ADITI ENTERPRISES,MEERUT V. ITO, WARD 1(1), MEERUT

ITA 1991/DEL/2024

AI Insights

Aditi Enterprises, a partnership firm engaged in trading and manufacturing of gold ornaments, appealed against the order of the CIT(A)/NFAC which confirmed the addition of Rs.2,58,00,000 under section 68 of the Income Tax Act. This addition was initially made by the AO during the assessment proceedings, which scrutinized the cash deposits made during the demonetization period. The firm argued that these deposits were from legitimate business cash sales, supported by audited financial statements, sales tax returns, and stock registers. The Tribunal, after reviewing the submissions and evidence, found merit in the assessee's arguments and overturned the CIT(A)'s decision.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841362 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 25-04-2024
• Other Referred Cases: Subhash Chand Gupta Vs. ACIT, Pragya Gupta Vs. ITO, J.R. Rice India (P) Ltd. Vs. ACIT, ITO VS. J.K. Wood India (P) Ltd., Yogesh Gupta Vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 143(3); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘A’: NEW DELHI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No.1991/Del/2024 Assessment Year 2017-18 Aditi Enterprises 213/4, Panna Bhawan, Chatta ali Raza, Neel Ki Gali Meerut PAN No.AAOFA3109L Vs ITO Ward-1(1) Meerut Assessee Respondent Assessee Sh. Rohit Aggarwal, CA Respondent Sh. Ajay Kumar Arora, Sr. DR Date of Hearing 09.01.2026 Date of Pronouncement 25.02.2026 ORDER PER C.N. PRASAD, JM, This appeal is filed by the assessee against the order of the CIT(A)/NFAC dated 07.02.2024 for the A.Y. 2017-18. The assessee in its appeal raised the following ground :- 1. That the Ld. CIT(A) has erred in law and the facts of the case by confirming the addition of Rs.2,58,00,000/-made u/s 68 of the Act, and the order under appeal as passed by the Ld. CIT(A), deserves to be set-aside being illegal and inconsistent with the facts of the case. Printed from counselvise.com Page | 2 2. That the Ld. CIT(A) has erred in law and facts of the case by confirming the impugned addition of Rs.2,58,00,000/-, as the same has been made without pointing out any deficiency in the audited books of the appellant and its stock registers and other documents placed on record. 3. That the appellant respectfully craves leave to add alter omit or substitute any or all of the above grounds of appeal at any time before or at the time of hearing of appeal to enable your good self to decide the appeal in accordance with law. 2. The brief facts of the case are that the assessee is a partnership firm carrying on the business of trading and manufacturing of gold ornaments as well as trading of bullion under the name and style of M/s Aditi Enterprises. The assessee filed its return of income for the relevant year on 27.09.2017, declaring a total income of Rs. 2,89,924/-. The books of accounts of the assessee were duly audited u/s 44AB of the Act. Copies of the audited balance sheet and tax audit report for the year under consideration are placed at page nos. 17 to 33 of the paper book. The ITR filed by the assessee was selected for scrutiny under CASS to verify the cash deposits of Rs.2,58,00,000/- made in its bank account during demonetization period on 10.11.2016 and 12.11.2016 at Rs.82 Lakhs and Rs. 176 Lakhs. 3. During the course of the assessment proceedings the assessee explained that the cash deposited in its bank account were out of its business cash in hand which was appearing in its Cash book on the close of business hours on 08.11.2016. It Printed from counselvise.com Page | 3 was further explained that the cash was collected from the cash sales made during the year which totaled to Rs.7,46,26,816/- Out of the total cash sales of Rs.7,46,26,816/-, cash sales of Rs.3,71,22,314/- were made from 1st October, 2016 to 08th November, 2016. The Ld. A.O. disbelieved the cash sales of the assessee during the month of October and November, 2016 and resultantly disbelieved the availability of cash for making bank deposit during demonetization period. 4. However, the Ld. A.O. without doubting the audited balance sheet and the book results of the assessee, completed the assessment proceedings vide order dated 27.12.2019, passed u/s 143(3) of the Act, wherein addition of the total amount of cash deposited during demonetization period of Rs.2,58,00,000/- was made u/s 68 of the Act. 5. Aggrieved by the above, the assessee filed an appeal before the Ld. CIT(A), Meerut, which was later on transferred to Ld. CIT(A), NFAC. During the course of the first appellate proceedings the submissions as made before the Ld. A.O. were reiterated. The appeal of the assesse was decided by the Ld. CIT(A) vide order dated 07.02.2024, wherein the order of the ld. AO was upheld and the appeal was dismissed. 6. The Ld. Counsel for the assessee submitted that the audited books of accounts of the assessee which were duly audited have neither been rejected or doubted by the Ld. A.O. and the Ld. CIT(A). Copy of the audited balance sheet of the assessee are placed at page nos. 17 to 33 of the paper book. Printed from counselvise.com Page | 4 7. The Ld. Counsel for the assessee submitted that the cash deposits made in the bank account of the assessee during demonetization period are duly recorded in the cash book of the assessee for the relevant year. Copy of the cash book is place at page nos. 76 to 139 of the paper book. The Id. A.O. and the Ld. CIT(A) did not point out any deficiency in the cash book of the assessee. 8. The Ld. Counsel for the assessee submitted that all the cash sales made by the assessee are duly supported by the stock movement. Copy of the itemized daily stock register of the assessee for the relevant year is placed at Page Nos. 36 to 72 of the paper book The Id. A.O. and the Ld. CIT(A) did not point out any deficiency in the stock register of the assessee cash book of the assessee. 9. The Ld. Counsel for the assessee submitted that all the cash sales made by the assessee have duly been declared in the sales tax return-which have been accepted by the VAT department in the VAT assessment order. Copy of the sales tax returns and sales tax assessment order are placed at page nos. 145 to 162 of paper book. 10. The Ld. Counsel for the assessee submitted that the difference in sales as per sales tax returns and that as per the audited profit and account of the assessee, as stated by the Ld. A.O. in his remand report has duly explained in the rejoinder to the remand report as filed before the Ld. CIT(A) during the course of the appeal proceedings. Copies of the remand report Printed from counselvise.com Page | 5 and rejoinder are placed at page nos. 163 to 167 and page nos, 168 to 170 of the paper book respectively. 11. The Ld. Counsel for the assessee submitted that the finding of the Ld. A.O. and Ld. CIT(A) that there were no cash sales after demonetization period is factually incorrect as the assessee has made cash sales even after demonetization period. Month wise breakup of cash and credit sales as made by the assessee during the year under consideration is placed at page no. 34 of the paper book 12. The Ld. Counsel for the assessee submitted that the assessee had the history of making huge cash sales in the months of October and November, as these months are Hindu festival months. The comparative chart of month wise cash sales made by the assessee from FY 2014-15 to FY 2017-18 is placed at page no. 75 of the paper book. From the said chart it can be noticed that the assessee has been making huge cash sales in the months of October and November every year. 13. The Ld. Counsel for the assessee submitted that the Ld. A.O. and the Ld. CIT(A) doubted the cash sale of the assessee for the sole reason that the cash sale bills under consideration did not bear the names and addresses of the buyers. Apart from that no deficiency has been pointed out in the books of account of the assessee by the Ld. CIT(A) and the id. A.O. 14. The Ld. Counsel for the assessee submitted that all the assessee was under no legal obligation to collect the KYC Printed from counselvise.com Page | 6 documents of the buyers hence, it did not collect the said documents from the buyers. 15. Reliance is placed on the following judicial pronouncements for the above contentions :- a) Subhash Chand Gupta Vs. ACIT (2024) 168 Taxmann.com 76 (Del ITAT) b) Pragya Gupta Vs. ITO (2024) [ITA no. 234/Del/2024] (Del ITAT) c) J.R. Rice India (P) Ltd. Vs. ACIT (2023) 157 taxmann.com 337 (Del ITAT) d) ITO VS. J.K. Wood India (P) Ltd. (2024) 158 taxmann.com 208 (Del ITAT) e) Yogesh Gupta Vs. ACIT (2024) 159 Taxmann.com 1396 (Del ITAT) 16. The Ld. Counsel for the assessee submitted that the additions so made by the Id. AO and confirmed by the Id. CIT(A), are illegal and bad in as the same has only been made on the basis of whims and surmises, and nothing has been brought on record both by the Id. AO and the Ld. CIT(A) to disprove the assessees submissions. On the basis of the above documents/ explanations, it is prayed that the impugned addition so made by the ld. AO and confirmed by the ld. CIT(A), be deleted and the order of the Ld. CIT(A) be set aside. 17. On the other hand the Ld. DR strongly placed reliance on the orders of the authorities below. 18. Heard rival contentions, perused the orders of the authorities blow. We find considerable merit in the submission of the Ld. Counsel for the assessee. The audited books of Printed from counselvise.com Page | 7 accounts were duly accepted by the AO, no defects have been pointed out, the cash deposits made into bank account during the demonetization period were duly recorded in the cash book. The AO did not point out any deficiency in the cash book. The cash sales made by the assessee are duly supported by the stock movement. A copy of itemized daily stock register was also furnished before the AO as well as the CIT(A) and both the authorities did not point out any deficiencies in the stock register and the cash book of the assessee. The cash sales of the assessee were duly reflected in the sale tax return and the VAT Department has accepted the sales returns filed by the assessee and the copies of the sales tax returns and assessment orders were also furnished by the assessee. 19. It is also the contention of the Ld. Counsel for the assessee that findings of the lower authorities that there were no cash sales after demonization period is factually incorrect as the assessee has made cash sales even after demonization period. The Ld. Counsel also stated that the month wise breakup of cash and credit sales made by the assessee during the year under consideration was placed in paper book at page -34. The Ld. Counsel also contended that assessee had the history of making huge cash sales in the months of October and November as these months are Hindu festival months. He also invited our attention to the comparative chart of month wise cash sales made by the assessee from F.Y. 2014-15 to F.Y. 2017-18 which is placed at page-75 of the paper book. The comparative chart of monthwise cash sales made by the assessee from the F.Y.2014-15 to 2017-18 shows that the assessee has been Printed from counselvise.com Page | 8 making huge cash sales in the months of October and November every year. Therefore, in our view merely there were cash deposits in the bank account during demonetization period they could not be treated as unexplained deposits when the assessee has furnished all the evidences to demonstrate that these deposits are from out of sales made by the assessee especially when the books were audited and no defects were pointed out by the lower authorities. Thus, we direct the AO to delete the addition made u/s.68 of the Act in respect of the cash deposits made by the assessee. The grounds raised by the assessee are allowed. 20. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 25.02.2026. Sd/- Sd/- [M. BALAGANESH] [C.N. PRASAD] ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25.02.2026 NEHA , Sr.P.S.* Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "