INCOME TAX OFFICER WARD-3(1), LUDHIANA V. MOHINDER PAL , LUDHIANA

ITA 550/CHANDI/2024

AI Insights

The case revolves around an appeal by the revenue against the decision of the CIT(A) which had deleted an addition made by the AO under section 68 of the Income Tax Act. The addition pertained to Rs.195.85 Lacs which the AO alleged were unexplained cash deposits made by the assessee, M/s Jippy Textiles, during the demonetization period. The AO questioned the legitimacy of the cash sales reported by the assessee, citing lack of customer details and unusual sales patterns during the demonetization. However, the CIT(A) found that the AO had not rejected the books of accounts nor disproved the sales, leading to the deletion of the addition. The Tribunal upheld the CIT(A)'s decision, emphasizing that the AO had not substantiated the addition with concrete evidence and that the books of accounts were not defective.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361001 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2017-2018
• Other Referred Cases: Smt. Charu Aggrawal & ors. (140 Taxmann.com 588)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PANKAJ BHALLA LD
• Assessee Lawyers: ANIL SHARMA LD.
• Keywords: Business income; Rejection of books of accounts
• Section: 143(3)

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH BEFORE HON’BLE SHRI LALIET KUMAR, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं. / ITA No. 550/CHANDI/2024 (िनधाŊरणवषŊ / Assessment Year: 2017-18 ITO, Ward No.3(1), Rishi Nagar Ludhiana.141001. बनाम/ Vs. Shri Mohinder Pal (Prop. M/s Jippy Textiles) 911, Street No.2, Sekhkewal Road, Ludhiana 141008. ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. ABJPP-5048-B (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Sh. Pankaj Bhalla (CA) – Ld. AR ŮȑथŎकीओरसे/Respondent by : Sh. Anil Sharma (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 15-04-2025 घोषणाकीतारीख /Date of Pronouncement : 20-05-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 12-03-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 31-12-2019. The sole grievance of the revenue is deletion of addition of Rs.195.85 Lacs as made by Ld. AO u/s 68. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 2 2. It transpired that the assessee deposited cash of Rs.225 Lacs in its bank accounts during demonetization period. The assessee carried on its business of cloth under proprietorship concern namely M/s Jippy Textiles and it stated that cash was deposited out of business receipts. The assessee tabulated month-wise cash sales and cash deposits for this year as well as for preceding year. The cash balance as on 08-11- 2016 was reflected as Rs.230.54 Lacs out of which impugned deposits were made. The Ld. AO noted that the assessee made huge cash sales of Rs.201.39 Lacs during 01-10-2016 to 08-11-2016 as against total cash sales of Rs.218.51 Lacs from 01-04-2016 to 08-11-2016. The sales of Rs.190.41 Lacs were made from 01-11-2016 to 08-11- 2016. The sale could not be attributed to large rush of customers due to declaration of demonetization. The field inspector reported that the assessee was not having any retail counter on which cash sales to retail customers could be made. The sales invoices were without name and address of the customers and therefore, the same could not be verified. The assessee maintained its stand that the cash was deposited out of sales proceeds and there was jump in sales at the time of announcement of demonetization. However, Ld. AO alleged that the assessee failed to substantiate the cash sales with sales bill either by furnishing name and address or by producing the alleged purchaser. The assessee had cash balance of Rs.29.14 Lacs as on 01- 10-2016 which could be considered to be genuine and accordingly, the remaining deposit of Rs.195.85 Lacs was added u/s 68. 3 3. During first appeal, the assessee vehemently assailed the conclusion of Ld. AO and cited various judicial pronouncements to support its contentions. The Ld. CIT(A), applying the decision of Chandigarh Tribunal in the case of Smt. Charu Aggrawal & ors. (140 Taxmann.com 588) held that Ld. AO did not question the sales as made by the assessee. The Ld. AO also accepted purchases and stock as shown by the assessee. The Ld. AO only relied on human probability to give a finding that the assessee could not have made such huge cash sales within short period of time. The Ld. AO did not reject the books of accounts. Therefore, the impugned addition was deleted against which the revenue is in further appeal before us. 4. From the facts it clearly emerges that the assessee is engaged in cloth business in proprietorship concern namely M/s Jippy Textiles. This is the regular business for the assessee and the assessee has maintained proper book of accounts as well as quantitative details of stock as required under law. The books have duly been audited as required by the statute. The assessee has furnished cash book and party-wise purchases, monthly stock details as well as other financial details as called for by Ld. AO. The opening stock for this year was Rs.344.62 Lacs which has been liquidated during the year. The cash book of the assessee would show that it had sufficient cash balance of Rs.230.54 Lacs as on 08-11-2016 and the impugned cash has been deposited out of this cash balance as available with the assessee. The sales proceeds have been offered to tax and adding the same amount again without reducing the sales turnover would amount to double 4 addition which is impermissible. The Ld. AO has not rejected the books of accounts nor pointed out any defect in the books as maintained by the assessee. The stock has moved out of the assessee books of accounts. It is trite law that no addition could be made on mere suspicion or presumptions. The profit rates are in consonance with the profits rates of earlier years. In our opinion, the onus was on Ld. AO to disprove the claim of the assessee but this onus has remained to be discharged. There is no concrete evidence to support the allegation of Ld. AO. The case law as cited by Ld. CIT(A) duly supports the case of the assessee. On these facts, the adjudication of Ld. CIT(A) could not be faulted with. We order so. 5. The appeal stand dismissed. Order pronounced on 20-05-2025. (LALIET KUMAR) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 20-05-2025. आदेश की Ůितिलिप अŤेिषत / Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH "