ITO, WARD-2(3)(1), KANPUR, KANPUR vs. KHANNA SALES (INDIA) PVT. LTD., KANPUR
In the result, the appeal of the Revenue is dismissed
ITA 232/LKW/2025[2017-18]Status: DisposedITAT Lucknow16 Feb 2026AY 2017-18
Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudharya.Y. 2017-18 Ito, Vs. Khanna Sales (India) Pvt. Ltd., Ward-2(3)(1), Kanpur 54/34, Nayaganj, Kanpur Pan: Aabck4442N (Appellant) (Respondent) Assessee By: Sh. Swarn Singh, C.A. Revenue By: Sh. Amit Kumar, Addl. Cit Dr Date Of Hearing: 20.11.2025 Date Of Pronouncement: 16.02.2026 O R D E R Per Nikhil Choudhary, A.M.: This Is An Appeal Filed By The Revenue Against The Orders Of The Ld. Cit(A), Nfac Wherein The Ld. Cit(A) Has Allowed The Appeal Of The Assessee Against The Orders Of The Ld. Ao Passed Under Section 143(3) For The A.Y. 2017- 18 On 29.12.2019. The Grounds Of The Appeal Are As Under: - “1- Ld. Cit (A) Has Erred In Law & Facts By Not Appreciating The Pattern Of Cash Sales Discussed By The Assessing Officer In Detail In His Order Which Shows A Substantial Jump Of 38% Of Total Sales In The Month Of October, 2016 I.E. The Period Immediately Prior To Demonetization In November, 2016. Cash Sales Before & After This Period Is Negligible. 2. That The Appellant Craves Leave To Add Or Amend Any One Or More Of The Grounds Of Appeal As Stated Above As & When Need For Doing So May Arise. 3. Ld. Cit(A) Has Erred In Law & Facts In Deleting The Addition Of 3 Rs. 2,64.19.000/- On Account Of Cash Deposits U/S 68 Of The Income Tax Act 1961. 4. Ld. Cit(A) Has Erred In Law & Facts By Not Appreciating That U/S 68 The Ao Is Not Required To Reject The Books Of Accounts. The Only Requirement Is That, If The Explanation Offered By The Assessee Is Not, In The Opinion Of The Assessing Officer Satisfactory, The Sum (Cash Sales) So Credited Can Be Charged To Income-Tax As The Income Of The Assessee Of That Previous Year.”
For Appellant: Sh. Swarn Singh, C.AFor Respondent: Sh. Amit Kumar, Addl. CIT DR
Section 143(3)Section 68
…sales. For this also, the ld. AO concluded that the assessee had gone to shown bogus sales. He thereafter, placed reliance on the decision of the Hon’ble Supreme Court in the case of Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC) and Sunil Siddharthbhai vs. CIT 156 ITR 507 (SC) as also the case of Mcdowell and Co. reported in 154 ITR 148 (SC) to hold that the income tax authorities were allowed to go behind the transactions and examine whether it was genuine or avoidance of tax through colourable devices which was not permissible. Using the VAT returns filed the assessee prior to demonetization, he calculated the d…
