DEEPIKA GARG, E-392, PHASE-VI, FOCAL POINT, LUDHIANA,LUDHIANA V. INCOME TAX OFFICER, WARD 1(1), LUDHIANA, JAO, THE INCOME TAX OFFICER, WARD 1(5), LUDHIANA, LUDHIANA

ITA 96/CHANDI/2025

AI Insights

The case involves an appeal by Deepika Garg against the order of the CIT(A), which confirmed the additions made by the Assessing Officer regarding unexplained income and fictitious sales. The Assessing Officer had treated certain cash receipts as fictitious sales and added them to the income. The CIT(A) upheld this addition, leading to the appeal before the Income Tax Appellate Tribunal. The Tribunal examined the detailed submissions, additional evidence, and the remand report, and found that the additions were not justified as the books of accounts were maintained properly, and the sales were supported by sufficient evidence including affidavits and income tax returns of the parties involved.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 774568 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 17-01-2025
• Other Referred Cases: PCIT Vs Akshit Kumar, PCIT vs Agson Global P. Ltd., DCIT Vs M/s Tirupati Balaji Exim Pvt. Ltd., DCIT Vs Fashion Zone, Smt.Charu Aggarwal & Others Vs DCIT, DCIT Circle 1(1), Chd. Vs M/s MooljiDiamons, ITO Vs Aakriti Jain, Shri Arun Garg Vs ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: SUDHIR SEHGAL; RELYING UPON NUMBER OF JUDGMENTS
• Keywords: Additional evidence; Unexplained cash credit; Bogus
• Section: 68

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी राजपाल यादव, उपाȯƗ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ ITA No. 96/Chd/ 2025 िनधाŊरण वषŊ / Assessment Years : 2017-18 Deepika Garg E-392, Phase-VI Focal Point, Ludhiana बनाम The ITO Ward-1(5), Ludhiana ˕ायी लेखा सं./PAN NO: ACAPG4693H अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राजˢ की ओर से/ Revenue by : Shri Vivek Vardhan, Addl. CIT सुनवाई की तारीख/Date of Hearing : 29/07/2025 उदघोषणा की तारीख/Date of Pronouncement : 09/09/2025 आदेश/Order PER KRINWANT SAHAY, AM: This is an appeal filed by the assessee against the order dt. 09/01/2025 passed by the Ld. CIT(A), NFAC, Delhi for A.Y. 2017-18. 2. In the present appeal Assessee has raised the following grounds:- 1. That the Ld. CIT(A) has erred in assessing the income at Rs. 59,55,330/- against the returned income of Rs. 30,05,330/- as returned by the assessee by invoking the provisions of section 115BBE. 2. That the Ld. CIT(A) has erred in confirming the addition of Rs. 5,50,000/-on account of unexplained credit u/s 68 and invoking the provisions of section 115BBE of the Income Tax Act. 3. That the Ld. Assessing Officer has erred in making the addition of Rs. 24 lacs on account of payment received from identifiable parties, against the purchases made by them from the assessee's Proprietary concern and the written submissions as filed in detail have not been considered properly by the Ld. CIT(A). Printed from counselvise.com 2 4. That the Ld. CIT(A) has also grossly erred in confirming the addition of Rs. 24 Lacs particularly, when the sales made to some parties have been accepted by the Assessing Officer and which sales are subject to VA T also. 5. That the Ld. CIT(A) has erred in not considering the fact that the cash as deposited in the regular bank account of the assessee is out of the regular books of accounts, which have not been rejected by the Assessing Officer and, thus, sustaining of addition of Rs. 24 lacs is against the facts and circumstances of the case. 6. That the Ld. CIT(A) has failed to appreciate that in the identical facts and circumstances, the addition in the case of family concern in the case ofSh. Arun Kumar Garg in IT A No. 13/Chd/2022 vide order, dated 05.08.2022 has since been deleted and the Ld. CIT(A) has failed to appreciate and follow the judgement of Jurisdictional Chandigarh Bench of the IT AT in the above case. 7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.\" 3. At the very outset, the Ld. Counsel of the assessee submitted that Ground No.1 is general ground of appeal and Ground No.2 is with regard to confirmation of addition of Rs. 5,50,000/- which have been treated as unexplained credit u/s 68. The Ld. Counsel of the assessee sought to withdraw the ground No.2 of the appeal and, accordingly, ground No.2 is dismissed. 4. The ground No. 3 to ground No.6 relate to addition of Rs. 24 lacs in respect of sales of finished goods. The facts are that the assessee is engaged in the business of manufacturing and trading of fasteners of Iron & Steel for the past many years. Complete books of accounts are being maintained, which are duly audited and such books of accounts are backed by bills/vouchers and no discrepancy have been pointed out by the Assessing Officer in such maintenance of books of accounts. 5. The Assessing Officer has discussed this issue from page 5 to page 7 of the assessment order. Facts of the case are that certain advance was received from the parties concerned against the Printed from counselvise.com 3 sales made subsequently and that advance was adjusted against the sale bills issued by the assessee. The Assessing Officer stated that there is uniform pattern of cash received amounting to Rs. 24,000/- at regular interval and the same has been reflected in books of account. The AO treated them as fictitious sales and, accordingly, the addition of Rs. 24 lacs was made in respect of cash received from four parties, to whom the sales have been made. 6. Against the order of the AO the assessee filed an appeal before the Ld. CIT(A) and made detailed submissions which have been reproduced in the order of Ld. CIT(A) starting from pages 4 to 56 of the order. The assessee also filed certain additional evidence, which were admitted and remand report was called by the Ld. CIT(A) as per para 4.4, page 56 of the order. The said remand report has been reproduced at pages 57 to 67 of the order of Ld. CIT(A). Rejoinder to remand report has been reproduced from pages 62 to 69 of the order and, thereafter, the assessee had sought even video conferencing , which was granted. The Ld. CIT(A) has given his finding on this issue from para 8, at page 71 to 74 of the order. 7. The Ld. CIT(A) has held that there is uniform pattern of receipt of cash against the sales made to four parties. It was also held that the sales as made by the appellant are bogus and onus has not been discharged, whereas, the contention of the assessee was that the assessee had sufficient stock of goods sold and there Printed from counselvise.com 4 is no bar in making the cash sales. Books of accounts of the assessee have not been rejected. 8. Against the order of the Ld. CIT(A) the assessee preferred an appeal before us. 9. During the course of hearing It was argued by the Ld. Counsel of the assessee that complete cash book for financial year 2016-17 had been furnished, confirmed copies of accounts of all the four parties have also been furnished, affidavits from four parties, where they have confirmed such payment of cash to assessee and sales made to them and the ITR copies of four parties, alongwith cash book have been furnished. Thus, the arguments of the assessee by relying upon number of judgments of jurisdictional Punjab & Haryana High Court and Others are that if the addition have been made without pointing out any specific defects in the books of accounts, no addition could be made in the case of assessee. Further, the assessee relied upon on number of case laws where the cash was deposited during demonetization period in the regular bank account of the assessee out of the sale of stocks, then no addition was liable to be made. The assessee relied upon following judgements for the preposition that no addition could be made under such circumstances. i). Judgement of Hon'ble Delhi High Court in the case of PCIT Vs Akshit Kumar in ITA No. 348 of 2019, reported in 197DTR 121. ii). PCIT vs Agson Global P. Ltd. 134 taxmann.com 256 (Del.HC). Printed from counselvise.com 5 iii). DCIT Vs M/s Tirupati Balaji Exim Pvt. Ltd. in ITA No.618/Chd/2023. iv). DCIT Vs Fashion Zone in ITA No. 331/Chd/2023 (Chd.Trib.), 20.03.2024. v). Smt.Charu Aggarwal & Others Vs DCIT as reported in 149 taxmann.com 588 (Chd.Trib.) vi). DCIT Circle 1(1), Chd. Vs M/s MooljiDiamons, in ITA No.188/Chd/2023. vii). ITO Vs Aakriti Jain in ITA No.481/Chd/2023 (Chd.Trib.) 14,06,2024. Thus, in nutshell, it was argued by the Ld. Counsel that since the assessee has sufficient stock as per Audited Financial Statements and no defects have been pointed out in the books of accounts of the parties, such stocks have been sold in cash and under these facts, no addition could be made of cash deposited in the bank account during demonetization period. Such cash has been received on account of the duly accounted for sales. In view of these facts and case laws relied upon, the addition as confirmed by the Worthy CIT(A) deserves to be deleted. 10. The assessee also relied upon the judgment of Shri Arun Garg Vs ITO, reported in (2023) 146 taxmann.com 10, where, the similar addition was made under same facts and circumstances, the said addition was deleted by the Hon'ble Chandigarh Bench of ITAT. 11. The Ld. CIT (DR) relied upon the order of Assessing and CIT(A) and further contended that the books of accounts have been manipulated and the nature of transactions appear to be suspicions. The Ld. DR argued that the Ld. CIT (A) has rightly confirmed the addition. Printed from counselvise.com 6 12. We have gone through the order of Assessing Officer, Appellate order of Ld. CIT(A), arguments of Ld. CIT (DR) and brief synopsis and case laws as cited by the Ld. Counsel. We find that the Assessing Officer has accepted the sales as made by the assessee in the audited books of accounts and no discrepancy have been noticed in day to day maintenance of books of accounts, purchase and sale invoices. The assessee has sufficient stocks to make the sales to 4 parties and all such four parties are being assessed to tax and they have filed the following documents during the course of proceedings before the lower authorities, which had been placed in the paper book at the following pages:- 1. Copy of documents of following related parties:- a. M/s Anant Trading Company i. Confirmed copy of A/c in the books of assessee. 46 ii. Copy of Affidavit confirming cash purchase from assessee. 47 iii. Copy of Income Tax Return for AY 2017-2018 48-50 iv. Copy of daily cash summary. 51-59 b. M/s Sanchay Trading Company i. Confirmed copy of A/c in the books of assessee. 60 Ii Copy of Affidavit confirming cash purchase from assessee. 61 iii. Copy of Income Tax Return for AY 2017-2018 62-64 iv. Copy of daily cash summary. 65-71 c. M/s L.K. Mechanical Works i. Confirmed copy of A/c in the books of assessee. 72 Ii Copy of Affidavit confirming cash purchase from assessee. 73 iii. Copy of Income Tax Return for AY 2017-2018 74-76 iv. Copy of daily cash summary. 77-85 d. M/s Ram & Co.. Printed from counselvise.com 7 i. Confirmed copy of A/c in the books of assessee. 86 Ii Copy of Affidavit confirming cash purchase from assessee. 87 iii. Copy of Income Tax Return for AY 2017-2018 88-90 iv. Copy of daily cash summary. 91-94 13. Thus, when such documentary evidences have been furnished before the lower authorities in the case of abovementioned 4 parties as stated above, such purchases have already been accepted in the cases of four parties and no adverse view has been drawn by the Assessing Officer concerned in their cases. Even the books of accounts of the assessee and all the four parties have been accepted, thus, under such circumstances, the addition as confirmed by the CIT(A), cannot be sustained. The assessee’s reliance on the case of Sh. Arun Garg as cited supra is quite relevant to the facts and circumstances of the case, for which, the following finding is being relied upon:- \"Section 68, read with section 69A, of the Income -tax Act, 1961- Cash credit (Bank deposits)- Assessment year 2017-18- During year, assessee receive d cash deposits of certain amount it its housing loan account by respective HUFs of assessee and his two brothers-Assessing Officer noted that it was unexplained cash in demonetized currency and assessee had made fictitious cash in books of account and, thus, made additions on account of same- it was noted that all HUFs had independent identities and they were being assessed to tax and were carrying out their business- They had made cash deposits out of their independent sources and furnished necessary proof for same and, thus, source stood justified- Further, opening stock, purchases, sales and closing stock in hands of assessee was accepted by the Assessing Officer and its books of account was also not rejected- Such entries related to parties in effect stood accepted- Whether, on facts, impugned additions made by the Assessing Officer was unjustified- Held, yes [Para 6.2.0 and 6.2.4] [In favour of assessee].\" Printed from counselvise.com 8 14. Thus, by relying on the above judgement and other case laws as cited by the Ld. Counsel and further since the books of accounts of the assessee as well as of the four parties have not been rejected, the Assessing Officer having already accepted the sales to four parties in the case of the assessee, the addition of Rs. 24 lakhs as confirmed by the CIT (A) cannot be sustained. Accordingly, additions made by the AO and sustained by the Ld. CIT(A) are rejected. 15. In the result, appeal of the Assessee is partly allowed. Order pronounced in the open Court on 09/09/2025 Sd/- Sd/- राजपाल यादव क ृणवȶ सहाय (RAJPAL YADAV) (KRINWANT SAHAY) उपाȯƗ/VICE PRESIDENT लेखा सद˟/ ACCOUNTANT MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "