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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal of the assessee is directed against the order dated 24.02.2026 of Id. CIT(A)/NFAC, Delhi passed u/s 250 of the Income Tax Act 1961 (hereinafter referred to as "the Act"), wherein the addition made vide assessment order dated 28.12.2019 u/s 68 of the Act to the tune of Rs.52,50,000/- were confirmed and the appeal was dismissed.
Facts of the case as culled out from the orders of the authorities below are that the assessee filed return of income for A.Y. 2017-18 on 25.12.2017. The cases was selected for scrutiny under CASS by issuing notice u/s 143(2) of the Act dated 09.08.2018 because as per information available on record, there was abnormal increase in the cash deposit during demonetization period as compared to pre-demonetization period relevant to A.Y. 2017-18. Subsequent notice u/s 143(2) of the Act and the notice u/s 142(1) of the Act were issued on various dates as find mentioned in para 3 of the Assessment Order to which reply was not filed by the assessee. Accordingly, show-cause notice was issued to the assessee in that regard and in response to the said show-cause notice, assessee field part details, i.e. primary declaration of cash deposit with income tax department which was primarily the cash deposit in out of cash sales, however, no substantive proof of cash sales was submitted by him. During the assessment proceedings, Assessing Officer observed that the cash deposited during demonetization period was out of cash sales, is not justified in his case because the total cash deposit during the demonetization period by the assessee was Rs.52,50,000/- whereas total cash deposit during pre-demonetization period (01.04.2016 to 08.11.2016) was only Rs.7,25,000/- which according to the Assessing Officer shows that the assessee was hiding such income that was unexplained in his bank accounts. Further, Assessing Officer observed that there was 700% increase in the cash deposit during demonetization period as compared to the pre-demonetization period. Accordingly, show-cause notice dated 13.11.2019 followed by notice u/s 142(1) of the Act dated 30.11.2019 were issued to the assessee for submitting complete details. Again, in response to the above notices, the assessee filed part details dated 05.12.2019, 09.12.2019 and 10.12.2019 of month-wise and party-wise purchases made for the year i.e. F.Ys. 2015-16 and 2016-17, alongwith details of top 10 parties from whom the purchases are made and details of top 10 parties to whom the sales were made. The Id. Assessing Officer observed that the assessee has not submitted details of cash register as well as confirmation of creditors and thus failed to explain and substantiate the source of cash deposit during demonetization period and has failed to file any detailed documents regarding explanation of steep increase in cash deposit during the demonetization period as compared to cash deposit during the pre-demonetization period. Accordingly, Id. Assessing Officer treated the total cash deposit made by the assessee during demonetization period of Rs.52,50,000/-as his cash credits and made addition of the said amount u/s 68 of the Act and also separately initiated a penalty proceeding u/s 271AAC of the Act. It was further observed that section 115BBE of the Act is also attracted in the case of the assessee and directing to charge tax @ 60% plus surcharge @ 25% of such tax.
Aggrieved by the assessment order, the assessee filed appeal before the Id. CIT(A) who has dismissed the same by observing that the cash sales which had risen up just before the demonetization period is not justified in the case as average monthly sales during first two quarters of F.Y. 2016-17 i.e. from 01.04.2016 to 30.09.2016 which is shown at Rs.1,96,800/- and thereafter in the month of October 2016, the cash sales have instantly risen to Rs.26,85,792/- and further in the month of From the month of November 2016, from the first day to 8th November 2016, only 8 days, the case sales have sharply risen to Rs.30,57,672/-. It was therefore observed by the Id. CIT(A) that as per bank statement of appellant, the cash deposited has been made on different dates, which shows the suspicious nature of cash deposited and accordingly, rejected the grounds raised in the appeal and confirmed the addition made by the Assessing Officer.
Aggrieved by the impound order, the assessee is in appeal before us and has raised the following grounds of appeal:
"A. Addition of Rs.52,50,000/- under Section 68
1.That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition of ^52,50,000/- made by the Assessing Officer under section 68 of the Income Tax Act, 1961, treating the cash deposits during the demonetization period as unexplained cash credit.
2.That the Ld. CIT(A) failed to appreciate that the impugned cash deposits were out of duly recorded business sales reflected in the regular books of account, which were audited and produced before the authorities below.
3.That the addition is unsustainable in law as the Assessing Officer has not rejected the books of account under section 145(3) of the Act, nor pointed out any specific defect in the purchases, sales register, stock records, cash book or VAT returns.
4.That in absence of rejection of books of account, the recorded sales forming part of business turnover cannot be treated as unexplained cash credit under section 68 of the Act.
5.That the Ld. CIT(A) erred in disregarding the documentary evidence furnished by the appellant, including:
- Month-wise cash sales,
- Month-wise cash deposits,
- VAT returns for all quarters,
- Cash book and sales registers, without recording any finding that such documents were false, fabricated or unreliable.
6.That the Ld. CIT(A) erred in upholding the addition merely on the basis of a perceived spike in cash sales during October and early November 2016, without appreciating:
- The festival season of Diwali and Dhanteras,
- The nature of the jewellery trade,
- The extraordinary circumstances prevailing immediately prior to demonetization.
7.That the comparison of monthly sales with earlier months or earlier years, without establishing that the sales were fictitious or unsupported by stock or purchases, cannot constitute valid legal basis for invoking section 68.
8.That the Ld. CIT(A) failed to appreciate that the total turnover for FY 2016-17 (Rs.1,42,42,534/-) was broadly comparable with the preceding financial year (Rs.1,35,47,421/-), thereby negating any allegation of artificial inflation of turnover.
9.That the reliance placed by the Ld. CIT(A) on the decision of the ITAT Patna Bench in the case of Shri Dharmendra Kumar is misplaced and legally unsustainable, as the facts of that case are clearly distinguishable and do not apply to a case where:
- Sales are recorded in regular course of business and also reported in Vat return,
- No defects are found in stock or purchases,
- Books are not rejected under section 145(3).
10.That the addition has been made purely on suspicion, conjectures and presumption, without any independent enquiry or evidence to establish that the sales recorded in the books were non-genuine.
2. Levy of Interest under Sections 234B and 234D
11.That the Ld. CIT(A) has erred in confirming the levy of interest under sections 234B and 234D of the Act.
12.That the interest being consequential in nature, once the addition of Rs.52,50,000/- is deleted, the levy of interest automatically deserves to be deleted.
3. General Ground
13.That the impugned order of the Ld. CIT(A) is contrary to facts, contrary to law and is liable to be set aside.
14.That the appellant craves leave to add, amend, alter or withdraw any ground of appeal at or before the time of hearing."
The Id. AR argued that during the assessment proceedings as well as appellate proceedings a comprehensive documentary evidence was furnished which has established that the cash deposits made during demonetization period was out of genuine business receipts was represented as genuine business receipts arising from the recorded cash sales. It is further stated that the entire details, statement containing month-wise, party-wise purchase details, detail of sundry creditors showing their name, address and PAN number, detail of top debtors and month-wise sales for F.Ys. 2015-16 and 2016-17, demonstrating the pattern of business turnover was duly submitted along with comparative figures showing the overall turnover during F.Y. 2016-17, which shows that the comparative turnover during these years was broadly consistent with the preceding financial year. The said information has been submitted in tabulator form alongwith written submissions. The written submissions filed along with tabulation evidence is extracted below as under:
FINAL WRITTEN SUBMISSIONS ON BEHALF OF THE APPELLANT
LIST OF ABBREVIATIONS USED
1. PRELIMINARY SUBMISSIONS
1.1.The Appellant is an individual engaged in the business of dealing in jewellery, maintaining regular books of account which are duly audited. For Assessment Year 2017-18, the Appellant filed his return of income on 25.12.2017 declaring total income of ₹8,35,500/-.
1.2.The Appellant assails the impugned order of the Ld. CIT(A) dated 29.01.2026, which mechanically confirmed the addition of ₹52,50,000/- made by the AO under Section 68 of the Act, treating the cash deposits during the demonetization period as unexplained cash credit.
1.3.The Appellant submits that the entire addition is founded on suspicion, conjecture and presumption, without any credible evidence or rejection of books of account. The addition deserves to be deleted in its entirety.
2. STATEMENT OF FACTS
2.1.The Appellant is engaged in the business of jewellery trading and maintains regular books of account including cash book, sales register, purchase register, stock register, and VAT records. The books of account are audited under the Income Tax Act.
2.2.During the demonetization period (09.11.2016 to 30.12.2016), the Appellant deposited ₹52,50,000/- in his bank accounts. The same were out of cash sales recorded in the regular books of account. The Appellant furnished the following documents before the authorities below:
- Month-wise cash sales statements
- Month-wise cash deposit details
- VAT returns for all four quarters
- Cash book and sales registers
- Audited financial statements
2.3.The AO, without rejecting the books of account under Section 145(3) and without pointing out any specific defect in purchases, sales register, stock records, cash book or VAT returns, treated the entire cash deposit of ₹52,50,000/- as unexplained cash credit under Section 68 and added the same to the total income.
2.4.The Ld. CIT(A) upheld the addition by relying upon the Patna ITAT decision in the case of Shri Dharmendra Kumar, which is factually distinguishable and has no application to the facts of the present case.
2.5.Aggrieved by the impugned order, the Appellant has filed the present appeal before this Hon'ble Tribunal.
3. GROUND-WISE ARGUMENTS AND SUBMISSIONS
GROUND NOS. 1 TO 5: Addition Under Section 68 is Illegal
3.1. No Rejection of Books of Account Under Section 145(3)
The Appellant submits that the AO has not invoked or applied the provisions of Section 145(3) of the Act to reject the books of account. No defect, infirmity or discrepancy has been pointed out in the books of account, including cash book, sales register, purchase register, stock records, and VAT returns. The law on this aspect is well-settled.
Reliance is placed on the following judgments:
(i) Pr. CIT vs. M/S Agson Global Pvt. Ltd. (Delhi HC, 19.01.2022)
The Delhi High Court upheld the ITAT's findings that:
- Cash deposits post-demonetization were in line with previous years' trends
- The assessee proved the identity, creditworthiness, and genuineness of transactions
- No incriminating evidence was found for certain assessment years
- Disallowance of purchases without evidence was not justified
This judgment is directly applicable to the present case. The Delhi High Court affirmed that where the assessee provides evidence and books of account are accepted, addition under Section 68 cannot be sustained merely on suspicion.
(ii) Agson Global Pvt. Ltd. v. ACIT (2019) 76 ITR 504 (Delhi)(Trib.)
The ITAT held that before rejecting the book results, the Department is duty bound to find patent, latent and glaring defects in the books of account. Where no allegations that the books were incomplete or incorrect were made by the Department, rejection of books is not justified. The Department is not entitled to make a pure guess in making assessment based on a mere suspicion.
(iii) ACIT v. Sunil Kumar Agrawal (Chhattisgarh HC, 2025)
The Chhattisgarh High Court held that the existence of infirmities and discrepancies in the accounts maintained by the assessee is sine qua non for invoking the provisions of Section 145(3). Unless and until the AO expressly notices the infirmities and discrepancies in the accounts maintained by the assessee, Section 145(3) cannot be invoked.
(iv) Dreamax Infrastructure Developers vs. ITO (ITAT Jaipur)
The ITAT held that books of accounts cannot be rejected under Section 145(3) merely because gross profit from a particular segment was lower. When the AO does not dispute that the assessee maintains books which are also audited, and has not doubted the genuineness of expenditure, insignificant defects cannot be a reason for rejection of books of account. Mere deviation of GP rate cannot be a ground for rejecting books of accounts and income cannot be determined on the basis of estimate and guesswork.
Application to the Present Case:
In the present case, the AO has not rejected the books of account under Section 145(3). No defect has been pointed out in the purchases, sales, stock, or VAT returns. In the absence of such rejection, the recorded sales forming part of business turnover cannot be treated as unexplained cash credit under Section 68. The addition is founded on mere suspicion and is legally unsustainable.
3.2. Addition Would Result in Double Taxation
The cash deposits are out of cash sales which were recorded in the books of account. The sales have been shown as revenue receipts in the Profit and Loss Account and the income therefrom has been offered to tax. If the same receipts are again taxed under Section 68, it would result in blatant double taxation—once as sales and again as unexplained cash credit. This is a fundamental principle consistently upheld by various ITAT benches.
Reliance is placed on the following judgments:
DCIT vs. Bawa Jewellers Pvt. Ltd. (ITAT Delhi, ITA No. 352/Del/2021, 09.06.2023)
The Delhi ITAT held that the provisions of Section 68 cannot be applied in relation to the sales receipt shown by the assessee in its books of accounts. It is because the sales receipt has already been shown in the books of accounts as income at the time of sale only. Once the purchases have been accepted, then the corresponding sales cannot be disturbed without giving any conclusive evidence/finding.
ABCAUS Case Law Citation 5051 (ITAT Ahmedabad, 2026)
The ITAT Ahmedabad held that once cash sales recorded in books are accepted, Section 68/69A cannot be invoked merely for violation of RBI guidelines for receipt of SBNs after the demonetisation announcement. Once sales are recorded in books and offered to tax, Section 68/69A cannot be invoked merely for violation of RBI guidelines.
ITAT Delhi ruling on Jewellery Cash Sales
The ITAT ruled that since the sales were already recorded, audited, and offered for tax, the deposits could not be taxed again under Section 68 or 69. The key takeaway is that when books of accounts are accepted and corroborated by stock and VAT returns, genuine sales receipts cannot be subjected to double taxation based on mere suspicion or averages.
Application to the Present Case:
The cash deposits in the present case are out of cash sales which are duly recorded in the books of account and offered to tax. The AO has not disputed the purchases, opening stock, or closing stock. In such circumstances, invoking Section 68 would result in double taxation, which is legally impermissible.
3.3. The Assessee Has Discharged the Onus Under Section 68
The burden of proof under Section 68 is on the assessee to prove the identity, creditworthiness, and genuineness of the transaction. The Appellant has fully discharged this burden by:
- Proving the identity of the source: The source is the Appellant's own business.
- Proving creditworthiness/availability of stock: The sales are supported by opening stock and purchases.
- Proving genuineness: The transactions are genuine and verifiable from sales registers, cash book, and VAT returns.
Once the primary onus is discharged, the burden shifts to the Revenue to bring credible material on record to disprove the assessee's explanation. The AO has conducted no independent enquiry with the customers by issuing summons under Section 131 or enquiry under Section 133(6) to disprove the cash sales.
GROUND NOS. 6 TO 9: Spike in Sales Due to Festival Season is Natural
3.4. Festival Season and Nature of Jewellery Trade
The AO's suspicion is based on a perceived "spike" in sales during the months of October and November 2016. The Appellant has explained this spike as being on account of the Diwali and Dhanteras festival season—a period of peak demand in the jewellery trade.
Reliance is placed on the following judgments:
DCIT vs. Bawa Jewellers Pvt. Ltd. (ITAT Delhi)
The Delhi ITAT accepted the assessee's explanation that after the Prime Minister's Speech on 08.11.2016, there was a huge rush of customers pouring in the showroom to purchase jewellery which the assessee had never seen before. The Tribunal held that cash sales is a common phenomenon in the jewellery business.
ITAT Ahmedabad judgment on Cash Sales (2026)
The ITAT observed that when the assessee had demonstrated that in the previous year, during the corresponding period, the cash sales were much higher, the allegation of "abnormal" sales during the demonetization period fell flat. The AO had rejected the books of account merely because there was a spike in cash advances on three dates. However, as per the comparative data, the cash sales in the year under consideration were in fact significantly lower than the preceding year.
ITAT Delhi ruling
The ITAT ruled that jewellery cash sales spike is normal and rejected the average sales comparison reasoning.
Application to the Present Case:
In the present case, the Appellant has demonstrated that the total turnover for FY 2016-17 (₹1,42,42,534/-) was broadly comparable with the preceding financial year (₹1,35,47,421/-), thereby negating any allegation of artificial inflation of turnover. The spike in sales during October and November 2016 is attributable to the Diwali and Dhanteras festival season, which is a normal feature in the jewellery trade.
GROUND NO. 9: Distinguishing the Revenue's Reliance on Shri Dharmendra Kumar
3.5. The Case of Shri Dharmendra Kumar is Factually Distinguishable
The Ld. CIT(A) has erred in relying upon the Patna ITAT decision in the case of Shri Dharmendra Kumar vs. ITO (ITAT Patna, 13.01.2025).
The facts of that case are entirely different:
| Parameter | Shri Dharmendra Kumar | Present Case |
|---|---|---|
| Return of Income | Not filed | Filed on 25.12.2017 declaring income of ₹8,35,500/- |
| Parameter | Shri Dharmendra Kumar | Present Case |
| Response to Notices | Failed to respond | Responded and cooperated with all notices |
| Explanation for Deposits | No explanation provided | Detailed explanation with documentary evidence |
| Compliance | Appeal filed with delay of 149 days without condonation application | Appeal filed in time |
| Evidence | No evidence furnished | Extensive evidence including audited books, VAT returns, sales registers |
The Patna ITAT emphasized that "procedural compliance, like applying for the condonation of delay, is essential" and the addition was confirmed only because the assessee had failed to prove the source of the cash deposits.
Application to the Present Case:
The present Appellant has:
- Filed return of income and cooperated throughout;
- Furnished detailed explanation supported by extensive documentary evidence;
- Complied with all procedural requirements;
- Discharged the onus of proving the source of deposits.
The Revenue's reliance on Shri Dharmendra Kumar is therefore misplaced and legally unsustainable.
4. REPLY TO ANTICIPATED REVENUE ARGUMENTS
The Revenue may rely upon the following arguments, to which the Appellant submits its replies:
| S. No. | Anticipated Revenue Argument | Appellant's Reply |
|---|---|---|
| 1. | Spike in sales indicates unaccounted cash being routed through books. | The spike is natural due to Diwali/Dhanteras festival and demonetization rush. The total turnover for FY 2016-17 is comparable with previous year. No evidence of artificial inflation. |
| 2. | Assessee failed to prove identity of customers. | The source is the Appellant's own business—not third parties. Sales are recorded in books and supported by stock. When cash sales are accepted, Section 68/69A cannot be invoked. |
| 3. | Reliance on Patna ITAT decision in Dharmendra Kumar. | The decision is factually distinguishable on multiple grounds—the assessee in that case was non-compliant and failed to prove source. The present Appellant is fully compliant. |
| 4. | Section 68 can be invoked for any credit in books. | Section 68 applies to "sums found credited in the books"—not to recorded business receipts which are already offered to tax. Addition would result in double taxation. |
5. SUMMARY OF LEGAL PRINCIPLES
Based on the foregoing analysis, the following legal principles emerge:
Section 68 cannot be invoked for recorded business receipts: Once cash sales are recorded in books and offered to tax, Section 68/69A cannot be invoked.
No rejection of books under Section 145(3): Without pointing out defects in books, the AO cannot reject books and make addition under Section 68. Defects in books are sine qua non for invoking Section 145(3).
Festival season spike is natural: In jewellery business, spike in sales during Diwali/Dhanteras is normal and cannot be treated as suspicious.
Double taxation is impermissible: Taxing the same income as sales and again under Section 68 results in double taxation, which is legally impermissible.
Distinguishing Dharmendra Kumar: The Patna ITAT decision is factually inapplicable as it dealt with a non-compliant assessee who failed to prove source.
Delhi High Court in Agson Global: The Delhi High Court upheld deletion of demonetization period cash deposits where explanation and books were provided.
6. PRAYER
In view of the facts, circumstances, and legal submissions made hereinabove, it is humbly prayed that this Hon'ble Tribunal may graciously be pleased to:
Admit the present appeal;
Set aside the impugned order of the Ld. CIT(A) dated 29.01.2026 and the assessment order to the extent of the addition made;
Delete the addition of ₹52,50,000/- made under Section 68 of the Act;
Delete the consequential interest levied under Sections 234B and 234D of the Act; and
Grant such other relief as the Hon'ble Tribunal may deem fit in the facts and circumstances of the case.
N/o NIRMALA JEWELIERS (Prop. NARAYAN CHANDRA GIRI) H.No. 8579/5, Gall No.03, Dev Nagar Karol Bagh New Delhi-110005 Details of Month wise & Party wise Purchases (Sundry Creditors) for the Period 01.04.2015 to 31.03.2016
| MONTH | PERIOD 2015 (%) | PERIOD 2016 (%) |
|---|---|---|
| APRIL | 658,504.00 | 161,550.00 |
| MAY | 42,744.00 | 81,225.00 |
| JUNE | 1,033,712.00 | 861,800.00 |
| JULY | 1,333,402.00 | 135,000.00 |
| AUGUST | 618,180.00 | 153,439.00 |
| SEPT | 1,277,980.00 | 46,436.00 |
| OCT | 1,445,880.00 | 3,891,536.00 |
| NOV | 1,501,832.00 | 3,057,671.00 |
| DEC | 1,976,221.00 | 1,891,105.00 |
| JAN | 1,636,025.00 | 2,820,766.00 |
| FEB | 1,902,851.00 | 1,537,585.00 |
| MARCH | 2,242,637.00 | |
| TOTAL | 13,547,421.00 | 14,243,516.00 |
Details of Sundry Debtors for the Period 01.04.2016 to 31.03.2017
| S.No. | Name | Address of the Debtors | PKN | Nature of Transitions | Date on which Final Payment was Made | Details of Current Position as on Date | Amount outstanding as on 31.03.2016 | Amount outstanding as on 31.03.2017 |
|---|---|---|---|---|---|---|---|---|
| 1 | AMIT BATRA | 38-6/1, D. & GUPTA ROAD- KAMAD PRABAT, NEW DELHI-05 | Gold Sales | 7,965.00 | 7,965.00 | |||
| 2 | Mr. KALA B | 1-16/1/8K, MILATARY ROAD- KAMAD PRABAT NEW DELHI-05 | Gold Sales | 4,931.00 | 4,931.00 | |||
| 3 | ALOK AKKARWAL B | 5A/1/3/1, MDA KAKOL BAGH NEW DELHI-110005 | Gold Sales | 7,640.00 | 7,640.00 | |||
| 4 | RAJESH KUMAR SHARMA | 14K, KINDHWA GALI FAHARGANJ NEW DELHI-110005 | Loans | 740,000.00 | 740,000.00 | |||
| 5 | RAVIG SHARMA | 1/1/1/07, SAT NAGAR KAKOL BAGH NEW DELHI-110005 | Gold Sales | 15,287.00 | 15,287.00 | |||
| 6 | NEV BADAVIJ JEWELIERS | M.C.C.HUMANJAGAR DEPT. JALANDWAR PURJAB | AAAPR2790P | Gold Sales | 978,000.00 | 978,000.00 | ||
| 7 | ULOGU MEAN | 5-16/7/1, TAMJ ROAD GALI NO. 1, KAKOL BAGH DELHI | Gold Sales | 5,191.00 | 5,191.00 | |||
| 8 | MANLY KUMAR B | 4,2.81, GALI NO. 02, KAMAR VIVAS NARAGALDI DELHI | Gold Sales | 43,400.00 | 43,400.00 | |||
| 9 | RAJESH GUPTA | 14K, KINDHWA GALI FAHARGANJ NEW DELHI-110005 | Loans | 740,000.00 | 740,000.00 | |||
| 10 | RAJESH GUPTA | 495/1, GALI NO. 03, MILATARY ROAD KAKOL BAGH DELHI | Gold Sales | 2,700.00 | 2,700.00 | |||
| 11 | GANGA DIVI | 8-4/4/4, SULTAN PURI DELHI-110005 | Gold Sales | 518.00 | 518.00 | |||
| 2,540,548.00 | 2,540,548.00 |
N/o NIRMALA JEWELIERS H.No. 8579/5, Gall No.03, Dev Nagar Karol Bagh New Delhi-110005 Details of Month wise & Party wise Purchases (Sundry Creditors) for the Period 01.04.2016 to 31.03.2017
| S.No. | Name | Address of the Supplier | PKN | Purchase of Month | Purchase Amount during the Month | Detail goods Purchased | Amount outstanding as on 31.03.2016 | Amount outstanding as on 31.03.2017 |
|---|---|---|---|---|---|---|---|---|
| 1 | C.DAMANI & SONS | 10K, Solitaire Plaza 1st Floor 2606, Soundwara Road Karol Bagh New Delhi-05 | AAEPD0375N | Jun-16 Oct-16 Jan-17 | 551,670.00 298,507.00 1,854,706.00 | Gold Bar 995 Gold Bar 995 Gold Bar 995 | NS | NS |
| Total | 3,256,485.00 | |||||||
| 2 | MIRJI JEWELS | 20K, 1st Floor, 2443/1/6, Beacon Pura Karol Bagh New Delhi-110005 | CRSP5580P | Apr-16 Oct-15 Nov-15 Jan-16 Mar-17 | 1,258,000.00 325,000.00 4,500,000.00 1,183,200.00 2,900,000.00 | Gold Bar 995 Gold Bar 995 Gold Bar 995 Gold Bar 995 Gold Bar 995 | NS | NS |
| Total | 10,108,200.00 |
| 3 | DAW SHAKTI-EMIRIKAS | 101, 1ST Floor 10/2445, Beacon Pura Karol Bagh Delhi-05 | AEOPN0350R | Nov-16 | 615,000.00 | Gold Bar 995 | NS | NS |
| Total | 615,000.00 | |||||||
| 4 | DAMORO TALJEE CO. LTD. | 2606, 2nd Floor East Street Ajmal Khan Road Karol Bagh New Delhi-110005 | AAECD0460E | Feb-17 | 400,000.00 | Gold Bar 995 | NS | NS |
| Total | 400,000.00 |
Details of Top Parties (Sales) for the Period 01.04.2016 to 31.03.2017
| S.No. | Name | Address of the Debtors | PKN | Sales Made during Yr as on 31.03.2016 | Sales Made during Yr as on 31.03.2017 | Tel No. |
|---|---|---|---|---|---|---|
| 1 | M.L. DARGOF & SONS | CHOWA SAMARA BAZAR MEERUT (D.P.) | AAEPD1265M | 10,988,850.00 | 5,890,113.00 | |
| 2 | RAJIV GAUTAM | 6501, STREET NO. 03, BLOCK NO. 09, DEV NAGAR K. BAGH | 271,570.00 | |||
| 3 | MANJARA KELKAR | SECTER-01, POCKET-1, FLAT NO. 04, DGA FLAT DHAKRA | 385,044.00 | |||
| 4 | SHEWARI PABANWAR | 761, NARAYAN TALA P.O. 07, NAGAR S-24, WEST BENGAL | 198,000.00 | |||
| 5 | SHAGRA KUMAR | 2034, STREET NO. 01, BLOCK-04, DEV NAGAR KAKOL BAGH | 195,000.00 | |||
| 6 | CAHI SALES | 1,241,817.00 | 7,328,210.00 | |||
| 7 | A.B. JEWELIERS | 80-103, Gall No. 01, Parli Nagar Delhi-110004 | 100,850.00 | 9811740217 | ||
| 8 | SHIV BHAGINAR B | 1st Mandir VIII, Kutub Garh Delhi-110009 | 213,000.00 | |||
| 9 | BHAGAT RAM JAI NARAYAN | 20, M.G. Marg Allahabad (D.P.) | AAEPN0350F | 97,475.00 | ||
| 10 | BELGER DAMMOND (P) LTD. | A-271, SHISHIM PITAMRAI NARAI DEFENCE COLONY DELHI | AAECD0460E | 257,021.00 | ||
| 11 | RAJESH KARA RAM SHIR | Hospital Road Nohodar 1945, Jalahander Punjab | AAEPN0350F | 201,555.00 | ||
| 12 | REKAR | 3810/22, Raghar pura karol Bagh Delhi-110005 | 148,000.00 | 9891104490 | ||
| 13 | ALOK GHOSH | 825, 02, Prem. Gall Garaghi Nagar Delhi-110001 | 97,270.00 | 9843547390 | ||
| 14 | MANITA GHOSH | 825, 02, Prem. Gall Garaghi Nagar Delhi-110001 | 9843547390 | |||
| Total | 13,427,694.00 | 14,100,220.00 |
N/o NIRMALA JEWELIERS (Prop. NARAYAN CHANDRA GIRI) H.No. 8579/5, Gall No.03, Dev Nagar Karol Bagh New Delhi-110005
Details of Sales for the Period 2015 & 2016 (Month wise)
| MONTH | PERIOD 2015 (%) | PERIOD 2016 (%) |
|---|---|---|
| APRIL | 658,504.00 | 161,550.00 |
| MAY | 42,744.00 | 81,225.00 |
| JUNE | 1,033,712.00 | 861,800.00 |
| JULY | 1,333,402.00 | 135,000.00 |
| AUGUST | 618,180.00 | 153,439.00 |
| SEPT | 1,277,980.00 | 46,436.00 |
| OCT | 1,445,880.00 | 3,891,536.00 |
| NOV | 1,501,832.00 | 3,057,671.00 |
| DEC | 1,976,221.00 | 1,891,105.00 |
| JAN | 1,636,025.00 | 2,820,766.00 |
| FEB | 1,902,851.00 | 1,537,585.00 |
| MARCH | 2,242,637.00 | |
| TOTAL | 13,547,421.00 | 14,243,516.00 |
In support of his arguments, the Id. AR has relied the case of Mumbai Tribunal in the case of Rakesh Jain Vs. DCIT in ITA No. 546/Mum/2024 order dated 04.12.2025 wherein identical addition made on account of cash deposit during demonetization was decided in favour of the assessee wherein various decision has been relied including Delhi Tribunal in the case of Agons Global P. Ltd. Vs. ACIT in ITA Nos. 741 to 746/Del/2019 wherein it has held that "mere addition made on this ground that there is deviation in ratio is not proper. When the assessee had regular cash sale and deposit of cash in bank accounts and if nothing incriminating is found contrary then addition u/s 68 of such cash sale would tantamount to double taxation."
The Id. DR on the other while supporting the order of the Id. lower authorities has argued that the assessee has failed to explain the abnormal increase in the cash sales during the demonetization and the addition has been rightly made by the Assessing Officer and lawfully confirmed by the Id. CIT(A), hence prayed for dismissal of the appeal.
We have considered the submissions and examined the factual metrics. Admittedly, the assessee has placed on record entire details by way of documentary evidence before the Assessing Officer and also for the perusal and consideration of the Id. CIT(A) in the form of sale and purchase details, party wise and month wise as reflected in table extracted earlier.
Further, in support of his written arguments as reproduced by us, the detail in tabulation form has been submitted which explains the cash sales during the demonetization period. There is no denial by the Revenue that the said evidence was duly produced before the Id. lower authority. We have examined the assessment order to find out how the evidence submitted is considered by the Id. AO. Para 6.1 extracted below as under:
"6.1As per the information made available, it is found that the assessee has booked huge cash sales before demonetization and also no satisfactory explanation in this regard has been filed. It is pertinent to mention here (the same thing has also been mentioned in the show cause notice produced above) that assessee has deposited most amount of cash i.e. Rs. 52,50,000/- during the demonization period whereas, during the period 01.04.2016 to 08.11.2019, assessee has deposited only Rs. 7,25,000/- in his bank accounts which is 723% increase in cash deposit during the demonetization period compared to pre-demonetization period. On perusal of reply of the assessee, it is coming to notice that assessee has shown cash sales during the whole year, whereas he has deposited most amount of cash during the demonetization period only. During the period 01.04.2016 to 31.10.2019 the total cash sales of assessee are Rs. 42,73,375/-, however during the whole FY -2016-17 till before the demonization period the assessee has deposited only Rs. 7,25,000/-. Vide reply of the assessee dated 23.12.2019, following details have been filed-
FY-2016-17
FY-2015-16
Purchases Sales Purchases Sales Credit Cash Credit Cash Credit Cash Credit Cash April 1138614 NIL NIL 101930 540500 NIL 389709 279795 May NIL NIL NIL 81225 1338813 NIL NIL 42744 June 546208 NIL 545431 117378 1079118 NIL 1002044 31668 July NIL NIL NIL 135000 396771 NIL 1210375 103027 August NIL NIL NIL 153439 1621380 NIL 560616 57566 September NIL NIL NIL 46436 600000 NIL 1244857 132223 October 618374 NIL 406744 2685792 2600000 NIL 1403347 42533 Upto 8th November 608911 NIL NIL 3057672 640000 NIL 9th November to 30th November 2016 4455445 NIL NIL NIL 500001 NIL 1235475 266357 December NIL NIL 1043420 47685 2032474 NIL 1585931 390280 January 3007828 NIL 1085005 935755 1553126 NIL 1415800 220223 February 297030 NIL 1236386 301199 125432 NIL 1307185 625666 March 2920793 NIL 1515206 746831 NIL NIL NIL NIL Total for the year 13593203 5832192 8410342 13027615 NIL 11355339 2192082 On perusal of above given table, it is seen that during FY-2015-16 total sales are shown Rs. 1,35,47,421/- and during FY-2016-17 total sales are shown Rs. 1,42,42,534/-. Hence, turnover during FY 2015-16 and FY 2016-17 are approximately similar. Further, cash sales in the whole month of November 2015 are shown Rs. 2,66,357/- but cash sales in the month of November 2016 till 8th day of November 2016 (only eight days) are shown Rs. 30,57,672/-. In this way the assessee has booked non-existing sales in its books pre-demonetization period and shown in the books of accounts i.e. till 08.11.2016. Further as per table above, cash sales which risen up just before the demonetization period is not justified in his case as average monthly sale during first two quarters of FY 2016-17 i.e. from 01.04.2016 to 30.09.2016 is Page 17 of 20 shown Rs.1,96,800/- thereafter in the month of October, 2016 cash sales have instantly risen to Rs. 26,85,792/- and further in the month of November 2016 from 1st day to 8th day of November 2016 ( only eight days ) cash sales have sharply risen to Rs. 30,57,672/-. As per bank statement of the assessee, the cash deposited has been made on different dates, which shows the suspicious nature of cash deposited.
Sl. No. Bank Name Date of deposit Amount 1. UNITED BANK OF INDIA 10.11.2016 9,00,000 2. UNITED BANK OF INDIA 12.11.2016 9,00,000 3. UNITED BANK OF INDIA 15.11.2016 9,00,000 4. RBL BANK 17.11.2016 9,00,000 5. RBL BANK 18.11.2016 9,00,000 6. KOTAK MAHINDRA BANK 09.12.2016 2,50,000 7. KOTAK MAHINDRA BANK 13.12.2016 2,50,000 8. YES BANK 17.12.2016 2,50,000 TOTAL 52,50,000 Therefore, the claim of assessee with regard to the cash deposited arising out of the cash sales made during the year under consideration is not acceptable."
Further, we have noticed that the Id. CIT(A) has disposed of ground Nos. 2 & 4 before him by observing in para no. 6.2.2 onwards as under:
'6.2.2 As the Grounds No. 2 to 4 are related, the same are decided together as under.
6.2.3On perusal of reply of the appellant, the Ld. AO noted that the appellant has shown cash sales during the whole year, whereas he has deposited most amount of cash during the demonetization period only. During the period 01.04.2016 to 31.10.2019, the total cash sales of the appellant are Rs. 42,73,375/-, however, during the whole of FY -2016-17 till before the demonetization period, the appellant had deposited only Rs. 7,25,000/-. It was further noted that, during FY -2015-16 total sales are shown Rs. 1,35,47,421/- and during the FY2016-17, total sales are shown Rs. 1,42,42,534/-. Hence, turnovers during the FY 2015-16 and FY -2016-17 are approximately similar. Further, the cash sales in the whole month of November 2015 are shown Rs. 2,66,357/-, however, the cash sales in the month of November 2016 till 8th day of November 2016 (only eight days) are shown at Rs. 30,57,672/-. In this way, the appellant has booked non-existing sales in its books for the pre-demonetization period and shown in the books of accounts i.e. till 08.11.2016.
6.2.4Further, the cash sales which had risen up just before the demonetization period is not justified in the case as average monthly sales during first two quarters of FY 2016-17 i.e. from 01.04.2016 to 30.09.2016 is shown at Rs. 1,96,800/-, thereafter, in the month of October, 2016, the cash sales have instantly risen to Rs. 26,85,792/- and further in the month of November 2016 from the 1st day to 8th day of November 2016 (only eight days), the cash sales have sharply risen to Rs. 30,57,672/-.
6.2.5As per the bank statement of the appellant, the cash deposited has been made on different dates, which shows the suspicious nature of cash deposited.
Sl. No. Bank Name Date of deposit Amount 1 UNITED BANK OF INDIA 10.11.2016 9,00,000 2 UNITED BANK OF INDIA 12.11.2016 9,00,000 3 UNITED BANK OF INDIA 15.11.2016 9,00,000 4 RBL BANK 17.11.2016 9,00,000 5 RBL BANK 18.11.2016 9,00,000 6 KOTAK MAHINDRA BAN 09.12.2016 2,50,000 7 KOTAK MAHINDRA BANK 13.12.2016 2,50,000 8 YES BANK 17.12.2016 2,50,000 TOTAL 52,50,000 6.2.6Therefore, the claim of the appellant with regard to the cash deposited arising out of the cash sales made during the year under consideration is rightly rejected by the Ld. AO.
6.2.7.Recently the following decision of the Hon'ble ITAT are decided in favour of revenue. The Patna bench of the ITAT, in the case of Shri Dharmendra Kumar, ITA No. 709/PAT/2024 (A.Y. 2017-2018) upheld the revenue's stand because the taxpayer could not provide any proper explanation regarding the significant cash deposits made during demonetization. In view of the above, I do not find any fault in the order of the Ld. AO. The appellant has failed to prove the source of cash deposits and hence the Ld. AO has rightly applied the provisions of Sec 68 of the Act. Respectfully following the above judicial precedent, the Grounds No. 2 to 4 of the appeal are, hereby, DISMISSED. The addition made by the Ld. AO is, therefore, upheld."
On perusal of the observation of the AO contained in assessment order and the observation of the Id. CIT(A) contained in the first appellate authority order, we have noticed that the material facts and the documentary evidence produced by the assessee in support of its case as already discussed by us has not been duly considered in a holistic manner by the both Id. authorities. By giving details of cash sales in the form of sale account from 01.04.2016 to 31.03.2017 and filing the necessary document in that regard, the assessee has discharged the primary onus and the assessing officer has not brought on record any new things to contradict the material facts and the documentary evidence produced on record by the assessee/appellant. In the given facts and circumstances, the addition made on account of cash sales during the demonetization period is not found to be legally justified and accordingly set aside. The addition made by Assessing Officer and confirmed by the Id. CIT(A) is accordingly ordered to be deleted. The grounds raised by the applicant are allowed.
In the result, the appeal of the assessee is allowed.