DY. COMMISSIONER OF INCOME TAX-1(1), RAIPUR, RAIPUR V. .G K AUTOWHEELS PRIVATE LIMITED, RAIPUR

ITA 316/RPR/2024

AI Insights

The case involves G. K. Autowheels Private Limited, which faced scrutiny from the Income Tax Department regarding cash deposits made during the demonetization period in India. The Assessing Officer (AO) added these deposits as unexplained cash credits under section 68 of the Income Tax Act, 1961, amounting to Rs. 88,95,458. The company appealed against this decision, and the CIT(A) deleted the additions, a decision which was contested by the revenue before the ITAT. The ITAT upheld the CIT(A)'s decision, agreeing that the deposits were from legitimate business activities and not unexplained.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 106790 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Other Referred Cases: Dhakeshwari Cotton Mills Ltd. vs CIT, Rachit Aggarwal (Prop.), Ashok Kumar Gupta & Co. v. Income-tax Officer, Raju Dinesh Kumar v. Deputy Commissioner of Income-tax, Income Tax Officer v. Sahana Jewellery-Exports Pvt. Ltd, Brij Bhushan Lal Parduman Kumar v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: B. SUBRAMANYAM
• Keywords: Condonation of delay; Set aside; Business income; Corroborative evidences; Unexplained cash credit
• Section: 142(1); 143(2); 250; 143(1); 68; 22; 13; 69A; 145(3); 20

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 316/RPR/2024 (िनधा[रण वष[ Assessment Year: 2017-18) Deputy Commissioner of Income Tax- 1(1), C.R. Building, Civil Lines, Raipur, 492001, C.G. V s G. K. Autowheels Private Limited, Telibandha, Raipur PAN: AADCG1986F (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से /Assessee by : Shri B. Subramanyam, CA राजˢ की ओर से /Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 09.10.2024 घोषणा की तारीख/Date of Pronouncement : 23.12.2024 आदेश / O R D E R Per Arun Khodpia, AM: This is an appeal by the revenue, directed against the order of Commissioner of Income Tax (Appeals), NFAC, Delhi, [(in short “Ld. CIT(A)”] u/s 250 of the Income Tax Act, 1961 (in short “the Act”), for the AY 2017-18, dated 10.05.2024, which in turn arises from the order of Income Tax Officer, Ward 3(1), Raipur (in short “Ld. AO”), u/s 143(1) of the Act, dated 30.12.2019. 2. The grounds of appeal raised by the revenue are as under: 1. The Ld. CIT(A) was justified in deleting the addition of Rs. 88,95,458/- u/s 68 of the IT Act, 1961. 2 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 2. The concise facts of the case are that, the assessee is a Private Limited Company, had electronically filed its return of income for the Assessment Year 2017-18 on 06.12.2017, declaring total income of Rs.15,94,740/-. The assessee is an authorized dealer of PIAGGIO Auto Rickshaw and Honda two wheelers. Case of the assessee was selected for scrutiny under “CASS”, accordingly, notice u/s 143(2) and 142(1) along with questionnaire were issued. In compliance, assessee furnished its response through online mode from time to time. After examining the details and documents furnished by the assessee, Ld. AO observed that the assessee has violated the provisions of section 68 therefore, an addition on account of unexplained cash credit for Rs.56,95,458/- was made. 2.1 While making the aforesaid addition, it was the observation by Ld. AO that during the demonetization period from 09.11.2016 to 31.12.2016, there was a total cash deposit of Rs. 2,14,91,400/- in old notes / SBN’s in the two accounts of the assessee. This issue is confronted to the assessee, accordingly, in compliance, assessee submitted that this money was available with it as closing balance on 08.11.2016, in support copy of cash books was furnished before the Ld. AO, showing closing cash-in-hand as on 08.11.2016 for Rs.2,15,65,473/-. To verify the authenticity of books of account and claim of the assessee, Ld. AO asked the assessee to produce sales bills and insurance invoices, in respect of sale of vehicles. It was the observations by Ld. AO, that 3 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited the assessee had claimed have received advance money in cash pre- demonetization from various customers, but their insurance invoices and Sale Bills were made during the demonetization period. Such contention of the assessee was found to be unacceptable in toto by the Ld. AO, therefore, it was noted that the advance from some customers might have been received before the Dhanteras and Deepawali only those cases, where vehicle was sold and delivered either on Dhanteras and Deepawali, he further added that no person generally without getting vehicles, gives advance money and that too of full amount on Dhanteras or Deepawali. On the basis of aforesaid observations, Ld. AO mentioned that on account of failure on the part of assessee that no supporting primary documents could have been furnished, the claim of assessee was not accepted. Ld. AO further exercised to prepare a list of customers from whom, the assessee had claimed to receive the cash in advance, but insurance invoices were generated during demonetization period from 09.11.2016 onwards. As per the list so prepared total amount of cash claimed to have been received in advance is found to be Rs. 15,80,430/- for APE/ Auto Rickshaw division and Rs. 71,29,497/- for two wheelers division i.e., Rs. 87,09,927/-, in aggregate. 4 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 3. On the basis of aforesaid working and conviction, Ld. AO issued a show cause notice to the assessee, requesting to explain as to why the addition for the aforesaid amounts should not be made in its hands treating the same as unexplained cash credit. In response, assessee furnished a submission before the Ld. AO, stating that during the FY 2016-17, the largest business festival of Deepawali was on 31st October, thereafter, the showroom of assessee remained closed for next 4 to 5 business days and the working of business has been restarted on 05.11.2016. It was the submission that during the aforesaid festival, assessee has booked a sale of 800 to 1400 vehicles, which is in conformity with the business trend in last three years. It is further submitted that during the period under consideration a consignment of 40 Two wheelers was shipped on 26.10.2016, which normally takes 5 to 7 days to reach at the premises of the assessee, therefore, the same could only be delivered after 05.11.2016. The next shipment followed on 05.11.2016, happened to be delivered and billed to the customers only after 11.11.2016. It is clarified that further similar 6 shipments were followed from 06.11.2016 to 19.11.2016 and all these 8 shipments in total have carried 320 vehicles, which were procured by the assessee, out of which 89 vehicles were booked during the festive season of Deepawali for which the cash payment were received in advance and duly account for in the books of the assessee. Assessee, further explained before the Ld. AO that the Brand ‘Activa’ is very popular amongst the various category 5 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited of customers like students, working / non-working ladies, housewives, office going as well as retired persons, middle class businesspeople etc. It was the submission that the brand has number of variants and colors, it is impossible to maintain stock as per the demand of the customers. 4. it is further stated that, accordingly, various customers had booked the vehicle by paying advance to ensure the delivered-on time and date. Before the Ld. AO, assessee furnished details of all the customers with the name and address and for information available with the request to cross verify the date of payment received from the customers. It the submission that the advance received from the customers have been recorded in the accounting software of the assessee company at 6 locations. It is the submission that the receipts were handed over to the customers, which may be verified from the customers or the system generated copy of the same can be produced, if so required. It is the submission by the assessee before Ld. AO, that the amount mentioned in the show cause notice is an unexplained cash credit are duly accounted for as to why received on 11 days in the books of the assessee, that the said books of account are duly audited, the financial statement has been submitted to the Ld. AO. It was the submission that during the demonetization period cash receipts recorded in books does not carry any SBN Notes / Currency. It is further submitted that during the period under consideration to buy the peace of mind, 6 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited the assessee had declared an amount of Rs. 25/- lacs under the Pramdhanmantri Garib Kalyan Yojna (PMGKY), 2016. Based on aforesaid submission, it was the request by the assessee that the proceedings initiated through the show cause notice may be dropped. 5. The submission of the assessee has been gone through by the Ld. AO but was not satisfied to find any merits in the same. Ld. AO further analyzed the cash balances of the assessee for the FY 2015-16, compared to the year under consideration i.e., FY 2016-17 and had arrived at the conclusion that the assessee was not having such huge cash-in-hand during the other periods of the year except September to November 2016, therefore, he doubted that the assessee was not having actual cash-in-hand in its books of accounts as has been claimed by it, but have introduced its unaccounted money in books of accounts, in the garb of advance received from customers against sale of vehicles during the demonetization period. It is further observed that no supporting primary evidence in respect of claimed cash receipts from customers have been produced for verification by the assessee. Ld. AO noted that, the claim of assessee is found against normal trend of the business, therefore, not acceptable. He further added that the assessee suo motu had disclosed and surrendered an amount of Rs. 25/- Lac under Pradhan Mantri Garib Kalyan Yojna (PMGKY) 2016, which itself shows that the assessee was having 7 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited unaccounted / unexplained money. Accordingly, it had declared and paid the taxes thereon. Ld. AO further rejected the books of account of the assessee stating that the audited books of account of the assessee are not projecting the true and correct picture of its financial statement. Ld. AO further worked out the amount of advance received from customers on 08.11.2016, with the reasoning that in such cases there may be certain constrained for which insurance could not have been made and the same was generated on the next date i.e., 09.11.2016, therefore, such cases are considered to be bonafide receipts. Accordingly, after describing such reason, the amount unexplained receipt worked out at Rs. 15,18,434/- for APE division and Rs. 66,15,025/- for two wheelers division. Which in total aggregates to Rs.81,95,458/- out of which the declaration of Rs. 25/- lacs under PMGKY was reduced, balancing of Rs. 56,95,458/- has been treated as unexplained cash credit u/s 68 of the Income Tax Act and added back to the income of assessee. 6. Another addition u/s 68 was made by the Ld. AO for Rs. 32/- lacs, for which, it was the observation by Ld. AO that huge cash amounts were deposited in the account of Shri Shiv Jaiswal proprietor of Shiv Kripa, Lakholi, during the demonetization period in the two bank accounts maintained with Indian bank. It is further observed that Shri Shiv Jaiswal had not filed his return of income for AY 2017-18, so notice u/s 143(1) was issued for filing of his return but there was 8 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited no compliance by him. During the course of assessment proceedings, in the case of Shri Shiv Jaiswal, it is revealed by the Ld. AO, that immediately after cash deposits during the demonetization period, the same amounts were transferred to the assessee i.e., M/s G. K. Automobiles Pvt. Ltd on various dates falling within demonetization period, out of which the amount of cash deposits in old notes / SBN’s transferred to assessee has been worked out at Rs. 32/- lacs. In view of such facts and circumstances, Ld. AO initiated inquiry qua the transactions through Shi Shiv Jaiswal, to which the assessee explained that it had sold two wheelers through Shri Shiv Jaiswal. Assessee also furnished the list of customers to whom two wheelers were sold through Shri Shiv Jaiswal. Going through the list of such customers, Ld. AO assumed that these were sold in the demonetization period accepting the old notes/ SBN’s which are illegal / prohibited. Ld. AO rejected the claim of assessee that the vehicles were sold through Shri Shiv Jaiswal in the circumstances, wherein Shri Jaiswal had neither issued any bill nor had given any documentary paper to such customers against such cash receipts. It was persuaded by the Ld. AO that, why any customers took so much risk by giving money in cash to Shri Shiv Jaiswal against no receipt, when sales bills / RTO receipts were given to them, later on by the assessee, this is against the preponderance of human probability. 9 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 7. With such observations, it was concluded by the Ld. AO that the amount of Rs. 32/- lacs received in cash by Shri Shiv Jaiswal and transferred to the assessee company, which are credited in the books of assessee but source of each such transaction has not been explained satisfactorily, therefore, the same is held to be an unexplained cash credit u/s 68 of the Act and accordingly, added to the return of income of the assessee. 8. With the aforesaid observations, the aforesaid two additions were made to the assessable income of the assessee, computed as under: Returned Income Rs. 15,94,740/- Add- Addition on account of unexplained cash credit u/s 68 0 IT Act, 1961, as discussed in para 3 above Rs. 56,95,458/- Add- Addition on account of unexplained cash credit u/s 68 in respect of receipts from Shiv Kripa Honda, Lakholi of Income TAx Act, 1961, as discussed in para 4 above Rs. 32,00,000/- Total Income Rs. 1,04,90,198/- 9. Aggrieved with the aforesaid additions, assessee preferred an appeal before the Ld. CIT(A), who had discussed and deliberated on the issues and have decided in favor of the assessee by allowing the appeal of the assessee. Relevant observations of the Ld. CIT(A), while deciding the issues, are extracted hereunder for the sake of clarity and completeness of facts: 10 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 5. DISCUSSION, REASON & DECISION: 5.1 On careful examination of the facts of the case, grounds of appeal and submission of the appellant against the addition of Rs. 56,95,458/- u/s 68 of the IT Act w.r.t. u/s 115BBE of the Act on the ground of unexplained cash credit with another addition of Rs. 32,00,000/- on account of unexplained cash credit u/s 68 of the Act in respect of receipts from Shiva Kripa Honda. I am of the Opinion that the AO has erred in making such addition though books of accounts and cash book were produced before the AO along with relevant documents and the AO did not find any infirmity in books of accounts even accepted the book results. Furthermore, Addition based on presumption and on estimation during scrutiny proceedings cannot be allowed. The Hon'ble Supreme Court in Dhakeshwari Cotton Mills Ltd. vs CIT (1954) 26 ITR 775 (SC) held that the AO cannot make an addition without reference to any material or evidence. Even the AO has not brought in record any evidence which could suggest that appellant has accepted any cash during the demonetization period i.e. from 09.11.2016 to 30.12.2016 whereas the appellant only deposited its cash balance as on 08.11.2016 with the bank which was received by it prior to demonetization period which the AO has already disclosed in assessment order which is detailed as under:- Branch Name Closing cash in hand as on 08.11.2016 (in Rs.) Two-wheeler/APE Division, Raipur 1,35,88,020/- Auto Rickshaw Division, Raipur 59,40,616/- 11 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited Jagdalpur Branch 3,04,474/- Dhamtari Branch 5,02,861/- Baloda Bazar Branch 22,384/- Katora Talab, Raipur Branch 12,07,118/- Total 2,15,65,473/- In this case the appellant has properly demonstrated that its cash deposit with bank from 9th Nov. 2016 onwards i.e. during demonetization period was out of its closing balance as of 8th Nov. 2016 i.e. prior to declaration of demonetarization when it was legal tender money and such was its receipts out of sale proceeds or customer advance/realization. Where the AO failed to establish any fact on record that amount of addition was ever received during demonetization period. In this connection, I would also wish to refer to the decision of the Hon'ble Chandigarh ITAT Bench vide ITA-858 (CHD.) OF 2023 held in the case of Rachit Aggarwal (Prop.), Ashok Kumar Gupta & Co. v. Income-tax Officer dt. 22.04.2023 where it is held: - Where cash deposit in bank on account of cash sales and cash realizations from debtors was a normal feature of assessee's business and that cash deposit figures of October and November were a little higher due to cyclic variations, mainly on account of festivals and marriage season in Northern India during that time and cash deposits in November mainly came from opening cash in hand balances on every first day of preceding months of financial year which was maintained by assessee throughout year, impugned addition made under section 68 would not be sustainable. 12 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited In one another decision decided by hon'ble ITAT CHENNAI BENCH 'A' in the case of Raju Dinesh Kumar v. Deputy Commissioner of Income-tax vide ITA1321(CHNY) OF 2023 dt. 19.01.2024 where it is held: - Where assessee, a dal manufacturer, made cash deposits into bank account during demonetization period, since assessee had pre-dominantly cash sales and he was able to file various evidences to prove availability of cash-in-hand as on 8-11-2016 and that there was no abnormal variation in total sales, cash sales and cash deposits, impugned addition made towards such cash deposited in bank account of assessee under section 69A read with section 115BBE was to be deleted. In the case of Income Tax Officer v. Sahana Jewellery-Exports Pvt. Ltd, it was held by ITAT-Delhi that the books of account were rejected without crystallizing the defect in the books of account, which could have been done only after examining the same. Furthermore, according to the Tribunal, even if it is assumed that the books of account could be rejected, the profit had to be estimated based on proper material. By rejecting the books of accounts, AO invoked the provision of section of 145(3) of the Act, according to which the assessment was to be made on the best judgement basis as per section 144. Further in the case of Brij Bhushan Lal Parduman Kumar v. CIT [19781115 ITR 524, the Supreme Court had this to say: “…..the authority making a best judgment assessment must make an honest and fair estimate of the income of the assessee and though arbitrariness cannot 13 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited be avoided in such estimate the same must not be capricious but should have a reasonable nexus to the available material and the circumstances of the case….”(P. 530) 5.1.3 In the given facts of the present case, there is no dispute with regard to the fact that the assessee's sales predominantly in cash. It is also an undisputed fact that there is no abnormal variation in total sales, cash sales and cash deposits for two Financial Years. The assessee is also able to file various evidences, including month wise purchase and sales and cash book to prove availability of cash in hand as on 08.11.2016. Therefore, I am of the considered view that going by the nature of business of the assessee and also details submitted for two Financial Years, the explanation offered by the assessee towards source for cash deposits into bank account during demonetization period, is bona fide and acceptable. The AO without considering the relevant submissions of the assessee simply made addition towards cash deposits u/s. 68 r.w.s. 115BBE of the Act. If the AO is making addition of the amount as cash credit which was claimed by the assessee as sales and reduced his stock then the AO should speak about the stock, sales etc as the AO did not reduce the corresponding sale, purchase and did not increase the stock. Thus, I find infirmity in the order of AO and therefore I delete the addition of Rs. 56,95,458/-. The ground taken by the appellant, thus succeeds. In result the addition of Rs. 56,95,458/- made u/s 68 of the IT Act, 1961 is hereby deleted. 5.2 On the second ground of appeal 14 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 5.2.1 In my opinion the AO has erred in making the addition of of business receipts against sales realization through banking channel from a party named as Shiva Kripa Honda who was responsible for appellant for the realization of sales proceeds made by the appellant for the sale made on his behalf in lieu of discount on purchase of Spares and Accessories from the appellant. An Affidavit as confirmation on behalf of Shiva Kripa Honda was submitted by the appellant during the course of assessment proceedings, where the Proprietor Shri Shiv Jaiswal had confirmed that such sale has been made by him on behalf of the appellant in lieu of discount on purchase of Spares and Accessories from the appellant. Further More, such sale made by Shiva Kripa Honda on behalf of the appellant has already been incorporated as sale by the appellant. That AO did not considered the affidavit of Shri Shiv Jaiswal as duly submitted during the assessment proceedings, which in itself is a Legally Enforceable agreement and falsifying which is a Cognizable Offence but also ignored the fact that there was continue business relation in between appellant and Shiva Kripa Honda where business transactions with that firm also continued for the whole year which can be evidenced from the copy of ledger submitted by appellant and such sales were never objected by AO and on other side sales realization was put on doubt without any material evidence on record under assumption. The authenticity of the affidavit was also never doubted by the AO and merely held the appellant is responsible for the demonetized currency deposited in the bank account of debtor which is merely hypothetical. The simple business receipts out of genuine sales which are never objected can never be a reason to assume and make addition u/s 68 of the Income Tax Act, 1961. Therefore, contention of the appellant is hereby considered and its second ground of appeal thus succeeds and addition made by AO of Rs. 32,00,000/- is hereby deleted. In result the addition of Rs. made u/s 68 of the IT Act, 1961 is hereby deleted. 15 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 10. Dissatisfied with the aforesaid decision by the Ld. CIT(A), granting complete relief from the additions made by the Ld. AO, now department felt aggrieved thus has carried the matter before us, assailing the grounds of appeal. 11. At the initiation of the hearing, it was pointed out by the registry that appeal of the revenue is delayed by 1 day. The application a/w affidavit seeking condonation of delay stating the reasons therein about delay are furnished by the revenue for our consideration (copy extracted). After considering the explanations causing delay in filing of present appeal, we find it appropriate to allow the condonation of slight delay of 1 day only and to take up the matter for hearing on merits. 16 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 17 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 18 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 12. At the outset, Dr. Priyanka Patel, Senior Departmental Representative (in short “Ld. Sr. DR”), on behalf of the department strongly, supported the order of Ld. AO and requested to set aside the order of Ld. CIT(A), stating that the same was not justified and acceptable. Ld. Sr. DR referred to the statement of facts submitted along with appeal memo supporting the stand of revenue, the relevant allegation from the statement of facts is culled out as under: 4. The order of the ld. CIT(A), NFAC is not acceptable on merits and needs to be challenged before the Hon'ble ITAT as the AO has rightly made the above addition in his order. From the Cash flow statement filed by the assessee it was crystal clear that the assessee was not having actual cash in hand in its books of accounts as claimed in this case but it was unaccounted money introduced in his books of account in the grab of advance receipts from customers against sale of vehicles during demonetization period. Hence, AO treated this amount as unexplained cash credit u/s 68 of the I.T. Act, 1961. Similarly, the AO has rightly pointed out that Shiv Jaiswal was not an authorized dealer of the assessee in this case cash in old notes/SBNs was deposited in Shiv Jaiswal's bank account and immediately on the same day it was transferred to assessee's account, it is crystal clear that it is the assessee's own unaccounted money which was deposited in the bank account of Shiv Jaiswal during demonetization period in the grab of cash receipts from prospective customers by him and which was immediately brought back into its own books of account. Hence, AO treated this amount as unexplained cash credit u/s 68 of the Account and added to income of the assessee. 19 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 13. Based on aforesaid submissions, it was the prayer by revenue that the order of Ld. CIT(A) is liable to be set aside, and the additions made by the Ld. AO, deserves to be restored back. 14. Per contra, Shri B. Subramanyam, Chartered Accountant, Authorized Representative of the assessee supported the order Ld. CIT(A), have submitted that the Ld. CIT(A) had appreciated the facts of the case in proper perspective and have very judiciously decided the issue after considering the facts of the case in totality. It was the submission that no infirmity in the books of account of the assessee were specifically brought on record by the Ld. AO, whereas the assessee has furnished all the necessary evidence to prove the availability of closing cash-in-hand on 08.11.2016. Further submitted that, the source of such cash balance was duly established by the assessee by furnishing the sale invoices and insurance of the respective customers to whom the vehicles were delivered. It is argued that the assessee had also requested the Ld. AO to enquire such material aspect from the customer, which was not considered and acted upon. 15. It is explained by the Ld AR that, there was no allegation by the Ld. AO that the transactions shown in the books of the assessee are ingenuine or not acceptable. Ld. AO merely rejected the books of account under self- 20 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited presumption that the audited books of assessee are not showing true and correct picture of its financial statement, such self-beliefs under preconceived notion cannot be the reason for rejection for books of account. Further, the income declared by the assessee in returned of income was accepted, while computing the taxable income in the assessment order, without any adjustment for the recorded sale, which is re-categorized as unexplained cash credit, shows that the books of account of the assessee are impliedly accepted by the Ld. AO. In order to examine the issue and veracity of the claim by the assessee that the cash was received against genuine transactions of the sale, the bank statement of the assessee for the year under consideration, list of advance from the customer, comparative amounts of the cash accumulative balance as on 08.11.2016 as against as on 08.11.2015 are furnished before us. Ld. AR has furnished a written synopsis explaining points in the defense, the same is extracted as under: 21 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 22 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 23 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 24 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 25 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 26 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 27 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 28 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 29 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited 16. Backed by the aforesaid submission, Ld AR requested that the addition made by the Ld. AO on account of unexplained cash credit despite sufficient and substantial clarification with supporting evidence by the assessee, was highly arbitrary, unwarranted and unjustified, which the Ld. CIT(A) had rightly observed 30 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited and decided by vacating the additions in favour of the assessee. It was therefore the prayer that the order of Ld. CIT(A) deserves to be upheld. 17. We have considered the rival submission, perused the material available on record and the judicial pronouncements relied upon in support of the contentions raised by the parties. In present case, undisputedly, it was the fact that the assessee company had deposited cash amounting to Rs.2,14,91,400/- in various bank accounts of the assessee during the demonetization period from 10.11.2016 to 30.11.2016. The issue was raised by the Ld. AO and confronted to the assessee, in response to which the assessee had furnished its cash book showing availability of cash-in-hand as on 08.11.2016 for Rs.2,15,65,473/- and have submitted that the cash deposited in SBN / demonetized currency was out of the cash balance available as on 08.11.2016. Regarding generation of cash and keeping such huge cash, it was the clarification by assessee that huge cash was received as advanced towards sale of vehicles, which were booked by the customers on the occasion of festive season of Dhanteras and Deepawali which happens to be on 28.10.2016 to 30.10.2016. Assessee also furnished the information regarding booking of around 800 to 1400 vehicles which is in consistency with the trend of its business in previous 3 years. Shipment of approximately 320 vehicles during the period is also a fact supporting the contentions of the assessee. Ld. CIT(A) had observed that there is no dispute with regard to the fact that assessee’s sale is predominantly in cash. 31 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited There was no dispute or whisper qua the genuineness of sale in the order of assessment. There was no conflict qua the stock maintained by the assessee. There was no verification / inquiry from the customers details of whom are duly submitted by the assessee during the assessment proceedings. The assessee has furnished all the primary information requisite to prove that the sales were genuine and that the customers identity are not suspected. Ld. AO had observed that primary evidence in respect of claimed cash receipts from customers have not been produced for verification, whereas in the response furnished by the assessee before the Ld. AO, it was the categorical request by the assessee that the receipts handed over to the customers can be verified from them or the system generated copy of same can be produced as and when demanded, such request of the assessee was overlooked by the Ld. AO. Ld. CIT(A) also observed that the assessment order was silent about the stock, sales of the assessee, he accepted the entire sales by accepting the returned income of the assessee, there was no reduction of the corresponding sale, purchase or any adjustment to the stock of the assessee, such action of Ld. AO is found to be arbitrary, unjustified and suffering with infirmity. We may herein observed that, cash deposits in bank in SBN / demonetized currency cannot be the reason alone for any adverse inference, dehors any substantial material to dislodge the contentions of the assessee, to prove that there was a failure on the part of assessee to explain the nature and source of amounts so deposited, whereas in the present case the assessee have furnished or requested to further 32 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited substantiate with all the necessary evidence to support the identity of the customers and genuineness of the transactions, much less when the returned income of the assessee emerging from the sale transactions recorded in the books of assessee has been accepted by the Ld. AO, addition by re-characterizing the same sales is incomprehensible. Our aforesaid view is further fortified by the relevant judgments relied upon by the Ld. AR, relevant observations therein are extracted (supra) in the written submissions. 18. In view of aforesaid facts and circumstances, we do not find any infirmity in the order of Ld. CIT(A), we, thus, approve the decision of Ld. CIT(A), having no reason to interfere with the same. In result the sole ground of department finding error in the decision of Ld. CIT(A) in deleting the addition of Rs.88,95,458/- u/s 68 of the Act, being deprived of substance has been rendered as dismissed. 19. In result, the appeal of the department stands dismissed, in terms of our aforesaid observations. Order pronounced in the open court on 23/12/2024. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 23/12/2024 Vaibhav Shrivastav 33 ITA No.316/RPR/2024 DCIT-1(1), Raipur vs G K Autowheels Private Limited आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- 2. ŮȑथŎ / The Respondent- 3. The Pr. CIT, Raipur (C.G.) 4. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाडŊ फाईल / Guard file. // स×याǒपत Ĥित True copy // "