DCIT, CENTRAL CIRCLE- 8, DELHI, JHANDEWALAN, DELHI V. SMS TRADING CO., GHAZIPUR, DELHI

ITA 955/DEL/2024

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470518 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYA CHAUDHARY
• Assessee Lawyers: AMIT GOEL; PRANAV YADAV
• Keywords: Business income; Unexplained cash credit; Rejection of books of accounts
• Section: 143(3); 139(1); 68; 13; 145; 133A

Judgement Text

"ITA No. 955/Del/2024 Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI BEFORE PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI YOGESH KUMAR US, JUDICIAL MEMBER ITA No. 955/Del/2024 [Asstt. Year : 2017-18] DCIT Central Circle-8 New Delhi Vs. SMS Trading Co. B-16, Ground Floor, Ghazipur Village New Delhi-110096 PAN No. ADBFS5233K (APPELLANT) (RESPONDENT) Revenue by Ms. Jaya Chaudhary, CIT-DR Assessee by Shri Amit Goel, Adv. & Shri Pranav Yadav, Adv. Date of hearing: 16.01.2025 Date of Pronouncement: 27.03.2025 ORDER PER PRADIP KUMAR KEDIA, AM : The instant appeal has been filed by the Revenue against the First Appellate Order dated 15.12.2023 passed by the Commissioner of Income Tax (Appeals)–30, [the CIT(A)], New Delhi dated 31.01.2024 under s. 250(6) of the Income Tax Act, 1961 (the Act) arising from the Assessment Order dated 26.12.2019 passed under Section 143(3) of the Act for the Assessment Year 2017-18. 2. The grounds of appeal raised by the Revenue reads as under: “1. The ld. CIT(A) has erred in deleting the addition of Rs.28,63,10,588/- made by the AO u/s 68 of the IT Act. 2. The ld. CIT(A) has erred in deleting the addition of Rs.28,63,10,588/- by not taking into consideration the observation of AO that as per books only Rs.1,87,230/- was present as cash-in-hand.” ITA No. 955/Del/2024 Page | 2 3. Briefly stated, that the assessee is a partnership engaged as consignment sales agent of M/s Dharam Pal Staya Pal Ltd. for selling Paan Masala under the brand name Rajnigandha and other tobacco products in retail. A survey action under Section 133A of the Act was carried out on 08.03.2017 by Investigation Wing at the business premises of the assessee. The assessee furnished return of income under Section 139(1) of the Act on 24.10.2017 declaring total income of Rs.4,97,78,370/- for the AY 2017-18 in question. The return filed by the assessee was selected for scrutiny assessment under CASS. In the course of the scrutiny assessment, the Assessing Officer found that during the demonetization period, the assessee deposited cash of Rs.109.41 Cr. in its two bank accounts as noted in para 4(i) of the order. It was further noted that on analysis of factual matrix as discussed in para 5 & 6 of the Assessment Order, the Assessing Officer concluded that cash deposited to the extent of Rs.28,63,10,588/- in the bank account of the assessee during the demonetization period is unexplained cash credit under Section 68 r.w.s. 115BBE of the Act from its undisclosed source of income. The Assessing Officer accordingly made addition of Rs.28,63,10,588/- to the returned income of the assessee. 4. Aggrieved, the assessee preferred appeal before the CIT(A). Detailed submissions were made before the CIT(A) to support its plea towards sufficiency of available cash in hand and explanation towards source of cash deposited. It was pointed out that in the course of survey, the books of account, invoices etc. were found which itself establishes the source of cash deposit. On consideration of detailed submissions made towards source of cash deposits and on appraisal of factual matrix, the CIT(A) found merit in the explanation offered by the assessee. The CIT(A) thus concluded that there is no justification in making additions towards cash deposits as unexplained cash credit under Section 68 of the Act. The relevant extract of the First Appellate Order is reproduced hereunder for easy reference: ITA No. 955/Del/2024 Page | 3 \"4.1.21 In view of the discussion above, the following issues are noteworthy: 1. The appellant is a consignment agent of M/s Dharampal Satypal group. The principal sends the goods to the appellant agent and the appellant as agent makes the sale on behalf of the principal. There are purchases/sales of the goods at the price fixed by the principal and the perusal of balance sheet clearly indicates that the purchase and the sale price of the products is the same. The appellant does not earn any profit on these sales as the sales have been made on behalf of the principal. The appellant is earning income by receiving commission from the principal. The income of the appellant is therefore not because of the profit on sales but it is due to the receipt of commission income. 2. The appellant had made proper disclosure of the deposition of SBNs in the return of income. Moreover, the certificate obtained from bank dated 11.11.2016 clearly mentions that the average receipt in the bank accounts on daily basis is around Rs. 12,00,00,000/- cash. Due to sudden emergency situation because the public rushing in the branch and due to operational difficulties, the bank was unable to receive three days collection of both the accounts and which has led to the accumulation of approximately Rs. 40,00,00,000/-cash in appellant's cash in hand. 3. The appellant has its sizable amount of sales in cash. It is observed that it deposited new currency on 13.11.2016 and had regularly started depositing new currency w.e.f. 21.11.2016. 4. The appellant have deposited Total Cash amounting to Rs.114,91,00,000/- in bank account from the period 08.11.2016 to 30.12.2016 out of which only Rs.38,58,00,000/- is deposited in Specified banking Notes (SBN) and Balance of Rs.76,33,00,000/- is deposited in Legal tender. This also shows that the cash sales in the appellant firm in not only for the specified period only but the 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 tender. 5. These sales for the month of November 2016 are duly recorded in the books of accounts. 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. The Cash Balance in the firm Head office and branch Office and in Totality shows that the firm has sufficient cash balance on each date which is subsequently deposited over a period of time. ITA No. 955/Del/2024 Page | 4 6. Further the appellant submitted the reason for such huge cash deposited in SBN is that Banks were closed on 09.11.2016 & 10.11.2016. The firm approached banks to deposit the cash of Rs.38,58,00,000/- on 11.11.2016 (First Opening date) But the banks had shown its inability to deposit the cash due to sudden emergency situation because of Public rush and operational difficulties, the letter for the same, taken from the banks on 11.11.2016 is available on record. 7. There was survey u/s 133A of Income Tax Act have been carried out in the case of the appellant on 08.03.2017 by the Investigation Wing. As per the assessment order, no discrepancy was found in the stock or cash in hand during the course of survey. Moreover, the Assessing Officer has not pointed out any specific material obtained during the course of survey to doubt the purchase/sales or the cash deposits in the bank. The details of documents impounded have already been narrated above. 8. The books of accounts including cash book, bank book, purchase book, sales book, stock register, ledger, parties account etc. were duly audited and were not rejected by the Assessing Officer u/s 145 of Income Tax Act. Therefore, the Assessing Officer had considered the books of accounts as correct and complete. 9. Moreover, during the assessment proceedings the appellant had submitted copies of consignment sale agreement alongwith working of the commission and reconciled the same with the Service tax return. Service tax returns were filed on 23.10.16 and 21.04.2017, i.e. within the due date of filing. 10. There is no anomaly pointed out by the Assessing Officer as far as the purchase and sales are concerned. Moreover, no excess stock or shortage had been found during survey. Moreover, the impounded documents also contained the billing machine wise sales details and invoices for the period prior to demonetization and no adverse finding regarding them is made in the assessment order. 11. As pointed out earlier, the cash deposited in the month of November and December 2016 is more or less in accordance with the pattern of cash deposits being regularly made by the appellant. It is noted that in the month of September, even a higher amount of cash was deposited by the appellant. 12. Since, the books have not been rejected and the assessment has been made taking the income as per the profit & loss account as the point of initiation of computation of total income, the sale figure in the trading account has been accepted by the Assessing Officer. Now making an addition of an amount, which has ITA No. 955/Del/2024 Page | 5 already been included in the sales figure would tantamount to a double addition. In fact, if it is presumed that the appellant had deposited some other cash and not the sales consideration then the appellant should be in possession of excess stock and the same should have been found during the survey. Moreover, no evidence of any out of books sales or purchases have been pointed out by the Assessing Officer. Further, the Assessing Officer has not highlighted any other source of income which could have resulted in receipts, which are required to be taxed u/s 68 of Income Tax Act. Moreover, lesser sale would mean lesser commission income, which is not the case of the Assessing Officer. 13. The appellant is a consignee in the case and had only earned commission income on these transactions. The commission income declared by the appellant in its Profit and loss account and Return of income has been duly accepted by the Assessing Officer. There is no adverse inference by the Assessing Officer regarding the commission income of the appellant. 14. 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 had 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. Therefore, this is a case where books of accounts have been considered as correct and complete, adequate stock was available to be sold prior to demonetization and no specific anomalies in purchase sales and stock have been pointed out the Assessing Officer. 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. Further, there is no adverse inference by the Assessing Officer regarding the commission income of the appellant. 4.1.22 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 ITA No. 955/Del/2024 Page | 6 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. 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. 4.1.23 This is a case of a firm engaged in trading of Paan masala and other related tobacco products as consignment agent of M/s Dharmpal Satypal group. The appellant deposited sizeable amount of cash in SBNs in his bank account subsequent to the demonetization. Demonetization has been an extraordinary event which never happened in the recent past. The sales figures for the month of November 2016 prior to demonetization 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. 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 and only for a period of 01.11.2016 to 08.11.2016, there are certain findings. The purchases and the stock position were also verified during the course of survey/assessment/appellate proceedings. The key issue in this case is whether the adequate stock was available ITA No. 955/Del/2024 Page | 7 with the appellant as on 01.11.2016 or not for making sales before demonetization. It has been verified that adequate stock was available with the appellant as on 01.11.2016 for making sales before demonetization 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 deficiency should be found in the sales records. Once there is no defect in the purchases and sales and the same are matching with inflow and the outflow of stock, there is no reason to disbelieve the sales. The appellant has included the sale of November 2016 prior to demonetization in the gross sales made by him in the Profit & Loss accounts and the Assessing Officer did not reduce this amount from the sales while making an addition u/s 68 of Income Tax Act. Presumption that the amount deposited in bank in SBNs is not sale proceed should have resulted in reduction of sales figure and also increase in closing stock, while computing business income. Any addition u/s 68 without corresponding reduction in the sales figure and increase in closing stock figure would result into a double addition which can never be considered as appropriate. Therefore, this is a case where books of accounts have been considered as correct and complete, adequate stock was available to be sold prior to demonetization and no specific anomalies in purchase sales and stock have been pointed out the Assessing Officer. The Assessing Officer did not dispute that the sales during November 2016 prior to demonetization were credited in the sale 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 survey was carried out during the year i.e. on 08.03.2017. As a result of survey, several documents including the bills/invoices and books pertaining to purchase/sales/stock were found and impounded. The details of impounded documents are already mentioned above. On the date of survey, there was no anomaly in the stock of the appellant. The Assessing Officer in ITA No. 955/Del/2024 Page | 8 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. There was no incriminating document, which could point out any discrepancy in the sale purchase and stock data/figures. All the details of books of accounts, Service tax returns, stock register, goods movement records, purchases, sales invoices etc. were available before the Assessing Officer as part of the impounded records and were also made available by the appellant during the course of assessment proceedings. There is no observation by the Assessing Officer in the assessment order that the books of accounts sought by the Assessing Officer were not made available by the appellant. In any case, the Assessing Officer was in possession of the complete data of the appellant as a result of survey. 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 or the commission earned by the appellant during the course of assessment proceedings. If the sales have 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 survey and all the books/documents was always available with the appellant. The likely presumption that the appellant might 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 be correct 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 ITA No. 955/Del/2024 Page | 9 Officer had not disputed the sales made by the appellant during the year. In view of the above, I am of the considered opinion that the Assessing Officer did not bring out any specific facts and evidences 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. Even the commission income on these sales has been rightly offered for taxation and the Assessing Officer did not dispute the same. As per the books of accounts there was sufficient stock to affect the sales and adequate stock was available during 1st to 8th November 2016. 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. 115B8E of income Tax Act again. Therefore, the addition made by the Assessing Officer u/s 68 r.w.s. 1158BE of Income Tax Act amounting to Rs 28,63,10,588/- cannot be considered as correct and the same is not found to be sustainable. Accordingly, the addition of an amount of Rs.28,63,10,588/- 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 4 of appeal are allowed.” 5. Aggrieved by the relief granted by the CIT(A), the Revenue has preferred appeal before the Tribunal. 6. When the matter was called for hearing, the ld. CIT-DR for the Revenue relied upon the observations made by the Assessing Officer while making the additions in the hands of the assessee. The ld. CIT-DR also emphasized that in the course of survey proceedings dated 08.03.2017 a meager physical cash in hand lying with assessee of Rs.1,87,230/- was found and therefore, the case built by the assessee that major sales consideration kept in the hands of the assessee prior to demonetization on 08.11.2016 to the tune of Rs.38,58,00,000/- in custody of the assessee is beyond comprehension. The ld. CIT-DR also submitted that the assessee has failed to submit the details of the parties to whom cash sales were effected and therefore, the version ITA No. 955/Del/2024 Page | 10 of the assessee that cash deposits in the bank is out of cash sales remains unverified and uncorroborated. The ld. CIT-DR thus urged for reversal in the action of the CIT(A) and restoration of the additions made in the Assessment Order. 7. The ld. Counsel, on the other hand, strongly defended the First Appellate Order. 7.1. The ld. Counsel broadly pointed out that; • The assessee deposited total cash amounting to Rs.114.91 Cr. in the bank account during the demonetization period 08.11.2016 to 30.12.2016 out of which only Rs.38.51 Cr. were deposited in Specified Banking Notes (SBN) and balance of Rs.76.33 Cr. were deposited in smaller denominations/ legal tender. The deposits during demonetization period were duly disclosed in the return filed by the assessee firm. The cash deposit was not made only during demonetization period but also in every month prior to demonetization as well as subsequent to demonetization as per the tabulation provided in the Assessment Order. • The Assessing Officer failed to appreciate the nature of business of the assessee. The assessee is merely a consignment agent of M/s Dharam Pal Satya Pal Group (Rajnigandha and Zarda). The Principal sends the goods to the assessee. The assessee in his capacity as agent makes the sale on behalf of the principal. The sales price are also fixed by the principal and the assessee has no authority of pricing of sale of goods. This way, the purchase and sales prices of the goods sold by the assessee are same as evident from the audited financial statement and reflected in profit and loss account of Financial Year 2017-18 in question. Similarly, the audited account of subsequent Financial Year 2017-18 will also reflect the position that the assessee sales the product at the price fixed by the principal and the assessee is merely an agent/conduit to sale the goods for which the assessee derives income by way of commission charges on sales. The stock lying with the assessee at any point of time is also held on behalf of ITA No. 955/Del/2024 Page | 11 the principal. All the sales made by the assessee are for and on behalf of the principal. The income of the assessee thus is from commission income and not from sales. All the commission income has been received through banking channel after deduction of tax as per law. The AO has accepted the commission income of the assessee and no discrepancy has been found by the AO in the commission income. In such business set up, where goods are received on consignment purchases and sold at the price fixed by the principal and where the purchases is through banking channel and sales are made in cash month after month having regard to the nature of product, the sales declared cannot be doubted. • Once, the purchase and corresponding sales are vindicated, the cash deposits made out of cash sales which money goes back to the consigner of the goods through banking channel, the source of cash deposits cannot be doubted by any stretch of imagination. • A survey operation u/s 133A of the Act was carried out on the assessee post demonetization on 08.03.2017 at its two business premises. Significantly, no discrepancy was found in the stocks or cash in hand at all. No incriminating material were found either, to doubt the sales or cash deposits in bank nor could have been. 7.2. Once the AO has accepted the purchases on consignment basis and in the absence of any worthwhile stock found in the course of survey, the cash sales of the remaining goods made by the assessee could not have been doubted. Had the sales not taken place, excess stock would have been found available with the assessee at the time of survey at the premises of the assessee is fact that no discrepancy in stock was found at the time of survey clearly established the factum of sales. 7.3. The books of account including the cash books, bank book, purchases book, sales book, stock register, ledger, parties account are duly matched, reconciled and audited and have been duly accepted by the AO. The books of account continue to ITA No. 955/Del/2024 Page | 12 carry its sanctity and have not been rejected by the AO under Section 145 of the Act. No discrepancy in the books of account was pointed out by the AO either. The AO declined to accept the source of cash deposits to be out of cash generated from sales made by the assessee on the ground that during the 8 days (01.11.2016 to 08.11.2016) prior to date of demonetization, the average daily cash deposits by the assessee in its bank accounts are relatively lower. Consequently, out of total cash deposits of Rs.38.58 Cr. made during demonetization period, the AO as per his own methodology, accepted source of Rs.9,94,89,412/- as admissible cash deposits out of sales and balance cash deposits of Rs.28,63,10,588/- has been treated as unadmissible and added by the AO as unexplained cash credit u/s 68 r.w.s. 115BBE of the Act. The action of the AO is grossly arbitrary and contrary to cogent facts available on record. Continuing further, the ld. Counsel referred to a certificate dated 11.11.2016 from its banker (Federal Bank) appearing at page no. 112 of the paper book to submit that average deposits in both bank accounts on daily basis is around Rs.12 Cr. cash. However, due to sudden emergency situation arising due to demonetization and because of public rush in the branch and consequently operation, the bank had confirmed its inability to receive three days cash collection of both accounts which led to accumulation of approximately Rs.40 Cr. cash and assured the assessee that they will receive the cash in due course as situation stabilizes. This confirmation from the bank also reinforces the stand of the assessee on source of cash deposit. 7.4. Complete details of cash deposits along with the documentary evidences were provided to the AO in the course of assessment. The documentary evidences include sales invoice; purchases invoice; chart showing details (quantity wise and amount wise) of opening stock, purchase, sales and closing stock; confirmation of parties; VAT returns and stock register. The AO has not pointed out any discrepancy in such self-explanatory evidences but choose to act on conjecture & surmises. The AO has also not controverted the fact that the assessee is a merely consignment agent and the cash deposits are routed back to the consignor. ITA No. 955/Del/2024 Page | 13 7.5. The assessee filed the VAT returns with the VAT/Sales Tax Department and paid the tax thereon in time. All the sales are duly reflected in these returns and hence any suspicion entertained by the AO in respect of sales is totally misconceived and squarely contrary to the glaring facts on record. The AO failed to appreciate that during demonetization period running from 09.11.2016 to 31.12.2016, the total cash deposits out of sales made by the assessee on behalf of the principal were Rs.109.41 Cr. out of which only Rs.38.58 Cr. wherein SBN and balance 65% was in non-SBNs i.e. non-demonetization currency. This itself establishes the fact that the deposit of cash in the business of the assessee is not an unusual feature. Besides, cash deposits are made on a regular basis prior to demonstration and also in subsequent period. 7.6. The AO also failed to appreciate that none of the products sold by the assessee on behalf of the principal are tax free. The VAT on the products ranges from 12.5% to 20%, percentage of Excise Duty on the product sold by the assessee on behalf of the principal ranges from 38.64% to 67.69%. Thus, the indirect tax paid on the sales varies from 51.14% to 87.69% either paid by the principal or by the assessee. 7.7. The impugned cash deposit under challenge do not fall under the ambit of credit u/s 68 of the Act. It is a simple case of sales of goods (Tobacco and pan masala product of Dharam Pal Satya Pal Group) on behalf of the principal and receipt of payments against cash sales on behalf of the principal. The documentary evidences of sales have been submitted along with VAT returns etc. and the particulars of stock, consignment, purchases, sales etc. The details have been submitted. Both quantities wise as well as amount wise. The additions made u/s 68 is thus prima facie misconceived and carried out in a casual manner in ignorance of the material facts emanating from records. 7.8. It is a settled law suspicion howsoever strong cannot take place of the evidences as held in Dhakeshwari Cotton Mills Ltd. Vs. CIT (1954) 26 ITR 775 (SC). In the present case, the suspicion itself has no factual foundation in the wake of details and documentary evidences placed before the AO. The action of the AO is completely ITA No. 955/Del/2024 Page | 14 arbitrary and based on pre-conceived notions entertained by the AO and clearly unsustainable in law. 7.9. To repeat the peculiarity existing in the present case, the assessee is merely consignment agent and has no say in the purchase or sale of the product. The assessee merely earns income by way of commission towards rendering services as sales on behalf of the principal. The cash deposits are not made only during the demonetization period but a continuous feature day after day and month after month before and after demonetization. Without prejudice, invocation of Section 115BBE of the Act further reflects a clear non-application of mind where the cash deposits are out of sales arising in the course of business. There are numerous decisions of different benches of the Tribunal which have held in chorus that Section 115BBE is not applicable in the additions arising from business transactions. 7.10. The ld. Counsel thus submitted that when the facts are seen in totality, the cash deposits in question are self-explanatory and corroborated by both direct and circumstantial evidence, the source of cash deposits are backed clinching evidences. The action of the AO was thus, contrary to the facts on record and rightly reversed by the CIT(A). The ld. Counsel thus, submitted that no interference with the order of the CIT(A) is called for in the facts of the case. 8. We have carefully considered the rival submissions and dispassionately considered the extensive submissions made on behalf of the respective sides and perused the Assessment Order and the First Appellate Order and the documentary evidence referred and relied upon in tandem. Short controversy arising in the present case relates to proprietary of additions made under Section 68 r.w.s. 115BBE of the Act towards cash deposits during demonetization period. 8.1. Facts existing in the present case are quite peculiar. As per the facts emanating from records and as demonstrated by the assessee before CIT(A), the assessee is a consignment agent of Dharam Pal Satya Pal Group. The principal supplies tobacco products to the assessee agent and the assessee agent carried out the sales on behalf of ITA No. 955/Del/2024 Page | 15 the principal. The purchases as well as sales of goods are carried out at the price fixed by the principal. The perusal of the financial statement clearly indicates that the purchase and sale price of the products is the same. The assessee does not take any business risk per se while carrying out the sales. The assessee merely earns commission income for the services rendered by way of sale of tobacco products on behalf of the principal. The income of the assessee is therefore not because of any products profits on sales but due to receipt of commission income. 8.2. The deposits of SBNs during demonetization period have been duly disclosed in the ROI. The certificate obtained from bank dated 11.11.2016 clearly mentions the average receipt of cash in the bank account on daily basis is about Rs.12 Cr. Having regards to nature of product, the assessee carried out sizeable amount of sales in cash. The sales, purchase and closing stock complement each other and properly tallies with each other. Bonafide of sales are ascertainable not only from corresponding purchase on consignment basis but also from VAT return etc. The assessee has made majority of cash deposits in small denominations even during demonetization and only a part of total deposits are in SBNs. Substantial deposits are thus in legal tender even during demonetization as also recorded by CIT(A). The pattern of cash sales and cash deposits are consistent and same trend of cash sales and deposits thereof in bank account continues in the later period as well. There is no remarkable difference in the pattern of business in pre-demonetization period or in the post demonetization period. 8.3. The survey operation carried out by the Revenue as a surprise check also confirms the fact that assessee carried out cash sales and makes deposits thereof in the wake of absence of any discrepancy in the closing stock, cash in hand etc. The books of accounts are audited and not rejected by the AO which further gives an assurance towards bonafide of cash sales. The receipts against cash sales have found its way in the bank account in the ordinary course of business. The consignment sale agreement and working of commission and service tax returns etc. yet again provide sound basis to the submissions propounded on behalf of the assessee. ITA No. 955/Del/2024 Page | 16 8.4. In the absence of any anomaly detected either in the course of survey or in the books of account, the source of cash deposit during demonetization recorded to be out of cash sales of tobacco products in ordinary course could not have been treated as unsatisfactory by the AO. The CIT(A), to our mind has rightly discredited the action of the AO on appraisal of factual matrix. 9. The CIT(A) has examined the issue threadbare and has dealt with factual aspects in a very cogent and precise manner. The process of reasoning adopted by the CIT(A) resonates with the facts on record. We, thus, do not consider it expedient to reiterate and repeat each observations made by the CIT(A). We fully endorse the process of reasoning adopted by the CIT(A) and conclusion derived thereon in the matter. To our mind, the CIT(A) has rightly obliterated and reversed the additions made u/s 68 r.w.s. 115BBE of the Act towards cash deposits and rightly held that the source of cash deposits have live link and clear nexus to the cash sales carried out in a routine manner by the assessee. The adverse action of the AO is devoid of any weight whereas the direct and circumstantial evidences placed by the assessee carries overwhelming rationale and probative value and hence cannot be brushed aside. We, thus, have no hesitation to uphold the rightful conclusion arrived by the CIT(A). Hence, we decline to interfere there with. 10. In the result, appeal of the Revenue is dismissed. Order is pronounced in the open court on 27.03.2025. Sd/- Sd/-d/- (YOGESH KUMAR US) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date: 27.03.2025 *Subodh Kumar & Amit Kumar, Sr. PS* ITA No. 955/Del/2024 Page | 17 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, Delhi "