ACIT-1(1), INDORE, INDORE V. SANJAY LADDHA, INDORE

ITA 658/IND/2024

AI Insights

The case revolves around an appeal by the revenue against the CIT(A)'s decision, which had reversed the AO's addition of Rs. 3,21,80,200 to the assessee's income for the Assessment Year 2017-18. The AO had treated these deposits as unexplained cash credits under section 68 read with section 115BBE of the Income-tax Act, 1961, citing a lack of satisfactory explanation and documentation from the assessee. However, the CIT(A) found that the assessee had provided sufficient evidence, including audited accounts and a detailed explanation of his business activities, which were not adequately considered by the AO. The Tribunal agreed with the CIT(A)'s findings, noting that the AO had not properly examined the evidences and had incorrectly applied the provisions of the law.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 707249 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 30-08-2024
• Other Referred Cases: Dharmendra Doshi vs. ITA No. 352/Ind/2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: FORASSESSEEINVITEDOURATTENTIONTOFOLLOWING; FORREVENUERELIEDUPONAOSORDERASWELLAS; FORREVENUEISNOTABLETOSHOWANY; FORREVENUECOULDNOT; SHRIANOOPSINGH
• Assessee Lawyers: SHRIKUNALAGRAWAL
• Keywords: Business income; Additional evidence; Unexplained cash credit; Source of fund
• Section: 143(3); 68

Judgement Text

"Page 1 of 17 आयकरअपीलीयअिधकरण, इंदौरɊायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI PARESH M. JOSHI, JUDICIAL MEMBER ITA No. 658/Ind/2024 Assessment Year: 2017-18 ACIT 1(1) Indore बनाम/ Vs. Sanjay Laddha, 121, Shrinagar Colony, Anand Bazar, Indore (Revenue/Appellant) (Assessee/Respondent) PAN: AAKPL1079N Revenue by Shri Anoop Singh, CIT-DR Assessee by Shri Kunal Agrawal, AR Date of Hearing 03.07.2025 Date of Pronouncement 08.07.2025 आदेश/ O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by order of first appeal dated 03.07.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 17.12.2019 passed by learned DCIT/ACIT-3(1), Indore [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the revenue has filed this appeal on following grounds: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 3,21,80,200/- made by the AO on account of cash deposit in bank account invoking section 68 r.w.s. 115BBE of the Act by treating the cash as unexplained money of the assessee. Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 2 of 17 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 3,21,80,200/- on the basis of additional evidences ignoring the facts that the conditions laid down in the Rules 46A of the IT Rules does not fulfil in assessee's case, even the same has been mentioned in the remand report submitted by L.d. AO during appellate proceedings.” 2. The background facts leading to present appeal are such that the assessee-individual is engaged in the business of activity of selling stamps, stamp tickets, memo tickets, special adhesive tickets, etc. [“stamps vending activity”]. For AY 2017-18 under consideration, the assessee filed return declaring a total income of Rs. 38,37,350/- from various sources including business income of Rs. 23,27,958/- from stamps vending activity. The assessee submitted audited accounts and audit report in Form No. 3CB and 3CD. The case of assessee was selected for limited scrutiny to examine “Large cash deposits in bank accounts during the year”. The AO issued statutory notices u/s 143(2)/142(1) which were complied with by assessee from time to time. Ultimately, the AO completed assessment vide order dated 17.12.2019 after making an addition of Rs. 3,21,80,200/- on account of unexplained cash deposits in bank a/c made during the year. Aggrieved, the assessee carried matter in first-appeal and succeeded. Now, the revenue has come in next appeal contesting the order of first-appeal passed by CIT(A). 3. During assessment-proceeding when the AO show-caused assessee to explain the source of cash deposits in bank a/c, the assessee filed following reply which is re-produced by AO himself in Para 4.1 of assessment-order: Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 3 of 17 “4.1…. We have to inform you that during the year total E-stamp purchased from M.P. Treasury is of Rs. 15,52,04,748/- and Printed Stamp, Stamp Ticket, Memo Ticket, Special Adhesive of Rs. 1,24,32,131/-, same has been sold to customers, payment received from the customers through Electronics channels account payee cheques and cash. Further, I have to inform your honour that I am authorised Stamp Vendor and having license issued by District Sub-Registrar, Indore to deal in E-Stamp on behalf M.P. Treasury, Bhopal. E-stamp payments deposited in MP treasury through Banking Channel only. Payment received in cash from customers against stamp has been deposited in own current, saving bank and overdraft account banks. The fund accumulated in Bank Account has been transferred to MP Govt. Treasury. I have received commission from M.P. Treasury against deposit amount against printed and E-stamp account with M.P. Treasury and same has been shown in Profit and Loss account as income from commission, I have also received-Registration fee of documents from customers and Agriculture Rent and other sources in cash/cheque, same has been shown as income.” 4. Thereafter, the AO passed following order making addition of Rs. 3,21,80,200/- u/s 68 r.w.s. 115BBE on account of unexplained cash deposit in bank a/c: “4.2 Reply submitted by the assessee is duly considered but found not acceptable. Assessee did not furnish any details of person to whom he has sold stamp in cash during the year under consideration. Assessee also failed to produce documentary evidences which could substantiated the he had deposited huge amount of cash during the demonetization period out of stamp sold during the year under consideration. Assessee did not produce any supportive documents/registers with regard to cash sales of stamp. Further, assessee has submitted a comparative chart with regard to details of cash deposit which is reproduced hereunder:- 6.1 A Total cash deposited in Bank in F.Y.2015-16 3,15,42,000/- B Total cash deposited in bank from 01.04.2015 to 08.11.2015 1,91,45,000/- C Total cash deposited in bank from 09.11.2015 to 31.12.2015 10,00,000/- 6.2 A Total cash deposited in bank in F.Y.2016-17 3,21,80,200/- B Total cash deposited in bank from 01.04.2016 to 08.11.2016 2,34,75,200/- C Total cash deposited in bank from 09.11.2016 to 31.12.2016 40,00,000/- Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 4 of 17 6.3 A Percentage increase between 6.2(a) and 6.1(a) 2.02% B Percentage increase between 6.2(b) and 6.1(b) 22.62% C Percentage increase between 6.2(c) and 6.1(c) 300% From the above table it is evident that there is a drastic increase i.e. 300% in cash deposit during the period 09/11/2016 to 31/12/2016 in compare to the period 09/11/2015 to 31/12/2015. From the table mentioned above it is clear and evident that the assessee has deposited huge amount of cash for which he did not furnish any justification. It is also pertinent to mention that the case of the assessee selected under scrutiny for the reason of 'Large cash deposit during the year and demonetization period'. In this regard, vide questionnaire dated 26.07.2019, the assessee has been asked to furnish the supporting documents. The assessee failed to furnish the justification of cash deposit by not submitting the required documentary evidences. The assessee did not furnished any details of cash receipts with any documentary evidences like stamp register, receipt issued to stamp purchaser. Therefore, the books of accounts is rejected u/s 145(3) of the Act and entire cash deposits of Rs. 3,21,80,200/- made by the assessee as per the table mentioned above is treated as unexplained cash credit not related to business of the assessee. Hence, an addition of Rs. 3,21,80,200/- is being done by invoking section 68 r.w.s. 115BBE of the Act by treating the cash as unexplained money of the assessee. Penalty proceedings u/s 271AAC is being initiated separately on this issue.” 5. During first-appeal, the assessee made a detailed submission to CIT(A). The assessee also filed additional evidences in terms of Rule 46A of Income- tax Rules, 1962 with a justification of filing additional evidences stating that his brother, Shri Sanjeev Laddha, was managing accounts-related work of assessee and at the time of assessment, he suffered from serious health issue of brain injury and went into comma as he fell down from first floor. The assessee also filed copies of medical documents to CIT(A), the same are available at Pages 550-574 of Paper-Book. After consideration, the CIT(A) accepted this as a case fit for admission of additional evidences in terms of Rule 46A and sought remand-report from AO. The AO conducted remand proceedings and issued a query letter dated 10.05.2024 to assessee (Paper- Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 5 of 17 Book Pages 575-577) which the assessee replied. Ultimately, the AO filed remand-report to CIT(A), copy is available in Paper-Book at Pages 583-587. 6. The CIT(A) forwarded remand-report to assessee for comments. In response, the assessee filed re-joinder. The CIT(A), being satisfied with assessee’s submission, took a final decision to admit additional evidences. Thereafter, the CIT(A), in Para 4.3 / Pages 7 to 14 of impugned order, re- produced the AO’s remand-report. We re-produce below only last concluding para of AO’s remand report, reading as under: “3.3 Comments of the Assessing Officer: On perusal of documents/reply/ evidences as submitted by assessee during remand proceedings it appears that during the relevant period, the assessee was an 'Authorized Stamp Vendor’ having a licence issued by Registration and Stamp Department, Madhya Pradesh on 12.06.2015 for the period 12.06.2015 to 31.03.20217 and he was earning commission income on account of sale of e-stamps, printed stamp, stamp ticket, memo ticket, special adhesive etc. In support of cash deposit during the relevant period the assessee has submitted copy of stamp register, cash book, ledger accounts, list of persons to whom E-stamp/ printed stamp were sold, however assessee failed to submit PAN/Adhaar of person from whom cash were received against sale of Stamp as required vide letter dated 10.05.2024. Further, the assessee has submitted all documents during the remand proceedings the same cannot be entertained as it does not fulfill the conditions laid down in the Rules 46A of the IT Rules. However, appeal filed by the assessee to be adjudicated on the basis of merit of the case. During the remand proceeding all correspondences and submissions made by the assessee are done through ITBA, which are available for perusal.” 7. Ultimately, the CIT(A), after consideration of assessment-order passed by AO; the reporting made by AO in remand-report; and the re-joinder filed by assessee, passed following order reversing the action of AO and deleting the addition: “5. Decision Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 6 of 17 It is seen that the Assessing Officer has mentioned in the assessment order that the appellant had made a cash deposit of Rs. 40 lakhs in his two bank accounts during the period of demonetization. He then compared the extent of cash deposits during the immediately preceding year and the current year, in respect of total cash deposit during the whole year, deposit during pre- demonetisation period and deposit during demonetization period. He came to the conclusion that there was an increase of 2.02% in total cash deposit during the year, an increase of 22.62% during pre-demonetisation period and 30% increase during demonetization period. However, for lack of supporting documents etc., he held the entire cash deposit made during the whole financial year to be unexplained money. From the records available on record, it is evident that the appellant has been engaged in the activities of an authorised Stamp Vendor and having license issued by District Sub-Registrar, Indore to deal in E-Stamp on behalf M.P. Treasury, Bhopal. Normal trend in his activities are that he purchases E-stamps and related instruments from M.P. Treasury and sales those to the customers. He acts as an agent between the treasury and customers and earns commission on those sale. Most of the sale of E-stamps are made on cash. He deposits the cash in his bank accounts and remit the same to the treasury. This activity is consistent over the years. This is the reason that cash is found deposited in earlier years also. The appellant has also submitted the copy of license issued by the state administration to this effect. In the year under consideration, the appellant has purchased E-stamps worth more than 15 crores from the treasury and has offered commission in his audited financials. Thus, the main issue remained to be examined is whether the cash deposits made by the appellant was from his known sources of income. The remand report was called for from the Assessing Officer with a direction to examine the same from the books of accounts of the appellant. The Assessing Officer has reported that the appellant had submitted all the required documents related to the issue. The Assessing Officer has not drawn any adverse inference regarding the source of cash deposits in the bank accounts of the appellant after examining books of accounts and other details submitted by the appellant. He has only pointed out the discrepancy that the appellant failed to submit the PAN/aadhar nos. of the customers. On this aspect, the appellant submitted his response, relevant part of which is reproduced as under: Our submission 1. In this regard, it is humbly submitted that the first objection of the Ld. AO Is that the assessee failed to submit PAN/Aadhar of the persons from whom cash were received against sale of stamps. B. In this regard, it is humbly that the appellant is not required to maintain the PAN/Aadhar of the customers under any statute/law on whose behalf the appellant purchases E-Stamp from MP Treasury. C. All the registered deeds are executed only after incorporating the details of PAN/Aadhar of all the concerned parties and are accented and issued by the Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 7 of 17 Registrar after thorough verification of each and every details by the Government officials. The appellant had duly submitted the front page of registered deed of majority of the customers from whom cash was received in respect of purchase of E-Stamp made by the appellant on their behalf. The said front page contains name and address of all the parties who executed the registered deeds, amount stamp duty and registration fees. The registered deed itself is a credible and authentic document issued by the District Registrar. That, it is pertinent to mention here that the appellant is engaged in this profession of stamp vendor and is following the business practices which is in accordance with the market practices since many years. The appellant had duly submitted all the possible documentary evidences and records maintained by him to substantiate his submission that the cash deposit during the year under consideration was purely out of the amount received from the customers on account of business activities. Thus, the initial onus which was laid on the appellant was duly discharged and the Ld. AO was able to prove anything contrary. Therefore, the deficiency pointed out by the Ld. AO regarding non submission of copy of PAN/Aadhar of customers is unreasonable and arbitrary. This discrepancy has been explained by the appellant that he is not required to maintain PAN/Aadhaar details of customers under any law and he also furnished the front page of registered deeds of some customers. 5.1 Based on above facts, it is held that the addition of Rs. 3,21,80,200/- made by the Assessing Officer is not sustainable and is hereby deleted.” 8. During hearing, Ld. AR for assessee invited our attention to following documents filed by assessee to CIT(A), copies held in Paper-Book, to corroborate the veracity of findings made by CIT(A): (i) Copy of licence issued by Registration and Stamps Department of Madhya Pradesh dated 12.06.2015 to assessee for the activity of stamp vending for the period 12.06.2015 to 31.03.2017 (Paper-Book Page 133). (ii) Complete Statement in a tabular format showing the details of sources of cash-receipts from customers under headings such as S.No., Name of person, Stamp sale & Registration fee received in cash, Date of receipt, Date of registry and Enclosures submitted (Paper-Book Pages Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 8 of 17 134-139). The Statement classifies details of receipt in four categories as under: I Cash received from sale of e-stamp/printed stamp and registration fee 3,04,40,982/- II Retail cash sale of stamp 11,91,157/- III Cash sale of memo tickets 2,84,000/- IV Cash sale of stamp ticket 44,85,998/- Total 3,64,02,137/- (iii) Audited Cash-Book of the financial year 2016-17 highlighting the transactions of receipts from customers (Paper-Book Pages 140-200). (iv) ‘Stamps Register’ issued by Stamps Department (Paper-Book Pages 201-289). (v) First pages of several registered-deeds executed by customers to whom stamps were sold by assessee (Paper-Book Pages 290-501). (vi) Ledger A/c of ‘M.P. Treasury’, a part of assessee’s audited books of account (Paper-Book Pages 502-515) (vii) Ledger A/c of Category-II - ‘Retail Stamps Sale’, a part of assessee’s audited books of account showing datewise entries for a total sale of Rs. 11,91,157/-during the year (Paper-Book Pages 521-523) (viii) Ledger A/c of Category-III - ‘Memo Ticket Sale’, a part of assessee’s audited books of account showing datewise entries for a total sale of Rs. 3,30,000/- during the year, which includes receipts in cash Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 9 of 17 amounting to Rs. 2,84,000/- and remaining receipts through bank (Paper-Book Pages 516-517). (ix) Ledger A/cs of Category-IV- ‘Stamps Ticket Sale’, part of assessee’s audited books of account showing datewise entries for a total sale of Rs. 4,68,800/- (+) Rs. 63,83,928/- during the year, which includes receipts in cash amounting to Rs. 44,85,998/- and remaining receipts through bank (Paper-Book Pages 518-520). 9. Thereafter, Ld. AR also drew our attention to the statistical data of cash deposits noted by AO in Para 4.2 of assessment-order and submitted that the total cash deposit of Rs. 3,21,80,200/- made by assessee in bank a/c during current financial year 2016-17 is very much comparable to the total cash deposit of Rs. 3,15,42,000/- made in bank a/c during immediately preceding financial year 2015-16. He submitted that the AO has himself computed just 2.02% increase in the level of deposit in Point No. 6.3(A) of his working and considering such a miniscule level of increase, not able to make any adverse comment in assessment-order. He submitted that the AO has taken note of cash deposit of Rs. 40,00,000/- made by assessee in bank a/c during the period 09.11.2016 to 31.12.2016 (demonetization period) as against cash deposits of Rs. 10,00,000/- during corresponding period of 09.11.2015 to 31.12.2015 in preceding year; computed 300% increase therein and based thereon treated the entire deposit of Rs. 3,21,80,200/- in current year as unexplained and made a hefty addition of Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 10 of 17 Rs. 3,21,80,200/-, which is a grossly wrong and illogical action of AO. He submitted that the AO’s observation is for demonetization period and still he has made addition for whole year; this step of AO is baseless and bad in the first blush. Even for cash deposit of Rs. 40,00,000/- made in the demonetization period, Ld. AR submitted that the assessee has filed audited cash-book showing adequate cash available to assessee and in Para 3.3 of remand-report, the AO has mentioned his satisfaction qua the documents submitted by assessee. Ld. AR went ahead to submit that the assessee is engaged in the activity of stamps vending; that all purchases are made from Govt. treasury and that all sales are made to customers as per statutory provisions; then there is no question of raising any doubt regarding assessee’s business. He submitted that the AO has raised an issue that PAN/Aadhar of customers (to whom the stamps, tickets, etc. were sold by assessee) but the assessee is not under any obligation to maintain PAN/aadhar numbers of customers any under any law and the Ld. CIT(A) has already considered this objection in his order. 10. Ld. AR further drew us to Pages 8 – 31 of Paper-Book where audited accounts of assessee alongwith audit report in Form No. 3CB and 3CD are filed. Ld. AR submitted that the assessee’s transactions of stamps vending activity have been properly recorded in audited books and the net income of Rs. 23,27,959/- generated therefrom had been shown in audited P&L A/c and offered in the return of income. He submitted that the AO, in the Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 11 of 17 assessment-order framed, has accepted and assessed the net business income of Rs. 23,27,959/-, as per audited accounts, without making any variation. Thus, the AO has accepted the audited transactions of stamps vending activity without finding any infirmity therein. That shows, according to Ld. AR, that the AO has not found any sort of ‘incompleteness’ or ‘incorrectness’ in assessee’s books so as to warrant invoking of section 145(3). Therefore, Ld. AR submitted, the AO is not correct in applying section 145(3) and rejecting audited books of assessee. 11. Ld. AR next proceeded to narrate a serious anomaly in the action of AO. He submitted that, on one hand the AO has rejected assessee’s books u/s 145(3) and on other hand invoked section 68 of the Act to make impugned addition. This is a contradiction in AO’s approach. Ld. AR relied upon following decision of ITAT, Indore in Dharmendra Doshi, ITA No. 352/Ind/2024, AY 2017-18, order dated 20.01.2025 wherein it has been categorically held that once the AO has rejected books of assessee u/s 145(3), section 68 cannot be applied and no addition can be made u/s 68: “9. Even on legal side, we find merit in the submission made by Ld. AR that once the AO has rejected books of assessee u/s 145, the addition u/s 68 cannot be made. Their Lordship in CIT Vs. Dulla Ram (2014) 42 taxmann.com 349 (Punjab & Haryana HC) have approved this proposition in following terms: “10. An Assessing Officer may, while considering a return of income, inspect the account books and, if satisfied, that account books do not reflect the true income of an assessee, reject the same. Account books once rejected, are ruled out of consideration and cannot be pressed into service whether by the assessee or the revenue. Thus, when account books are rejected, it would follow, as a necessary corrollary, that entries in the account books whether suspicious or not cannot be relied Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 12 of 17 by the revenue or the assessee. To hold otherwise, would, in essence, render account books valid for certain purposes and invalid for others, a course impermissible in law. The Assessing Officer rejected the account books in their entirety and thereafter proceeded to assess income by applying a flat rate of profit of 10%. After applying a flat rate of profit of 10%, the Assessing Officer added Rs.1,98,298/- to the income of the assessee on the basis of certain 'entries' deemed to be suspicious. The Commissioner of Income Tax (Appeals) as well as the Tribunal have rightly held that as books of accounts were rejected in their entirety, the Assessing Officer could not rely upon any entry in the books of accounts for making an addition of Rs. 1,98,298/-. A bare reading of Section 68 of the Act would reveal that it would not apply to a situation where account books have not been rejected.” 10. Therefore, in view of above discussion, we are of the considered view that the addition made by AO in present case is neither tenable on merit nor on legal provisions of section 68. Therefore, the AO is directed to delete the addition. The assessee succeeds in this appeal.” 12. Per contra, Ld. DR for revenue relied upon AO’s order as well as remand-report and pointed out that there are two objections raised by AO, namely (i) the AO objected against admission of additional evidences, and (ii) the AO also objected that the PAN/Aadhar of the customers (to whom stamps were sold by assessee) were not provided. Ld. DR further referred the Statement submitted by assessee to CIT(A) (Paper-Book Pages 134-139) and narrated that the assessee filed evidences only of Category-I, the assessee did not file any evidence of Category II, III and IV. He submitted that the business of stamps vending is an organized sector and the assessee must file complete details which was not done. Finally, Ld. DR relied heavily upon the AO’s objections and opposed the order of CIT(A). 13. We have heard learned Representatives of both sides and carefully perused the orders passed by respective lower-authorities as also the documents held in Paper-Book to which our attention has been drawn. We Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 13 of 17 have also perused the relevant provisions of law and the judicial rulings cited before us. The dispute in present case relates to the addition of Rs. 3,21,80,200/- made by AO on account of unexplained cash deposits made by assessee in bank a/c during the financial year 2016-17 relevant to AY 2017-18 under consideration. The assessee’s claim is such that the impugned deposits were made from cash received from customers towards stamps vending activity carried on by him. The undisputed facts are such that (i) the assessee is a licence holder of stamps vendor granted by Stamps and Registration Department of Madhya Pradesh and (ii) the assessee has maintained regular books of account which were audited in terms of section 44AB. The assessee is claiming that the impugned bank a/c was duly recorded in his audited books. Further, the transactions of cash receipts from customers towards stamps vending activity and deposits of such receipts in bank a/c are duly recorded in audited cash-book. Although the assessee could not file evidences to AO during assessment-proceeding but the assessee has filed additional evidences to CIT(A) during first appellate proceedings and the CIT(A) has sought remand report from AO. The AO conducted remand-proceedings by giving notice to assessee and thereafter submitted remand-report to CIT(A). In remand report, the AO made objection against admission of additional evidence but the CIT(A) has turned down the AO’s objection and the Ld. DR for revenue is not able to show any error or infirmity in such action of CIT(A) except relying upon AO’s objection. Therefore, we do not find any error in the order of CIT(A) in so far as Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 14 of 17 admission of additional evidences are concerned. In fact, the AO has himself reported to CIT(A) thus: “the assessee failed to submit PAN/Adhaar of person from whom cash were received against sale of Stamp as required vide letter dated 10.05.2024. Further, the assessee has submitted all documents during the remand proceedings the same cannot be entertained as it does not fulfill the conditions laid down in the Rules 46A of the IT Rules. However, appeal filed by the assessee to be adjudicated on the basis of merit of the case. During the remand proceeding all correspondences and submissions made by the assessee are done through ITBA, which are available for perusal.” Thus, the sole objection of AO, after conducting remand proceeding, was that the assessee did not file PAN/ Aadhar data of the customers to whom stamps were sold. Barring this observation, the AO has himself accepted that assessee submitted all documents during remand-proceeding. He also recommended to CIT(A) to decide assessee’s appeal on merit. The CIT(A) has dissolved AO’s objection of non-furnishing of PAN/aadhar data by rightly holding that the assessee was not required to maintain PAN/aadhar data of customers. Further, the CIT(A) has also made a finding that the assessee has filed first pages of several registered-deeds executed by customers to whom the stamps were sold. In response to a query raised by bench, Ld. AR submitted that these documents were collected by assessee for submission to CIT(A) which are also filed in Paper-Book at Pages 290-501 of Paper-Book and these are copies of statutory documents being the registered-deeds executed by customers. Thus, the CIT(A) has passed a meritorious order after vehement Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 15 of 17 consideration of all facts and documents. The Ld. DR for revenue could not controvert the findings made by Ld. CIT(A) except to submit that in relation to Categories-II, III and IV (discussed earlier) relating to retail sale of stamps, memo tickets and stamps tickets, the assessee did not furnish evidences. Ld. AR submitted that these were the transactions for sale of tickets “over the counter” and the assessee filed Ledger A/cs which contain date-wise sales entries. We find that the tickets sold by assessee are statutory stationery and when they are sold “over the counter” and recorded in books of account on regular basis, nothing more can be expected from assessee. 14. At this stage, we also find a strong merit in the legal pleading raised by Ld. AR that the AO was not justified in rejecting audited books of assessee on mere trend analysis of cash deposits in current year vis-à-vis preceding year (that too only demonetization period) without finding that the books were not correct or complete. Needless to mention that the provision of section 145(3) empowers the AO to reject books of account only if he “is not satisfied about the correctness or completeness of the accounts of the assessee”. Alternatively, even if it is assumed that the books were rightly rejected u/s 145(3), then in that event also the AO is wrong in making addition u/s 68 as has been held by ITAT, Indore in Dharmendra Doshi (supra). Therefore, the addition made by AO is not sustainable for this reason also. At this stage, we may mention that the Ld. DR has, after conclusion of hearing, filed a letter dated 07.07.2025 submitting that “the Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 16 of 17 instant appeal has been filed by the Revenue, and the Assessee Respondent has not filed any cross appeal or for that matter any cross objection to support the order of the CIT(A). Therefore, in absence of the same, no new legal ground can be raised by Assessee Respondent and adjudicated by the Hon’ble Bench as per the Appellate Tribunal Rules, 1963”. So far as this objection raised by Ld. DR is concerned, we may state that the assessee is raising a legal claim qua the infirmity in AO’s action and this claim of assessee has not been adversely commented/adjudicated by CIT(A) in first appeal. The provision of section 253(4) which governs filing of cross-objection prescribes that the respondent (i.e. assessee in present case) “may” file a cross-objection “against any part of the order of CIT(A)”. Thus, at first, the use of word “may” indicates that the filing of cross-objection is discretionary and not mandatory and secondly, the cross-objection is necessary “against any part of the order of CIT(A)”. In present case, the assessee is pointing out a weakness in the action of AO in as much as the AO has wrongly invoked section 68 even while rejecting books u/s 145(3); the assessee is not claiming anything “against the order of CIT(A)”. Therefore, there is no necessity to file cross-objection. Needless to mention that the Hon’ble Supreme Court has held in National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) that a legal claim can be raised at any stage and can be entertained and adjudicated by appellate bodies. Being so, we do not find any substance in the objection raised by Ld. DR. Sanjay Laddha ITA No. 658/Ind/2024 – AY 2017-18 Page 17 of 17 15. In view of above discussions and various reasons cites therein, we arrive at a conclusion that the addition made by AO is not sustainable and hence the order passed by CIT(A) deleting the addition made by AO is in order. We uphold the same and the present appeal of revenue is dismissed being meritless. 16. Resultantly, this appeal of revenue is dismissed. Order pronounced in open court on 08/07/2025 Sd/- Sd/- (PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/Dated : 08/07/2025 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order E COPYSr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore "