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Judgment
PER MADHUMITA ROY, JM:
The instant appeal filed by the Revenue is directed against the order dated 23.07.2025 passed by the Ld. Commissioner of Income-tax (Appeals), NFAC, Delhi [hereinafter referred to as the Ld. CIT(A)] under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the assessment order dated 28.09.2021 passed by the NFAC, Delhi (hereinafter referred to as ‘the ld. AO’) under Section 147 r.w.s. 144B of the Act for Assessment Year 2017-18 8-19 with the following grounds:-
“1."Whether on the facts and in the circumstances of the case as well as in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 82,78,000/-made by the AO, as unexplained and unaccounted income in the hands of the assessee u/s 69A of the I.T.Act, 1961 ignoring that during the assessment proceedings the assessee failed to justify maintaining huge cash in hand just before announcement of demonetization of SBN's.
2.That the grounds of appeal are without prejudice to each other.
3.That the appellant craves leave to add/alter/delete/modify any/all the grounds of appeal before or during the course of hearing of the appeal." 2. Deletion of addition of Rs.82,78,000/- under Section 69A of the Act on account of unexplained and unaccounted income in the hands of the assessee is the subject matter before us. The impugned amount represents the cash deposit in SBN’s during demonetization period from 08.11.2016 to 31.12.2016 in the following manner:-
S. No. Bank details Cash deposit other than SBNs Cash deposit in SBNs Total cash deposit in demonetization 1 Andhra Bank Current A/c No. 109211100002740 Rs. 91,60,500 Rs. 92,58,000 Rs 1,84,18,500 2 Andhra Bank Current A/c No. 109211011000133 Rs. 2,57,000 ---- Rs. 2,57,000 Total 94,17,500 R, 92,58,000 Rs. 1,86,75,500 Sr. SBN Non SBN Total amount Cash balance Accepted Addition
Date Amount Date Amount 1 10-11-2016 9,80,000 --- --- 9,80,000 93,49,839.66 9,80,000 ---2 11-11-2016 9,50,000 --- --- 9,50,000 84,92,118.23 --- 9,50,000 3 11-11-2016 70,00,000 --- --- 70,00,000 84,92,118.23 --- 70,00,000 4 18-11-2016 1,90,000 18-11-2016 1,30,000 3,20,000 6,92,517.94 1,30,000 1,90,000 5 21-11-2016 1,38,000 --- --- 1,38,000 10,79,719.43 --- 1,38,000 6 --- --- 21-11-2016 3,07,000 3,07,000 10,79,719.43 3,07,000 ---7 --- --- 22-11-2016 4,20,000 4,20,000 9,62,726.99 4,20,000 ---8 --- --- 22-11-2016 2,20,000 2,20,000 9,62,726.99 2,20,000 ---9 --- --- 23-11-2016 1,70,000 1,70,000 4,69,669.98 1,70,000 ---10 --- --- 24-11-2016 1,35,000 1,35,000 6,51,337.11 1,35,000 ---11 --- --- 24-11-2016 81,000 81,000 6,51,337.11 81,000 ---12 --- --- 28-11-2016 3,70,000 3,70,000 14,49,926.36 3,70,000 ---13 --- --- 29-11-2016 4,89,000 4,89,000 11,28,636.02 4,89,000 ---14 --- --- 30-11-2016 4,15,000 4,15,000 7,40,300.43 4,15,000 ---15 --- --- 02-12-2016 1,92,000 1,92,000 7,50,870.41 1,92,000 ---16 --- --- 03-12-2016 5,10,000 5,10,000 7,35,168.78 5,10,000 ---17 --- --- 03-12-2016 30,000 30,000 7,35,168.78 30,000 ---18 --- --- 08-12-2016 6,30,000 6,30,000 15,86,512.99 6,30,000 ---19 --- --- 09-12-2016 5,15,000 5,15,000 11,97,636.11 5,15,000 ---20 --- --- 09-12-2016 3,00,000 3,00,000 11,97,636.11 3,00,000 ---21 --- --- 13-12-2016 2,00,000 2,00,000 12,18,907.96 2,00,000 ---22 --- --- 14-12-2016 7,35,000 7,35,000 12,75,532.56 7,35,000 ---23 --- --- 15-12-2016 1,24,000 1,24,000 8,70,846.74 1,24,000 ---24 --- --- 15-12-2016 4,500 4,500 8,70,846.74 4,500 ---25 --- --- 15-12-2016 1,05,000 1,05,000 8,70,846.74 1,05,000 ---26 --- --- 17-12-2016 4,90,000 4,90,000 12,18,009.3 4,90,000 ---27 --- --- 19-12-2016 5,90,000 5,90,000 13,19,272.13 5,90,000 ---28 --- --- 21-12-2016 1,79,000 1,79,000 12,20,147.45 1,79,000 ---29 --- --- 23-12-2016 2,15,000 2,15,000 13,62,592.61 2,15,000 ---30 --- --- 26-12-2016 3,75,000 3,75,000 19,54,979.41 3,75,000 ---31 --- --- 27-12-2016 4,30,000 4,30,000 17,99,455.4 4,30,000 ---32 --- --- 27-12-2016 5,05,000 5,05,000 17,99,455.4 5,05,000 ---33 --- --- 30-12-2016 4,22,000 4,22,000 16,34,344.83 4,22,000 ---34 --- --- 30-12-2016 10,000 10,000 16,34,344.83 10,000 ---35 --- --- 31-12-2016 3,06,000 3,06,000 13,85,029.19 3,06,000 ---36 --- --- 31-12-2016 98,000 98,000 13,85,029.19 98,000 ---37 Total 92,58,000 --- 97,02,500 1,89,60,500 --- 1,06,82,500 82,78,000
The said deposits were out of the cash balance in the books of account of the assessee maintaining in the ordinary course of business carried out as the case made out by the assessee which was negated by the Ld. AO, but, accepted by the Ld.CIT(A). Hence, the instant appeal by the Department before us.
The assessee is an authorized reseller of Haldiram products buying goods from authorized Haldiram distributors and the sales to such vendors who in turn made sales to public at large. This sale to the small vendors have done essentially in cash which is evident from the books of account evidencing from AY 2014-15 to 2019-20 with the following details:-Months 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 April 54,12,500 73,77,000 73,43,000 85,93,980 64,09,200 63,30,850 May 80,03,000 78,01,500 85,63,000 94,06,150 75,85,600 84,25,450 June 75,84,500 82,81,000 82,47,000 1,03,92,670 77,63,100 79,55,050 July 86,42,000 80,12,000 77,71,000 84,37,010 91,89,800 89,43,100 August 80,33,000 1,11,04,000 1,14,69,000 91,02,740 72,57,500 1,04,45,250 September 70,06,500 63,81,000 81,15,000 59,96,270 1,14,04,150 78,27,200 October 1,28,34,000 1,08,55,000 94,71,500 1,56,17,500 1,42,74,250 1,38,92,450 November 1,00,45,000 1,75,27,000 1,71,67,000 98,18,350 1,29,07,100 1,39,11,550 December 61,32,000 60,20,000 69,65,500 69,16,800 79,45,100 75,85,300 January 68,87,400 60,21,000 52,86,900 85,53,900 77,45,100 59,26,500 February 72,75,850 71,43,000 69,99,920 82,43,750 70,32,500 72,14,800 March 88,48,000 1,01,67,000 96,33,000 73,46,400 1,06,26,600 69,72,200
The current position of the cash sales qua cash deposits from the books of account are as follows:-
| Month | Cash Sales (In Rs.) | Cash Deposit (In Rs.) |
| April 2016 | 78,71,213.07 | 73,43,000 |
| May 2016 | 95,30,967.17 | 86,38,000 |
| June 2016 | 89,63,010.70 | 82,57,000 |
| July 2016 | 89,19,470.34 | 98,36,950 |
| August 2016 | 1,24,32,730.86 | 1,17,64,000 |
| September 2016 | 85,53,966.95 | 81,85,000 |
| October 2016 | 1,91,91,082.96 | 94,71,500 |
| November 2016 | 72,27,591.03 | 1,72,62,000 |
| December 2016 | 79,24,082.56 | 71,27,500 |
| Total | 9,06,14,115.64 | 8,78,84,950 |
It is the case of the assessee that the books of account are duly audited and have been accepted as such and all sales are subject to VAT. The turnover as per DVAT returns is at par with the turnover as per books of account the details whereof is as follows:-
| DVAT Return | Turnover as per return (In Rs.) |
| 01-04-2016 TO 30-06-2016 First Quarter | 2,85,20,013 |
| 01-07-2016 TO 30-09-2016 Second Quarter | 3,31,93,920 |
| 01-10-2016 TO 31-12-2016 Third Quarter | 3,98,53,155 |
| 01-01-2017 TO 31-03-2017 Fourth Quarter | 3,08,10,922 |
| TOTAL TURNOVER AS PER DVAT RETURNS (A) | 13,23,78,010 |
| TOTAL TURNOVER AS PER BOOKS OF ACCOUNTS (B) | 13,23,78,010 |
| Difference (A) – (B) | 0 |
At the time of hearing of the instant appeal, the Departmental Representative relied upon the order passed by the Ld. AO whereas the Ld. AR Mr. Lalit Mohan, CA submitted that on the date of announcement of demonetization on 8th November, 2016 the old currency notes available with the assessee amounting to Rs.92,58,000/- which was deposited in the bank account within a reasonable time from 10.11.2016 to 21.11.2016 the details whereof is as follows:-
| S.No. | Date of deposit | Total amount deposit in SBN (Amount in Rs.) |
| i) | 10.11.2016 | 9,80,000 |
| ii) | 11.11.2016 | 79,50,000 |
| iii) | 18.11.2016 | 1,90,000 |
| iv) | 21.11.2016 | 1,38,000 |
| Total | 92,58,000 |
Further, that the assessee deposited approximately 97% of the specified notes amounting to Rs.89,30,000/- within four days from the date of announcement of demonetization policy, i.e., by November 11, 2016. After the announcement of demonetization the banks were closed on 09.11.2016 and the assessee deposited approximately 97% of SBNs into the bank. Further, that the assessee has not only deposited rs.92,58,000/-, but also amount of Rs.94,17,500/-during the demonetization period which was in new currency/legal currency. In that view of the matter, it can easily be inferred that SBNs were readily available with the assessee and the same were expeditiously deposited immediately after the announcement of demonetization.
On the other hand, the Ld. DR sought to make out a case that the assessee furnished unsigned copy of cash book without a bank column list of cash sales/purchases prepared in MS Word/excel sheet and the assessee only furnished the documents in the form of excel sheet.
In rebuttal, the Ld. AR submitted that even if there is no bank column in the cash book submitted the bank statement with narration for the complete year was duly submitted during the course of assessment proceedings along with an affidavit to authenticate such document. Further, that the during the course of assessment proceedings details were filed by the assessee in PDF format as there is no facility to directly submit the accounting software data on the Income-tax website and the details of the case required to be prepared through MS Word/Excel.
It is further the case made out by the Ld. DR that the assessee never maintained any cash in hand bank balance of more than Rs.25 lakhs. But it has increased from Rs.13,97,870/- as on 01.10.2016 to Rs.1,10,72,316/- as on 01.11.2016. In fact, the Ld. DR has drawn our attention to page 5 of the assessment order. As it is clear that the assessee was making cash deposit continuously as the case sought to be made out by the assessee as argued by the Ld. AR the assessee could have deposited if this much accounted cash in hand was available with him during this transaction as submitted by the Ld. DR.
The Ld. AR joins issue on this aspect to this effect that the fact of slight delay in deposit of cash amount in the bank account of the assessee was due to the Accountant having been suffered injuries followed by hospitalization in Max Super Speciality Hospital in Patparganj, New Delhi on 24.06.2016 the fact fo which was duly submitted before the Ld. AO which was reiterated through video conferencing where the said accountant, namely, Ankur Goyal was also present. The supporting documents of the accident and hospitalization of Shri Ankur Goyal were duly provided to the AO the fact of which was not taken into consideration in its proper perspective as a result whereof the cash in hand balance rose as on 01.11.2016. The celebration of Diwali on 30.10.2016 resulting in maximum cash generation was the added factor which was also made known to the Ld. AO., however, failed to obtain any consideration from the Ld. AO. The question of impugned debit entries ranting from smaller amounts in hundreds to larger amounts in lakhs showing receipts from collection from debtors only and receipts showing figures in decimal of two digits i.e., in paisa which is not possible in cash transactions as raised by the Department was controverted by the Ld. AR that whatever the assessee is selling its all in a packaged form with a bar code on each & every item and therefore, at the point of sales the assessee is just scanning the bar code to record the sales / cash sales due to which entries with decimal figures are recorded in the books. But practically when any payment is received, it is received in the round figure, for example if an entry is recorded like Rs. 2249.51 then an amount of Rs. 2250/-would be received. So, decimal figures are just due to automated bar code system and practically the amount is received in round figures as mentioned above.
As the assessee purchased majority of its goods in FY 2016-17 approximately 99% of the total purchase from SB Markplus Pvt. Ltd. to whom payment is made through proper banking channels only the confirmation from creditors/suppliers as not filed by the assessee is of no relevance as submitted by the Ld. AR. However, the balance confirmation for the period ending March 31, 2017 from the SB Markplus Pvt. Ltd. found to have been duly provided during the assessment proceedings which is also on record before us. The assessee further submitted the written submissions with the following contentions:-
“11 It is submitted that learned Commissioner of Income Tax (Appeals) has forwarded the additional evidence to learned Assessing Officer for his comments. It is submitted that during the course of remand proceedings assessee filed a reply on 9.11.2024 (pages 72-81 of Paper Book) alongwith following evidences:
i)VAT returns for financial year 2016-17 relevant to assessment year 2017-18.
ii) Purchase invoices
iii) Sale invoices of amount greater than 1 lakh rupees
iv) Day wise Purchase, sale and stock register.
v)Ledger of M/s SB Marketplus Pvt. Ltd.
vi) Bank Statement for FY 2016-17.
12 It is submitted that in the remand report learned Assessing officer have examined the purchase bills and VAT returns submitted by the assessee and also sales shown by the assessee have been checked on test check basis against sale bills and VAT returns and concluded that assessee had equivalent or more stock at the time of sale and didn’t have negative stock at any point of time. It is submitted that by considering the written submission and remand report learned Commissioner of Income Tax (Appeals) deleted the addition by holding as under: (page 33 of Paper Book)
“8.1The grounds of appeal, assessment order, submissions of the appellant and have been carefully considered and adjudicated as under:
8.2The AO in the remand report has verified and ascertained that the appellant had equivalent or more stock at the time of sale. Further the AO has not brought on record any findings to prove that the cash deposits were made out of unexplained or unaccounted money.
8.3Considering the above, the Assessing Officer is directed to delete the addition on sources for cash deposits in SBNs during demonetization period, considering the normal balance of average cash in hand and Human Probability Test, first deposit of Rs.9,80,000/- after declaration of demonetization of SBNs is deemed to be out of normal balance of cash in hand on 08.11.2016, hence has been accepted as out of cash generated from cash sales the amount of cash deposits of Rs.82,78,000/- in SBNs during demonetization period.
9.0As a result, the appeal of the appellant is allowed.”
13 In such circumstances addition made of Rs. 82,78,000/- representing alleged unexplained cash deposits in the bank account of the assessee during the period of demonetization and brought to tax u/s 69A of the Act read with section 115BBE of the Act is illegal, invalid, untenable and is not in accordance with law in light of the following propositions:
I THAT ONCE CASH SALES HAVE ALREADY BEEN OFFERED AS INCOME SUCH SALES CANNOT AGAIN BE TAXED AS INCOME U/S 69A OF THE ACT AS THAT TANTAMOUNTS TO DOUBLE TAXATION
DELHI HIGH COURT
i)ITA No. 613/2010 (Del) dated 9.4.2010 CIT v. Kailash Jewellery House
ii) 277 Taxman 423 (Del) Pr. CIT v. Akshit Kumar
iii) 177 Taxman 29 (Del) CIT v. Goverdhan India (P) Ltd.
iv) 441 ITR 550 (Del) Pr. CIT v. Agson Global (P) Ltd.
v)ITA No. 96/1989 dated 15.7.2010 J.M. Wire Industries v. CIT
GUJARAT HIGH COURT
i)ITA No. 2471/2009 (Guj) dated 3.7.2012 CIT vs. Vishal Export Overseas Ltd.
MADHYA PRADESH HIGH COURT
i)344 ITR 294 (MP) CIT v. Jaora Flour and Foods (P) Ltd.
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH
i)ITA No. 6520/D/2018 AY 2014-15 M/s Singhal Exim (P) Ltd.
ii) ITA No. 1220/D/2011 AY 2006-07 Kishore Jeram Bhai Khaniya
iii) ITA No. 524/D/2017 dated 25.11.2019 Neeta Breja
iv) 55 ITD 159 (Del) Racmann Springs (P) Ltd. v. DC
v)84 ITR (Trib) 537 (Del) DCIT v. Garg Acrylics Ltd.
vi) ITA 8761/D/2019 dated 10.7.2020 A.K. Lumbers Ltd. vs. ACIT
vii) ITA No. 358/D/2023 dated 7.8.2023 Metro Filling Station v. ITO
viii) ITA No. 1612/D/2021 Shivam Industries Radheshyam Sharma v. Co. v. ACIT
ix) ITA No. 927/D/2023 ACIT v. Himachal Fibres Ltd.
x)ITA No. 1597/D/2023 ACIT v. M/s Goel Jewellers Overseas Corp.
BANGALORE BENCH
i)194 ITD 702 (Bang) Anantpur Kalpana v. ITO
Followed:
- 212 ITR 417 (Cal) CIT v. Associated Transport (P.) Ltd.
- 189 ITD 608 ((Visakhapatnam) ACIT v. Hirapanna Jewellers
- ITA No. 613/2010 (Del) dated 19.4.2010 CIT vs Kailash Jewellery House
- ITA No. 2471/2009 (Guj) dated 3.7.2012 CIT vs. Vishal Export Overseas Ltd.
- ITA No. 552/Bang/2022 Manasa Medicals
ii) ITA No. 48/Bang/2019 dated 27.2.2019 Shri Ashok Desingnaik vs. ITO
iii) ITA No. 1383/Bang/2019 dated 28.8.2019 Smt. Teena Bethala
CHANDIGARH BENCH
i)ITA No. 310/Chd/2021 dated 25.3.2022 Charu Aggarwal v. DCIT
MUMBAI BENCH
i)ITA No. 1035/Mum/2022 dated 29.5.2023 DCIT vs. Kundan Jewellers (P) Ltd.
ii) ITA No. 1102/Mum/2022 Shail Jayesh Shah v. ITO
KOLKATA BENCH
i)ITA 1329/Kol/2018 dated 26.2.2020 New Pooja Jewellers vs. ITO
ii) ITA 2614/Kol/2019 dated 29.5.2020 Bhagwant Merchants (P) Ltd. Vs. ITO
VISKAHAPATTNAM BENCH
i)189 ITD 608 (Visakha)(Trib.) ACIT Vs M/s Hirapanna Jewellers
HYDERABAD
i)ITA No. 1019/Hyd/2017 dated 18.5.2018 ITO vs. Shaik Zameer
GAUHATI BENCH
i)I.T.A. No. 88/Gau/2020 dated 17.02.2021 Nilkantha Saha Vs ITO
AMRITSAR
i)ITA No. 476/Asr/2019 AY 2017-18 DCIT v. Sh. Ram Pal Gupta
CHENNAI BENCH
i)ITA No. 277/Chny/2021 Kaliannan Ganesan v. ITO
II THAT ADDITION TANTAMOUNTS TO DOUBLE TAXATION AND IS THEREFORE NOT PERMISSIBLE
i)72 ITR 291 (SC) CIT v. Laxmi Pat Singhania vs. CIT
ii) 118 ITR 50 (SC) State of Uttar Pradesh vs. Raja Buland Sugar Co. Ltd.
iii) 42 ITR 427 (SC) CIT vs. Dharamdas Hargovandas
iv) 258 ITR 717 (Del) ITO v. Vinod Kumar Soni
v)404 ITR 738 (SC) Mahaveer Kumar Jain v. CIT
III THAT ONCE BOOKS OF ACCOUNTS HAS BEEN ACCEPTED THEN CASH SALES CAN BY NO JUSTIFABLE BASIS BE HELD TO BE UNEXPLAINED MONEY U/S 69A OF THE ACT:
HIGH COURT
i)277 Taxman 423 (Del) Pr. CIT v. Akshit Kumar
ii) 441 ITR 550 (Del) Pr. CIT v. Agson Global (P) Ltd.
iii) 424 ITR 195 (Bom) Pr CIT vs Sunshine Import & Export Pvt Ltd.
iv) ITA No. 228/2020 (Del) dated 22.2.2021Pr CIT vs M/s Singhal Exim (P) Ltd.
INCOME TAX APPELLATE TRIBUNAL
i)ITA No. 8761/Del/2019 M/s A.K. Lumbers Ltd vs ACIT
ii) ITA No. 1185/D/2021 dated 26.4.2022 Mr. Atish Singla v. ITO
iii) ITA No. 176/D/2018 dated 27.5.2021 ACIT v. Madhur Jain
ii) ITA No. 194/Del/2020 dated 17.3.2020 Navkaar Traders v. ITO
iii) 146 taxmann.com 349 (Mum) Jet Freight Logistic Ltd. v. CIT
v)ITA No. 184/JP/2021 dated 6.5.2022 Smt Kanchan vs ITO.
vi) 78 ITD 326(CHD) (TM) Bansal Rice Mills vs ITO
xi) 65 CCH 175 (Hyd) dated 10.6.2022 Lateef Abdul Mohd. v. ITO
xii) ITA No. 336/Ind/2012 ACIT vs Dewas Soya Limited. (Observations such as TIN cancelled by Sales tax department or the fact that buyer not traceable is devoid of merits)
xiii) ITA No. 1011/Del/2022 dated 18.8.2023 DCIT v. M/s Manuvel Malabar Jewellers (P) Ltd.
xiv) ITA No. 383/D/2024 dated 3.7.2024 Durga Fire Work v. ITO
xv) ITA No. 1426/D/2021 Harisons Diamonds (P) Ltd. v. ACIT
xvi) 154 taxmann.com 584 (Mum) dated 26.7.2023 ACIT vs. Ramlal Jewellers (P) Ltd.
IV THAT IN THE CASE OF CASH SALES, THE ASSESSEE IS NOT BOUND TO KEEP RECORD OF THE NAMES AND ADDRESS OF THE BUYERS:
i)75 ITR 33 (Bom) R B GurnamFatehchand vs. ACIT
ii) 83 ITR 484 (kerala) M. Durai Raj vs CIT
iii) 101 ITR 535 (Mad) M. Kaliappa Goundder v. CIT
iv) 105 ITD 585 (Rajkot) ITO v. Girish M. Mehta
v)ITA 896/Ahd./2011dated 20.7.2012 M/s Nitisha Silk Mills (P) Ltd. Vs. ITO
V THAT SECTION 69A OF THE ACT DOES NOT APPLY TO REVENUE TRANSACTIONS
i)ITA NO. 4958-59/D/2018 dated 29.3.2019 Nand Kumar Taneja vs. ITO
ii) 213 TTJ 0558 (Chd) Jagmohan Kaur Bajwa vs. ITO
iii) 200 Taxman 186 (Del) CIT v. Vishal Holding & Capital (P) Ltd.
iv) ITA No. 9147-9152/D/2019 Sh. Vishnu Kumar Garg v. DCIT
VI BURDEN IS ON THE REVENUE TO SHOW UNEXPLAINED MONEY UNDER SECTION 69A OF THE ACT. SUCH BURDEN HAS NOT BEEN DISCHARGED ON THE FACTS OF THE ASSESSEE
i)22 SOT 174 (Mum) Rupee Finance & Management (P.) Ltd. v ACIT
ii) 81 taxmann.com 257 (Bom) CIT v. Devesh Agarwal
iii) 64 taxmann.com 332 (Del) ACIT v. Rakesh Narang
iv) ITA no. 610/2012, Dated 19.10.2012 (Del) CIT vs Dinesh Jain HUF
v)ITA No. 176/204 dated 25.4.2014 (Del) CIT v. Agile Properties (P) Ltd.
vi) 237 ITR 570 (SC) CIT vs. Smt. P. K. Noorjahan
vii) 107 ITR 938 (SC) Roshan Di Hatt vs. CIT
viii) 261 ITR 664 (Del) CIT vs. Naresh Khattar (HUF)
ix) 328 ITR 513 (SC) Sargam Cinema vs. CIT
x)328 ITR 516 (Del) CIT vs. Naveen Gera
xi) 316 ITR 46 (Del.) CIT vs. Shakuntala Devi
xii) 335 ITR 572 (Del.) CIT vs. Bajrang Lal Bansal
VII THAT SECTION 69A OF THE ACT DOES NOT APPLY TO A SUM ALREADY DISCLOSED AS INCOME:
i)278 ITR 152 (Del) DIT vs. Keshav Social & Charitable Foundation affirmed by the judgment of Hon’ble Apex Court DIT v. Keshav Social and Charitable Foundation reported in 394 ITR 496.
ii) ITA No. 827/2011 dated 7.07.2011 CIT vs. Sadhana Foundation
iii) ITA No(s). 1754/2010, 1755/2010 and 206/2011 (Del) dated 7.07.2011 CIT vs. O. P. Suri Memorial Education Society upholding decision of ITAT in the case of DCIT vs. Sadhana Foundation in ITA No. 2704/D/2010 dated 08.10.2010
iv) 298 ITR 190 (Del) DIT vs. Moti Bagh Mutual Aid Education
v)ITA No. 214/2009 dated 13.05.2009 DIT vs. Akhil Bhartiya Mahajan Siromani Sabha which has been SLP dismissed by the Hon’ble Supreme Court in SLP (C)(CC 385/2010 in the case of DIT vs. Akhil Bhartiya Mahajan Siromani Sabha dated 11.02.2010
vi) 364 ITR 398 (All) CIT vs Uttaranchal Welfare Society
vii) ITA No. 2957/D/2010 dated 14.01.2011 Hans Raj Samarak Society vs. DIT
viii) 35 taxmann.com 642 (Del- High Court) DIT vs. Hans Raj Samarak Society
ix) ITA No. 776/LKW/2014 (Luck) dated 17.6.2015 ITO vs. M/s Saraswati Educational Charitable Trust
x)177 ITD 184 (Del) (Trib.) ACIT vs. Shree Shiv Vankeshwar Educational & Social Welfare Trust
xi) 8 ITR(T) 340 (Del- Trib.) dated 14.2.2020 Shugan Chandra Kothari Trust vs. CIT (Exemption)
xii) 49 ITR (Trib.) 276 (Lucknow) Fateh Chand Charitable Trust vs. CIT (Exemptions)
VIII THAT ONCE AUDITED BOOKS OF ACCOUNTS ARE ACCEPTED AS SUCH NO ADDITION IS PERMISSIBLE
i)326 ITR 323 (Del) CIT v. Smt. Poonam Rani
ii) 315 ITR 185 (P&H) CIT vs. OM Overseas
iii) 320 ITR 116 (All) CIT vs. Mascot India Tools & Forgings (P) Ltd.
iv) 64 DTR 409 (Jai) Asstt. CIT vs. Shankar Exports
v)325 ITR 13 (Del) CIT vs. Paradise Holidays
vi) ITA No. 999/2010 dated 03.08.2010 (Del)CIT vs. M/s Rice India Exports Pvt. Ltd.
vii) ITA No. 283/2011 ITA No. 343/2011 (Del) CIT v. Jindal Dyechem Industries (P) Ltd.
viii) ITA No. 336/Ind./2012 dated 31.10.2012 ACIT vs. Dewas Soya Ltd.
ix) ITA No. 165/2010 dated 04.05.2017 CIT vs. M/s Pashupati Nath Agro Food Products (P) Ltd
IX IT IS WELL SETTLED LAW THAT REVENUE CANNOT BLOW HOT AND COLD AS HAS BEEN HELD IN THE FOLLOWING JUDGMENTS:
i)268 ITR 481 (SC) Union of India v British India Corporation
ii) 217 Taxmann 247 (Guj) CIT vs. Jayantkumar Motichand Doshi
iii) 217 Taxman 29 (All) CIT vs. Mohan Lal Agarwal
iv) ITA No. 564/2012 (Guj) CIT vs. Illaben Jayant Kumar Doshi
X THAT NO ADDITION CAN BE MADE ON THE BASIS OF SURMISES, SUSPICION AND CONJECTRUES:
i)37 ITR 271 (SC) Uma Charan Shaw & Bros. Co. v. CIT
ii) 37 ITR 151(SC) Omar Salay Mohammad Sait v CIT
iii) 26 ITR 736 (SC) DhirajlalGirdharilal v CIT, Bombay
iv) 26 ITR 775 (SC) Dhakeshwari Cotton Mills Ltd. v CIT
v)37 ITR 288 (SC) Lal Chand BhagatAmbica Ram v CIT
14 In view of the aforesaid the finding of learned Commissioner of Income Tax (Appeals) deleting the addition made of Rs. 82,78,000./- may kindly be upheld and appeal filed by the revenue may kindly be dismissed.”
Considering the entire aspect of the matter the Ld.CIT(A) finally granted relief to the assessee with the following observations:-
“8.3Considering the above, the Assessing Officer is directed to delete the addition on sources for cash deposits in SBNs during demonetization period, considering the normal balance of average cash in hand and Human Probability Test, first deposit of Rs.9,80,000/- after declaration of demonetization of SBNs is deemed to be out of normal balance of cash in hand on 08.11.2016, hence has been accepted as out of cash generated from cash sales the amount of cash deposits of Rs.82,78,000/- in SBNs during demonetization period.”
The assessee further relies on the decision of the Hon’ble Orissa High Court in Pankaj Gupta vs. PCIT [2025] 174 taxmann.com 747 (Orissa) the para 6 of which reads as under:-
“6.Mr. Mohanty opposes admission of the appeal. He submits, there is no error on fact, let alone in law as appearing or questions can be said to arise from impugned order of the Tribunal. It is a clear case where the assesse had only Rs.252.40 shown as balance in his cash book on 8th November, 2016 but thereafter on 12th November, 2016 deposited by SBN, Rs.28,00,000/-. It was unexplained money and correctly added by the AO. A mistaken reference by the Tribunal to the unexplained money as unexplained investment does not make a difference.”
It is relevant to mention that a remand report was called for by the Ld.CIT(A) and the Ld. AO in the remand report verified and ascertained that the appellant had equivalent or more stock at the time of sale. Further, that the AO has not been able to bring on record any findings to prove that the cash deposit were made out of unexplained or unaccounted money. In fact, the Ld.CIT(A) while granting relief observed as follows:-
“1.The assessee further submitted the copies of the following for FY 2016-17 :
•VATreturns for FY 2016-17.
•Purchase invoices.
•Sale Invoices of amount greater than 1 Lakh Rupees
•Day wise Purchase, Sale and Stock Register.
•Day wise Cash Register
•Ledger of M/s SB Markplus Pvt Ltd.
•Bank Statement for FY 2016-17.
iii.The above-mentioned response of the assessee was perused. As this office has been directed to examine the fresh evidences in the back drop as to whether an equivalent or more stock existed at the time of sale or not, the findings are submitted only on the stock.
iv.The purchases shown by the assessee have been checked on test check basis against the purchase bills and VAT returns submitted by the assessee. Similarly, the sales shown by the assessee have been checked on test check basis against the sale bills and VAT returns submitted by the assessee. The daily stock for the month of September to November (as cash deposited during demonetization in SBNs relates to this period only) is
Summary of Daywise purchase sale and Stock(All figures in Rupees)
Date Opening stock Purchase Sales Amount Closing Stock 01-09-2016 38,09,680 1,54,181 2,67,803 37,04,654 02-09-2016 37,04,654 1,57,558 2,69,113 36,01,737 03-09-2016 36,01,737 3,01,217 3,82,006 35,33,211 04-09-2016 35,33,211 2,31,306 3,55,923 34,20,019 05-09-2016 34,20,019 0 1,23,364 33,00,615 06-09-2016 33,00,615 7,53,678 1,71,501 38,88,297
07-09-2016 38,88,297 6,80,518 2,94,094 42,84,162 08-09-2016 42,84,162 2,56,299 4,80,850 40,75,046 09-09-2016 40,75,046 0 2,49,329 38,33,721 10-09-2016 38,33,721 3,06,087 3,10,460 38,39,313 11-09-2016 38,39,313 0 2,92,889 35,30,121 12-09-2016 35,30,121 6,12,033 1,05,441 40,40,098 13-09-2016 40,40,098 4,05,038 2,84,536 41,69,734 14-09-2016 41,69,734 4,92,215 3,58,067 43,15,377 15-09-2016 43,15,377 2,06,120 4,10,635 41,24,044 16-09-2016 41,24,044 7,73,540 5,65,841 43,49,906 17-09-2016 43,49,906 0 4,37,788 39,26,171 18-09-2016 39,26,171 3,16,133 3,81,937 38,72,627 19-09-2016 38,72,627 0 55,543 38,18,867 20-09-2016 38,18,867 2,67,270 3,03,059 37,92,807
21-09-2016 37,92,807 3,39,560 2,35,476 39,04,450 22-09-2016 39,04,450 4,74,396 3,28,916 40,47,778 23-09-2016 40,47,778 4,67,168 4,62,149 40,67,632 24-09-2016 40,67,632 1,95,784 3,56,888 39,17,984
25-09-2016 39,17,984 5,78,483 3,57,787 41,47,487 26-09-2016 41,47,487 0 3,27,785 38,30,224 27-09-2016 38,30,224 0 1,87,384 36,48,855 28-09-2016 36,48,855 6,23,428 2,81,904 39,99,427 29-09-2016 39,99,427 2,98,196 2,35,943 40,69,253 30-09-2016 40,69,253 12,81,767 3,43,321 50,18,709 01-10-2016 50,18,709 0 6,52,842 43,86,823 02-10-2016 43,86,823 0 1,70,964 42,21,347 03-10-2016 42,21,347 1,05,657 5,67,373 37,74,512 04-10-2016 37,74,512 1,88,755 2,32,232 37,38,489 05-10-2016 37,38,489 5,31,553 4,88,515 37,97,208 06-10-2016 37,97,208 18,761 4,57,884 33,63,104 07-10-2016 33,63,104 7,94,937 4,64,151 37,08,790 08-10-2016 37,08,790 2,55,274 5,26,711 34,48,691 09-10-2016 34,48,691 2,39,123 5,48,592 31,49,355 10-10-2016 31,49,355 7,84,849 2,08,079 37,32,804 11-10-2016 37,32,804 0 4,45,429 33,01,673 12-10-2016 33,01,673 0 1,65,827 31,41,169
13-10-2016 31,41,169 0 2,15,157 29,32,918 14-10-2016 29,32,918 0 0 29,32,918 15-10-2016 29,32,918 9,72,748 1,89,862 37,21,899 16-10-2016 37,21,899 8,75,406 7,45,768 38,74,508 17-10-2016 38,74,508 47,92,482 6,09,639 80,76,920 18-10-2016 80,76,920 25,78,014 7,62,704 99,16,713 19-10-2016 99,16,713 13,29,429 14,58,266 98,34,687 20-10-2016 98,34,687 12,76,772 4,11,575 1,07,13,096 21-10-2016 1,07,13,096 3,78,729 12,71,948 98,60,707 22-10-2016 98,60,707 5,81,240 11,22,422 93,55,554 23-10-2016 93,55,554 12,98,893 3,52,041 1,03,13,707 24-10-2016 1,03,13,707 4,87,110 12,57,372 95,83,807 25-10-2016 95,83,807 10,14,371 5,83,730 1,00,33,185 26-10-2016 1,00,33,185 6,63,361 7,23,548 99,96,224 27-10-2016 99,96,224 5,39,901 4,70,114 1,00,69,464 28-10-2016 1,00,69,464 3,80,666 4,14,541 1,00,48,896 29-10-2016 1,00,48,896 5,47,261 3,51,707 1,02,55,740 30-10-2016 1,02,55,740 0 14,715 1,02,41,497
From the above, it can be seen that the assessee had equivalent or more stock at the time of sale and didn’t have negative stock at any point of time. Submitted for your kind consideration.
7.0The remand report received from the AO, was forwarded to the appellant for comments on it. The appellant submitted his Rejoinder Report dated 19.06.2025
8.0 CIT’s Decision:
8.1The grounds of appeal, assessment order, submissions of the appellant and have been carefully considered and adjudicated as under:
8.2The AO in the remand report has verified and ascertained that the appellant had equivalent or more stock at the time of sale. Further the AO has not brought on record any findings to prove that the cash deposits were made out of unexplained or unaccounted money.
8.3Considering the above, the Assessing Officer is directed to delete the addition on sources for cash deposits in SBNs during demonetization period, considering the normal balance of average cash in hand and Human Probability Test, first deposit of Rs.9,80,000/- after declaration of demonetization of SBNs is deemed to be out of normal balance of cash in hand on 08.11.2016, hence has been accepted as out of cash generated from cash sales the amount of cash deposits of Rs.82,78,000/- in SBNs during demonetization period
9.0As a result, the appeal of the appellant is allowed.”
Under these facts and circumstances of the matter, it is apparent that the assessee was having equivalent or more stock at the time of sale and even in the remand report no finding was made by the Ld. AO so as to prove that the cash deposits were made out of unexplained or unaccounted money as the case made out by the Ld. AO during the course of assessment proceedings.
Having regard to the balance of average cash in hand coupled with the fact that the first deposit of Rs.98,00,000/- after declaration of demonetization of SBNs as found to have been made out of normal cash balance in hand as on 08.11.2016, accepting the cash generated out of cash sales, the deletion of addition of the impugned amount of cash deposit of Rs.82,78,000/- in SBNs during demonetization period by the Ld.CIT(A) is found to be just and proper so as not to warrant any interference.
In the result, the appeal filed by the Revenue is dismissed.