INCOME TAX OFFICER, NEW DELHI V. MISHKA EXIM LTD., NEW DELHI

ITA 4464/DEL/2024

AI Insights

The case involves an appeal by the Income Tax Officer against Mishka Exim Limited, concerning the deletion of an addition of Rs. 1,45,00,000 made under section 68 read with section 115BBE of the Income Tax Act, 1961. The addition was initially made by the AO due to an observed increase in cash sales and deposits during the demonetization period, which the AO suspected were used to convert unaccounted money into accounted sales. The CIT(A) deleted the addition, finding the AO's conclusions to be based on conjecture rather than concrete evidence. The tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841366 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Appeal Filed On: 26-09-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUSH KALRA
• Assessee Lawyers: MUKESH JAIN; ATUL DHAMA
• Keywords: Rejection of books of accounts
• Section: 143(3); 68; 145

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘E’: NEW DELHI BEFORE SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTNAT MEMBER ITA No.4464/DEL/2024 [Assessment Year: 2017-18] Income Tax Officer, C.R. Building, I.P. Estate, New Delhi-110002 Vs Mishka Exim limited, Flat No.-102, Plot no-10, First Floor, Chetan Complex, Central Market, Surajmal Vihar, Delhi 110092, PAN-AAJCM3435F Appellant/Revenue Respondent/Assessee Assessee by Shri Mukesh Jain, CA & Shri Atul Dhama, CA, Shri Smayak Jain, Adv. Revenue by Ms. Ankush Kalra, Sr. DR Date of Hearing 03.02.2026 Date of Pronouncement 25.02.2026 ORDER PER AMITABH SHUKLA, AM, This appeal filed by the assessee is against order dated 13.08.2024 of National Faceless Appeal Centre/learned Commissioner of Income Tax (Appeals), New Delhi, [hereinafter referred to as ‘ld. CIT(A)] arising out of assessment order dated 29.12.2019 passed u/s 143(3) of the Income Tax Act, 1961 pertaining to Assessment Year 2017-18. The word ‘Act’ herein this order would mean Income Tax Act, 1961. Printed from counselvise.com ITA No.4464/Del/2025 Page 2 of 4 2. The appellant Revenue has raised following grounds of appeal:- 1. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(Appeal) has rightly deleted the addition amounting to Rs. 1,45,00,000/- made u/s 68 r.w.s 115BBE of the Act? 2. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(Appeal) has rightly has rightly deleted the addition amounting to Rs. 1,45,00,000/- made u/s 68 r.w.s 11SBBE of the Act on the basis that the addition was merely made on surmises, conjectures, suspicion, presumptions and assumptions? 3. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(Appeal) has rightly has rightly deleted the addition amounting to Rs. 1,45,00,000/- made u/s 68 r.w.s 115BBE of the Act on the basis that the cash receipts represent the sales which has been offered for taxation but ignoring the fact that there has been exponential rise in cash sales during the period October and November, 2016 in comparison to the preceding same period and that no cash sales might have been made by the assessee before the demonetization period or that the sales are existing on papers to bring assessee's unaccounted money into its books of account through paper trail? 4. Whether, on the facts and circumstances of the case and in law, the Ld. CIT (Appeal) has rightly has rightly deleted the addition amounting to Rs. 1,45,00,000/- made u/s 68 r.w.s 111BBE of the Act on the basis that the assessee had sufficient stock to effect the sales but ignoring the fact that during the previous Diwali period, the assessee had meager cash sales which Suggests that the assessee had no reason to accumulate such large stock in anticipation of huge sales during October and November, 2016 and that also no such large accumulation of stock was undertaken during the succeeding financial year? 3. As per the brief facts of the case available in the order under section 143(3) dated 29.12.2019, the ld. AO had noted that the assessee company engaged in the business of trading of fabrics, ornaments and equity shares had deposited large amount of cash in its bank account during the demonetization Printed from counselvise.com ITA No.4464/Del/2025 Page 3 of 4 period. The ld. AO noted that there was an increase in cash sales during the demonetization period. The AO rejected assessee’s explanation for the impugned rise by observing that there was no history of assessee making such unprecedented cash sales in earlier years. The ld. AO while examining the cash sales invoices on sample basis concluded that the same were self-generated, self-serving invoices having various discrepancies. Consequently, applying the theory of human probability, he proceeded to make an addition of Rs.1,45,00,000/- under section 68 r.w.s. 115BBE of the Act. 4. The ld. DR, Ms. Ankush Kalra, vehemently argued in favour of the orders of the assessing authority. It was stated that the addition made by the ld. AO was made upon correct understanding of the facts of the case. She assailed the order of the ld. CIT(A) making reference to the grounds of appeal to assert that the relief was excessive and erroneous. 5. The ld. Counsel for the assessee reiterated the arguments made before the ld. CIT(A) and submitted no infirmity can be found in the decision of granting him relief by the authority. 6. We have heard rival submission in the light of material placed on record. AT the outset, we have noted that the arguments raised by the Revenue through ground of appeal no.3 and 4 are purely speculative and conjectural in nature. The grounds are based upon supposition and human probability theory which do not have place in any direct tax jurisprudence. As regards the merits of the Printed from counselvise.com ITA No.4464/Del/2025 Page 4 of 4 addition, we have noted that the ld. AO has accepted the book results of the assessee and has not rejected the books of accounts under section 145 of the Act. That being the case, there cannot be any justification in making any addition by doubting the sales including cash sales. We have also noted that the cash sales and significant cash deposits was made by the assessee prior to the demonetization and therefore the allegation of any mischief cannot survive. Accordingly, we are of the considered view that there is no infirmity in the appellate order. We therefore confirm the relief accorded by the ld. CIT(A) and dismissed the appeal of the Revenue. 7. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 25th February, 2026. Sd/- Sd/- [RAJ KUMAR CHAUHAN] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25.02.2026 f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, Printed from counselvise.com "