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Judgment
PER BRAJESH KUMAR SINGH, AM:
This appeal by the Revenue is against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘Ld. CIT(A)] dated 16.09.2025 arising out of the assessment order dated 28.12.2019 passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘the Act’) by the ACIT, Circle-45(1), Delhi (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (AY) 2017-18.
At the time of hearing before us, none appeared on behalf of the assessee. This appeal was heard after hearing the Ld. Sr. DR and on the basis of material available on record.
Brief facts of the case: The assessee e-filed his Return of income for the AY 2017-18 on 31.10.2017 declaring total Income of Rs. 18,10,030/- The case was selected for scrutiny. The assessee is proprietor of M/s R K Jewllery and the notice u/s 143(2) of the Act dated 9.8.2018 was issued through ITBA and served upon the assessee.
During the course of assessment proceedings, the AO noted that during the year the assessee had an unpaid liability of Rs. 2,81,91,983/- to M/s Aastha Jewellers. The AO issued a show-cause notice to the assessee informing the assessee that a notice u/s 133(6) of the Act was issued to the M/s Aastha Jewellers, which was returned by the postal authorities with remarks "no such address" and thus asked the assessee to explain the transactions. The assessee submitted its reply but the same was not accepted by the AO and the sum of Rs. 2,81,91,883/- was added to the total income of the assessee. The relevant discussion in the assessment order is reproduced as under:
“4.1.Regarding unpaid liability in respect of M/s Aastha Jewellers, the assessee stated that we are attaching copies of their account of the next two financial years. On perusal of the same it shall be very clear that the complete liability has been discharged by us. Also we would like to emphasize that all the payments have been made account payee cheques.
The assessee was very clearly requested to submit the payment details for the next year(s) along with marked specified bank entry to substantiate the payment actually made to M/s Aastha jewellers as against the sundry creditor amounts. Since, it was stated by the assessee in his explanation that M/s Aashtha Jewellers is absconding as it was declared by a defaulter by the bank, therefore claimed liability of the assessee in respect of M/s Aastha Jewellers could not be verified and despite being specifically asked, the assessee failed to submit the payment details along with marked specified bank entry for the next year(s).
Hence, the payments as claimed by the assessee remained unverified due to lack of evidence. Hence, the unpaid liability of Rs 2,81,91,883/- is added to the total income of the assessee for the year concerned.
Penalty u/s 270A(9) of the Act is initiated on this addition.”
(emphasis supplied by us)
Aggrieved with the said order, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the said addition and the relevant extracts of the said order are reproduced as under:
“5. Addition of Rs. 2,81,91,883/- on Account of unpaid Creditor
The AO's decision to add back the outstanding liability of Rs.2,81,91,883/- to M/s Aastha Jewellers was predicated on two primary findings: (1) a notice issued to the creditor under Section 133(6) of the Act was returned by postal authorities with the remark "no such address," and (2) the assessee failed to provide specific, verifiable proof of payment in subsequent years, despite claiming that the liability had been discharged via account payee cheques. The AO concluded that since the creditor was "absconding" and the payment could not be substantiated, the liability was bogus and warranted an addition under Section 68 of the Act.
Upon a thorough examination of the financial documents, a significant factual discrepancy in the AO's finding comes to light. The appellant's ledger and bank statement for the relevant period (A.Y. 2017-18) reveal that two payments were, in fact, made to M/s Aastha Jewellers. A payment of Rs.1,94,750/- was made via NEFT on 02.03.2017 (with cheque number 024477 noted in the ledger), and another payment of Rs.25,00,000/-was made via RTGS on 21.03.2017 (with cheque number 024482 noted in the ledger). These verifiable bank entries, totaling Rs.26,94,750/-, directly contradict the AO's assertion that the appellant "failed to submit the payment details". The fact that payments were made to the creditor through official banking channels, even if only a partial amount of the total liability, fundamentally undermines the premise that the entire liability was fictitious.
The AO's rationale for the addition is based on the inability to trace the creditor, but this burden cannot be placed solely on the appellant, especially when the transactions are clearly recorded in the books and substantiated by bank statements. This situation closely mirrors a principle established by the Hon'ble Income Tax Appellate Tribunal (ITAT), Delhi in the case of Hind Globe Links, New Delhi vs. ITO (ITA No. 4904/Del/2014). The Hon'ble Delhi ITAT held that "the learned Commissioner of Income Tax (Appeals) has failed to appreciate the basic fact that the sum of Rs.3.57.17,506/- represented closing balance of nine sundry creditors as per books of accounts of the assessee, which was added by learned assessing officer, whereas, purchases made and payments made to the said creditors through account payee cheques were accepted as genuine by the learned assessing officer. Thus, the addition so made... is completely misconceived and misplaced in law and should be deleted, as such". The Tribunal further noted that "mere non production of creditors cannot be taken as a basis to make and sustain the addition" when transactions are documented and payments are made in subsequent years.
Applying this principle, the AO's addition is found to be misconceived. The payments made by the assessee through verifiable banking channels, even if they were for a partial amount, prove the genuineness of the liability. The AO's failure to recognize this evidence and his conclusion that the entire liability was unexplained, based purely on the non-service of a notice, cannot be sustained. The liability, being part of the appellant’s regular business, cannot be treated as unexplained cash credit under section 68 of the Act.”
(emphasis supplied by us)
Aggrieved with the said order, the Revenue is in appeal before us on the following ground of appeal:
“1.On facts and circumstances of the case, the Ld. CITA has erred in deleting the addition of Rs. 2,81,91,883 by ignoring the fact that the burden to prove the existence of the creditor rest with the assessee, ignoring the settled principle that under section 68, the onus squarely lies on the assessee to prove the identity. genuineness, and creditworthiness of creditors and that mere book entries OR partial payments through banking channels do not discharge this onus.
2.On facts and circumstances of the case, the Ld. CITA has erred in deleting the addition of Rs. 2,81,91,883 by ignoring the fact that the burden to prove the existence of the creditor rest with the assessee, ignoring the settled principle that under section 68, the onus squarely lies on the assessee to prove the identity. genuineness, and creditworthiness of creditors and that mere book entries OR partial payments through banking channels do not discharge this onus.”
The ld. Sr. DR supported the order of the AO and the grounds of appeal.
We have heard the ld. Sr. DR and perused the material available on record. In this case, the AO issued a notice u/s 133(6) of the Act to M/s Aastha Jewellers which was returned by the postal authorities with remarks – ‘no such address’. However, the assessee submitted before the AO that M/s Aastha Jewellers was absconding and was declared as a defaulter by the Bank. Further, the assessee submitted before the AO that the complete liability of Rs. 2,81,91,983/- was discharged in the next two financial years. In this regard, the AO asked the assessee to submit the payment details along with the marked specified bank entries in the bank account to substantiate that the payment actually was made to M/s Aastha Jewellers against the sundry creditors balance outstanding in the name of M/s Aastha Jewellers for the next years. According to the AO no such details was furnished by the assessee. On the other hand, the Ld. CIT(A) after examining the relevant details noted that a significant factual discrepancy in the AO's finding comes to light. The Ld. CIT(A) noted that the appellant's ledger and bank statement for the relevant period (A.Y. 2017-18) reveal that two payments were, in fact, made to M/s Aastha Jewellers i.e. a payment of Rs.1,94,750/- was made via NEFT on 02.03.2017 (with cheque number 024477 noted in the ledger), and another payment of Rs.25,00,000/- was made via RTGS on 21.03.2017 (with cheque number 024482 noted in the ledger). The Ld. CIT(A) held that these verifiable bank entries, totaling Rs.26,94,750/-, directly contradict the AO's assertion that the appellant "failed to submit the payment details”. The Ld. CIT(A) further held that the fact that payments were made to the creditor through official banking channels, even if only a partial amount of the total liability, fundamentally undermines the premise that the entire liability was fictitious. Further, in view of the other facts as stated by the Ld. CIT(A) in his order and reproduced earlier in this order and further relying upon the order of the Co-ordinate Bench of the Tribunal in the case of Hind Globe Links, New Delhi vs. ITO (ITA No. 4904/Del/2014), deleted the said addition. In the given facts of the case, we prima facie agree with the findings of the Ld. CIT(A) that the liability of Rs. 2,81,91,883/- is a part of assessee’s regular business, but in the present case, the assessee himself states an attached copies of their account of the next two financial years to show that the complete liabilities were discharged by them and all the payments were made by account payee cheques. The payment of the outstanding sundry creditors balance in the subsequent years was also one of the factors for the deletion of similar addition of sundry creditors by the Co-ordinate Bench of the Tribunal in the case of Hind Globe Links, New Delhi vs. ITO (supra), and the concluding para of the said order is reproduced as below:
“ 21. In the present case also the assessee made the purchases of Rs. 52,28,52,754/-. Against the said purchases an amount of Rs. 4,63,08,977/- was outstanding in the name of 50 creditors. The AO doubted outstanding balance of Rs. 3,57,17,506/- in the name of 9 parties. In the instant case the gross profit rate for the year under consideration of the assessee was at 1.97% in comparison to 5.63% in the preceding year. The AO accepted the fall in G.P rate after considering the explanation of the assessee. However, he did not accept the outstanding balances in the name of 9 creditors for a sum of Rs. 3,57,17,506/-and made the addition u/s 68 of the Act. In our opinion, the said addition was not justified because the provisions of Section 68 of the Act relates to the “cash credit”, however, the amount in question was on account of outstanding balance of the creditors and the purchases from the said creditors had been accepted by the AO. In the present case, there was no cessation of the liability and even the payment made to the creditors in the subsequent year was not doubted, so there was no occasion to make the addition by considering the creditors as bogus for the year under consideration particularly when the purchases from the same creditors were considered by the AO as genuine and even the payments made to them for the amount outstanding at the end of the year under consideration was not doubted in the subsequent year. We, therefore, are of the confirmed view that the addition made by the AO and sustained by the ld. CIT(A) was not justified. For the aforesaid view, we are also fortified by the decision of the ITAT Lucknow Bench ‘A’ (Third Member) in the case of ITO, ward-29(4), New Delhi Vs Zazsons Exports Ltd. (supra) wherein the third member concurred with the view taken by the AM who confirmed the order of the ld. CIT(A) for deleting the similar addition for the following reasons:
"(a)AO doubted the creditors against the purchases and made the addition of the entire amount outstanding against the purchases, however, he did not point out any mistake in the books of account maintained by the assessee in regular course of business and also not doubted method of accounting employed regularly.
(b)The AO did not point out any suppressed sale and inflated purchase. Gross profit rate which was at 12.09% in comparison to the gross profit rate of 9.92% in the preceding year had not been doubted.
(c)The AO did not rebut the contention of assessee that liability against the purchase had been paid in the succeeding year.
(d)The ld. CIT(A) categorically stated that during the assessment proceedings for the A.Y. 2006-07, the assessee filed the confirmation from 8,478 vendors of 11 mandies, so there was no occasion to doubt the supplier/creditor against the purchases when the trading results had not been disturbed
(e)When the AO did not doubt the purchases and the gross profit rate, there was no occasion to doubt the corresponding characters of the purchases."
22.Considering the totality of the facts as discussed hereinabove, the impugned addition sustained by the ld. CIT(A) is deleted.
However, as noted above in the present case, the assessee claimed before the AO that the entire liability of Rs. 2,81,91,883/- was liquidated in the next two years, but this aspect has not been discussed by the Ld. CIT(A) and the AO in the assessment order stated that no such details were furnished before him. To reiterate, the Ld. CIT(A) accepted the claim of the assessee that the payment of Rs. 1,94,750/-and Rs. 25,00,000/- was made by the assessee on 02.03.2017 and 21.03.2017 respectively, which falls within the F.Y. 2016-17 relevant to A.Y. 2017-18 and it contradicts the AO’s assertion that the assessee “failed to submit payment details”, whereas the assessee claimed before the AO that the entire Rs. 2,81,91,883/- was liquidated in the next two years and the AO was looking for the evidence in respect of payments of the entire outstanding liability of Rs. 2,81,91,883/- in the next two years. Therefore, in the given facts of the case, the order of the Ld. CIT(A) cannot be upheld and the same is set aside and we, restore this issue to the file of the AO to verify the above payments of Rs.1,94,750/- made via NEFT on 02.03.2017 (with cheque number 024477 noted in the ledger), and another payment of Rs.25,00,000/-made via RTGS on 21.03.2017 (with cheque number 024482 noted in the ledger) and the balance payments in the next two financial year as claimed by the assessee and if found to be correct to delete the addition of Rs. 2,81,91,883/-. Ground no. 1 of the appeal is partly allowed.
Further, the AO noted that the assessee had deposited a sum of Rs. 67,55,000/-in bank account in just four days, (10,11, 12 and 13, November 2016) just after demonetization period. The AO issued show-cause notice to the assessee. The assessee submitted his reply but it was not accepted by the AO and the AO made an addition of Rs. 68,41,000/-. The relevant extract of the assessment order is reproduced as under:
“5. Abnormal increase in cash deposit during demonetization:
In his explanation dated 24.12.2019, the assessee stated the same thing as stated earlier : “ if a customer comes to the shop and asked to purchase some jewellery, what do we tell him? Do we refuse to sell our merchandise just because I have already completed my sales for the period as per last year's estimate and I shall make no further sales now?" The explanation of the assessee on this issue found not satisfactory and unbelievable. The reasons are:
1.As per the data mentioned hereunder, from the above chart, your total cash sales was found at Rs 6540588/- only in the above mentioned 5 days. From the cash book it has been found that, you reported whole year's sales for the amount of Rs. 16986198/- and it was a sales consideration of 253 days. So, as on average your daily cash has been worked out at Rs. 67139/-. But, just before the demonetization, you reported sales of Rs. 6540588/-, just in a period of 5 days which comes on average of Rs. 1308117. That simply translates into growth of 19.38 times of average daily sales.
Date Opening cash in hand Sales Closing cash in hand 3/11/2016 345668 4/11/2016 345668 505980 851648 5/11/2016 851648 692170 1543818 6/11/2016 1543818 1083962 2627780 7/11/2016 2627780 764485 3392265 8/11/2016 3392265 3573709 6965974 1.In this office notice u/s 142(1) dated 14/12/2019, the assessee was clearly requested to produced month wise stock register along with month wise purchase and sale bill, in query no. 4 of the said notice. But, he failed to do so.
2.In this office notice u/s 142(1) dated 5/12/2019 and 11/11/2019, the assessee was clearly requested to produced books of account, bill and vouchers for the A.Y. 17-18 for examination. But, he failed to do so.
3.Further, in show cause letter dated 23/12/2019, the assessee was requested to mention the extra ordinary reason for such type of great response from customers as reported earlier in 5 days, just before the demonetization period. The assessee was also requested to mention such type of response, if happened, in his business in any assessment year. But, the assessee failed to make response to this. This type of cash sales just in 5 days is beyond normal human probabilities as defined by the hon'ble SC in cases of CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) and SumatiDayal vs. CIT (1995)214 ITR 801(SC).
Therefore, the amount of cash deposits of Rs 6841000/- reported to be from cash sales by the assessee remains unexplained. Hence, the same is added to the total income of the assessee for the year concerned under section 68 of Income tax Act, 1961 to be taxed as per provisions of section 115BBE.
Penalty under section 271AAC of the Income tax Act, 1961 is initiated separately on this addition.”
(emphasis supplied by us)
Aggrieved with the said order, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the said addition and the relevant extracts of the said order are reproduced as under:
“6. Addition of Rs. 68,41,000/- on Account of Abnormal Cash Deposits
The AO's addition of Rs.68,41,000/- was based on the premise that the cash deposits made between 09.11.2016 and 31.12.2016, were unexplained and sourced from outside the appellant's regular business: This conclusion was supported by a comparative analysis showing that cash deposits during this period in A.Y. 2017-18 (Rs.68,41,000/-) were 1700% higher than in the previous year (Rs.4,00,000/-), The AO further highlighted an extraordinary spike in cash sales in the five days. preceding the demonetization announcement, which amounted to Rs.65,40,588/- and represented a 19.38-fold increase over the average daily sales for the year. The AO dismissed the appellant's explanation as "unbelievable" and "against all human probabilities," and also noted the appellant's failure to produce a month-wise stock register, sales and purchase bills, or books of accounts as requested.
The appellant's counter-argument is that these sales were genuine and that the cash deposits were a direct consequence of the extraordinary and unprecedented circumstances created by the demonetization announcement on 08.11.2016. This argument rests on a crucial distinction between normal business operations and the unique market conditions that prevailed in the immediate aftermath of the announcement.
The AO's application of the "test of human probabilities," while a valid tool in tax jurisprudence, appears to be flawed in this context. While a 19.38-fold increase in average daily sales would indeed be improbable under normal circumstances, the demonetization event was, by its very nature, an extraordinary and abnormal circumstance. It is a matter of common knowledge that the sudden invalidation of high-denomination currency notes led to a surge in demand for high-value assets like gold and jewellery. The AO's dismissal of the appellant's explanation as a "miracle" demonstrates a failure to contextualize the business transactions within the reality of this event.
A deeper analysis of the AO's methodology also reveals a significant legal error. The AO utilized the appellant's own cash book to identify the surge in sales and then proceeded to tax the resulting cash deposits as unexplained income under Section 68 of the Act. This action is legally problematic because it amounts to double taxation. The sales from which the cash was generated were already recorded in the books of account. The AO did not explicitly reject these books of accounts under Section 145(3) of the Act, which is a prerequisite for making such a substantive addition by questioning the veracity of the sales themselves. By accepting the books to calculate the average daily sales but rejecting the sales for the demonetization period, the AO has created a contradictory position. The addition of the sale proceeds as unexplained cash credits. after they were already accounted for as revenue, constitutes taxing the same income twice.
This position is strongly supported by a recent and relevant judicial precedent from the Hon'ble Delhi ITAT in the case of Sunita Gold and Diamonds Pvt. Ltd. vs. ITO(ITA No.4039/Del/2024). The Hon'ble Delhi ITAT held that cash deposits by jewellers during the demonetization period, arising from genuine sales, cannot be treated as unexplained cash credits. The Tribunal's reasoning was based on several key factors: the extraordinary market conditions created by the demonetization announcement, the seasonal nature of the jewellery business (coinciding with Diwali and Dhanteras), and the fundamental principle against double taxation. The Tribunal emphasized that "once the sale proceeds received are accounted for as income, then further addition under Section 68 on account of cash sales amounts to double taxation and inclusion of the same amount as income twice". The judgment was also significant because it found the AO's action to be unjustified when the books of accounts were not rejected and no discrepancies were found in the stock or purchase records, which is precisely the situation in the present case.
This precedent squarely addresses the factual and legal issues in the present appeal. The appellant's business is jewellery, and the cash deposits were made during the demonetization period, which coincided with the peak business season of Dhanteras and Diwali. The AO failed to reject the books of accounts and did not provide concrete evidence to prove that the sales were bogus.
Conclusion: This ground of appeal is allowed.”
(emphasis supplied by us)
Aggrieved with the said order, the Revenue is in appeal before us on the following ground of appeal:
“3.On the facts and circumstances of the case, the Ld. CIT A has erred in deleting the addition of Rs. 68,41,000 on account of abnormal cash deposits during demonetization period, by ignoring the fact that the assessee average daily sales showed an abnormal and extraordinary jump of 19.38 times in the five days preceding demonetization compared to the rest of the year and the assessee has failed to produce the stock register along with month wise purchase and sale bill and to produce books of account, bill and vouchers for the A.Y. 2017-18 for examination.”
The ld. Sr. DR supported the order of the AO and the ground of appeal.
We have heard the ld. Sr. DR and perused the material available on record. In this case, the assessee had deposited a sum of Rs. 67,55,000/- in bank account in just four days, (10,11, 12 and 13, November 2016) just after demonetization was announced on 08.11.2016. It was explained by the assessee that the source of the cash deposit of Rs. 68,41,000/-in the bank was on account of cash sales of jewellery made between 04.11.2016 to 08.11.2016. In this regard, the AO had asked for the various details as listed out at Sr. no. 1, 2, and 3 below the tabular chart in the assessment order, (which is reproduced as above on pages 9 & 10 of this order) which included month wise stock register along with month wise purchase and sales bills and the books of accounts, bill & vouchers for A.Y. 2017-18. According to the AO, the assessee did not produce the same for examination and the AO states that necessary verification in respect of the claim made by the assessee the sales were made to said customers in his normal course of business could not be made by him. Further, the AO observed that the assessee did not furnish the reasons for the extra-ordinary sales just five days before the demonetization was announced. Further, he held that such huge sales were against the test of human probabilities. Accordingly, he added the sum of Rs. 68,41,000/- as the income of the assessee under section 68 of the Act.
On the other hand, the Ld. CIT(A) observed that the AO's application of the "test of human probabilities" while a valid tool in tax jurisprudence, appears to be flawed in this context. According to the Ld. CIT(A), while a 19.38-fold increase in average daily sales would indeed be improbable under normal circumstances, the demonetization event was, by its very nature, an extraordinary and abnormal circumstance and it is a matter of common knowledge that the sudden invalidation of high-denomination currency notes led to a surge in demand for high-value assets like gold and jewellery. The Ld. CIT(A) further held that the AO's dismissal of the appellant's explanation as a "miracle" demonstrates a failure to contextualize the business transactions within the reality of this event. The Ld. CIT(A) further held that the cash sales were already offered for tax and thereafter to tax the resulting cash deposits as unexplained income under Section 68 of the Act was legally not correct as it amounts to double taxation. Further, the Ld. CIT(A) observed that the AO did not explicitly reject these books of accounts under Section 145(3) of the Act, which is a prerequisite for making such a substantive addition by questioning the veracity of the sales themselves. Thereafter, the Ld. CIT(A) relied upon the order of the Co-ordinate Bench of the Tribunal in the case of Sunita Gold and Diamonds Pvt. Ltd. vs. ITO (ITA No.4039/Del/2024), which held that cash deposits by jewellers during the demonetization period, arising from genuine sales, cannot be treated as unexplained cash credits for the reasons as detailed in the order of the Ld. CIT(A) as reproduced above earlier in this order. Ultimately, the Ld. CIT(A) deleted the said addition by observing that the AO failed to reject the books of accounts and did not provide concrete evidence to prove that the sales were bogus.
The above findings of the AO along with the findings of the Ld. CIT(A) have been carefully examined by us. In this case, the AO did not reject the books of accounts but it has been judicially held and it is an established precedent that once the AO rejects the books of accounts the AO cannot make any other addition like the addition u/s 68 in this case and only addition that can be made after rejecting the books of accounts is restricted to estimation of net profit of the sales turnover of the assessee, whereas the case of the AO is that a sum of Rs. 68,41,000/- deposited in cash in his bank and credited in his books of account represents unexplained cash credits liable to be added u/s 68 of the Act. Therefore, in the given facts of the case the order of the AO cannot be faulted that the AO did not reject the books of accounts of the assessee before making the impugned addition. Moreover, as the AO noted that the assessee did not produce month wise stock register along with month wise purchase and sales bills and also failed to produce the books of accounts, bill & vouchers for A.Y. 2017-18 for examination and he could not make the necessary verification in respect of the claims made by the assessee that the extraordinary sales of the jewellery was on account of customers visiting their shop in normal course of business and the sales were made to said customers. Moreover, in this case, the Ld. CIT (A) failed to appreciate that the cash sales of jewellery as tabulated on page 2 of the assessment order (and reproduced earlier on page 9 of this order) amounting to Rs. 65,40,588/- which was the source of the cash deposit of Rs. 68,41,000/- in the bank of the assessee was made between 04.11.2016 to 08.11.2016 which was before the announcement of the demonetization by the government. Therefore, the reasoning given by the Ld. CIT (A) and the case law relied upon by him that the unusual cash sales was on account of high volume of sales of jewellery on account of demonetization will not be applicable in the given facts of the case. Further, in the case law relied upon by the Ld. CIT (A) it is seen in that the assessee had submitted all the relevant details of month wise sales and purchase details and detail working of opening stock wise and closing stock and specimen copy of purchase invoices and price tag, whereas no such details were submitted by the assessee in the present case. The said details submitted by the assessee in the cited case are mentioned in para 4 on page on the 4 of the said order. Further, the reasoning of the ld. CIT(A) that cash deposits coincided with the peak season of Dhanteras and Diwali cannot also be fully relied upon in absence of any comparative data of sale of jewellery on such occasions in the previous financial years. Therefore, in the given facts of the case the order of the Ld. CIT(A) cannot be sustained and same is set aside.
However, the assessee did not produce the relevant documents before the AO as discussed above to support his claim of cash sales on account of jewellery. Therefore, in the interest of justice and to allow one more opportunity to explain his case before the AO, this issue is set aside to the file of the AO for de novo assessment in accordance with law. Ground no. 3 of the appeal is allowed for statistical purposes.
In the result, the appeal of the Revenue is partly allowed.