DCIT, CENTRAL CIRCLE-8, DELHI, JHANDEWALAN, DELHI V. SANJAY SALES AGENCY, FATEHPURI, DELHI

ITA 963/DEL/2024

AI Insights

The case revolves around an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) which had allowed the appeal of Sanjay Sales Agency, deleting an addition of Rs. 12,20,50,000 made by the Assessing Officer. The addition was initially made on the grounds that the cash deposited in the assessee's bank account during the demonetization period was unexplained. The Tribunal examined the evidence presented, including the books of accounts, VAT returns, and the circumstances of the cash deposits, and concluded that the sales were legitimate and properly recorded.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 789401 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: misc
• Appeal Filed On: 01-03-2024
• Other Referred Cases: CIT v Paradise Holidays, ITO vs. Surana Traders, CIT v. Kailash Jewellery House, CIT v. Vishal Exports Overseas Limited
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH KUMAR
• Assessee Lawyers: AMIT GOEL; PRANAV
• Keywords: Business income; Question of law; Unexplained cash credit; Rejection of books of accounts; Cost of acquisition; Search and seizure; Bogus
• Section: 143(3); 132; 68; 133A

Judgement Text

" 1 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency IN THE INCOME TAX APPELLATE TRIBUNAL DELHI [DELHI BENCH:“ G” New Delhi] BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER I.T.A. No. 963/Del/2024 (A.Y 2017-18) DCIT E-2, ARA, Central, Jhandewalan Extension, New Delhi Vs Sanjay Sales Agency, 58, Ekta Market, Katra Baryan, Fatehpur, Delhi PAN: ABDFS3566K Appellant Respondent Assessee by Sh. Amit Goel, Advocate and Shri Pranav Yadav, Advocate Revenue by Sh. Mahesh Kumar, CIT(DR) Date of Hearing 11/09/2025 Date of Pronouncement 27/11/2025 ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Revenue against the order of Commissioner of Income Tax (Appeals)- 24, New Delhi (‘Ld. CIT(A)’ for short), dated 15/12/2023 the Assessment Year 2017-18. 2. The grounds of Appeal are as under:- “1. The Ld. CIT(A) has erred in deleting the addition of Rs. 12,20,50,000/- made by A.O. u/s 68 of the I.T., Act. 2. The Ld. CIT(A) has erred in deleting the addition of Rs. 12,20,50,000/- by not taking into consideration of the observation of A.O. that as per books only Rs. 2,32,50,000/- was present as cash in hand.” Printed from counselvise.com 2 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency 3. Facts in brief are that, the Assessee filed return of income u/s 139(1) of the Income Tax Act, 1961 ('Act' for short) declaring total income of Rs. 1,01,11,160/- and claimed refund of Rs. 6,19,665/-. Subsequently, case of the Assessee was taken up for scrutiny under CASS. As search and seizure operation u/s 132 of the Act was conducted on the Assessee on 29/03/2017. An assessment order came to be passed u/s 143(3) of the Act by making an addition of Rs. 12,20,50,000/- on account of cash deposited in (SBN) in the bank account of the Assessee during the demonization period considering the same as unexplained cash credit u/s 68 r.w. Section 115BBE of the Act. 4. Aggrieved by the assessment order dated 30/12/2018, Assessee preferred Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 15/12/2023, allowed the Appeal of the Assessee by deleting the addition made by the A.O. As against the order of the Ld. CIT(A), the Revenue preferred t he present Appeal on the grounds mentioned above. 5. The Ld. Departmental Representative submitted that Assessee used to deposit the cash gathered out of sales on the very next day of sales taking place, therefore, as on the date of the search i.e. 29/03/2017, physical cash in hand lying with the Assessee at its premises was Rs. 24,61,170/- and at other premises, no cash in hand was found, Printed from counselvise.com 3 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency therefore, there were no major cash in hand kept by the Assessee as on 08/11/2016. Further submitted that, the Assessee has manipulated the books of accounts to justify the bogus sales/purchases and shown almost twice the normal transactions which is not practically possible. The Ld. Departmental Representative hasalso taken us through the findings of the A.O. at Page 5 para 6 (iii) and submitted that the Assessee has deposited nearly 28Crore in 8 days during demonization which is not only abnormal but also the Assessee has manipulated the books of account. The Ld. Departmental Representative further submitted that the Ld. CIT(A) has not considered the observation of the A.O. that as per the books only Rs. 2,32,50,000/- was present as cash in hand, therefore, the Ld. CIT(A) as committed grave error in deleting the addition. Further, the Department's Representative relying on the findings and conclusion of the A.O., sought for allowing the Appeal. 6. Per contra, the Ld. Assessee's Representative submitted that the Assessee has produced the entire details of cash deposit along with the documentary evidences, A.O. has not pointed out any discrepancy produced by the Assessee. Even during the course search conducted u/s 132 of the Act at the premises of the Assessee, no discrepancy was found in the stock and cash in hand. The books of accounts including Printed from counselvise.com 4 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency cash book, bank book, purchase book, sales book, stock register, ledger, parties accounts are duly audited and have been duly accepted by the A.O. and the A.O. has not rejected the books of account and no discrepancy was pointed out by the A.O. in the books of accounts. Further submitted that all the sales are duly reflected in the VAT return, therefore, there cannot be any doubt/suspicion be raised by the A.O. in respect of the sales. Further submitted that, the Ld. CIT(A) has thoroughly verified the facts and circumstances of the case and deleted the addition,thus, by relying on the findings and conclusion of the Ld. CIT(A), sought for dismissal of the Appeal filed by the Revenue. 7. We have heard both the parties and perused the material available on record. The Ld. CIT(A) deleted the addition made by the A.O. in following manners:- “4.1.20 The appellant submitted that the main reason for increase in sale in November is due to addition of New Trading Product in our Firm Namely Tansen. Tansen was introduced in the market by us in the month of November and our sale of Tansen has increased during this period Further, it is evident that sale between 01/11/2016 to 08/11/2016 not only continues even after 08/11/2016. The appellant deposited Total Cash amounting 16 Rs. 85.61.00.000 レ in its bank account from the period 09.11.2016 to 31.12.2016 out of which only 14,33,00,000/-deposited in Specified banking Notes (SBN) and Balance of Rs 59,69,00,000/- is deposited in Legal tender. This also shows that the cash sales in the firm in eo only for the specified period only but ther same trends of cash sales continue later also in legal tender currency and that also over that period of time where there is huge crunch of cash in legal Printed from counselvise.com 5 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency tender. Further, the cash deposited in the bank account is of the cash Sale including VAT that took place in the firm on 05/11/2016, 07/11/2016 and 08/11/2016. These sales are duly recorded in the books of accounts further on the above sale we had duly paid Vat which ranges from 12.50% to 20%. The shime tax was duly deposited with the State Government before the Due Date. Further I would like to submit that the Firm maintained proper Stock Register Item wise which shows that the firm has sufficient stock on each date of sale, there is no instance when the Stock becomes negative or there is a back dated purchases. All purchases made by the appellant are excise paid, and the Excise Duty is paid under \"Compound Levy Scheme Le Excise Duty on Machine wise. The Machine Wise excise duty was paid as per the details submitted. It has been seen that sage of excise duty paid on purchase cost excluding VAT varies from 38.64%-67.69%. Hence it can be inferred the Indirect Taxes Paid on Sale Varies from 51.14% - 87.69% (Approx) and therefore out of the total Cash deposited the major amount was utilized for payment of Indirect Taxes. This annexure shows that the firm has sufficient cash balance on each date which is subsequently deposited over a period of time. 4.1.21 As per the assessment order the Assessing Officer pointed out that the appellant routinely deposited cash generated out of sales on the very next date of the sales taking place. Therefore, Assessing Officer disagreed with the appellant's contention that the major sale consideration was kept in the hands of the appellant as on 08.11.2016. Further, the Assessing Officer mentioned that it is obvious that the appellant has manipulated its books of accounts to justify the bogus sales/purchases. The Assessing Officer worked out the average cash deposit from 01.11.2016 to 08.11.2016 and found out the average cash deposited on any given day as Rs. 2,32,50,000/-. The Assessing Officer worked out the cash sale of 08.11.2016 as Rs. 2,32,50,000/-: Accordingly, the Assessing Officer reduced this amount of Rs. 2,32,50,000/- out of the cash deposited of Rs. 14,53,00,000/- in SBNs and made the addition of Rs. 12,20,50,000/- u/s 68 r.ws. 115BBE of Income Tax Act. It is noteworthy to mention that the Assessing Officer did not point out any specific defects in the books of accounts or identified any manipulation in sales/purchases Printed from counselvise.com 6 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency and also did not reject the books of accounts. Moreover, the Assessing Officer did not comment the cash sales figures for the period 01.11.2016 το 08.11.2016 and only worked out on the basis of the average cash deposit figures worked out the cash sale of 08.11.2016 as Rs. 2,32,50,000/-. As per the appellant the total sale for the period 01.11.2016 to 08.11.2016 was Rs. 28,11,34,999/- and the closing cash in hand was Rs. 14,61,68,135/-. Even the opening cash in hand of Rs. 5,15,15,711/- as on 01.11.2016 remained undisputed in the assessment order. These figures of total sales and closing cash in hand on 08.11.2016 remained unaltered in the assessment order. As per records before the Assessing Officer and before the undersigned the appellant hadundisputed cash in hand as on 31.10.2016 amounting to Rs. 5,15,15,711/-, This figure has not been altered by the Assessing Officer and therefore it can he concluded that the opening cash in hand at the beginning of the month remained the same. There is no specific evidence pointing out that the 08.11.2016. If the sale remained unaltered and there is no specific anomaly in purchase and stocks, appellant could not or did not make sale amounting to Rs 28,11,34,999/- during 01.11.2016 to then it is undisputed that the appellant has a cash in hand amounting to Rs. 14,61,68,135/- as on 08.11.2016 for deposition in bank during demonetization. The appellant submitted reasons for higher sales in the month of November which have not been disputed by the AO in the assessment order. Moreover, higher sales or higher deposition of cash cannot be a justification to challenge the correctness of books of accounts. Therefore, the appellant, as per the books of accounts, considered complete and correct by the Assessing Officer, had adequate cash in hand as on 08.11.2016 for deposition in bank accounts during the demonetization period. 4.122 view of the discussion above, the following points are noteworthy: 1. The appellant deposited an amount of Rs. 14,53,00,000/- in its bank accounts in SBNs during demonetization period. Out of this amount, the Assessing Officer considered that except for one day average cash deposit in the bank the remaining amount of Rs. 12,20,50,000/-(14,53,00,000-2,32,50,000) (in Printed from counselvise.com 7 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency SBN) was held as unexplained cash credit u/s 68 r.w.s 115BBE of the Income Tax Act 2. As per the return of income filed by the appellant, the due disclosure of the cash deposited in the bank during the demonetization period was made by the appellant. 3. As per the certificate furnished by the IDBI Bank dated 11.11.2016, the IDBI Bank had mentioned that they are unable to accept complete cash as tendered by the appellant in view of sudden emergency situation of Public rushing in the branch and due to operational difficulties and this has led to accumulation of cash at appellant's end. This certificate justifies the delay in deposition of cash by the appellant in the bank. 4. This is a case where a search/survey was carried out during the year in the case of the appellant. As per the list of impounded documents, it is clear that the Investigation wing and the Assessing Officer were in possession of the entire books of accounts and related documents of the appellant. The list of such documents impounded during the survey has already been mentioned above. Moreover, during the course of assessment proceedings, the appellant has submitted before the Assessing Officer the complete details of cash deposits along with documentary evidences. The documentary evidences furnished by the appellant included Tax /Sale Invoices, Purchase Invoices, Chart showing detail (Qty wise and amount wise) of opening stock, purchase, sales and closing stock, Excise Returns, Confirmation of purchase parties, VAT Returns and Stock Register. Therefore, the books of accounts, Stock registers, bills. vouchers etc. were available with the Assessing Officer during the course of assessment. The Assessing Officer never made any adverse observation about the availability of the books of account. The Assessing Officer only made a comment that the appellant had manipulated its books of accounts to justify the bogus sales / purchases, however, this comment was without pointing out any specific instances of manipulations in the books of accounts. Therefore, theAssessing Officer was in possession/knowledge of the books of accounts and other supporting vouchers etc. and they were not reiected by the Printed from counselvise.com 8 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency Assessing Officer during the course of assessment proceedings. Therefore, it can be safely concluded that the books of accounts of the appellant have been considered by the Assessing Officer as complete and correct. 5. It is noteworthy to mention that the products sold by the appellant firm are not tas free. The VAT on the products ranges from 12.50% to 20%. The percentage of excise duty on assessee's product ranges from 38.64% to 67.69% Therefore, the indirect tax liability on the appellant's product is more than 50% 6. The books of accounts including the cashbook, bank book, purchase book, sales book, stock register, ledger, and parties accounts are duty audited and have been duly accepted by Assessing Officer. The books of accounts have not been rejected by the Assessing Officer No discrepancies in the books of account have been pointed out by Assessing Officer. 7. Moreover, as per the copies of orders passed by the Assessing Officer is 153.A. of Income Tax Act in the case of the appellant for the six preceding AYs, no additions have been made 8. The sales cannot take place without purchases and the assessee has furnished complete details of purchases with even the confirmation of purchase parties. The Assessing Officer has accepted the purchases. Once the Assessing Officer has accepted the purchases, there was no justification for him to not accept the sales, particularly in view of the fact that had the sales not taken place, the excess stock would have been found available with the assessee at the time of survey at the premises of the assessee by income tax departinent. The fact that no discrepancy in stock was found at the time of survey clearly establishes the correctness of sales and purchases. 9. The assessee has filed the VAT returns with the VAT/Sales Tax Department and all the sales are duly reflected in these returns. Thus, the doubt/ suspicion raised by Assessing Officer in respect of sales are totally unsubstantiated. Printed from counselvise.com 9 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency 10. During the demonetization period (09.11.2016 to 31.12.2016) the total cash deposits by the assessee in the Bank were Rs. 83,61,00,000/- out of which only Rs. 14,53,00,000/- were in specified bank notes (SBN) and balance 83% was in non SBNs i.e non-demonetized currency This establishes the fact that deposit of cash in the business of the assessee is not an unusual feature. 11. An amount of Rs. 14,53,00,000/- was deposited in bank's in SBNs during demonetisation out of the total cash sale and total cash deposit in bank's for the year amounting to Rs. 449,95,09,044/- and Rs. 447,94,00,000/-respectively. 12. The appellant's data of opening cash, cash sales, cash deposit in banks and cash expenses have been analysed above and accordingly the monthly closing cash in hand has been worked out. It has been observed that the closing cash in hand at the end of the month has been consistent ail through the year. However, there is a spike in daily availability of cash and closing cash in hand as on 08.11.2016. The appellant deposited an amount of cash of Rs. 18,60,00,000/-and Rs. 36,00,000/- during the month of November 2016, which is only slightly higher and largely similar to the cash deposited in banks during the earlier and subsequent months. The details of monthly cash deposited during the year is as under:- Month Cash deposited in Bank April 20,30,00,000/- May 31,80,00,000/- June 38,20,00,000/- July 31,45,00,000/- August 25,25,00,000/- September 19,50,00,000/- October 32,20,00,000/- November (Upto 8th Nov) 18,60,00,000/- November (After 8th Nov) 36,83,00,000/- December 48,78,00,000/- January 49,00,00,000/- February 46,85,00,000/- March 49,18,00,000/- Total 4,47,94,00,000/- Printed from counselvise.com 10 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency 13. The Assessing Officer was satisfied with the correctness and completeness of the books of accounts of the appellant and therefore he chose not to reject the books of accounts. No specific anomaly or defect/s had been pointed out in the books of accounts. This would mean that the Assessing Officer found the purchase, sales, expenditure, opening and closing stock etc. to be correct. The Assessing Officer did not doubt the genuineness of the purchases and stock and therefore, all the receipts of the appellant have also been considered to be in order. Further the Assessing Officer did not find any anomaly with the purchases or sales of profit & loss account also. The cash receipts are credited in the sales account and had been included in the profit declared by the assessee in its return of income. The same profit figure has been used by the Assessing Officer to compute the total income of the appellant. 14. The accounts of the appellant are audited by the certified Chartered Accountant and the books of accounts have not been rejected by the Assessing Officer. The AO has accepted the stock as per books of account and at any stage he did not doubt the availability of stock, which could have been sold during the period prior to demonetization. 15. The major part of cash deposited during demonetization was considered as assessee's income and was added u/s 68 of Income Tax Act but the corresponding figure was not reduced from the sales figure for the year. The Assessing Officer has considered the figure of total sales as correct and did neither reduce the figure of total sales nor increased the figure of closing stock. 16. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the correctness of sales either the assessee should not have the sufficient stocks in their possession or there must be defects in the stock registers/ stocks. Once there is no defect in the purchases and sales and the same matching with inflow and the outflow of stock, there is no reason to disbelieve the sales 17. Further, it is observed that not only the sale between 01/11/2016 to 08/11/2016 Increased but the same trend Printed from counselvise.com 11 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency continued even after 08/11/2016. The appellant deposited Total Cash amounting to Rs.85.61.00.000/-in its bank account from the period 09.11.2016 to 31.12.2016 out of which only Rs. 14,53,00,000/- is deposited in Specified banking Notes (SBN) and Balance of Rs.59,69,00,000/- is deposited in Legal tender. This sio shows that the cash sales in the firm are not only for the specified period only but the same uends of cash sales continued later also in legal tender currency and that also over that period of time where there is huge chinch of cash in legal tender. 18. The total sale for the period 01.11.2016 to 08.11.2016 was Rs. 28,11,34,999/- and the closing cash in hand was Rs. 14,61,68,135/- as on 08.11.2016. This figures of total sales and closing cash in hand remained unaltered in the assessment order. As per records before the Assessing Officer and before the undersigned the appellant had undisputed cash in hand as on 31.10.2016 amounting to Rs. 5,15,15,711/-. This figure has not been altered by the Assessing Officer and can be concluded that the opening cash in hand at the beginning of the month remained the same. There is no specific evidence pointing out that the appellant could not or did not make sale amounting to Rs. 28,11,34,999/- during 01.11.2016 to 08.11.2016. If the sale remained unaltered and there is no specific anomaly in purchase and stocks, then it cannot be disputed that the appellant did not have a cash in hand amounting to Rs. 14,61,68,135/- as on 08.11.2016 for deposition in bank during demonetization. The appellant submitted reasons for higher sales in the month of November, which have not been disputed by the Assessing Officer. Moreover, mere higher sales or higher deposition of cash cannot be a justification to challenge the correctness of books of accounts unless specific defects are pointed out in the books of accounts. Moreover, the trading results of the appellant have not been altered by the Assessing Officer. 19. This is a case where the search and survey were carried out on the appellant during the year and no anomaly/discrepancy about the stock/purchase/sales has been pointed out by the Assessing Officer. Since the department had verified the correctness of accounts and supporting vouchers during the course of search and survey; it Printed from counselvise.com 12 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency will not be appropriate for the Assessing Officer to consider the opening cash balance as on 01.11.2016, the sale of the month of November before demonetization and resultant cash in hand as on 08.11.2016 as incorrect while carrying out the assessment. Therefore, the appellant, as per the books of accounts, considered complete and correct by the Assessing Officer, had adequate cash in hand as on 08.11.2016 for deposition in bank accounts during the demonetization period. Moreover, there is no adverse inference drawn out of the impounded documents. 4.1.23 in view of the discussion above the Assessing Officer had made the addition on the basis of the presumption that the sale during the period 01.11.2016 to 08.11.2016 has been inflated by the appellant and the same had resulted in higher availability of cash in hand on 08.11.2016. The Assessing Officer opined that the cash deposited in SBNs in the bank is not the cash obtained by the sales declared by the appellant. The basis of Assessing Officer's presumption is higher cash sale during the period of 01.11.2016 to 08.11.2016 and non deposition of these sale proceeds in the bank account on the very next day. The Assessing Officer reworked the cash sale figures for 08.11.2016. These arguments of the Assessing Officer are not based on any documentary evidence and are only presumptions resulting from the suspicion of higher cash sales and non deposition of cash immediately in the bank account. The Assessing Officer considered the books of account as correct and complete and did not reduce the alleged excess sale from the total sale proceeds declared by the bank. The investigation wing had carried out a survey in this case and despite of the impounding of several documents, no discrepancy regarding purchase/sale/stock have been pointed out in the assessment order. The findings of survey conclusively established the fact that there is no identifiable discrepancy in purchase/sale/stock. The Assessing Officer's opinion is not substantiated by any documentary evidence and the contention of the appellant is therefore cannot be disputed. 4.1.24 This is a case of a firm engaged in trading of Paan masala and other related tobacco products. The appellant Printed from counselvise.com 13 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency deposited sizeable amount of cash in SBNs in his bank account subsequent to the demonetization. Demonetization has been an extra ordinary event which never happened in the recent past. The sales figures for the month of November 2016 prior to demonetisation have been high and the cash deposited during the month of November/December in SBNs is higher than the average cash deposits in the Bank. This can be at best a reason for suspicion for further investigation but cannot be alone considered as sufficient evidence for making addition. The Assessing Officer could have examined and verified the sales made and pointed out specific anomalies in the sales records. He could have verified purchases to prove that adequate stock was not available with the appellant to be sold during demonetization. But the Assessing Officer did not carry out any enquiries to find anomalies in the purchase and sale records. Assessing Officer as per the assessment order perused the books of accounts but he did not reject the books of accounts and therefore, considered them as correct and complete. There is no debate about the sales prior to 31.10.2016 and subsequent to 08.11.2016. The books of accounts and the results have been considered as correct for the entire year except this period of 01.11.2016 to 08.11.2016, where the Assessing Officer used an average figure of cash deposited in the bank accounts as average daily sale. The purchases and the stock position were also verified during the course of search/survey/assessment/appellate proceedings. The key issue in this case is whether the adequate stock was available with the appellant prior to demonetisation or not for making sales before demonetisation. It has been verified that adequate stock was available with the appellant as on 01.11.2016 for making sales before demonetisation and no discrepancy have been pointed out by the Assessing Officer in the stock position during the assessment proceedings. Therefore, there is no justification to doubt the fact that adequate amount of stock was available with the appellant to be sold in the month of November 2016. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the correctness of sales either the assessee should not have the sufficient stocks in their possession or there must be defects in the stock registers/stocks or specific deficientcy should be found in the sales records. Once there is no defect in Printed from counselvise.com 14 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency the purchases and sales and the same are matching with in now and the outflow of stock, there the stock registers/stocks or specific deficiency should be fund in the sales records. Once there is no demonetisation in the gross sales made by him in the Profit &Loss accounts and the Assessing Officer is no reason to disbelieve the sales. The appellant has included the sale of November 2016 prior to Presumption that the amount deposited in bank in SBNs is not sale proceed should have resulted in did not reduce this amount from the sales while making an addition is 68 of Income Tax Act reduction of sales figure and also increase in closing stock while computing business income. Any would result into a double addition, which can never be considered as appropriate. Therefore, this is a addition u/s 68 without corresponding reduction in the sales figure and increase in closing stock figure case where books of accounts have been considered and complete, adequate stock available to be sold prior to demonetization and no specific aromalies in purchase sales undertaking been pointed out the Assessing Officer. The Assessing officer did not dispute that the sales during November 2016 prior to demonetisation were credited in the ale account and had been duly included in the profit disclosed by the assessee in its return. Therefore in these circumstances, the cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same, Moreover, this is a case where a search and survey was carried out during the year books 29.03.2017. As a result of search/survey, several documentary including the bills/invoices and books pertaining to purchase/sales/stock were found and impounded seized. The details of impounded documents are already mentioned above. On the date of search, there was no anomaly in the stock of the appellant. The Assessing Officer in the assessment order did not point out any discrepancy in the stock or made any addition for shortage/excess stock. Therefore, the stock found on the date of search was as per the books of accounts of the appellant. Further there is no discrepancy either in the purchase bills or in the sales records found during the survey. As per the assessment order, there was no incriminating document, which could point out any discrepancy in the sale purchase and stock data/figures. All the books of accounts, VAT returns, stock register etc. were available before the Assessing Officer as part of the impounded records and were Printed from counselvise.com 15 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency also made available by the appellant during the course of assessment/appellate proceedings. There is no observation by the Assessing Officer in the assessment order that any books of accounts/details sought by the Assessing Officer were not made available by the appellant. Therefore, keeping in mind the holistic picture the Assessing Officer was in complete knowledge of sale, purchase transactions and stock position of the appellant during the course of assessment proceedings. The Assessing Officer did not dispute the purchase or the sales or the stock position of the appellant during the course of assessment proceedings. If the saleshave been considered correct, this would mean that the amount which was added by the Assessing Officer u/s 68 of Income Tax Act has already been considered and included in the sales figures of the appellant. Making another addition u/s 68 of the Income Tax Act for the same amount would result double addition. The trading results of the appellant cannot be doubted firstly because the Assessing Officer had not rejected the books of accounts and secondly because this is a case of search/survey andall the books/documents was always available with the appellant. The presumption that the appellantmight have deposited its own undisclosed cash during demonetization is without any evidentiary basis and not in accordance with the books of accounts of the appellant. Even if it is presumed for argument. sake that the appellant was in possession of undisclosed cash, which was later deposited in the bank account as sales then that would tantamount to lesser sales and resultant excess stock. The reduced sales would result in surplus stock, which is not the case here because the stock has been found to becorrect as a result of survey. Therefore, any such presumption of undisclosed cash would be devoid of merit as the same is not based by any evidence. Further, the Assessing Officer had not disputed the sales made by the appellant during the year. This is a case where the search and survey were carried out on the appellant during the year and no anomaly/discrepancy about the stock/purchase/sales had been pointed out by the Assessing Officer. Since the department had verified the correctness of accounts and supporting vouchers during the course of search and survey; it will not be appropriate for the Assessing Officer to consider the opening cash balance as on 01.11.2016, the sale of the month of November before demonetization and cash in hand as on Printed from counselvise.com 16 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency 08.11.2016 as incorrect while carrying out the assessment. In view of the above, I am of the considered opinion that the Assessing Officer did not bring out any specific facts and evidence to negate the genuineness of the figure of purchase, sales and stock. If the figure of sales has been considered as correct then there is no justification for making an addition of the same sales as unexplained cash credit u/s 68 of Income Tax Act. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, it is clear that the cash receipts represent the sales, which the assessee has rightly offered for taxation. As per the books of accounts there was sufficient stock to affect the sales and adequate stock was available during November 2016 in pre- demonetization period and there is no evidence that the sales as per the books of accounts were not made. Further, since the appellant has already included the amount of SBNs deposited in bank in sales figures in P&L Account; there is no case for making the addition u/s 68 r.w.s. 115BBE of Income Tax Act again. Therefore, the addition made by the Assessing Officer u/s 68 r.w.s 115BBE of Income Tax Act amounting to Rs. 12,20,50,000/- cannot be considered as correct and the same is not found to be sustainable. Accordingly, the addition of an amount of Rs.12,20,50,000/- u/s 68 r.w.s 115BBE of Income Tax Act is deleted and the relief is allowed to the appellant. Accordingly, Ground Nos. 1 to 3 of appeal are allowed.” 8. During the course of assessment proceedings, Assessee submitted following details/documentary evidence regarding the issue of cash deposits made by the Assessee: a) Tax/Sale Invoices b) Purchase Invoices c) Chart showing detail (Qty wise and amount wise) of opening d) stock, purchase, sales and closing stock. e) Confirmation of purchase parties f) VAT Returns g) Stock Register Printed from counselvise.com 17 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency All the documentary evidence above-mentioned have been submitted before A.O such as complete details of opening stock, purchases, sales and closing stock along with both quantity wise as well as amount wise. No discrepancy has been pointed out by A.O on the above documents submitted by the Assessee. 9. Further, a survey u/s 133A (according to the A.O. search u/s 132) of the Act was carried out at the premises of the assessee on 29/03/2017. During the course of such survey (search according to the A.O.), no discrepancy was found in the stocks or cash in hand of the Assessee. No incriminatory material was found to doubt the sales of the assessee or cash deposits in bank. 10. The books of accounts including the cashbook, bank book, purchase book, sales book, stock register, ledger, parties accounts are duly audited and have been duly accepted by A.O. The books of accounts have not been rejected by the A.O. No discrepancy in the book of accounts have been pointed out by A.O. Further, the Ld. CIT(A) observed that the assessee has furnished complete details of purchases along with the confirmation of purchase parties and the A.O has accepted the purchases. Therefore, once the A.O has accepted the purchases, there was no justification for A.O. not accept the sales, particularly in view of Printed from counselvise.com 18 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency the fact that had the sales not taken place, excess stock would have been found available with the assessee at the time of search at the premises of the assessee by income tax department. The fact that no discrepancy in stock was found at the time of search clearly establishes the factum of sales. The assessee has also filed the VAT returns with the VAT/Sales Tax Department and paid the taxes thereon in time. All the sales are duly reflected in these returns, therefore, there was no reason for the A.O. to doubt or have suspicion in respect of sales. 11. It is noteworthy to observe that the assessing officer has failed to appreciate that during the demonetization period (9/11/2016 to 31/12/2016) the total cash deposits by the assessee in the Bank were Rs. 83,61,00,000/- out of which only Rs. 14,53,00,000/- were in specified bank notes (SBN) and balance 83% was in non SBNs ie., non- demonetized currency, whichsupports the contention of the Assessee that the deposit of cash in the business of the assessee is not an unusual feature. 12. It is further observed that none of the products of the assessee is tax free. The VAT on the Assessee’s products ranges from 12.50% to 20%. The percentage on excise duty on the Assessee’s products ranges Printed from counselvise.com 19 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency from 38.64% to 67.69%. Thus the indirect tax on the sales varies from 51.14% to 87.69%. 13. The Hon'ble jurisdictional Delhi High court in the case of CIT v Paradise Holidays(2010) 325 ITR 13 (Delhi) held as under:- 6. The Assessing Officer has not pointed out any specific defect or discrepancy in the Account Books maintained by the assessee. Admittedly, the assessee had been maintaining regular Books of Accounts, which were duly audited by anindependent Chartered Accountant. As noted by CIT(A), the financial results were fully supported by the assessee with vouchers and the Books of Account were complete and correct in all respects. The accounts which are regularly maintained in the course of business and are duly audited, free from any qualification by the auditors, should normally be taken as correct unless there are adequate reasons to indicate that they are incorrect or unreliable. The onus is upon the Revenue to show that either the Books of Accounts maintained by the assessee were incorrect or incomplete or method of accounting adopted by him was such that true profits of the assessee cannot be deduced therefrom. 14. In the case of ITO vs. Surana Traders, (2005)93 TTJ 875: (2005)92 ITD 212 the Co-ordinate Bench of the Tribunal, Mumbai Bench held that, since the purchases have been held to be genuine, the corresponding sales cannot, by any stretch of imagination be termed as hawala transaction. It is the burden of the department to prove the correctness of such additions. When, in such like cases, a quantitative tally is furnished, even if purchasers are not available no addition is called for. The present case lies on much stronger foot as the payments for purchases are made through banking channel. Printed from counselvise.com 20 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency 15. In the present case, the amount of Rs. 12,20,50,000/- already stood credited to the Profit & Loss account under the head \"Sales\", therefore there is no applicability of provisions of section 68 of the Act. Therefore, the addition made by the A.O. results in double addition as the consolidated effect of amount of Rs 12,20,50,000/- added by the A.O. was already appearing in the books of accounts/on the audited financial statements. 16. In the case of CIT v. KailashJewellery House ITA No. 613/2010 decided by Jurisdictional Delhi High Court on 09.04.2010 it was held as under:- “3. The Commissioner of Income-tax (Appeals) had returned a finding that the stock and cash found at the time of search had been examined by the Assessing Officer and was compared with the stock and cash position as per books. The stock and cash position as per the books had been arrived at after the effect of the aforesaid cash sales. The stock position as well as the cash position as per the said books had been accepted by the Assessing Officer. The Commissioner of Income-tax (Appeals) also noted that the appellant had furnished the complete set of books of accounts and the cash books and no discrepancy had been pointed out. The Assessing Officer had doubted the aforesaid sales as bogus and had made the aforesaid addition. However, the Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal returned findings of fact to the contrary. 4. The Tribunal also noted that the departmental representative could not challenge the factual finding recorded by the Commissioner of Income-tax (Appeals). Nor could he advance any substantive argument in support of his appeal. The Tribunal also observed that it is not in dispute that the sum of Rs. 24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by Printed from counselvise.com 21 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency the assessee in its return. It is in these circumstances that the Tribunal observed that the cash sales could not betreated as undisclosed income and no addition could be made once again in respect of the same. 5. The findings of the Commissioner of Income-tax (Appeals) and the Tribunal, which are purely in the nature of the factual findings, do not require any interference and, in any event, no substantial question of law arises for our consideration. The appeal is dismissed. 17. The Hon'ble Gujrat high court in the case of CIT v. Vishal Exports Overseas Limited (Gujarat High Court) Tax Appeal No. 2471 of 2009 held as under:- 5. Revenue carried the matter in appeal before the Tribunal. The Tribunal did not address the question of correctness of the C.1. T. (Appeals)'s conclusion that amount of Rs.70 lakhs represented the genuine export sale of the assessee. 6. The Tribunal however, upheld the deletion of Rs.70 lakhs under section 68 of the Act observing that when the assessee had already offered sales realisation and such income is accepted by the Assessing Officer to be the income of the assessee, addition of the same amount once again under section 68 of the Act would tantamount to double taxation of the same income. 7. In view of the above situation, we do not find any reason to interfere with the Tribunal's order. 2.11. The accounts of the assessee are duly audited. The books of accounts have not been rejected by the A.O. No discrepancy in the sales/purchase/stock has been pointed out. The addition made by the A.O. is based only on conjecture and surmises. It is a settled law that suspicion howsoever big cannot take place of evidence Dhakeshwari Cotton Mills Ltd v CIT (1954) 26 ITR 775 (SC)). In the present case, the assessee has furnished all the details and documentary evidences. The assessing officer has not rebutted the details / evidences filed by the assessee. He has made the addition in an arbitrary manner as if he was predetermined to make addition. The action of the A.O. is not sustainable under law. The Id. CIT(A) after detailed discussion and examination has rightly deleted the addition. Printed from counselvise.com 22 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency 18. Considering the fact that the accounts of the Assessee was duly audited, the books of accountshave not been rejected by the A.O. and no discrepancy in sales/purchase/stock has been pointed out by the A.O. and considering the fact that the Assessee has duly declared the sales in the VAT/Sales Tax return, by relying on the judicial precedents mentioned supra, we find no reason to interfere in the findings and the conclusion of the Ld. CIT(A). Accordingly, we find no merits in the grounds of Appeal of the Revenue. 19. In the result, Appeal of the Revenue is dismissed. Order pronounced in the open court on 27th November, 2025 Sd/- Sd/- (MANISH AGARWAL) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 27.11.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTR ITAT, NEW DELHI Printed from counselvise.com 23 ITA No. 963/Del/2024 DCIT Vs. Sanjay Sales Agency Printed from counselvise.com "