DEPUTY COMMISSIONER OF INCOME TAX, DELHI V. ARTEX TEXTILE PRIVATE LIMITED, DELHI

ITA 5005/DEL/2024

AI Insights

The case revolves around the appeal by the Deputy Commissioner of Income Tax (DCIT) against M/s. Artex Textile Private Limited concerning the assessment year 2017-18. The primary issues were the rejection of the assessee's books of accounts and the additions made under section 68 of the Income Tax Act, 1961, due to alleged unexplained cash deposits during the demonetization period. The Assessing Officer had initially rejected the books and made additions based on the discrepancies noted in the sales and cash deposits. However, the CIT(A) reversed these decisions, leading to the Revenue's appeal to the Tribunal. The Tribunal's decision favored the assessee, affirming the CIT(A)'s conclusions and dismissing the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775962 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 29-10-2024
• Other Referred Cases: Unit Construction Co. Ltd. vs. JCTI, S. Balaji Mech-Tech Private Ltd. vs. ITO, ACIT vs Vikas Gutgutia, J.R. Rice India (P) Ltd vs. ITO, Dhakeswari Cotton Mills Ltd vs. CIT, PCIT vs Forum Sales Private Ltd, Vijay Kumar Jain vs. ITO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Assessee Lawyers: KAPIL GOEL
• Keywords: Business income; Unexplained cash credit; Onus to prove; Tangible material; Bogus
• Section: 144; 142(1); 68; 145

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER and SHRIS.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.5005/DEL/2024 (Assessment Year: 2017-18) DCIT, vs. M/s. Artex Textile Private Limited, New Delhi. Khasra No.282, Gali No.04, Industrial Area Shalimar Bagh, Delhi – 110 088. (PAN :AAHCA7681B) (APPELLANT) (RESPONDENT) ASSESSEE BY : Dr. Kapil Goel, Advocate REVENUE BY : Shri Manoj Kumar, Sr. DR Date of Hearing : 22.08.2025 Date of Order : 10.09.2025 O R D E R PER S.RIFAUR RAHMAN,AM: 1. This appeal has been filed by the assessee against the order of ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) [“ld. CIT(A)”, for short] dated 03.09.2024for the Assessment Year 2017-18. 2. Brief facts of the case are, the assessee filed its return of income declaring an income of Rs.79,11,969/- on 30.10.2017. The case was selected for scrutiny under CASS. Accordingly, statutory notice under section 143(2) of the Income-tax Act, 1961 (for short ‘the act) was issued and served on the assessee. Printed from counselvise.com 2 ITA No.5005/DEL/2024 3. Assessee was engaged involved in the business of trading of fabrics. The reasons of scrutiny along with issue are that cash deposit during demonetization period, sales turnover/receipts and custom duty paid as shown in the ITR is less than the duty paid as per export import data. 4. Notices under section 142 (1) of the Income-tax Act, 1961 (for short ‘the Act’) were served on the assessee. After issue of several notices u/s 142(1) of the Act, assessee filed part reply and the Assessing Officer observed that the assessee was provided enough opportunities but the assessee opted for non-compliance. Accordingly, Assessing Officer observed that he has no other alternative but to complete the assessment on best judgment u/s 144 of the Act. The Assessing Officer issued two show-cause notices dated 08.11.2019 and 12.12.2019 to the assessee. Even in response to these notices also, the assessee neither submitted any details nor filed any reason for not passing an ex-parte order as per the provisions of section 144 r.w.s. 145(3) of the Act. Accordingly, the Assessing Officer proceeded to assess the case of the assessee. Assessing Officer observed that during the period under consideration, as per information available, assessee deposited huge amounts of cash and on verification it has been noticed that maximum amount was deposited in the month of October and November. The assessee submitted month wise summary of cash book and was noticed that the sale of the assessee in Printed from counselvise.com 3 ITA No.5005/DEL/2024 cash was inflated without any specific reason. Assessing Officer observed that in the month of October, assessee declared sale of Rs.3,99,91,189/- which is highest of the year. He further observed that in the month of January, February march the sale of the assessee was in between Rs.1,40,000/- to Rs.2,78,000/-. A comparative chart is submitted which is self speaking that the sale declared by the assessee during October & November, was abnormally high and sale during January, February &March was abnormally low, that was zero rupees. Hence, he observed that the assessee has not declared proper sale of cash in its books of accounts. He observed that as the books are already rejected and he is left with no choice but to estimate the turnover and apply NP on same and the basis of estimating turnover has been taken as per the monthly sale till September and November & December. The Assessing Officer has given the details of sale declared by the assessee in tabulated form at pages 11 & 12 of the assessment order. Assessing Officer observed from the details that when assessee is not declaring any sale in the months of January, February and March, declaring sale above Rs.4 crores in the month of October and constantly declaring Rs.30 to Rs.49 Lakhs from April to October, it is crystal clear that the books of assessee are not declared true profit. Printed from counselvise.com 4 ITA No.5005/DEL/2024 5. Assessing Officer further observed that till September, assessee has submitted sales tax return before demonetization but during the months of October and November (till 11.11.2016) assessee declared abnormal cash sales and after that, to control GP, NP and tax payments, assessee declared NIL sales in three months. Assessing Officer observed that in the cash book,1,85,000/- has been introduced as cash and no detail/ reason was provided; sale of NIL in three months is beyond human and business probabilities; assessee deposited huge cash during demonetization but was maintaining cash is hand in between Rs.10 lacs to Rs.47 lacks, though the monthly expenditure was in between Rs.13,050/- to Rs.2,88,000/-and the expenses in cash were drastically reduced from an average of two lakhs to Rs.13,000/- during demonetization, though sale were increased and expenditure are vice-versa with sale. From the above details, he observed that it is clear that assessee’s books are fabricated to hide true profit, hence, the turnover is estimated in the months of January, February and March on the monthly average of April to September. He calculated the same as under : Month Per month sale (Rs.) Per month average April 3042097 Per month average May 3738437 June 3789088 July 3440054 August 2144597 Septemebr 4958028 Total 21112301 3518717 Printed from counselvise.com 5 ITA No.5005/DEL/2024 6. Hence, he observed that for the months of January, February and March the estimated sale is taken as Rs.35,18,717/- rounded off to Rs.35,20,000/-. He observed that the assessee has declared GP @ 4.90 and NP of 0.83. Accordingly, he applied the rate of NP @ 5% at an estimated trading turnover of Rs.35,20,000/- as the assessee has booked all the expenses, which comes to Rs.1,75,100. Accordingly, he made an addition of Rs.1,85,000/- in addition to GP as assessee has not provided the detail of cash receipt other than sales and this cash receipt was in the month of June, hence credit of GP and cash deposit is not given against Rs.1,85,000/- and made total addition of Rs.3,60,100/-. 7. Further, with regard to cash deposited, as per the information available in ITR of the assessee, the Assessing Officer observed that assessee had deposited cash during demonetization period i.e. 09.11.2016 to 30.12.2016 in Bank of Baroda, Kirti Nagar, Axis Bank, Rajouri Garden and Yes Bank Pitampur of Rs.1,77,44,500/-, Rs.3,85,60,000/- and Rs.1,41,60,00/- respectively Rs.7,04,64,500/-. In response to the questionnaire issued to assessee regarding the details of cash deposited during demonetization, the assessee has submitted the details which the Assessing Officer placed at pages 15 1o 17 of the assessment order. The Assessing Officer observed that the details of sale have already been discussed in the addition made on gross profit of the assessee and also, Printed from counselvise.com 6 ITA No.5005/DEL/2024 the amount of cash deposit details provided by the assessee clearly illustrate abnormal rise in the cash deposits during demonetization and then steep fall in cash deposited after December 2016. After observing the provisions of section 68 of the Act and relying on the decision of Hon’ble Calcutta High Court in the case of Unit Construction Co. Ltd. vs. JCTI 260 ITR 189, Assessing Officer observed that the assessee failed to offer satisfactory explanation with regard to the source of cash deposits made in the bank accounts during the demonetization period and it is upon the assessee to furnish an explanation about the nature and source of unexplained money, or other valuable article owned by the assessee to the satisfaction of the Assessing Officer. He further observed that in respect of the deposits, no proper explanation is offered for reasons of failure on the part of the assessee throughout the proceedings. Accordingly, Assessing Officer held that the provisions of section 68 of the Act are clearly attracted in this case and it is held that the assessee has failed to furnish a satisfactory explanation and discharge his onus to prove the sources of cash deposits made in the Bank Accounts during the demonetization period, hence, the total cash deposit amount of Rs.7,04,64,500/- is added to the total income of the assessee u/s 68 of the Act and accordingly assessed the income at Rs.7,87,36,589/-. Printed from counselvise.com 7 ITA No.5005/DEL/2024 8. Aggrieved, the assessee preferred an appeal before the ld. CIT(A) and filed detailed submissions before the ld. CIT(A) along with supporting documents at pages 2 to 48 of the appellate order. After considering the detailed submissions of the assessee, ld. CIT (A) allowed the grounds taken by the assessee and partly allowed the appeal. 9. Aggrieved, assessee is in appeal before us raising following grounds of appeal :- “1. Whether on the facts and circumstances as well as in law the Ld. CIT(A) is correct in law in holding that the action of the Assessing Office in rejecting the books of account is void-ab-initio without appreciating the facts that during the assessment proceeding the assessee either partly complied or did not comply with the statutory notices in the manner requested by AO? 2. Whether on the facts and circumstances as well as in law the Ld. CIT(A) İs correct. in deleting the additions of Rs.1,75,100/- made on account of estimated Net profit @ 5% by taking estimated cash sale for the Jan, Feb and March Month after rejected books of accounts without appreciating the facts that the assessee tried to fabricate its books of account to hide true profit? 3. Whether on the facts and circumstances as well as in law the Ld. CIT(A) is correct in deleting the additions of Rs.1,85,000/- made on account of cash received on sale of Vehicle without appreciating the facts that the assessee has failed to furnish the details of cash receipt other than sales? 4. Whether on the facts and circumstances as well as in law the Ld. CIT(A) is correct in deleting the additions of Rs.7,04,64,500/ made u/s 68 of the Act on account of cash deposited during the demonetization period without appreciating the facts that the assessee has failed to furnish a satisfactory explanation and discharge his onus to prove the sources of cash deposits made in the Bank Accounts during the demonetization period within the meaning of section 68 of the IT Act 1961? 5. Whether on the facts and circumstances as well as in law the Ld. CIT(A) Is correct in law in holding that provisions of section 115BBE is unwarranted in this case without appreciating the facts that under the provisions of section 68 of the T Act, it is upon the assessee to furnish an explanation about the nature and source of unexplained money, or other valuable article owned by the assessee to the satisfaction of the Assessing Officer?” Printed from counselvise.com 8 ITA No.5005/DEL/2024 10. At the time of hearing, Ld DR submitted that Assessing Officer has issued 12 notices and assessee has not complied to those notices. He brought to our notice, cash chart, as per which the assessee has deposited huge cash only during demonetization. He objected to the relief granted by the ld. CIT (A) merely relied on the VAT return, not called for remand report from Assessing Officer. 11. On the other hand, ld. AR of the assessee brought to our notice detailed findings of ld. CIT (A) specifically para 5.7 of the impugned order. He relied on the decision of the ITAT in the case of S. Balaji Mech-Tech Private Ltd. vs. ITO in ITA No.556/Del/.2024 dated 25.09.2024. 12. Considered the rival submissions and material placed on record. We are dealing Revenue’s appeal ground-wise as under. 13. With regard to Ground No.1 of Revenue’s appeal that is on issue of books rejection, we find that ld. CIT (A) has made comprehensive and detailed examination of all relevant facts in para 5.3 to para 5.3.20 and the conclusion of the same is recorded by the ld. CIT (A) in para 5.3.20 which is reproduced as under, for the sake of clarity :- “5.3.20. From the discussion and analysis in the foregoing paragraphs, I am of the considered opinion that the addition made u/s 68 by rejecting the books of accounts is devoid of any merit and bad in law. Even after appellant had submitted the stock register, the assessing officer has invoked sub section 3 of section 145 of the Income Tax Act, 1961 for rejection of the books of accounts of the appellant by alleging that correct profits and gains cannot be deducted from the accounts which is in complete breach of the principles of natural Printed from counselvise.com 9 ITA No.5005/DEL/2024 justice, and therefore, the action of the assessing officer in rejecting the books of accounts is void-ab-initio, and I rule accordingly, and as a consequence all the grounds raised by the appellant in this regard are allowed in favour of the appellant, and hence this issue is decided in favour of the appellant.” 14. Since revenue has not been able to establish any perversity or any factual/legal error in stated finding of ld. CIT (A), we hereby do not see any reason to disturb the same and dismiss Revenue’s Ground No.1. 15. Once this ground of Revenue’s appeal on issue of invalid rejection of books u/s 145 is decided against Revenue, then all other issues would itself become infructuous as, in our opinion, it is settled law by now that once assessee books are not doubted/rejected u/s 145 on tenable grounds, then no exception can be made to assessee’s audited trading results and no addition on trading account is permissible sans valid invocation of section 145(3) of the Act. This if permitted would be allowing Revenue to make approbate and reprobate which is not permissible. On importance of valid books of accounts, we find force from the decision of Hon’ble Delhi High Court in PCIT vs Forum Sales Private Ltd (468 ITR 394) wherein it is held as under :- “ 24. The series of judgments referred to hereinabove clearly allude to the settled position of law that the books of account have to be necessarily rejected before the AO proceeds to the best judgment assessment upon fulfilment of conditions mentioned in the Act. The underlying rationale behind such an action is to meet the standards of correct computation of accounts for the purpose of a more transparent and precise assessment of income. Therefore, any pick and choose method of rejecting certain entries from the books of account while accepting other, without an appropriate justification, is arbitrary and may lead to an incomplete, unreasonable and erroneous computation of income of an assessee.” Printed from counselvise.com 10 ITA No.5005/DEL/2024 16. With regard to Ground Nos.2 & 3 on the issue of addition of Rs.1,75,100 and Rs.185,000 on account of estimated net profit on sales and cash receipt from sale of vehicle , we have gone through relevant finding of ld. CIT (A) in the order at paras 5.4 to 5.4.6 at pages 60 to 62 & paras 5.5. to para 5.5.5 at pages 62 to64 of the impugned order and in paras 5.6 to 5.6.5 detailed findings are recorded after correct and complete factual examination of the matter and there is no perversity in the same much less pointed from Revenue side. We hereby reproduce relevant conclusion of ld. CIT(A)as under :- “5.4.6. For the reasons enumerated above and case-laws relied upon stating the established principles of law, I am of the considered opinion that the addition made by the assessing officer of Rs.3,60,100/- u/s 68 by re-computing the gross profit of the appellant and making an addition of Rs.3,60,100/- to returned income and profit declared by appellant company is grossly unjustified and not sustainable in law. Accordingly, I, hereby, direct the assessing officer to delete the addition of Rs.3,60,100/- made to the returned income and profit declared by appellant company as not supported by the facts, devoid of merit and bad in law, and consequently allow the grounds of appeal raised by the appellant in this regard in favour of the appellant, and hence this issue is decided in favour of the appellant.” “5.5.5. For the reasons enumerated above, I am of the considered opinion that the addition made by the assessing officer based on assumptions that there might have been cash sales is illogical and is therefore, liable to be deleted. Further, when there was no evidence of cash sales, the assessing officer was not justified in making an estimated addition on the basis of notional cash sales. Accordingly, I, hereby, direct the assessing officer to delete the addition of Rs.1,75,100/- made on the basis of estimated notional cash sales since the same is found to be unreasonable and unjustified in the absence of any evidence in support of this notional estimate, and consequently allow the grounds of appeal raised by the appellant in this regard in favour of the appellant, and hence this issue is decided in favour of the appellant” “5.6.5. It is seen from the ledger account and cash sheet pertaining to sale of vehicle, the appellant had considered the said receipt from sale of Vehicle in Printed from counselvise.com 11 ITA No.5005/DEL/2024 the books of accounts of the company. Further, vide its reply dated 12.12.2019, the appellant had duly explained the said sale transaction with evidence from the profit and loss account. Also, the said receipt is duly recorded in the books of accounts and also taken in Profit & Loss account and correspondingly the amount of vehicle has deducted from the fixed assets chart of the audited balance sheet and independent auditor has not taken any adverse remark on it. Similarly, the tax auditor has also taken the effect of same in the deprecation chart under Income Tax Act, 1961 as reported in the tax audit report. Accordingly, I am of the considered opinion that the addition made by the learned assessing officer ignoring the facts of the case and above details based on conjectures and surmises is bad in law and liable to be deleted. Accordingly, I, hereby, direct the assessing officer to delete the addition of Rs.1,85,000/- made u/s 68 on account of cash received from sale of vehicle, and consequently allow the grounds of appeal raised by the appellant in this regard in favour of the appellant, and hence this issue is decided in favour of the appellant.” 17. After going through the detailed finding of ld. CIT (A), we do not disturb the findings of ld. CIT (A) on Ground Nos.2 & 3 and accordingly, these grounds are dismissed. 18. With regard to Ground No.4, the same relates to issue of addition made u/s 68 amounting to Rs.7,04,64,500 on account of cash deposits during demonetization period, we have carefully gone through impugned orders of AO and ld. CIT(A) and once books of assessee are valid and correct/complete u/s 145 then no exception can be made to stated cash deposit being generated from cash sales recorded and forming part of defect free audited books. We consistently refer to reasoning recorded on ground no.1 above. Further, independently viewing the findings of ld. CIT (A) from paras 5.7 to 5.7.34 are without any perversity and finds our complete concurrence. For the sake of brevity, we reproduce the relevant gist of the same from order of ld. CIT(A) :- Printed from counselvise.com 12 ITA No.5005/DEL/2024 “5.7.16. Further, the appellant had already offered net profit after deduction of purchases (cost of goods purchased) on such cash sales as Net profit as per audited financials on which due tax as per law has already been paid. At this juncture, it is pertinent to note that the assessing officer has not reclassified the closing stock, but proceeded to make addition of the cash sales embedded in the books u/s 68. This treatment of the assessing officer has been rightly objected by the appellant when the appellant contends that assessing officer cannot be permitted to approbate and reprobate and blow hot and cold at the same instance. In this context, the appellant’s claims/contentions that on the one hand, the assessing officer had accepted total turnover, closing stock and purchases in the appellant’s books, and on other hand, had added the recorded cash sales in books under section 68, which the appellant claims is grossly unjustified deserves merit. 5.7.17. Furthermore, the cash sales is already reduced from inventory of company which has been purchased through registered dealers by banking channel which is never in dispute in the assessment proceedings. Therefore, the addition u/s 68 made on the basis of assumptions, premises, and conjectures alone {assumption that there cannot prevail over established evidence as contended by the appellant. The appellant’s observations in this regard that this reasoning smells foul of absurdity and irrationality of pretense only which can never partake the character of evidence in law, and that this addition u/s 68 would amount to double taxation deserves merit and due consideration. 5.7.18. For the reasons discussed in the foregoing paragraphs, I am of the considered opinion that the addition made by the assessing officer u/s 68 does not deserve any merit at all were no cash sales prior to October 2016 so the cash sales are not acceptable} cannot prevail over established evidence as contended by the appellant. The appellant’s observations in this regard that this reasoning smells foul of absurdity and irrationality of pretense only which can never partake the character of evidence in law, and that this addition u/s 68 would amount to double taxation deserves merit and due consideration. 5.7.18. For the reasons discussed in the foregoing paragraphs, I am of the considered opinion that the addition made by the assessing officer u/s 68 does not deserve any merit at all. 5.7.22. The cash deposited in bank can be called bogus only if the appellant had failed to offer any satisfactory explanation with corroboratory evidence regarding the source of receipt of cash. However, in the instant case, the appellant had produced before the assessing officer all the details of cash deposit made during the financial year, and had also furnished the details of the PAN and address of the different buyers and sellers, and duly corroborated by the purchase / sale ledgers and stock register etc. to substantiate the source for the cash sales and had clearly established that the appellant had duly accounted and recorded in its books of accounts all the purchases and sales which has also been accepted by the assessing officer, since no adverse inference was drawn, and therefore, the appellant had rightly contended that Printed from counselvise.com 13 ITA No.5005/DEL/2024 the addition made u/s 68 is liable to be deleted. In this context, reliance is placed on the decision of the h’ble jurisdictional ITAT Delhi in the case of The same view had been taken by ITAT Delhi Bench “D” in the matter of ACIT vs Vikas Gutgutia [2017] 77 taxmann.com 268 (Delhi – Trib.) ,…………… 5.7.33. Therefore, I am of the considered opinion that the assessing officer had grossly erred in the facts and circumstances of the case by not considering the relevant material submitted by the appellant viz., cash sheet of the current and preceding financial years, stock register showing purchase and sale entries, sale and purchase ledger, GP ratio, cash to total sale ratio reflecting the trend of the cash sales is not unusual, VAT return along with reconciliation with books of accounts and audited balance sheet. Therefore, the addition made by the assessing officer u/s 68is not supported by facts and is also not sustainable in law. 5.7.34. From the discussion and findings in the foregoing paragraphs, it is clearly evident that the addition made by the assessing officer is devoid of merit and bad in law and is liable to be deleted, and accordingly, I, hereby, direct the assessing officer to delete the addition of Rs.7,04,64,500/- made u/s 68, and consequently, allow all the grounds of appeal raised by the appellant in this regard in favour of the appellant, and hence this issue is decided in favour of the appellant” 19. We find that above findings of ld. CIT(A) are as per factual position of the case and is legally correct. Ld. AR of assessee has rightly drawn our attention to our decision in case of S. Balaji Multitech Private Ltd vs ITO Ward 22(1) New Delhi dated 25.09.2024 (ITA 556/DEL/2024) relevant extract of same is reproduced below:- “20. Whether the recording of cash sales which is already declared in the books of account will attract the deeming provisions of sec.68 or 69A of Act. We observed that the assessee has declared all the cash transactions in its books of account and merely because the cash deposits are more during the demonetization period, whether the CIT(A) can invoke the provisions of section 69A of the Act. As per provisions of the section, it is necessary that the assessee be found with the money, the same is not recorded in the books accounts maintained by it for any source and not offers any explanation or such explanations are not found to be satisfactory to the AO. In this case, the assessee has already declared the cash sales in its books of account and offers the explanation as cash sales, which the lower authorities has accepted it as regular business transactions because they have not rejected the book results and brought to tax the total sales declared by the assessee in its books. Since the cash were already recorded and explanation is already part of the book results, there is no avenue for the CIT(A) to reject such explanations. This Printed from counselvise.com 14 ITA No.5005/DEL/2024 expression ““explanation is found not satisfactory to the AO” is purely relates to the money found with the assessee which are not recorded in the books of account. In this case, the above expression has no relevance since the assessee had already declared the cash sales in its books. In the similar situation, the coordinate bench has held in the case of J.R. Rice India (P) Ltd as under: “At the cost of repetition, to the extent of sales made, the stock position is also correspondingly reduced by the assessee which goes to prove the genuineness of the claim of the assessee. On examination of the cash book of the assessee, it is found that the assessee had cash balance of Rs. 55.94 lakhs as on 8-11-2016, i.e., the date on which demonetization was announced, which sufficiently explains the source of deposit of Rs. 52.60 lakhs in specified bank notes. Apart from this, the assessee had duly furnished the month wise details of sales, month wise details of purchase, corresponding freight charges incurred month wise, month wise power and fuel expenses and month wise selling expenses in the form of rebate and discount. The assessee also furnished the quantitative details of goods month wise for rice, sugar, chana dal and wheat flour before the Assessing Officer. All these facts clearly go to prove the genuineness claim made by the assessee that cash deposits of Rs.52.60 lakhs has been made out of cash balance available with the assessee and, hence, there is absolutely no case made out by the revenue for making addition under section 68.” 21. Respectfully, following the above decisions, we are inclined to allow the grounds raised by the assessee with the observation that the AO/CIT(A) cannot invoke the provisions of section 68 or 69A when the assessee is already declared the source for cash deposits in the books of accounts and the lower authorities without their being any material to support on their contrary view, the provisions of section 68 or 69A cannot be invoked” 20. We further finding force from the decision of coordinate bench in case of Delhi H bench ITAT in case of Vijay Kumar Jain ITA No.1730/Del/2024 (31.07.2024) AY 2017-2018 wherein it is held as under :- “10.1 Needless to say, sale of goods has corresponding effect on the closing stock as well as the profitability. These aspects have not been questioned. The Assessing Officer has picked up the amount declared by way of cash sales and treated that as non-existent to hold the corresponding cash deposits as unexplained. The assessee, on the other hand, has demonstrated the factum of cash sales to be genuine by the direct and circumstantial evidences as noted above. 10.2 The Revenue, in our view, has based itself findings on suspicion and conjectures and on improper rejection of tangible material. The assessee on the other hand has successfully demonstrated the propriety of cash sales by Printed from counselvise.com 15 ITA No.5005/DEL/2024 corresponding purchases, reduction in stock and declaration of profits on sales. 10.3 Having assessed a credit of revenue character as income, it is outside the remit of the AO to subject the same credit under different provision i.e. section 68 yet again, inflicting double whammy on the assessee. Besides, the books of accounts and book results have been not rejected per se. No defect has been pointed out on the declarations made towards purchases, the closing stock and the profits either. The additions made have resulted assessment of cash sales twice which is not permissible in law. 11. It is trite that suspicion, howsoever strong, cannot take the place of proof as held in Umacharan Shaw & Bros. vs. CIT (1959) 37 ITR 271 (SC). The Hon’ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd v. Commissioner of Income Tax (1954) 26 ITR 775 (SC) has observed that powers given to the Revenue authority, howsoever, wide, do not entitle him to make the assessment on pure guess without reference to any evidence or material. The assessment cannot be framed only on bare suspicion. The assessment should rest on principles of law and one should avoid presumption of evasion in every matter. The assessee, in the instant case, has sufficiently demonstrated the source of cash deposits. On a broader reckoning, the apprehension raised by the Revenue authorities militates against the tangible material and is thus extraneous.” 21. Respectfully following the aforesaid decisions which apply squarely to the facts of instant case, we are inclined to uphold the finding of the ld. CIT (A) on Ground No.4 and accordingly, ground no.4 of Revenue’s appeal is dismissed. 22. With regard to Ground No.5, on invocation of section 115BBE, the same becomes infructuous in light of our findings on Ground Nos.1 and 4 on books rejection and section 68 addition of cash deposits, accordingly, we dismiss Revenue’s Ground No.5. Even otherwise, we are in complete agreement with the view of ld. CIT(A) at paras 5.8 to 5.8.7 of the impugned order, gist of same is reproduced below for the sake of brevity:- “5.8.6. From the facts of the case at hand, and from the foregoing discussions while adjudicating on the issue of addition made u/s 68 it has been already Printed from counselvise.com 16 ITA No.5005/DEL/2024 held by the undersigned that the assessing officer was not justified in rejecting the genuine explanations offered by the appellant in respect of the cash deposits that they were generated out of genuine and regular business sales receipts as unsatisfactory based on surmises and conjectures, and with the aim of fastening exorbitant tax liability on the appellant-firm under the garb of unexplained cash credit u/s 68 of the Act, and since the additions so made are unsustainable in the eyes of law, they deserve to be quashed and it has already been held that addition u/s 68 is clearly unwarranted in the case of the appellant, and has also been accordingly directed to be deleted. Therefore, as a natural corollary, the provisions of sec. 115BBE of the Act are also wholly inapplicable to the facts of the case, and hence the invocation of the provisions of section 115BBE by the assessing officer is also unwarranted. 5.8.7. At this juncture, reliance is placed on the decision of the Hon’ble Bombay High Court in the case of CIT vs Surat Cotton Spinning and Weaving Mills [1993] 202 ITR932 (BOM) that once the assessing officer has assessed a particular receipt under a particular head of income the amount is no more available to him for assessment under another head like having accepted income resulting from P&L a/c to “isolate”“purchase” or “sales” to fix them u/s 68 to 69D/115BBE is fundamentally flawed and against established legal principles. Therefore, since the invocation of the provisions of section 115BBE by the assessing officer in this case is unwarranted, the same is hereby directed to be deleted, and the grounds raised by the appellant in this regard are allowed, and hence this issue is decided in favour of the appellant.” 23. After going through the findings of ld. CIT (A), we are inclined not to disturb the same and accordingly ground no.5 of Revenue’s appeal is dismissed. 24. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on this 10th day of September, 2025. Sd/- sd/- (SATBEER SINGH GODARA) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 10.09.2025 TS Printed from counselvise.com 17 ITA No.5005/DEL/2024 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "