आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘B’, CHANDIGARH BEFORE SHRI A.D. JAIN, VICE PRESIDENT & DR KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 499/CHD/2023 Ǔनधा[रण वष[ / Assessment Year : 2017-18 The ITO, Ward-1(3), Ludhiana Vs. बनाम Shree Balaji Processors, Tajpur Road, Opp. Central Jail, Ludhiana 141010 èथायी लेखा सं./PAN No: ACTFS8428B अपीलाथȸ/ APPELLANT Ĥ×यथȸ/ REPSONDENT AND C.O. No. 09/Chd/2024 ( In आयकर अपील सं./ ITA No. 499/CHD/2023) Ǔनधा[रण वष[ / Assessment Year : 2017-18 Shree Balaji Processors, Tajpur Road, Opp. Central Jail, Ludhiana 141010 Vs. बनाम The ITO, Ward-1(3), Ludhiana èथायी लेखा सं./PAN No: ACTFS8428B अपीलाथȸ/ APPELLANT Ĥ×यथȸ/ REPSONDENT ( Physical Hearing ) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राजèव कȧ ओर से/ Revenue by : Smt. Kusum Bansal, CIT DR स ु नवाई कȧ तारȣख/Date of Hearing : 26.06.2024 उदघोषणा कȧ तारȣख/Date of Pronouncement : 20.08.2024 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 2 आदेश/Order Per Dr. Krinwant Sahay, A.M.: The appeal in this cases has been filed by the Revenue against the order dated 12.06.2023 of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. 2. The Grounds of appeal raised by the Revenue are as under: - I. That the Id CIT(A). Ludhiana erred in law, in deleting the addition of Rs. 1,58,607/- made by the Assessing Officer on account of GP shown by the assesses by increasing GP Rate from 3.18 percent to 3.43 percent, which is contrary to the facts laid town in lite assessment order I (a). That the Ld. CIT(A), Ludhiana erred in law in deleting addition of Rs.6,89,67,208/- made by the Assessing Officer in respect of cash deposited in bank account of the Assessee u/s 69A of the Act during the period of demonetization. 1(b) That the ld. CIT(A), Ludhiana erred in law, by relying on non-jurisdiction High court decisions even which is contrary to the facts and circumstances mentioned in the assessment order. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 3 1(c) That the appellant craves leave to add or amend any ground or appeal before it is finally disposed off. 3. There is a Cross Objection, i.e., C.O. No. 09/Chd/2024 in this case filed by the Assessee, which we shall deal in latter part of this order after deciding the appeal of the Revenue. 4. The appeal of the Revenue on first ground is basically in respect of deletion of addition of Rs. 1,58,607/- made by the Assessing Officer of GP shown by the Assessee by increasing GP rate from 3.18% to 3.43% and the second ground is regarding deletion of addition of Rs. 6,89,67,208/- made by the Assessing Officer in respect of cash deposited in bank account of the Assessee u/s 69A of the Income Tax Act, 1961 (in short 'the Act'). 5. Brief facts of the case that the Assessee firm is engaged in the business of manufacturing as well as trading of knitted cloth, mink blankets, manufacturing of T-shirts and job work of dyeing. The Assessee filed its return of income for the assessment year 2017-18 on 30.10.2017 declaring income of Rs. 57,15,510/-. During the assessment proceedings before the A.O., Assessee’s books of account were rejected u/s 145(3) and additions were made – 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 4 (a) by adopting higher rate of GP by 25% at Rs. 1,58,607/- (b) Cash deposited during demonetization period treated as unexplained u/s 69A at Rs. 68967208. Aggrieved by the additions, the Assessee filed an appeal before the ld. CIT(A). The ld. Commissioner of Income Tax (Appeals) has given his findings on different issues raised as under:- “5.2 I have carefully examined the facts of the case and the submissions filed by the appellant have been taken due cognizance of. The additions in the case of the appellant have been made on two issues. The addition on the first issue amounting to Rs.1,58,607/- has been made on application of excess GP rate of 0.25% after rejecting the books of accounts by giving various, reasons. In second issue, the additions amounting to Rs.6,89,67,208/- was made u/s 69A of the Act by treating the cash deposited during the demonetization period as unexplained money. 5.3. As regards to the Ist ground of appeal, I have carefully perused the assessment order passed u/s 143(3) of the Act dated 29/12/2019. In the assessment order the AO has narrated various facts for the rejection of the books of accounts under section 145(3) of the Act. The observation and discrepancies in nutshell as observed by the AO are as under: 1. Cash sale of October and November 2016 shows sudden high as compared to preceding month and again drop to almost NIL in the month of December 2016. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 5 2. The Appellant has not uploaded cash book of Kolkata branch for whole of the year. 3. There is a huge difference in closing cash in hand which was submitted to the investigation wing vis a vis submitted during the assessment- proceedings. 4. There are no name/PAN/complete address details of the persons with whom the appellant had cash sale transactions. 5 Majority of the bills in the month of October and November are generally of amount of Rs. 1,0.000/- to Rs. 1,95,000/-. All the sales-bills are below Rs. 2,00,000/- so as to obviate the mandator provision of quoting PAN above Rs. 2,00,000/-. 6 From the perusal of the cash book and ledger account of the sales was observed that the appellant is maintaining four series if bills, which are introduced at different time of the year with some bills having same invoice numbers though the series are different. 7. Despite being enough cash in hand, the unsecured Loans and Car loans are not set off. 8. Despite being enough cash in hand there is a withdrawal of cash in the month of October and November- 9. More cc Loan during 2016-17 despite having so much cash in hand. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 6 10. The Appellant had manipulated his books of accounts and made back dated cash sales in order to adjust the demonetized cash. 11. There is a failure on the part of appellant to provide month-wise quantitative details in the said format. Farther no valuation and quantification of closing stock has been uploaded by the assessee. 12. There is no maintenance of stock register. 13. Further, it is clear that the Appellant is changing its stand again and again with respect to Kolkata Branch. It only leads to the conclusion that the neither there is any Kolkata Branch nor any person is appointed by the Appellant to manage the affairs of the branch. It is the unaccounted money of M/s. Shree Balaji processors lying somewhere in Kolkata which the Appellant had deposited during demonetization. Hence.it is a sufficient ground for rejection of books of accounts. In view of above discrepancies, the books of account of the Appellant was rejected by the AO and gross profit was estimated by the Assessing Officer. 5.4 In the appellate proceedings, though the appellant had tried to rebut all the issues but could not explain satisfactorily the various issues/ discrepancies raised /noted by the AO, In view of this, the action taken by the AO in rejecting the books of account u/s 145(3) of Income Tax Act, 1961 is upheld and accordingly the ground 1 is dismissed. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 7 5.5. As regards to Ground no 2 for making addition of Rs 1,58,607/-. It is pertinent to mention here that while estimating the GP the AO himself has observed in para 11 as under: "11 One method of estimating of income of the assessee in the case of rejection of accounts is calculation of GP on estimated basis of the last three assessment years including the current AY. i.e. 2017-18 of the assessee company. But it is observed from thee- filling portal that assessee has not filed its return of income before the A.Y.2016-17. Assessment Year GP. AY 2017-18 3.18% A.Y. 2016-17 3.27% Since the GP of current year is less than the previous year. The GP on estimated basis is increased by 0.25%. The detailed calculation is mentioned below: - The taxable income at normal rates after increasing the GP to 3.43% comes to be Rs.58,74,117/ - [addition of amount of Rs. 1,58,607/-to the taxable income at normal rates." 5.6. The AO has without any base or comparable case simply increases the GP by 0.25% which in my opinion is not correct. At the most GP should have been estimated at 3.27% which is logical and same as of earlier year. It is therefore held that the GP percentage to be adopted at 3.27% instead of 3.43%. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 8 Further, the AO has reduced the sales by cash deposit during demonetization period, which is not correct. After the rejection of books, the GP should have been estimated at 3.27% on the total turnover as per the books of accounts as well as VAT return. Thus, the AO is directed to recalculate the addition on account of low GP based on the above discussion. Accordingly ground 2 is decided. 5.7. As regards the addition of Rs.6,89,67,208/-I n respect of cash deposit by the Appellant, the reasons given by the AO is predominantly cash sales made by the Appellant at various occasions of the amount less than Rs. 2 Lakhs where the Appellant doesn't maintain the name and address of the purchaser. Thereby observing that the Assessee must have done bogus sales to increase turnover. Further, the doubts as to Kolkata operations and cash deposited at Kolkata led the AO to observe that the unaccounted money of M/s Balaji Processors find somewhere in Kolkata which the Assessee has deposited during the demonetization period. 5.8 While making the above observations, the AO failed It appreciate that all the purchases of the Appellant are properly vouched for which required details have been submitted. Further, the Appellant has given quantitative detail such as opening stock, purchased, sales and closing stock for the year under consideration. The closing stock as reflected in books of accounts has not been disturbed and the same has been adopted as opening stock in the following year. In light of these facts, the AO mis-directed himself while calculating the total sales of the Appellant as the total sales declared by the appellant less cash deposited during the demonetization period. Actually, if the sales are reduced by the amount of cash deposited during the 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 9 demonetization period, there will be loss in the books of accounts as no other figure in the financial statement has been modified. This is contrary to the action of the AO in estimating profits, as well as observing that it appears that these are bogus sales which result in inflated gross profits" Accordingly, while estimating profits of the Appellant I have considered the total sales as declared by the Appellant and supported by VAT return. On the above observations, the following points/issues are made out as under A. Cash deposit is a part of sale proceeds and provision of section 69A of the Act cannot be applied in respect of income from a source which has already been taxed and which would amount to double taxation. B. No addition u/s 69A of Income Tax Act, 1961 can be made as where the books of accounts have been rejected by the AO u/s 145 [3] of the Act and again relying on the same books of account, addition under section 69A of the Act is made. 5.9 During the appellate proceedings the appellant has placed reliance on various decisions rendered by the various Hon'ble courts few of them are as under: I. In the case of Pr. CIT Vs. Akshit kumar in ITA No. 348 of 2019 [2021] 124 taxmann.com 123 (Delhi), it was held by the Delhi High Court that "Where opening stock was accepted in scrutiny assessment, revenue could not treat sales made by assessee out of such opening stock as income from unexplained sources." 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 10 II. In the case of Pr. CIT Vs. Dilip Kumar Swami in appeal No 19 of 2018, [2019] 106 taxmann.com 59 (Rajasthan), it was held by the Rajasthan High Court that "Where Commissioner passed a revisional order making addition to assessee's income under section 68 in respect of amount deposited in bank account, in view of fact that said amount represented sale consideration of goods in support of which assessee had produced statement of bank account, copies of bills issued to purchasers as also books of account showing entries of deposits made in bank, impugned revision at order was to be set aside.” In view of the above and the fact that the total sales as per VAT return have been adopted as basis for estimating GP, no separate addition under section 69A of the Act in respect of cash deposited during the demonetization period which is represented by sales is required. In view of the facts quoted above, the addition made of Rs.6,89,67,208/- u/s 69A of the Act is hereby deleted and accordingly ground 3 is allowed. 5.10. In ground 4, the appellant tends to challenge the computational errors committed by the AO. During the appellant proceedings, this ground is not pressed by the appellant and accordingly is dismissed. 5.11. In ground 5 the appellant craves for the right to add, delete or amend any ground of appeal before the disposal This option was not exercised by the appellant during the appellate proceedings hence this ground is dismissed.” 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 11 6. During the proceedings before us, the ld. DR vehemently argued that the ld. CIT(A) considered the addition of Rs. 1,58,607/- on the basis of increase of GP rate from 3.18% to 3.43%. The ld. DR argued that the act of the Assessing Officer was based on scientific and statistical analysis of the figures and facts given by the Assessee during the assessment proceedings, therefore, the deletion of amount of Rs. 1,58,607/- was not justified. 7 On the second Ground of appeal, the ld. DR vehemently argued against the deletion of Rs. 6,89,67,208/- which was added by the Assessing Officer in the assessment order in respect of cash deposited in the bank account of the Assessee during the demonetarization period. The ld. DR argued that the cash deposited in Assessee’s account during the demonetization period was abnormally high as brought out on record in the assessment order by the Assessing Officer but the ld. CIT(A) did not take into consideration the findings of the Assessing Officer and relying on non-jurisdictional High Court’s decisions, the ld. CIT(A) has deleted the addition. The ld. DR also vehemently argued that even the decisions of the Hon'ble non-jurisdictional High Court are not the same as brought out on record. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 12 8 During the appellate proceedings, the Counsel of the Assessee has filed the written submissions which is reproduced as under: - 1. The facts, in brief, are that the assessee is into the business of manufacturing, as well as, trading of knitted cloth, mink Blanket, manufacturing of T-Shirts and job work of Dyeing and the return of income had been filed on the basis of audited books of accounts and the case was selected under scrutiny on account of abnormal cash deposited during demonetization period in the regular bank accounts of the assessee, maintained with the 'Axis Bank' and 'HDFC Bank' as reflected in the balance sheet of the assessee. 2. Explaining the background of the case, Counsel of the Assessee argued that the Assessing Officer during the course of assessment proceedings raised the query with regard to the cash deposited in the regular bank accounts of the assessee, maintained with 'Axis Bank' and 'HDFC Bank' during assessment proceedings and the assessee explained that the cash deposits in the bank accounts were as per regular audited books of accounts and they are out of the cash sale proceeds of cloth/Blanket at the retail outlets of the assessee at Ludhiana and Kolkata besides recoveries from debtors and the stand of the assessee have been that all the purchases and sales have been reflected in the audited books of accounts and there is sufficient stocks available in the books of accounts, out of purchases and sale transactions. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 13 3. It was further argued that the sales have been made at the retail counter at Kolkata, and such sales have also been out of the available stock in the audited books of accounts and no doubt, have been raised on account of opening stocks, the purchases of raw material, closing stocks. The detail of cash sales were there at the 'Ludhiana Unit' during financial year 2015-16 and though, retail outlet at Kolkata was new during the year under consideration and such sales were out of available stocks and the only doubt of Assessing Officer was about the names and addresses of the parties to whom the cash sales have been made by the assessee and, thus, no adverse view can be drawn. 4 It was vehemently argued that the commodity wise details of opening and closing stock and quantitative details of all types of finished goods and raw material month wise in quantity and value have been furnished and confirmed copies of accounts of majority of the creditors have also been filed and regarding the cash sales, reliance was placed upon the judgment of different High Courts, including Punjab & Haryana High Court in the case of Sh. Rajiv Aggarwal in ITA No. 35/2020, wherein, it was held that the cash sales, cannot be doubted only on account of the fact, that the name and address of the purchaser had not been mentioned and the same have been upheld by the Hon'ble Bombay High Court in the case of "R.B. Jassaram Fateh Chand" reported in 741 ITR 33 (Bom.) and the said judgment have been followed by the Chandigarh Bench of the ITAT in the case of 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 14 Sunny Jewllery House in ITA No. 196/Chd/2014 and in the case of M/s Kewal Singh in ITA No. 664/Chd.2014. 5. Regarding the non-maintenance of detail of stock register, as stated, by the Assessing Officer, it was argued that the same cannot lead to rejection of books of accounts. Regarding no Invoices being there of the purchases of Fire^ ood over a period of time, it has been brought to our attention that day to day vouchers of the purchases of firewood have been maintained and firewood is necessary item for power and fuel. As regards the outlet at Kolkata Office, the sales as made ir Kolkata Office have been recorded in the regular books of accounts and all such invoices have been uploaded to the Assessing Officer regarding the sales made at Kokkata Branch. Regarding non-response against certain notices, issued u/s 133(6) by certain parties from whom purchases have been made, all such transactions have been made through banking channels and the same cannot be held against the assessee if such parties do not respond to the notices of the Assessing Officer as per the judgment of WFC Project Pvt. Ltd. reported in 133 TTJ 167 of Delhi Bench of the ITAT and Continental Carbon (India) Ltd. in ITA No. 526905270/Del/2010, ITAT, Delhi Bench. 6. It was also argued that the case of the assessee regarding the deposit of cash is duly covered by the Judgement of Jurisdictional Bench of the ITAT Chandigarh Bench in the case of 'Charu Aggarwal and Others' reported in 96 ITR (Trib) 0066, copy placed at pages 44 to 109 of the Judgement Set, judgment 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 15 of Delhi High Court in the case of Akshit Kumar, reported in 197 DTR 121 and Akriti Jain in ITA No. 481/Chd/2023, datd 14.06.2024, copy placed at pages 229 to 238 of the 'Judgement Set' and various other judgements of difference Benches of the ITAT and of Delhi High Court in the case of 'Agson Global', reported in 134 taxman.com 256. Judgement of Chandigarh Bench of the ITAT in the case of 'Fashion Zone' in ITA No. 331/Chd/2023. In all such judgements, it has been held that, where there is availability of stocks, and the stock has been sold on cash basis and then such cash so realized, if deposited during the period of demonetization, cannot be doubted at all. The relevant para of the judgement in the case of Fashion Zone Vs JCIT in ITA No. 331/Chd/2023 is being reproduced:- "We have heard the rival submissions and perused the material available on record. The assessee has deposited a sum of Rs 48 lacs on 13/11/2016 and a sum of Rs.2 lacs on 22/02117 in its bank account maintained with Axis Bank. The source of such cash deposits has been explained by the assessee as out of its cash sales so undertaken and it has also been explained that such cash sales are subject to VAT where VAT has been collected and deposited with the government treasury. In support of its explanation, the assessee has furnished the cash book containing the entries towards the cash sales, bank statement for the relevant period, VAT returns, copy of trading nid profit I loss account and balance sheet which are duly audited. No defect t as been pointed out by the AO in terms of availability of stock or in any of the documentation so submitted by the assessee or in the books of accounts. Therefore, merely the fact that certain cash deposits have been made by the assessee during the period of demonization such 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 16 deposits are on a higher side considering the past year figures cannot be basis to hold the explanation so made by the assessee as unsustainable and treat the cash sales as bogus and bringing the cash deposits to tax u/s 68 of the Act. The comparative figures for past years can no doubt provides a starting point for further examination and verification but basis such comparative analysis alone and without any further examination which points out any defect or manipulation in the documentation so submitted or in terms of availability of requisite stock in the books of accounts, the sales so undertaken by the assessee which is duly recorded in the books of accounts cannot be rejected and treated as bogus. Therefore, we agree with the contention of the Id AR that where the cash sales duly offered to tax have been accepted, bringing the realization of sale proceeds in cash to tax will amount to double taxation and the same is clearly unsustainable in law and cannot be upheld. In view of the same, we find the explanation of the assessee as genuine and reasonable duly supported by the documentation and books of accounts and the addition so made by the AO and confirmed by the Ld. CIT(A) is hereby directed to be deleted." 7. The Ld. Counsel also referred to the order of the Ld. CIT(A), where reliance has been placed on certain judgment of Delhi High Court and of Rajasthan High Court and the Ld. CIT(A) has allowed the appeal of the assessee on merits, on similar judgements and it was argued that order of CIT(A) be accepted.. 8. Regarding the appeal of the assessee bearing ITA No.9/Chd/2024, it has been argued that the Assessing Officer while framing the assessment had rejected the books of accounts 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 17 u/s 145(3) and applied the Gross Profit rate of 3.43% against the profit rate of 3.18% as declared by the assessee and thus, there is addition of excess G.P. rate of 0.25%.I 9. The CIT(A) has discussed the grounds for rejection of books of accounts in para 5.3, at page 3 & 4 of the order and it was argued by the Ld. Counsel of the assessee that each and every point as mentioned at page 3 & 4 of the order of CIT(A regarding the rejection of books of accounts u/s 145(3) have been dealt by way of detailed submissions made vide letter, dated 21.03.2023 before CIT(A) and our attention was drawn to page 2 to page 32 of the Paper Book submitted before us. wherein all such issues have been explained at length and it was pointed that there is no basis o rejection of books of accounts and, thereby, making the enhancement of G.P. rate by the Assessing Officer. It was brought to our notice that each and every allegation as made by the Assessing Officer for rejection of books of accounts u/s 145(3) have been extensively dealt in the written submissions, dated 21.03.2023 and for the sake of brevity, the same is being reproduced as under:- i) So called high cash sales in October and November At the outset it is submitted that the assessee has been regularly making cash sales of the Blankets and knitted cloth in the normal course of its business. The assessee has been making such retail cash sales from the past many years and the details of the same has also been filed during the course of the assessment proceedings. The assessee 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 18 has been making such retail cash sales both in Ludhiana and Kolkata for which the assessee has filed the complete cash book of the Ludhiana Unit and the imprest account of Kolkata Branch along with the same the assessee has filed the copies of the entire cash sale invoices. The assessee has also filed the Details of sales of goods made in West Bengal depicting the nature and the amount of the goods sold and the details of the parties to whom such goods have been sold. The assessee has also filed the entire cash book evidencing the fact that the assessee has been making cash sales in the entire year and then regularly depositing the cash proceeds in the bank accounts being maintained by the assessee. The assessee has also filed the details evidencing that the assessee regularly deposits the cash in the bank accounts in the earlier years also. ii) Thus, it is clear that the assessee has been depositing huge amount of cash both in the previous two assessment years i.e. AY 2015-16 & AY 2016-17. Therefore, it is also not the assessee had deposited the cash only during the demonetization period as the assessee has been regularly depositing cash generated from the cash sales being made by it. It is submitted that the impugned cash deposited by the assessee during the year is out of the verified sources. Furthermore, it is also submitted here that the sales made by the assessee has not been debated by the AO during the course of the assessment proceedings, which is very much clear from the assessment order as the AO has not negated 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 19 or given any adverse remarks on the documents as mentioned in para (i) above. Therefore, your goodself's kind attention is again invited towards the fact that this modus operandi of depositing cash is not only being followed in the relevant assessment year but the same has been done by the assessee in the past years also. iii). Therefore, from the above it is clear that the cash sales has been made by the assessee in the normal course of his business and that the same modus operandi has been followed by the assessee from the earlier assessment years. It does no: matter whether the cash deposited in the earlier years were higher or lower the important fact to consider here is that the cash sales are being regularly made by the assessee and the same is part and parcel of the assessee's normal business. Thus, rejecting the cash proceeds of the sales which are deposited during the demonetization period and accepting the purchases, the sales made in the other part of the year is just blowing hot and cold air at the same time and the same merely shows the mindset of the AO to tax the cash deposit of the demonetization period without going through the facts of the case. Therefore, there is no iota of doubt left regarding the fact that the cash deposited is actually the proceeds of the sale made by the assessee. iv). It is also submitted herewith that the case of the assessee was also selected for scrutiny by the VAT department also 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 20 and the books of accounts including the cash sales made by the assessee. Further, the assessee has also filed the quantity wise details of the purchases made by the assessee and the said details also stands accepted by the AO. Apart from the same, the assessee has filed the confirmed copies of accounts of the majority of the creditors further substantiating our claim that when the purchases made by the assessee has been accepted, the quantity purchased have been accepted, no adverse inference against the confirmed copies of accounts or the ledger account of the suppliers have been drawn and moreover, the cash sales bills filed by the assessee has also been accepted then how the cash sales made during the relevant assessment year can be rejected and that too merely due to the some vague and unnatural allegations and thus, it is humbly requested that the sales made by the assessee deserves to be accepted. v) The Counsel has further submitted that the case of the assessee is squarely covered by the latest judgment of Hon'ble Delhi High Court in the case of Pr. CIT Vs Akshit Kumar in ITA No. 348 of 2019 as reported in 197 DTR 121, decided on 17th of November, 2020, in which, the. issue was with regard to cash deposits in the bank account of the assessee, which the lessee had stated out of the sale proceeds and the Assessing Officer had framed the assessment by making the addition on account of entries in the bank account and hac not accepted the sale 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 21 proceeds and the addition was deleted by the Hon'ble ITAT and the same was upheld by Delhi High Court reported in 134Taxman.com 256, copy at page; 14 to43 of Paper Book. vi) Reliance in this regard is placed on the following judgements, wherein it has been held that where the cash credits have been declared as sales by the assessee than making addition of the same under section 68/69 of the act is prohibited, as the same shall amount to double taxation. Reliance is being placed on the following judgment of Hon'ble Gujarat High Court in the case of President Industries reported in 258 ITR 654, wherein, it was held as under:- "The amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represent the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realisation of excess over the cost incurred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that the investment by way of incurring cost in acquiring goods which have been sold has been made by the assessee and that has also not been disclosed, the question whether entire sum of undisclosed sales proceeds can be treated as income, answers by itself in the negative." The same judgment have been relied upon by the Ahmedabad Bench of the ITAT in the case of Shree Sanand Textiles Industries Ltd., in ITA No. 995/Ahd/2014 and CO No. 167/Ahd/2014, in which, the issue was with regard to the fact that the assessee 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 22 had received the sale consideration from certain parties to the tune of Rs. 3,76,44,053/- and which have been reflected in the trading account and which facts were not doubted by the authorities. However, the existence of the party was not proved on the basis of documentary evidence and he Assessing Officer has treated the same amount received from the party as unexplained cash credit u/s 68 of the Income Tax Act. This addition was confirmed by the Ld. CIT(A). The matter was carried by the assessee before the Hon'ble ITAT and the Hon'ble ITAT deleted the addition vii). Further, it is submitted that whatever cash deposits were made by the assessee during the year under consideration and during the demonetization period were made out of the regular cash sales of the assessee which were duly recorded in the books of accounts including cash book and corresponding entries on account of deposit of cash were reflecting in the bank statement. The copy of cash book along with connected bank statements were also filed with the AO during the course of assessment proceedings and therefore, the entries of cash deposits appearing in the bank statements were fully explainable and out of the tax paid source of income of the assessee duly recorded in the books of accounts. Therefore, the cash sales made by the assessee are genuine and it does not matter whether the same has increased or decreased in a particular period when the same has duly been recorded in the books of accounts of the assessee and moreover, when the same has been substantiated by the documents filed as above. Furthermore, it is also submitted and substantiated above 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 23 that the assessee has regularly been making cash sales since the past many years and the same has been accepted by the Department also then how the AO can do cherry picking an reject the cash sales of a particular period, which is totally against the principles of natural justice and shows an partial mindset of the AO and thus, the allegation of the AO is incorrect. viii) Allegation of difference in cash in hand. The Assessing Officer gave his finding that there is a difference in the closing cash in hand as reported by the assessee before/the DDIT (lnv.)-1 and the cash in hand filed before the AO. With regard to the same it is submitted that there is no difference in cash in hand as filed by the assessee during the assessment proceedings and during the investigation proceedings. The details of the cash in hand given during the assessment proceedings is enclosed in the paper book at pages and also at page 25 of the assessment order and the details of the cash in hand given before the DDIT(lnv.)-1, is reproduced at page 26-27 of the assessment order and from a perusal of the same it is clear that there is no difference in such cash in hand and it seems the Ld. AO has merely made up this allegation. Therefore, the allegation made by the Ld. AO is incorrect. ix) Allegation- No details of the buyers on the cash bills of knitted cloth and mink blankets 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 24 The Assessing Officer further given his finding that there is no name/complete addresses, TIN, VAT, Telephone or GR on the bills. With regard to the same it is submitted that as clarified earlier the assessee has been making retail sales of goods from the past many years and depositing the proceeds of the said sales in the bank accounts. It is submitted that the assessee is not duty bound to obtain the names and addresses of every client who buys goods on retail basis and moreover, the department cannot challenge the cash sales made by the Assessee, as it is part and parcel of every business. Moreover, the CBDT has not put any bar on making any cash sales. The Assessee has not done any transaction outside the purview of the Income Tax Act. The Assessee cannot say no to any of its customer to give cash against the sales made by if unless, it is not allowed as per the laws of the land. x) Even it has been held by various Hon'ble Courts that the person is not bound to give details of its customers in case of cash sales. Reliance in this regard is being placed upon the following case laws: a) The judgment of Hon'ble High Court of Bombay in the case of R.B. Jessaram Fatehchand (Sugar Dept.) v. CIT reported at [1970] 75 ITR 33 (BOM.) "There is no necessity for assessee to maintain the addresses of customers and failure to maintain the same or to supply them as and when called for cannot give rise to suspicion with regard to genuineness of transactions" 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 25 b) The Hon'ble High Court of Kerala reported at [1972] 83 ITR 484 (Kerala): M. Durai Raj v. CIT. c) M/s Asian Consolidated Industries Limited vs ITO in ITA No. 4873/Del/1998 order dated 05.10.2018 (Del Bench) d) ITO vs M/s Sunny Jewellery House in ITA No. 196/Chd/2014 order dated 06.05.2016. e) ACIT vs M/s Kewal Singh in ITA No. 664/Chd/2016 order dated 08.02.2017. f). The judgement of Hon'ble Delhi ITAT in the case of ITO v. Jethu Ram Prem Chand reported at [2001] 114 Taxman 219 (Delhi)(Mag.), g) NITISHA SILK MILLS (P.) LTD. v. ITO [IT Apped No. 896 (Ahd.) of 2011, dated 20-7-2012] h) M/s Singhal Exim Pvt. Ltd. v. ITO ITA No. 6520/Del/2018 decided by ITAT Delhi on 12.04.2019 Therefore, the allegation made by the AO regarding the identity of the buyers is invalid and certainly not a ground for rejection of books of accounts xi) Allegation regarding BUI series given on page 28 of the assessment order. The Assessing Officer found that the assessee has been keeping 4 different series of retail invoices and the AO also alleged that the same is against the VAT rules. With regard to the same it is submitted that it has nowhere been prohibited in the VAT law regarding keeping of different 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 26 sales bills and thus, the allegation of the AO is unfounded and based on wrong interpretation or knowledge of VAT law. Also your goodself's kind attention is invited towards the fact that the AO has been deviating the whole case from the very basic and important point that the sales bills has actually been issued by the assessee and the sales have been booked in the books of accounts and the taxes have been paid on the same. These allegations are merely the modus operandi with which the assessee operates its business merely to differentiate the different types of sales being made and there is nothing wrong with that. Therefore, the allegation of the AO is complete baseless and deserves to be rejected. x) Allegation regarding non-payment of loans, increase in CC Limits and cash withdrawal from the bank accounts The Assessing Officer found that the assessee has been keeping huge cash in hand and not making payment to the unsecured loans lenders, secured car loans, CC limits. Similarly, the AO has also alleged that the assessee has increased the amount of CC limit and secured loans even when the assessee had cash in hand. Moreover, the AO has also alleged that the assessee has made self-withdrawals even when it had enough cash in hand. With regard to the same it is submitted that the cash in hand has been generated out of the regular business sales and it is very much rational and common that the said sales proceeds are utilized to pay the normal business creditors and the same has been done by the assessee also which is clear 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 27 from the details of the creditors along with the ledger accounts filed by the assessee during the course of the assessment proceedings. The said details depict that the assessee has been regularly making payment to the said creditors and due to which the business cycle of the assessee has been running. Furthermore, it is also submitted that the unsecured loans are majorly taken from relatives and close friends and there is no compulsion of repayment of the same and thus, the assessee can very well utilize the said funds without any adverse effect on its CIBIL or any other ratings. Therefore, the cash in hand has been utilized to make the payments in the regular course of the assessee's business. Further it is also submitted that a business concern takes or increases the credit limit as per the regular business requirement and for the daily working capital requirements and as mentioned earlier the cash deposited has been utilized for the payment of the creditors. Moreover, the cash withdrawn from the bank accounts of the assessee is again an individual and business decision and the same can depend on various factors such a requirement of cash at such point of time and the AO cannot state that the same should not be withdrawn by the assessee. Moreover, what business would take irrational decisions and increase its financial cost burden and a business would only increase the secured loans when the same is required for the business and the same has accordingly been done by the assessee. The AO has no right to sit on the arm chair of 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 28 the businessman and dictate how to run its business. Further, In this connection, it is more appropriate to have a glimpse of the ruling of the Hon'ble Apex Court in the case of S.A. Builders v. CIT reported in 288 ITR 1 (SC) wherein the Hon'ble Court, in its infinite wisdom, had observed thus- "The expression commercial expediency is one of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal, but yet it is allowable as business expenditure if it was incurred on grounds of commercial expediency. .........That the borrowed amount is not utilized by the assessee in its own business but had been advanced as interest free loan to its sister concern is not relevant. What is relevant is whether the amount was advanced as a measure of commercial expediency and not from the point of whether the amount was advanced for earning profits...." Therefore, the allegation of the AO with regard to the repayment of loans is incorrect and the books of accounts cannot be rejected on the basis of the same. xiii). Allegation- Non maintenance of Stock register The Assessing Officer has further given finding that the assessee has not given item wise/month wise details of stocks and neither the assessee the valuation of opening stock and closing stock. The AO also alleged that the assessee has not maintained Stock register. With regard to the same it is submitted that the assessee has filed various details in respect of the stock which are sufficient enough 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 29 considering the scale and nature of the business of the assessee. The details filed by the assessee during the assessment proceedings in respect of the stock are as under:- a. The assessee vide reply dated 24.07.2019 has duly filed the Quantity wise details of the raw materials depicting the name of the item, opening stock, purchases made, consumed during the year, closing quantity and the valuation of the closing stock of the raw materials. b. Similarly, the assessee vide reply dated 24.07.2019 has also filed the Quantity wise details of all types of finished goods depicting the name of the item, opening stock, manufactured during the year, sold during the year, closing quantity and the valuation of the closing stock of the Finished Goods. c. Apart from the same the assessee has also filed the month-wise details of the raw materials depicting the quantity purchased, its value and the value of the closing stock and the same has been filed vide reply dated 23.10.2019. d. Apart from the same the assessee has also filed the quantitative details of the purchases made during the year and the same has also been accepted by the A.O. during the assessment proceedings. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 30 xiv) Firstly the allegation of the AO that the assessee has not filed the month-wise details of the quantity purchased in incorrect and the same has been filed by the assessee and the explained as above and moreover, the allegation of the AO that the assessee has not filed the valuation of the opening and closing stock is again incorrect as the same has also been filed by>the assessee. therefore, the allegations are again falsely made up by the AO merely to reject the books of accounts and without even considering the materials and documents already on record. xv). It is also submitted that the nature of the business of the assessee is in the nature of manufacturing of Mink Blanket, knitted cloth and T-shirt and as submitted during the assessment proceedings, the manufacturing processes undertaken by the assessee is as under:- Manufacturing of Mink Blankets Yarn Purchase -Knitting -Dyeing/Printing -Washing-Hydro- Dryer-Fishing ( Raising /Polish / Brushing/ Embossing / Stenter / Tubler ) -Knitted Fabric-Cutting-Side Stitching- Dispatch (Mink Blanket ) Manufacturing of Knitted Cloth Yarn Purchase- knitting - Dyeing/Printing -Washing - Hydro - Dryer - Finishing (Rasing /Polish / Brushing / Embossing / Stenter/Tubler )-Knitted Fabric Manufacturing of T-shirts Knitted Cloth - Cutting - Stitching - T-shirts. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 31 From a perusal of the above it is clear that the assessee undertakes various in house complex manufacturing activities and used various raw materials. Not only this the unit of measurement of the raw materials and finished goods is also not the same and therefore, it is not feasible to maintain daily stock register. However, the assessee has filed various details as detailed below which is a sufficient compliance in respect of the valuation of the stock. xvi). Notwithstanding the above explanation, it is submitted that merely non-maintenance of daily stock register cannot lead to rejection of books of accounts moreover, when sufficient details of the stock have been filed by the assessee during the course of the assessment proceedings and moreover, the said details have been accepted by the Ld. AO. Reliance in this regard is placed on the following judgments:- a). CIT vs. Poonam Rani 326 ITR 223 (Del HC) b). CIT vs. Jas Jack Elegance Exports 324 ITR 95 (Del HC) c) Ashoke Refractories (P) Ltd. v. CIT 279 ITR 457 (Cal HC) d) Neeraj jain vs. ITO 33 CCH 436 (Del Trib) e). Teletronics Dealing Systems (P) Ltd. vs. Additional CIT 31 CCH 037 (Mum Trib) f). ACIT vs. Ramesh Kumar Siwach in ITA No. 3269/Der/2013 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 32 g) [2016] 73 taxmann.com 195 (Gujarat) HIGH COURT OF GUJARAT Jaytick Intermediates (P.) Ltd. v. Assistant Commissioner of Income-tax h) [2020] 117 taxmann.com 802 (Chandigarh - Trib.U[2020] 183 IN THE ITAT CHANDIGARH BENCH 'B' in the case of Paramount Impex vs. Assistant Commissioner of Income-tax, Circle-J, Ludhiana i) [2016] 73 taxmann.com 195 (Gujarat) of Hon'ble HIGH COURT OF GUJARAT in the case of Jaytick Intermediates (P.) Ltd. vs. Assistant Commissioner ofIncome-tax j) The Dy. Commissioner Of Income Tax vs M/S Sifti Rice Mills, Amritsar in ITA No. ITA No.764/(Asr)/2014, Assessment Year 2011-12, PAN: AAPFS6697G dated 26/05/2017 Therefore, the rejection of books of accounts on the basis of the allegations made by the Ld. AO is invalid as per the above explanation. xvii). Non-maintenance of bills regarding purchase of wood With regard to this ground of appeal it is submitted that the assessee had incurred power and fuel expenses of Rs 2.71 crs for purchasing pet coke and fire wood from the market. The bifurcation of the expenses are as under: Pet Coke with all the bills Rs 2.00 crs Fire wood (Cash) Rs 0.71 crs xviii). Regarding purchase of firewood in cash, it is submitted that the assessee is engaged in the business of dyeing of 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 33 cloth from the past many years and in the dyeing processing business the major fuel is generated from the Firewood itself. The firewood is used in the boiler to fuel up the water in the boiler itself and in turn the steam generated from the boiler is utilized in the dyeing machines for the purpose of heating up of the dyeing machines to 130 degrees Celsius for the dyeing of polyester fabrics. It is a standard business process of dyeing industry and such process cannot be undertaken without the use of such firewood. It is further submitted that the assessee has purchasing such firewood from the past many years as there are only two common source of power & fuel of dyeing industry i.e. firewood and pet coke and moreover, the assessee has filed the details of the purchase of such sources of power & fuel in the earlier years also and no adverse inference with regard to the same has been drawn by the AO. Therefore, the AO has merely based his decision on surmises and conjectures. xix) Even though the sale & purchase of such firewood is from a very unorganized sector even then, the assessee has filed the copies of vouchers of all such purchases and along with the copies of Kanda purchases. The said documents are sufficient evidences which proves that the assessee has duly purchased the said firewood from the market and moreover, the AO has not been even able to give any adverse remarks against the said document or against the said explanation filed by the assessee. The AO in a perfunctory manner mad the addition by merely alleging 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 34 that the assessee has not maintain bills regarding the said purchases. The AO has even reproduced the chart depicting the date-wise amount of purchases of such consumables purchased by the assessee and the AO has not even been able to find single defect in such details. Therefore, the AO has merely created some self-made assumptions & allegations in making such allegation and rejecting the books of accounts on the basis of this reason. xx) Allegation regarding the office at Kolkata In this allegation of the AO, he stated that the assessee has not been able to clarify its stand regarding the sales made in Kolkata Branch. With regard to the same, it is submitted that the assessee has very well clarified its stand regarding the cash sales being made at Kolkata Branch. The counsel of the assessee has already submitted that the assessee proposed to open the Branch at Kolkata and due to which, they took a premises on rent there and opened a bank account there mentioning the due details of the Branch. The assessee has also submitted that immediately opening that branch the management realized that it is not possible for them to administer the affairs of that branch directly. So, due to this situation, the assessee appointed a person namely Ashish Kumar Kundu to administer the affairs of the branch as the assessee could not run the Kolkata Branch directly, so the whole operations of Kolkata Branch was handed over to the above mentioned person. It was agreed between the assessee and the said person that the 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 35 assessee would sell the goods to the said person at a predetermined price and realize the proceeds from the said person irrespective of "he price realized by him. Meaning thereby that, the assessee would send the goods to the said person and as soon as the said person sells those goods from the Kolkata Office, the proceeds which he would realize from the sales of the said goods would be deposited in the bank account of the assessee. The profit margin at which the said person sells those goods to the subsequent parties would only be earned by the said person only and the said profit would not be transferred to the assessee. Therefore, the assessee has recorded the sales as soon as the goods are sent to the Kolkata Office managed by Ashish Kumar Kundu and for which the assessee has duly filed the copies of the retail invoices issued by the assessee to the Kolkata Office. Therefore, the assessee has been operating with the same modus operandi in the entire year and the same is evident from various documents in the form of sales invoices, details of the cash being regularly deposited in the entire year and the assessee has never changed its stand regarding the Kolkata Office and the allegation of the AO is incorrect. This stand of the assessee has been the same during the entire assessment proceedings and it is not clear as to why the AO has not been able to clearly understand the same. The assessee has even filed the sales bills of the goods sold in Kolkata along with the same, the assessee has filed the date-wise and bill-wise details of the goods sold to the Kolkata office 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 36 and the AO has not been able to find any adverse inference in the said documents and detail. xxi) The AO alleged that the assessee has never mentioned Kolkata as its Branch in the reply filed during the course of assessment proceedings. With regard to the same and in view of the above explanation, it is clarified that the office at Kolkata is not an actual branch of the assessee and rather it is an office being run by another person and the assessee is merely selling the goods at the said mentioned office and realizing the proceeds of the said sales as soon as the person appointed sells these goods and realize the proceeds either through banking channel or via cash. Either way, the sale made by the assessee to the Kolkata Branch is deposited to the bank account of the assessee maintained at Kolkata and the details of which has been given by the assessee during the course of assessment proceedings and against which the AO has not drawn any adverse inference. xxii). The AO also alleged that in order to carry out the said transactions the person Mr. Ashish Kumar Kundu should not be employee of the assesses as no employee can bear the loss. With regard to the same, it is submitted that this allegation of the AO is totally misplaced and irrelevant as under which logical reasons or logical circumstances, would an employee miss an opportunity of running the operation of whole branch when there is an opportunity of earning huge amount of profits there and that too without 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 37 employing even a single amount of capital. It is submitted that the said person was earning a meager salary of Rs. 5 to 6 thousand and the assessee gave that person a very good opportunity of earning huge amount of profits by selling the goods at his own will. It is also clear and also admitted by the AO himself that said persons generates his profit and said loss and the same also has been disclosed by the said person in his return of income wherein he has shown income from business of Rs. 2,55,420/-. Therefore, apart from earning a regular salary of Rs. 60,000/- annually the said person is earned profit of Rs. 2,55,420/ - which depicts the operations being carried out by the person independently at Kolkata Office. Therefore, the allegation of the AO is totally false. xxiii). The AO reproduced the salary sheets for the month of April, 2016 to November, 2016 and on the basis of which he alleged that the person Ashish Kumar Kundu is getting meager salary of Rs. 5000/- then how can he manage the affairs of branch in such meager salary. The AO also alleged that the assessee has not deducted the TDS on the commission earned by the said persons against the goods sold by him. With regard to the same, it is reiterated that the said person is not only earning meager wages of Rs. 5,000/-, but rather he also earning a great amount of profits which has also been disclosed by him in the return of income amounting to Rs. 2,55,420/- and the same has also been mentioned at page 49 of the assessment order. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 38 Moreover, without prejudice to the above, it is also submitted that the said person has been assigned a specific task by the assessee and whatever the said person do in order to maximize his profits or whatever the said person discloses in his return of income, is not the concern of the assessee as whatever had to sold, to the Kolkata office has been clearly disclosed in the sales of the audited books of accounts of the assessee and on which due taxes has also been paid by the assessee. Therefore, the assessee has made correct disclosure of the same made at Kolkata Branch and, thus, the said submissions deserve to be accepted. xxiv). It is also for kind information that the assessee has filed the detailed reply before the Investigation Wing wherein, the assessee has filed a list of the cash realized from the debtors during the relevant assessment ear and in which, the assessee has specifically mentioned the month wise cash received from the Kolkata Office and now the same is also enclosed in the paper book. Further along with the same, the assessee has also filed month wise sales made at Kolkata and a clear bifurcation between the cash sales and other sales has also been given and same is also enclosed in the paper book. xxv). It is also relevant to add here that the assessee has filed month wise details of the cash in hand at Kolkata Branch and from a collective reading of the said details and the detail of the cash realized from debtors at Kolkata Branch, 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 39 it is clear that the person appointed there has been regularly depositing the cash in the bank maintained at Kolkata which depicts that the receipt of cash and depositing the same in the bank account is a regular modus operandi and moreover, the same has been accepted even by the Investigation Wing itself. The assessee has also filed the copy of account of the Ludhiana Branch, in the books of Kolkata Office. The said copy of account reflects the sales made by the assessee to the Kolkata Office and against which either the assessee has received cash or payment has been received via banking channel. From a perusal of the said copy of account, it is clear that the cash is being regularly deposited every month starting from April, 2016 and the fact which is very pertinent to be seen here is that the amount being deposited in cash is far more than the amount received through banking channels. Therefore, there is no iota of doubt left that the assessee has been regularly receiving the cash from the Kolkata Office and the same is being regularly deposited in the bank account of the assessee. The AO has time and time again, failed to see these facts which are already part of the departmental record and it seems the AO was so adamantly stuck with his own assumptions and presumptions that he did not even consider the record which was already in his possession or in the possession of the Income Tax Department. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 40 xxvi). The AO has alleged that why there is an Imprest Account in the books of the assessee and with regard to the same, it is submitted that the said account has been maintained in order to keep up with the position of cash in hand in the said unit. It is further submitted that the same cannot be taken into the cash book since it has not been realized by * the assessee yet and as per the general principle of accountancy an amount is only debited to the cash book only when the same is realized by an assessee. However, in the current case, the cash proceeds have only been realized at Kolkata Office by Ashish Kumar Kundu and has not been transferred to the assessee and that is why the same has been recorded in the imprest account and not in the cash book. Further, the assessee has duly filed the imprest account and no adverse inference with regard to the recording of the cash being received at the Kolkata Office has been drawn by the and the AO has merely alleged that why the imprest account has been prepared by the assessee. xxvii). Furthermore, regarding the goods sold by the assessee to the Kolkata Branch the assessee has filed the details of the transport used for sending the goods to Kolkata office. The copies of the sales invoices issued duly reflects the Truck number on which the goods have been transported. Along with the same the assessee has also filed the certificate from the transporter itself wherein the bill wise details depicting the GR No. and Truck No. has been mentioned. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 41 Further, the assessee has also filed the copy of account wherein the payment has been made via banking channels to the said transporter. The AO alleged that the transporter has issued only one bill amounting to Rs.73,200 against many bilties and with regard to the same it is submitted that neither the details in the form of GR Number, truck numbers of the transporter and nor the details of the payment made to the transporter have been debated and moreover, it does not matter if the bill of the entire transportation made by the transporter have been issued at one time and moreover, when the transporter itself has confirmed the same. Further the AO also alleged that the assessee has not maintained the copy of account of Khamkhya Transport, however, with regard to the same it is submitted that the said goods sent through the said transport was "to pay" basis and no payment has been paid by the assessee itself and the same is evident from the copies of the bilties filed during the assessment proceedings wherein "Kolkata" has been mentioned against "To Pay", therefore, when no payment has been paid by the assessee then no ledger would exist in the books of the assessee. It is submitted that the AO has merely done cherry picking and that too has been done incorrectly and without any application of mind. The AO has not given any remarks against the documents which have actually been filed by the assessee and neither any opinion has been given in 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 42 respect of the sufficiency of the said documents, rather the AO was mainly focused on what has not been filed by the assessee which shows the specific mindset of the AO and his fixation on ejecting the books of accounts of the assessee. It is reiterated that the documents filed by the assessee were sufficient evidences to prove the transportation of goods and thus, the allegation of the AO is incorrect and against the facts of the case. xxviii). Allegation regarding non-receipt of confirmation from creditors u/s 133(6) At the outset it is submitted that the assessee in order to prove the genuineness of the purchases has filed various details as under:- (i) The complete purchase register, (ii) The party-wise details of purchases, (iii) The details of the creditors, (iv) Confirmed copies of accounts of majority of the creditors, (v) Quantitative details of purchases, (vi) Ledger account of purchases (vii) Quantitative details of Opening and closing stock xxix). It is submitted that the above documents also form part of the paper book being filed herewith and your kind 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 43 attention is also invited towards the fact that no adverse inference regarding the above documents filed by the assessee have been noticed by the AO during the assessment proceedings. It is surprising that when the AO is himself accepting such details and documents and then rejecting the books merely because the confirmations have not been received from the creditors u/s 133(6) of the Act. It is further submitted that the payment to the above creditors have been made through proper banking channels, thus, the details provided by the assessee duly proves the genuineness of the purchases. Moreover, it is also not the case that the AO has raised any addition queries or raised concern during the assessment proceedings regarding the purchases made by the assessee. The AO is merely forcing allegations without considering the record on hand. Further, it is also relevant to add here that the assessee has no control over the actions of its creditors and neither the assessee should be held liable for their omission in filing of the replies. Thus, the rejection of the books of accounts on the basis of this allegation is incorrect. Reliance is placed on Hon'ble Supreme Court's judgment in the case of CIT Vs. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC) for the proposition that if the AO has issued summons u/s 133(6) it is his duty to bring the process to a logical conclusion and non-response by such person cannot be held against the assessee. On similar lines reliance is also p aced on the following judgments: - 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 44 (a) YFC Projects (P) Ltd. Vs. DCIT (Del) 134 TTJ 167 (b) ACIT vs. Han Singar Gutkha (P) Ltd. (2008) 9 DTR 604(Trib.) (c) Continental Carbon India Ltd. Income-tax Officer. ITA Nos. 5269. 5270 & 5271/Del/2010. ITAT Delhi. xxx). Further, it is also submitted that the parties namely M/s Upvan Syntex, M/s Payal Fashions and M/s Gaurang Knit Fab Corporation has filed their confirmations, even then the AO alleged that they have not filed the their ITR along with the confirmation and that confirmation without ITR has not legal value. With regard to the same it is submitted that time and time again the AO has made such allegations which has no legal or factual standing and which is not even relevant to the case of the assessee. The confirmation filed by the above parties are more than sufficient evidence to substantiate the sales made by the assessee to the above parties and there is no requirement to file the ITR and moreover it is not the case of unsecured loan rather the assessee has only made sales in the normal course of business to the said parties and against which no adverse remarks have been given by the AO. Therefore, the allegation made by the AO is totally incorrect and baseless. xxx). Allegation in respect of variation in expenses vis a vis previous year. The AO alleged that there have been variation in the Power and Fuel Expenses in the relevant assessment year vis a vis previous year and with regard to the same we have 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 45 already filed detailed submissions in para above. Further, the AO has also alleged that the wages and salaries have increased vis a vis and it has also been alleged that the assessee has been keeping bogus names in the salary register. With regard to the same it is submitted that the assessee has duly filed the salary and wages register during the assessment proceedings and it is very much common that labour does not have Adhaar Cards, however, due to the business requirements the assessee is bound to employ even such labour due to the needs of the productions. Furthermore, it is also submitted that the payment made to these labour or employees have not been doubted by the AO and when the payment made to the said persons are debated then how the existence of such labour can be debate. Furthermore, it is also submitted that the AO has questioned the existence of these labourers merely because the payment made to these workers were more than Rs. 15000 and as per the AO this has been done to prevent from ESI provisions and with regard to the same it is submitted that the AO has questioned the existence of the entire team of employees merely on the basis of assumptions and presumptions and without debating the payment made to these persons. Moreover, where the assessee had produced the evidences as mentioned in our submissions above, then the onus to prove it otherwise had clearly shifted to the department. The whole case has been made by the Assessing Officer on doubt, conjectures and surmises which is not valid as per the law settled in the 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 46 case of Hon'ble Supreme Court in the case of Sh. Omar Salay Mohammed Sait Vs CIT as reported in 37 ITR 151 (SC), the Hon'ble Supreme Court has held as under:- “if the Tribunal bases its findings on suspicions, conjectures or surmises or it acts on improper rejection of material and relevant evidence, or partly on evidence or partly on suspicions, conjectures or surmises and if it does anything of the sort, its findings, even though on questions of fact, will be liable to be set aside by the Court". xxxii). The Hon'ble Supreme Court also stated in the case of Umacharan Shaw 8t Bros. v. CIT (1959) [1959] 37 ITR 271 (SC) held that suspicion however strong, cannot take the place of evidence. xxxiii). The Hon'ble Supreme Court way back in the case of Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC) held that assessment could not be based on background of suspicion and in absence of any evidence to support the same. The Hon'ble Court held: "The mere possibility of the appellant earning considerable amounts in the year under consideration was a pure conjecture on the part of the ITO and the fact that the appellant indulged in speculation (in Kalai account) could not legitimately lead to the inference that the profit in a single transaction or in a chain of transactions could exceed the amounts, involved in the high 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 47 denomination notes,-this also was a pure conjecture or surmise on the part of the ITO.” 13. It was argued that in para 5.4, the Ld. CIT(A) has acknowledged that detailed reply was submitted but in summary manner has upheld the rejection of books of accounts without assigning any reason, whatsoever and in view of the detailed reply rebutting all the allegation made for rejection of books of accounts have not seen considered and then in para 5.5, the G.P. rate has been applied on the basis of last year G.P. rate of 3.27% instead of 3.43% as applied by the Ld. Assessing Officer. 14. The Counsel argued that such observation of Ld. CIT(A) is very casual and he had not been able to rebut the detailed submissions of the assessee as submitted before the Ld. CIT (A) from pages 1 to 32, wherein, each and every issue has been thrashed and, as such, there is no justification in rejecting the books of accounts u/s 145(3) and prays for accepting of trading results as declared in view of the above said submissions. Discussion 10. We have considered the findings of the ld. CIT(A) in his order and the arguments of the ld. DR on different grounds during the proceedings before us. We find that the ld. CIT(A) has given a very clear findings on the addition on the basis of GP ratio. He has categorically stated in his order that since the GP rate of the year under consideration is less than the GP ratio of the previous year, 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 48 therefore, increase in GP ratio on estimated basis by the Assessing Officer is not justified to the extent the Assessing Officer has done. 11. On this issue the ld. CIT(A) has given his findings as under: - “5.6. The AO has without any base or comparable case simply increases the GP by 0.25% which in my opinion is not correct. At the most GP should have been estimated at 3.27% which is logical and same as of earlier year. It is therefore held that the GP percentage to be adopted at 3.27% instead of 3.43%. Further, the AO has reduced the sales by cash deposit during demonetization period, which is not correct. After the rejection of books, the GP should have been estimated at 3.27% on the total turnover as per the books of accounts as well as VAT return. Thus, the AO is directed to recalculate the addition on account of low GP based on the above discussion. Accordingly ground 2 is decided.” 12. We have considered the arguments of the ld. DR and the Counsel of the Assessee on this issue. We have also gone through the findings of the ld. CIT(A) on this issue in his order and we find that the findings given by the ld. CIT(A) on this issue is very logical and thus justified hence it needs no interference. Accordingly, Revenue’s appeal on this Ground is dismissed. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 49 13. Appeal on Ground No. 2 filed by the Revenue is against the deletion of Rs. 6,89,67,208/-. The ld. CIT(A) in his order has given his findings as under:- 5.7. As regards the addition of Rs.6,89,67,208/-I n respect of cash deposit by the Appellant, the reasons given by the AO is predominantly cash sales made by the Appellant at various occasions of the amount less than Rs. 2 Lakhs where the Appellant doesn't maintain the name and address of the purchaser. Thereby observing that the Assessee must have done bogus sales to increase turnover. Further, the doubts as to Kolkata operations and cash deposited at Kolkata led the AO to observe that the unaccounted money of M/s Balaji Processors find somewhere in Kolkata which the Assessee has deposited during the demonetization period. 5.8 While making the above observations, the AO failed It appreciate that all the purchases of the Appellant are properly vouched for which required details have been submitted. Further, the Appellant has given quantitative detail such as opening stock, purchased, sales and closing stock for the year under consideration. The closing stock as reflected in books of accounts has not been disturbed and the same has been adopted as opening stock in the following year. In light of these facts, the AO mis-directed himself while calculating the total sales of the Appellant as the total sales declared by the appellant less cash deposited during the demonetization period. Actually, if the sales are reduced by the amount of cash deposited during the demonetization period, there will be loss in the books of accounts as no other figure in the financial statement has been modified. This is contrary to the action of the AO in estimating profits, as well as observing that it 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 50 appears that these are bogus sales which result in inflated gross profits" Accordingly, while estimating profits of the Appellant I have considered the total sales as declared by the Appellant and supported by VAT return. On the above observations, the following points/issues are made out as under A. Cash deposit is a part of sale proceeds and provision of section 69A of the Act cannot be applied in respect of income from a source which has already been taxed and which would amount to double taxation. B. No addition u/s 69A of Income Tax Act, 1961 can be made as where the books of accounts have been rejected by the AO u/s 145 [3] of the Act and again relying on the same books of account, addition under section 69A of the Act is made. 5.9 During the appellate proceedings the appellant has placed reliance on various decisions rendered by the various Hon'ble courts few of them are as under: I. In the case of Pr. CIT Vs. Akshit kumar in ITA No. 348 of 2019 [2021] 124 taxmann.com 123 (Delhi), it was held by the Delhi High Court that "Where opening stock was accepted in scrutiny assessment, revenue could not treat sales made by assessee out of such opening stock as income from unexplained sources." II. In the case of Pr. CIT Vs. Dilip Kumar Swami in appeal No 19 of 2018, [2019] 106 taxmann.com 59 (Rajasthan), it was held by the Rajasthan High Court that 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 51 "Where Commissioner passed a revisional order making addition to assessee's income under section 68 in respect of amount deposited in bank account, in view of fact that said amount represented sale consideration of goods in support of which assessee had produced statement of bank account, copies of bills issued to purchasers as also books of account showing entries of deposits made in bank, impugned revision at order was to be set aside.” In view of the above and the fact that the total sales as per VAT return have been adopted as basis for estimating GP, no separate addition under section 69A of the Act in respect of cash deposited during the demonetization period which is represented by sales is required. In view of the facts quoted above, the addition made of Rs.6,89,67,208/- u/s 69A of the Act is hereby deleted and accordingly ground 3 is allowed. 14. We have considered the arguments of the ld. DR who has argued against the said deletion on the basis that the ld. CIT(A) has followed the decisions of non-jurisdictional High Courts on this issue. Here we want to make it clear that in the absence of an order of the jurisdictional High Court, relevant orders on the same issue of even non-jurisdictional High Court are also accepted. It is a normal practice and thus there is nothing wrong in it. We have also considered the arguments of the Counsel of the Assessee and 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 52 the findings given by the ld. CIT(A) in his order. We find that it is a matter on record that regarding allegation of bogus sales, nothing has been brought on record by the Assessing Officer. The Assessing Officer has accepted all the purchases along with opening and closing stock of the Assessee. Then on what basis sales out of such stock / purchases may be rejected without any proof brought on record. Thus, the above findings given by the ld. CIT(A) on this issue in his order is very much justified and needs no interference. Accordingly, Revenue’s appeal on this Ground is hereby dismissed. 15. In the result, Revenue’s appeal is dismissed. C.O. No.09/Chd/2024 – Assessee’s Cross Objections. 16. The Assessee through its aforesaid Cross objections has raised following grounds: 1 That the Ld. CIT (Appeals) has erred in upholding the action of the assessing officer in rejecting the books of accounts u/s 145(3) of the Income Tax Act, 1961. 2. That the Ld. CIT(A) has failed to appreciate the details submissions filed on each and every issue with regard to rejection of books of accounts u/s 145(3). 3. That the adoption of gross profit by the CIT(A) @ 3.27% against the gross profit of 3.18% as 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 53 declared by the assessee, is against the facts and circumstances of the case. 4. That the ground of appeal as taken by the department regarding reliance upon some judgements of non-jurisdictional High Court by the CIT(A), have correctly been relied upon while deleting the addition. 5. That respondent craves leave to add or amend the ground of cross objections before the appeal is finally heard or disposed off. 17. There is a delay of 145 days in filing the Cross Objections by the Assessee. During the proceedings before us, the ld. Counsel for the Assessee has filed an affidavit dated 24.06.2024 by the Accountant of the Assessee along with a letter from the partner of the firm, relevant contents of which are reproduced as under: -- Contents of letter from the partner of the Assessee firm “Reg: M/s Shree Balaji Processors, Ludhiana. CO. No.9/Chd/2024 arising out of ITA No. 499/Chd/2023 For Asstt. Year 2017-18. Sub: Request for condonation of delay in filing the cross objections. It is submitted that above said Cross Objections are late as per the following detail: - i). The Memo of appeal of the department was received on - 13.09.2023. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 54 ii). The Cross Objections were to be filed on or before - 12.10.2023 iii). The appeal was filed on - 06.03.2024 Delay in filing the appeal /C.O. - 145 days. 2. It is submitted that we have a full time Accountant namely Sh. Raman Changotra, who had been looking after our Accounts and legal matters viz-a-viz Income Tax. 3. That we had received the memo of appeal by post on 13.09.2023 and the same was handed over to our Accountant, Sh. Raman Changotra for taking an appropriate action in the month of September 2023. 4. That however, later on when the date was fixed for hearing on 11.03.2024, he was asked to engage Sh. Sudhir Sehgal as our counsel and when he approached the counsel concerned, he (the counsel) enquired from him, whether any cross objections had been filed or not and then it came to know that the cross objections had to be filed within 30 days and, accordingly, we then advised him to take immediate step to file the Cross objections/ appeal immediately, which was filed by our counsel, Sh. Sudhir Sehgal on 06.03.2024. We told him to be careful in future and this default has occurred only on account of the above said reason, it is, therefore, very humbly requested that delay of 145 days may, please, be condoned and we assure that we shall fully cooperate with the department for early disposal of the above said appeal and oblige”. Affidavit of the Assessee :- “AFFIDAVIT 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 55 I Raman Changotra S/o Shri. Satnam Singh R/c House No. 7491, Street No.1, Maya Puri, Tibba Road, Ludhiana do hereby solemnly state and affirm as under:- 1. That I am working as an Accountant with M/s Shree Balaji Processors, Ludhiana for the past few years. 2. That the firm had received the grounds of appeals as filed by the department for the Asstt. Year 2017- 18 on 13.09.2023 and the same were handed over to me by the partner for taking appropriate action against that appeal filed by the department. 3. That I had kept the same in the file relating to the above said year and was under the bonafide impression that no action is to be done by us and it will be taken into consideration at the time of hearing only. 4. That it was only when the first hearing was fixed for 11.03.2024 before the Hon'ble Bench, that I approached counsel Sh. Sudhir Sehgal for the attending to the above said proceedings and there he asked about the cross objections and only then I became aware that cross objections had to be filed against the appeal filed by the department and, accordingly, I took immediate step in filing the cross objections and the appeal was filed on 06.03.2024. 5. That it was because of the bonafide belief of mine that I did not pursue the matter earlier. 6. That this default is highly regretted as it has happened only on account of above said bonafide reason. DEPONENT 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 56 VERIFICATION That the contents of the above affidavit are true to the best of my knowledge and belief and nothing has been concealed therein. DEPONENT” 18. Both, the affidavit and letter are regarding condonation of delay. 19. The ld. DR had no objection on this issue. 20. We have considered the contents of the Affidavit as well as the letter of the Accountant and find the reasons furnished are justified and accordingly, the delay in filing the Cross Objections is hereby condoned. Now, the case is heard on merits. 21. Ground Nos. 1 & 2: During the proceedings before us, the ld. Counsel of the Assessee argued vehemently against the order of the ld. CIT(A) in accepting the rejection of the books of account. The ld. CIT(A) in his order has discussed this issue as under: - “5.3. As regards to the 1 ground of appeal, I have carefully perused the assessment order passed u/s 143(3) of the Act dated 29/12/2019. In the assessment order the AO has narrated various facts for the rejection of the books of accounts under section 145(3) of the Act. The observation and discrepancies in nutshell as observed by the AO are as under: 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 57 1. Cash sale of October and November 2016 shows sudden high as compared to preceding month and again drop to almost NIL in the month of December 2016. 2. The Appellant has not uploaded cash book of Kolkata branch for whole of the year. 3. There is a huge difference in closing cash in hand which was submitted to the investigation wing vis a vis submitted during the assessment- proceedings. 4. There are no name/PAN/complete address details of the persons with whom the appellant had cash sale transactions. 5 Majority of the bills in the month of October and November are generally of amount of Rs. 1,0.000/- to Rs. 1,95,000/-. All the sales-bills are below Rs. 2,00,000/- so as to obviate the mandator provision of quoting PAN above Rs. 2,00,000/-. 6 From the perusal of the cash book and ledger account of the sales was observed that the appellant is maintaining four series if bills, which are introduced at different time of the year with some bills having same invoice numbers though the series are different. 7. Despite being enough cash in hand, the unsecured Loans and Car loans are not set off. 8. Despite being enough cash in hand there is a withdrawal of cash in the month of October and November- 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 58 9. More cc Loan during 2016-17 despite having so much cash in hand. 10. The Appellant had manipulated his books of accounts and made back dated cash sales in order to adjust the demonetized cash. 11. There is a failure on the part of appellant to provide month-wise quantitative details in the said format. Farther no valuation and quantification of closing stock has been uploaded by the assessee. 12. There is no maintenance of stock register. 13. Further, it is clear that the Appellant is changing its stand again and again with respect to Kolkata Branch. It only leads to the conclusion that the neither there is any Kolkata Branch nor any person is appointed by the Appellant to manage the affairs of the branch. It is the unaccounted money of M/s. Shree Balaji processors lying somewhere in Kolkata which the Appellant had deposited during demonetization. Hence.it is a sufficient ground for rejection of books of accounts. In view of above discrepancies, the books of account of the Appellant was rejected by the AO and gross profit was estimated by the Assessing Officer. 5.4 In the appellate proceedings, though the appellant had tried to rebut all the issues but could not explain satisfactorily the various issues/ discrepancies raised /noted by the AG, In view of this, the action taken by the AO in rejecting the books of account u/s 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 59 145(3) of Income Tax Act, 1961 is upheld and accordingly the ground 1 is dismissed.” 22. The Ld. Counsel has already filed a detailed written submission on this issue which has been reproduced above. We have considered the written submission filed by the ld. Counsel and his arguments put forth in the proceedings before us. We find that the order of the ld. CIT(A), on this issue, for reasons discussed in the order is very much justified and needs no interference. Accordingly, the issue raised vide Ground Nos. 1 & 2 of the Cross objection is dismissed. 23. Ground No. 3 of Assessee’s Cross objection is against the calculation of GPA @ 3.27% against the GP shown by the Assessee @ 3.18%. In the written submissions filed, the ld. Counsel has submitted that they had submitted the detailed reply on this issue before the ld. CIT(A) but in his order, the ld. CIT(A) has although acknowledged that detailed reply was submitted but in summarily manner has upheld the rejection of books of account and in para 5.5 of the order, the CIT(A) has given his findings rejecting the GP ratio adopted at the rate of 3.43% by the Assessing Officer and bringing in down at the rate of 3.27%. On this issue, a detailed discussion has already been done in the former part of this Order in 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 60 the appeal filed by the Department in ITA No.499/Chd/2023. However, at the cost of repetition, it is to again brought on record the findings of the ld. CIT(A) on this issue, which is as under: - “5.6. The AO has without any base or comparable case simply increases the GP by 0.25% which in my opinion is not correct. At the most GP should have been estimated at 3.27% which is logical and same as of earlier year. It is therefore held that the GP percentage to be adopted at 3.27% instead of 3.43%. Further, the AO has reduced the sales by cash deposit during demonetization period, which is not correct. After the rejection of books, the GP should have been estimated at 3.27% on the total turnover as per the books of accounts as well as VAT return. Thus, the AO is directed to recalculate the addition on account of low GP based on the above discussion. Accordingly ground 2 is decided.” 24. We have considered the findings of the Assessing Officer on this issue in the assessment order, the findings of the ld. CIT(A) in the appeal order and the arguments as well as written submissions filed by the Counsel of the Assessee during the proceedings before us. We find that the finings on this issue given by the ld. CIT(A) is very clear and categorical as well as logical, therefore, it needs no further interference. Accordingly, Assessee’s Cross Objection on this ground is dismissed. 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 61 25. Ground No.4 of the Assessee’e Cross Objection is in support of CIT(A) decision relying on of some judgement of non-jurisdictional High Court. On this issue, we have considered the arguments put forward by the ld. DR as well as ls Counsel of the Assessee. We have also considered the written submissions filed by the Counsel of the Assessee on this issue and we find that reliance of the ld. CIT(A) on some judgements of non-jurisdictional High Courts are appropriate and justified. A detailed finding has already been given in appeal order filed by the Revenue. Accordingly, Assessee’s appeal on this Ground is allowed. 26. Ground No.5 raised in the Cross objection is general in nature. 27. Accordingly, Assessee’s Cross objections are partly allowed. 29. In the result, appeal of the Revenue is dismissed whereas, the Cross Objections of the Assessee stand partly allowed. Order pronounced on 20.08.2024. Sd/- Sd/- ( A.D. JAIN ) (DR KRINWANT SAHAY) Vice President Accountant Member “आर.के.” 499-Chd-2023 & C.O.09-Chd-2024 Shree Balaji Processors, Ludhiana 62 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकर आय ु Èत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[ फाईल/ Guard File आदेशान ु सार/ By order, सहायक पंजीकार/ Assistant Registrar