, Dated:
April 6, 2022
Conjectures and Surmises
32. The AO is required to base their findings on facts and evidence rather than relying on surmises or conjectures. It is well established that the AD must examine the case in light of the evidence provided, and any explanation offered by the assessee cannot be rejected arbitrarily without corroborative material to support such rejection.
33. This contention of assessee is also supported by the following judicial pronouncements-
*
LALCHAND BHAGAT AMBICA RAM VERSUS COMMISSIONER
OF INCOME-TAX, BIHAR AND ORISSA, 1959 (5) TMI 12-SUPREME
COURT, Dated. May 14, 1959
*
COMMISSIONER OF INCOME-TAX VERSUS DINESH JAIN
HUF, 2012 (10) TMI 158 DELHI HIGH COURT, Dated. September 28,
2012
*
SR.
VENKATA
RATNAM
VERSUS
COMMISSIONER
OF INCOME-TAX, KARNATAKA I AND ANOTHER, 1980 (8) TMI 73-
KARNATAKA HIGH COURT, Dated. August 14, 1980
*
COMMR. OF INCOME TAX VERSUS MIS LOVELY EXPORTS
(PVT) LTD, 2008 (1) TMI 575-SC ORDER, Dated: January 11, 2008

ITA No.2696/Del/2023 & Others
*
THE INCOME TAX OFFICER, WARD-1 & TPS, SHIVAMOGGA,
VERSUS M/S. MANASA MEDICALS, 2022 (11) TMI 74-ITAT
BANGALORE, Dated: October 31, 2022
*
SAI PETROLEUM VERSUS PRINCIPAL COMMISSIONER OF INCOME TAX-1, SURAT, 2023 (3) TMI 1312-ITAT SURAT, Dated:
March 17, 2023
*
MR. ATISH SINGLA VERSUS THE INCOME TAX OFFICER,
WARD-43 (7), NEW DELHL, 2022 (4) TMI 451 ITAT DELHI, Dated:
April 6, 2022
*
THE INCOME TAX OFFICER WARD-2 VS J.K. WOOD INDIA
PVT. LTD., ITA No. 1550/Del/2020, ITAT Delhi, Dated-03.01.2024
*
JCIT, CENTRAL CIRCLE- 18 VS M/S PARI AGENCIES PVT.
LTD., ITA No. 2006/Del/2023, ITAT Delhi, Dated- 14.12.2023
*
M/S. RAMA HYGIENIC PRODUCTS PVT. LTD. VERSUS ACIT,
CC-14, DELHI AND (VICE-VERSA), 2023 (10) TMI 202, ITAT Delhi,
Dated-27.09.2023
*
ACIT-3 (1) (1) VERSUS M/S. RAMLAL JEWELLERS PRIVATE
LIMITED, MUMBAI, 2023 (9) TMI 673, ITAT Mumbai, Dated-
26.07.2023
No sale can be rejected merely on the ground that sale fo the particular month or period is higher when compared to corresponding pervious period.
34. When assessee has declared the sales backed by corresponding purchases and filed comparative sale for the month April 2016 to November 2016 and corresponding April 2015 to November 2015
and there is no abnormal deviation in sales declared for the month of November 2016 when compared to earlier period.
35 The business of assessee company is retail trade which arises out of its own manufacturing. Most of the customers in such retail trade are cash customers and huge cash sales is no surprise for anyone. The cash sales are normal routine for assessee company be it any month any year. Thus, it is not the case where there is abnormal increase in sales in the first week of November or say during FY 2016-17. 36. It is further pertinent to note that on analysis of the data mentioned in the table, it is evident that during the year under consideration the cash sales to other than cash sales ratio of the assessee company is line with the said ratio of the preceding year.
The said data is reproduced in the below mentioned table
Particulars
AY 2017-18
AY 2016-17
Card
1,28,68,83,418
1,04 31,01,673
Cash
48,83,84,519
48,89,35,729
Total
1,77,62,67,937
1,53,20,37.402
Cash sales ratio
28%
32%

ITA No.2696/Del/2023 & Others
37 Assessee even submitted during assessment proceedings vide reply dated 24.03.2021 that assessee bi-annually in its clearance sale offers and discounts and promotions to sell the stocks mostly in month of January and June Maximum sale reported during any day of this offer period sometimes reached as high as 1.75 cr.
38
Therefore, sale of Rs 2.738 cr on a single day, rather than the day which was a bigger event than a normal promotional day is no big deal
39. No sale can be rejected merely on ground that sale for particular month is much higher. Reliance is placed on the basis of following judicial pronouncements
THE INCOME TAX OFFICER, CORPORATE WARD-2, COIMBATORE.
VERSUS M/S. SAHANA JEWELLERY-EXPORTS PVT. LTD., 2024 (1) TMI
112-ITAT CHENNAI Dated: 20-12-2023
The AO never disputed sales declared by the assessee nor pointed out any discrepancy in purchase or stock in trade held in the business of the assessee before the date of demonetization. In fact, the assessee has filed comparative sales for the month of April, 2016 to November 2016 and corresponding April-15 to November, 2015 and we find that there is no abnormal deviation in sales declared for the month of November, 2016
when compared to earlier periods. It is not a case of the AO that the assessee has declared sales without purchases In fact, as ale declared by the assessee is backed by corresponding purchases, and is supported by necessary purchase bills. The AD could not point out any discrepancy in stock register maintained by the assessee nor made out a case that the assessee has declared sales without there being any stock in hand.
Therefore, in absence of any contrary findings to the effect that the sales declared by the assessee is not backed by any corresponding purchase or supported by stock in hand, in our considered view, simply sales cannot be rejected on the ground that sale for the particular month or period is higher when compared to corresponding previous period in our considered view, there cannot be any reason for uniform sales in all days or month or year. There may be various masons for increase or decrease in sales which depends upon various factors, including festival sales, clearing sales, yearend sales, etc. Therefore, in our considered view the explanation of the assessee that it has received cash from various customers towards sale of jewellery and subsequently the advances have been converted into sales, appears to be bona fide and reasonable.
DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -1,
COIMBATORE VERSUS MIS. DARPARADISE PVT. LTD., 2024 (8) TMI 741-
ITAT CHENNAI, Dated:-21-3-2024
Therefore, in absence of any contrary findings to the effect that the sales declared by the assessee is not backed by corresponding purchase or supported by stock in hand, in our considered view, simply sales cannot

ITA No.2696/Del/2023 & Others be rejected on the ground that sale for the particular month or period is higher when compared to corresponding previous period in our considered view, there cannot be any reason for uniform sales in all days or month or year, There may be various reasons for increase or decrease in sales which depends upon various factors, including festival sales, clearing sales, yearend sales, etc. Therefore, in our considered view, the explanation of the assessee that it has received cash from various customers towards sale of jewellery and subsequently the advances have been converted into sales, appears to be bona fide and reasonable.
23. In this view of the matter and by considering facts and circumstances of the case and also by respectfully following the decision of coordinate bench of ITAT, Chennai in the case of ITO vs M/s Sahana Jewellery
Exports Pvt Ltd (Supra), we are of the considered view that the assessee has satisfactorily explained source for cash deposits into bank account during demonetization period, out of cash balance in hand as on 08
11.2016 and further, said cash in hand has been explained out of known source of income. The Assessing Officer, without appreciating relevant facts simply made additions towards cash deposits u/s 68 of the Act and also brought to tax u/s 11588E of the Act. The id CIT(A), after considering relevant facts, has rightly deleted additions made by the Assessing Officer
Thus, we are inclined to uphold the findings of the Id. CIT(A) and dismiss appeal filed by the revenue.
24. In the result appeal filed by the revenue is dismissed
Therefore, on the basis of above judicial pronouncements, CIT(A) confirming the addition of Rs 2,39,99,886/-made by the AO on account of cash deposited in the bank account treating the same as unexplained is liable to be deleted.”
38. In view of above submission, it was prayed by ld. AR to delete the addition so confirmed by Ld. CIT(A).

ITA No.2696/Del/2023 & Others
ITA No.231/Del/2024 [Assessment Year 2018-19]

(ii)
That the above disallowance has been confirmed despite the fact that such clairn is made in the Revised Income Tax Return
("ITR") filed under section 139(5) as well as ITR filed in response to section 153A of the Act.

(iii)
That the abovesaid disallowance has been confirmed despite the fact that the assessee has fulfilled all the conditions specified under section 80JJAA of the Act and hence eligible for the entire deduction of Rs. 77,63,811/- claimed by the assessee.

ITA No.2696/Del/2023 & Others
(iv)
That the abovesaid disallowance has been confirmed despite the fact the assessee claim for deduction under section 80JJAA of the Act is duly substantiated by the 'audit report' filed by a Chartered accountant in 'Form No.10DA' submitted along with the return of income.

(v)
That the abovesaid disallowance has been confirmed despite the fact that deduction under section 80JJAA of the Act amounting to Rs. 77,63,811/-has already been allowed and accepted in the Intimation order dated 02.10.2019 passed under section 143(1) of the Act.

(vi)
That the abovesaid addition has been confirmed rejecting the detailed submissions and explanations along with the evidences brought by the assessee in this regard.

ITA No.2696/Del/2023 & Others income of INR 9,23,87,300/-. Thereafter, return of income was revised on 31.03.2019 at a total income of INR 4,70,08,030/-. The main reason for revision of return was that there was claim of amortization of expenses on lease hold improvements of INR
4,74,28,909/- which were not claimed in the original return of income filed u/s 139(1) of the Act. Besides this, assessee has claimed further deduction u/s 80JJAA of the Act of INR
32,14,874/- and further added back certain more disallowance of INR 52,64,513/- and accordingly, income declared in original return field u/s 139(1) of the Act of INR 9,23,87,300/- was revised to INR 4,70,08,030/- in the revised return. In response to notice issued u/s 153A, assessee declared same income as was declared in the revised return filed on 31.03.2019. AO in para 3 of the order observed that assessee has reduced the income in the return filed in response to notice u/s 153A as against the income declared in original return filed u/s 139(1) of the Act and accordingly, taking the figure of the income declared u/s 139(1) of the Act at INR
9,23,87,300/- for computing the total income of the assessee.

ITA No.2696/Del/2023 & Others
52. Against such action of Ld. CIT(A), the assessee is in appeal before the Tribunal.

Sr.
No.
ITA No./ CO No.
Asstt. Year
Name of Assessee
Disallowance of job charges
(in INR)
1-2
ITA No.2696/Del/2023 [R]*
& C.O.-37/Del/2024 [A]*
[AY 2014-15]
Reliance Ritu Kumar
Pvt.Ltd.
3,66,50,155/-
3-4
ITA No.2748/Del/2023 [R]
& C.O.No.-38/Del/2024[A]
[AY 2015-16]
Reliance Ritu Kumar
Pvt.Ltd.
6,25,18,345/-
5. ITA No.2944/Del/2023 [R]

[AY 2017-18]
Reliance Ritu Kumar
Pvt.Ltd.
17,10,52,156/-
6. ITA No.128/Del/2024 [R]

[AY 2018-19]
Reliance Ritu Kumar
Pvt.Ltd.
15,57,23,419/-
7-8
ITA No.340/Del/2024 [R]
& C.O.44/Del/2024 [A]
[AY 2013-14]
Kalamkari Designs
Pvt.Ltd.
10,67,07,519/-
9-10 ITA No.341/Del/2024 [R]
& C.O.-45/Del/2024 [A]
[AY 2014-15]
Kalamkari Designs
Pvt.Ltd.
7,48,99,083/-
11-12 ITA No.342/Del/2024 [R]
& C.O.-46/Del/2024 [A]
[AY 2015-16]
Kalamkari Designs
Pvt.Ltd.
5,68,93,239/-

* [A]: Assessee

* [R]: Revenue

ITA No.2696/Del/2023 & Others
59. In the final result, all captioned appeals of the Revenue as well as all Cross-objections of the assessee for AY 2013-14 to AY 2018-
19 are dismissed and both appeals of the assessee in ITA
No.3053/Del/2023 for AY 2017-18 and ITA No.231/Del/2024 for AY 2018-19 are partly allowed.

Order pronounced in the open Court on 17.09.2025. (SUDHIR KUMAR)
JUDICIAL MEMBER

Date:- 17.09.2025
*Amit Kumar, Sr.P.S*