Neeraj Jain, Delhi V. DCIT, Central Circle-31, New Delhi

ITA 1591/DEL/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5617 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: E
• Next Hearing Date: 02-07-2024
• Assessment Year: 2019-2020
• Appeal Filed On: 23-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 69; 201; 69A; 43; 73; 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR US, JUDICIAL MEMBER ITA No.1591/Del/2023 Assessment Year 2019-20 Neeraj Jain 388/5, 1 st Floor, Khari Baoli Delhi Vs. DCIT Central Circle-31 New Delhi TAN/PAN: ABQPJ3048Q (Appellant) (Respondent) Applicant by: Shri Amit Goel, Chartered Accountant Shri Pranav Yadav, Advocate Respondent by: Shri Subhra Jyoti Chakraborty, CIT-DR Date of hearing: 03 07 2024 Date of pronouncement: 25 07 2024 O R D E R PER PRADIP KUMAR KEDIA - A.M.: The ca pti on ed ap pe al h as b ee n f ile d b y the a ss es se e ag ai ns t th e ord er of t he C o mm iss io ne r of In co me Tax ( Ap pe al s)-30, Ne w Del hi (‘CIT(A)’ in short) dated 30.03. 2023 ar isi n g f rom t he ass es s men t ord er d at ed 3 1. 05 .2 02 1 pa sse d b y the As ses si ng Of f icer ( AO ) un der Sec ti on 1 4 3(3 ) of the I nc o me T ax A ct, 1 96 1 ( the Ac t) con cer ni ng A.Y. 20 19-20. 2. The g ro un ds of a pp eal r ais ed b y t h e a s ses se e rea d as u nd e r: “1. On t he fa ct s a nd c irc um st ance s o f t he ca se an d i n l a w, the no tic e u/ s. 14 3 (2 ) of t he A ct i ss u ed i n th is c as e is wit ho ut jur is di ct io n a nd ba rre d b y l im it at ion an d t he re fo re , th e ass es sm en t or de r pa sse d on t he f ou nd ati on o f su ch n oti ce i s lia bl e to be q ua sh e d a nd C IT (A ) er re d in n ot hol di ng so . 2. On t he f ac ts a nd ci rcu ms ta nc es of t he cas e a nd i n la w, ITA No.1591/Del/2023 2 the no ti ce u/ s. 1 4 3 (2 ) o f t he Ac t w as not is su ed wi th in t he sti pu la te d st at ut or y tim e a nd t her ef o re, t he a ss es sm en t ord er pa sse d b y t he a ss ess in g o ff ice r i s li abl e t o be qu as he d an d CI T (A ) er re d in no t ho ld in g so . 3. On t he f ac ts a nd ci rcu ms ta nc es of t he cas e a nd i n la w, the a ss es sm en t o rd er pa ss ed by t he a s ses si ng o ff ice r is b ad-in- la w, w it ho ut ju ri sd ict io n a nd ba rre d by l im it at io n an d CI T (A ) err ed i n no t h ol di n g s o. 4. On t he f ac ts a nd ci rcu ms ta nc es of t he cas e a nd i n la w, the as se ss me nt or d er p as se d b y t he a sse ss in g o ff ic er is ill eg al an d no n-e st a s th e or der h as bee n pa s sed wit ho ut v al id D IN a nd CI T (A ) er re d in no t ho ld in g so . 5. On t he f ac ts a nd ci rcu ms ta nc es of t he cas e a nd i n la w, the as se ss me nt or d er p as se d b y t he as ses si ng of fi cer is li abl e t o be q ua sh ed as it is con tr ar y t o t he pr ovi si on s o f s ec ti on 15 3D of th e I nc om e T ax Act , 19 61 an d CI T (A ) e rre d in no t h old in g so. 6. On t he f ac ts c ir cu ms ta nce s o f th e ca se a nd i n l aw , th e CIT (A ) e rr ed i n c onf ir mi ng th e ad d iti on ma de b y a ss ess in g off ic er o f R s. 1 ,3 2, 61, 46 7/- u/ s. 69 A o f t he A ct.” 3. Bri ef l y st at ed , t he as se ss ee is e nga g ed in th e wh ol es al e a nd ret ai l b us in es s of Kir ya n a it e ms at D elh i an d H ar ya n a . The a ss es see is s tat ed t o de ri ve inc o me so le l y f ro m th e af ore sa id b u sin es s o nl y and ha s no ot her s our ce of inc o me. A se ar ch u nd er S e cti on 13 2 of the A ct w as c on du cte d on 3 1. 10 .2 01 8 to 1 7. 12 .2 01 8 at t he bu si ne ss pre mi se s of M/ s. F aqi r Ch an d L oc ke r s a nd V aul ts P vt . Ltd . It wa s f ound b y t he I nv est iga ti on Te a m t ha t o ne of th e l oc ke rs w as all ot te d in th e n a me of th e as se ss ee he rei n. C on seq ue nt l y, a s ear ch wa rra nt was is su ed i n th e na me of the a ss ess ee a nd wa s ex ecu te d on 04. 12 .2 01 8. D uri ng th e s ea rch, cas h o f Rs. 1, 70, 00 ,0 00 /- was f ou nd f ro m th e lo ck er al l ott ed t o th e a ss es s ee. A s pe r as ses s m ent o rd er , sta te me nt of t he a s ses se e w as r ec or de d un de r Se ct io n 1 3 1(1 A) of the Act . T her eaf t er, th e as ses se e f ile d re tur n of in co me u n der Se cti on ITA No.1591/Del/2023 3 13 9 of the Ac t on 27. 09 .2 01 9 de cl ar ing in co me of R s. 5,3 1, 15 0/-. No tic e u nd er Se ct i on 14 3(2 ) a nd 14 2( 1) wer e i ss ue d t o t he a ss es se e wh ere in t he c as h a mo un t f oun d in t h e loc ke r wa s n ot a d mitt ed a s inc o me of the a ss e sse e. T he AO, b as ed on i nf or ma ti on gat he re d in the c ou rs e of hea ri ng t ow ard s mon th-wi se tu rn ov er , ca sh sal es a nd cas h i n han d f or F . Y. 20 16-1 7, 20 17-1 8 a nd 20 18-1 9 f or med a vi ew tha t th e cas h f o un d and s ei ze d f ro m th e lo ck er s re mai ns u n exp la in ed . Ba sed o n a ver ag e cas h h ol di ng be tw e en Ap ril, 2 01 8 to Se pte mb er , 20 18 wh ic h st an ds at Rs .3 8, 37 ,5 33 /-, the AO t oo k a v ie w tha t ou t of Rs .1, 70 ,0 0,00 0/- c ash in ha nd to t he e xt en t of R s. 37, 38 ,5 33 /- (av er ag e ca sh b ala n ce) st an ds ex pl ai ne d a nd th e s ou rce of re mai ni ng cas h b ala nc e of Rs .1, 32 ,6 1, 46 7/- r e ma in s u ne xp lai ne d. T he AO acc or di ng l y i nv ok e d pr ovi si on s of Sec tio n 69A of th e Ac t and a dd ed the sa me to th e t ot al i nc o me of t he a sse ss ee. T he in co m e wa s t hu s ass es se d at R s.1 , 37, 92 ,6 17 /- a s a gai ns t ret ur ne d i nco me of Rs .5, 31 ,1 50 /-. 4. Ag gri ev ed , the a ss ess ee p ref er re d a p pea l bef or e th e CI T( A). The C IT (A ) de ni ed rel ief b ot h on l eg al gr ou nd s as w el l a s on mer it s. The l eg al g ro un ds in rel at io n to D o cu men t Id en tif ic at i on N u mbe r (DI N) , mec ha ni cal app ro va l u nd er Sec ti on 15 3D , abs en ce of jur is di ct io n u po n t he AO is s uin g no ti ce un der S ec tio n 1 43( 2) w ere adj ud ic at ed to b e w ith ou t meri t. 5. On me ri ts a ls o, th e CIT( A) e nd or se d t he ac ti on of t he A O a nd den ie d an y r el ief . 6. Fu rth er a gg rie ve d, th e as se ss ee pr ef err ed a ppe al b ef or e t he Tri bu na l. 7. Wh en th e mat te r w as cal le d f or h ear in g, th e l d. co un se l f or th e ass es se e vo cif e ro us l y a ss ail ed the ac ti on of th e A O an d CI T( A). It ITA No.1591/Del/2023 4 was as ser te d th at the le ga l gr ou nd s ra ise d b y the a ss es se e has bee n arb it rar il y r eje ct ed b y t he CI T( A) des pi te lo ng lin e of jud ic ial pre ce de nt s. I t wa s con te nd ed t ha t th e ass es s men t ha s b ee n co mp le te d bas ed o n mech ani cal a pp ro va l un de r Sec ti on 1 53 D o f the Act . Lik ew is e, t he a ss es s ment ord er p as se d wit ho ut DI N w as not hel d to be no n-es t. Ho we v er, o n i nq ui r y f ro m t he B en ch , t he ld. c ou ns el su b mitt ed th at the gro un ds ta ke n i n t his re ga rd a s p er Grou nd No .4 ma y b e tr eat ed a s n ot pr es se d. 8. Gro u nd N o.4 i s th u s d is mi ss ed a s no t pre ss ed . 9. Co nti nu in g f u rt her , th e ld . co un sel f o r t he a ss es see a dd r ess ed cas e on meri ts b ro a dl y a s un de r: (a) The a ss es see i s e nga ge d in th e wh ole sa le an d re tai l bu sin es s of K ir ya n a i te ms i n D el hi a nd Ha r ya n a. Th e a sse ss ee has no o th er s ou rce of inco me o th er t h an b usi ne ss i nc o me f ro m af ore sa id b us in es s. Sear ch a nd sei zu r e ope ra ti on s we re car ri ed out on 04 .1 2. 20 18 at t he loc ke r of t he ass es se e mai nta in e d wi th M/ s. F aq ir Cha nd Loc ke rs a nd Va ul ts Pvt . Lt d. an d an a mo un t of Rs .1 ,7 0,00 ,0 00 /- wa s f o un d f ro m t he ab ov e loc ke r. Dur in g the c ou rs e of ass e ss me nt pr oc ee di ng s, th e as se ss ee e x pla in ed bef or e t he AO th at th e c as h f ou nd in th e lo ck er wa s d ul y rec or de d f ro m th e bo ok s of acc ou nt a nd t he so urc e of c ash is thu s d ul y e xp la in e d. T he AO h ow ev e r on l y pa rt l y acc ep ted th e su b mis sio ns of the ass es see to wa rd s s our ce of cas h b y h old in g tha t a ve ra ge bal an ce of c as h i n h an d b et wee n Apr il , 20 18 to Se pte mb er , 2 01 8 c o mes to Rs .3 7, 38 ,5 33/- a nd t hu s a ll o we d t he cre di t of th is a mo u nt of R s. 37 ,3 8, 53 3 /- an d ma de ad di ti on s of re mai ni ng a mo un t of Rs .1 ,3 2, 61 ,4 67 /-. Whi le d oi ng s o, t he AO ob ser ve d t hat in t h e st ate me nt re cor de d bef o re t he I nv es ti gat io n Wi ng, t he a sse ss ee ha d a d mit te d un di sc lo se d i nc o me of ITA No.1591/Del/2023 5 Rs .1, 20 ,0 0, 00 0/-. T he ad di tio ns mad e b y th e AO wa s co n f ir me d b y th e CI T( A) o n m is-ap pr eci at io n of f act s. (b) The St at e men t of ass es se e bef o re Inv es ti ga ti on Win g doe s n ot f o r m th e b asi s of t he act io n o f the AO. Th e AO has no t ma de ad di ti on of R s.1 ,3 2, 61 ,4 67 /- o n the b as is of sta tem ent of the as se ss ee. In f ac t ne it he r t he ad dit i on s ha ve be en ma d e ba se d on so cal le d c onf e ssi on al st at e men t n or c ou ld ha ve be en ma de mer el y on t he b a sis of ba ld s ta te me nt in t he l ig ht of the jud g men t of Ho n’b le S upr e me C ou rt i n the cas e of Pul la ng ode Ru bbe r an d Pr od uce C om pa ny Lim ite d vs . S ta te o f Ke ral a (19 73 ) 91 I TR 1 8 (SC) wh ere in i t is h e ld th at a n ad mi ss io n ma de is no t c o ncl us iv e and i t i s op en t o t he pe rs on w ho ma de th e add it io n to show t h at it is i nc or rec t. (c) The C B DT v ide In str uc ti on No. 28 6/ 2/ 20 23 IT(I nv .) ha s lent e mp ha si s th at dur in g t he s ea rc h and se iz ure, t he re sh oul d be f oc us a nd co nc e ntrat io n o n col le ct i on of ev id en ce of i nco me and n o a tt e mpt s ho uld b e mad e to ob tai n co nf ess io n as to th e un dis cl os ed in co me . Th e CB DT ha s r e cog ni ze d t he po si ti on tha t ass es s men t of un d isc lo se d i nc o me h as to be ba se d u p on th e evi de nc e an d n ot o n st at e ment . T hu s sta te me nt o bt ai ne d in th e cou rs e of se ar ch d o n ot c arr y mu ch wei gh t in t he ab se nce of evi de nc e. (d) Wit ho ut pr ej ud ic e, eve n as pe r s tat e me nt as rep ro du ce d at pa ge n o. 3 of the as se ss me nt orde r, t he a mo unt of Rs .1, 20 ,0 0, 00 0/- w as men ti on ed a s s al es, i.e ., gro ss in co me a nd ent ir e sal es h av e b een w ro ng l y a sse ss ed as i nc o me i ns te ad of onl y p r of it el e men t e mbe dd ed t he rei n. (e) Be t ha t a s it ma y, th e AO h as no t m ade t he ad di ti on of ITA No.1591/Del/2023 6 Rs .1, 32 ,6 1, 46 7/- o n t he ba si s of a n y st ate me nt. The AO h as ma de t he a dd iti on s ind ep en den t of an y s t ate me nt ba sed on t he f act th at av era ge cas h ba la nc e b etw ee n A pr il, 20 18 to Se pte mb er , 2 01 8 w as Rs .3 7, 38, 53 3/- onl y a n d t her ef or e, cre di t to t hi s e xte nt wa s g ive n a s e xpl ai ne d s our ce wh il e as se ss i ng t he bal an ce a mou nt of Rs .1 ,3 2, 61, 4 67/- a s u ne xp lai ne d inc o me. I n thi s re ga rd , th e ld . cou ns el f or t he a s ses se e co nt en ds t ha t th ere is no lo gi c or rat i ona li t y in t he ac ti on of th e AO in a do pti ng ave ra ge b alanc e of cash i n ha nd . Th e bala nc e of cas h in han d has t o b e see n o n the da te of se ar c h an d gi vi ng cr ed it f or ave ra ge c as h ba la n ce d isr eg ar di ng t h e act ua l ca sh in h and is inc o mpr eh en si bl e. (f) The AO h i mself i n par ag ra ph 7. 4 of th e as se ss me nt or der has re co rded th at a sse ss ee ha s sta rt ed bu si ne ss in th e na me of ne w p ro pr ie tar y c onc er n M/ s. S a mb hav T ra di ng C o mp an y i n Ba had ur ga rh, Ha r yana wh er ein ca sh i n ha nd of Rs. 1, 22 ,2 2,4 97 /- was s ho wn o n 2 5. 10. 20 18 . It wa s f u rth er ob se rv ed b y the AO tha t as se ss ee ha s s ho wn t ota l tu rn ov e r of Rs.7 .4 6 cr ore dur in g the F. Y. 2 01 8-19 rele va nt to A .Y . 201 9-20 i n q ue s tio n a s aga in st R s. 2. 02 c ro re f or F. Y. 2 01 7-18 rele va nt t o A. Y. 2 01 8-19 and d uri ng t he c ur ren t p er io d c as h s ale s of t he as se ss ee h as inc re as ed su bs tan ti all y. It wa s t hu s conte nd ed th at a dve rs e inf er en ce co ul d no t ha ve b ee n d ra wn o n s uc h f a cts . 10. The l d. c ou ns el t h us s ub mi tte d th at wh ere t he t ur no ver has inc re as ed a nd b us i nes s o per at io ns h a ve st ar te d in n ew plac e, t he cas h in han d a t th e dis po sal of the a ss ess ee i s bo un d t o b e hi ghe r as co mpa re d to e ar li er pe ri od p ar tic ul arl y wh er e th e a sse ss ee i s eng ag ed i n c as h sa l es in K ir ya n a go od s . 11. The l d. c o un sel n ext ad ve rt ed to ad dit io ns ma de u nde r th e ITA No.1591/Del/2023 7 she lt er of S ect io n 6 9A a nd c on te nd ed t hat pr ovi si on s of S ect io n 6 9A are n ot app li ca bl e in t he f act s of the cas e si nc e th e a mo unt of cas h f ound at th e t i me o f sear ch is dul y r ec ord ed in th e b oo ks of acc ou nt and suc h b oo ks i ncl udi ng c as h bo ok ha s no t bee n re je ct ed b y t he AO at a n y po int of t i me in th e co ur se of ass es s men t a nd f ur th er con te nd ed th at ca s h b oo k i s i nc lu de d in th e d ef ini ti on of ‘boo ks of acc ou nt’ a s gi ven i n s ub se ct io n ( 12 A ) of S ec ti on 2 of th e A ct . T he ld. c ou ns el a dv er t ed t o th e de cis io n of the Co-o rd in at e Be nc h in Tee na Be th ala vs . I TO i n I TA N o. 13 83 /Ba ng /2 01 9 d at ed 28.0 8. 20 19 to su b mit th at th e on us is up on t he AO t o f in d th at th e ass es se e i s the ow ne r of an y m one y, etc wh ic h w a s no t re co rd ed i n t h e bo ok s of acc ou nt w hi ch o nu s has n ot b ee n di s cha rg ed . Th e ld. c ou nse l al so ref err ed t o t he de c isi on r en de re d in t he ca se of D CI T v s. K ar thik Co ns tr uct io n Co . in I TA 2 29 2/ Mu m/ 2 01 6, or de r da te d 2 3.02. 20 18 t o rei te rat e t ha t S ec t ion 6 9A ca nn ot b e made i n r es pec t of th os e ass et s/ mo ni es/tr an s act io ns w hi ch ar e re co rde d in t he bo ok s of acc ou nt . In t he i ns t ant c as e, t he b oo ks of accou nt a re d ul y s u bj ect ed to st at ut or y a ud it an d are r e mai n int ac t i n th e ab se nce of i ts rej ec tio n b y th e AO. Th e l d. co un se l nex t su b mitt ed t hat th ere i s n o cas e of a n y une x pla in ed mo ne y i n the li gh t of th e evi de nc es f urni sh ed su ch a s co mpl et e det ai ls o f purcha se s, s ale s and s to ck s bot h q uan ti t y-w is e as wel l as a mo u nt-wi se ; de tai ls of part y-w i se pur ch as e, det ai ls o f part y-w i se s al es and co mp le te cas h boo ks . N o def ec t has b ee n p oin te d ou t in th e de ta il s/ doc u men ts /ca sh b oo k f urni sh ed bef o re t h e AO. Th e sa le s a re du l y re co rd ed in the bo ok s and a ud it ed. T he s ale s a mou nt ha s be en du l y ac ce pt ed b y t he AO, Bo ok s h av e n ot be en r ej ec ted. Al mo s t al l t he pu rc has es hav e b ee n ma de t hr ou gh acc o unt pa ye e ch eq ue s and th er ef ore, p urc has e c an no t be d ou bt ed . T he AO ha s a cc ep ted su c h pu rc ha se tra ns ac t ion s a s w el l as s to ck de cl are d. On ce, th e AO ha s ac ce pt ed th e p ur cha se s a nd ITA No.1591/Del/2023 8 sto ck s, th er e i s no jus tif i cat io n f or h i m t o dra w ad ver se inf er en ce in res pe ct of sa le s. A ref er en ce i n t h is r ega rd wa s ma de t o th e jud g men t i n t he c a se of CIT vs . Par a dis e Hol id ay , (2 01 0 ) 3 25 IT R 13 (De l ); IT O v s. Su ra na T ra de rs (2 00 5 ) 9 2 I TD 21 2 (IT AT Mu m ); Sh ree S an ad Tex ti l e Ind us tr ie s Lt d. v s . DC IT , IT A No .1 16 6/A hd /2 01 4 (IT A T Ah d ). T he l d . cou ns el t hu s su b mit te d th at i mp ug n ed ad di ti on is de vo id of a n y r at ion al b as is b oth o n f acts a nd on l aw . 11. Wit ho ut pr eju di ce and i n t he a lt er nat iv e, t he l d. co un sel su b mitt ed th at th e act io n of t he AO h as r es ul te d i n d ou b le a dd it io n to t he e xt en t of Rs .1, 32 ,6 1, 46 7/- o ne b y w a y of cas h sa le s an d sec on d b y wa y of cas h f ou nd . Th us, bot h d eb it a nd cre dit ha s be en ass es se d s i mul ta ne ou sl y c on tra r y to t he pri nc ip le s of d ou ble e ntr y s ys te m of ac co un ti ng wh ic h is ye t ag ain u ns us ta ina bl e i n l aw . Fo r thi s pr op osi ti on , t h e j ud g men t r en der e d b y t he H on’b le Del hi H ig h Co urt i n th e ca se of CI T vs . Vi sh al Exp or ts O ve rs ea s Lt d. in T ax Ap pea l N o. 24 71 /2 0 09 o rd er d at ed 3 .0 7.2 01 2 w as r ef err e d. T he l d. cou ns el t hu s u rge d f or re ver sa l of the i mp ug ne d ad dit io ns a nd res to ra tio n of t he i nco me d ec lar ed . 12. The ld. DR f or t he Re ven ue, on th e ot her han d, r el ie d up on t he ass es s men t or der and t he f irs t ap pe lla te or de r. T he l d. D R a ls o ref err ed to t he s t ate me nt mad e b y the a ss es see un der Sec ti on 13 1(1 A) of th e A c t wh er ei n t he a ss e sse e h i mse lf ad mit ted to ha ve ear ne d un di sc lo se d inco me of Rs. 1, 2 0,0 0, 00 0/-. T he l d . DR t hu s su b mitt ed th at th e po sit io n t ak en b y t he a ss es se e i s c ont rar y t o t he ad mit te d st at e men t as we ll a s do cu me nts pla ce d o n rec or d an d th us act io n of th e Re ve n ue ca nn ot be a ss ai l ed. 13. We h av e ca ref u ll y c o ns id ere d t he riv al s ub mi ss io ns an d per us ed the ma te ri al a va ila bl e o n re c ord as wel l a s or d ers of bot h the a ut ho rit ie s. ITA No.1591/Del/2023 9 14. The as ses se e ha s dis pu te d th e ad di t ion of Rs. 1, 32 ,6 1, 46 7/- ma de b y th e AO u nde r Sec ti on 69 A o f the Ac t t ow ar ds une xp la in ed so urc e of ca sh in h and . T he as ses se e h as c ha lleng ed th e a ddi ti on s o n leg al gr ou nd su ch as l ac k of ju ri sd i cti on in ap pr opr ia t e ap pr ov al un der Se cti on 15 3 D an d n on-me nt io n ing of DIN, e tc. T he a ss es see has al so a ss ail ed th e act io n of th e Re v enu e o n th e f act ual mat ri x as wel l. I t is t he c as e of the a sse ss ee as re co rd ed i n th e prec ed in g par ag ra ph s t ha t c o mple te d eta il s of pu rc ha ses , sa les and s to ck s inc lu di ng q ua nt it y det ail s w ere pr o vid ed in t he c ou r se of th e ass es s men t. The re l eva nt det ai ls suc h a s pa rt y-w i se s al es, par t y-w is e pur ch as es we re al s o f ile d t oget he r w i th c as h b oo k sh ow ing ca sh in han d in ex ce ss of the c as h f ou nd i n the c ou rse of sea rc h c ov er in g loc ke r ma in ta in ed wit h M /s. Fa qi r Ch and Loc ke rs a nd V aul ts Pri va te Li mit ed. T he b oo k s an d t he d et ail s s o f ile d have no t be en r eje ct ed and al so t he a dd it ion s so ma de w ou ld res ult in d ou bl e ta xat io n. I t is f urth er c as e of th e ass es se e th at w i tho ut r ej ec ti on of bo ok s, t he add it io ns o n ac co u nt of un ex pla in ed c ash c an no t be ma de deh or s th e cas h b oo k. I t i s f urth er c as e of th e a sse ss ee tha t c red it f or av era ge cas h b ala nc e he ld i n pa st s ix mo nt hs i s to tal l y in co mp reh ens ib le a nd wh at i s t o b e se en i s ca sh in ha nd a t t h e ti me of sea rc h. T he a ss es se e als o co nt en ds th at the a dd it io ns ha ve not b ee n ma de on t he ba si s of sta te me nt nor co u ld h av e be en ma de b as ed o n s o me ad di tio ns wit ho ut d is lo dg in g the f act s ava il ab l e on re co rd i n vie w of CBD T Ins tr uc ti on an d th e jud g men t re nd er ed in t he c ase of Pol la ng od e Ru bbe r (s up ra ). Wit ho ut p rej ud ic e an d i n th e a lt e rna ti ve , t he ass es se e c on te nd s t hat it is on l y th e p rof it el e men t e mbe dde d i n the sal es of Rs .1, 20 ,0 0,0 00 /- wh ic h ca n be tr eat ed as inc o me o n est i mat ed ba si s. Th e ld . c ou ns el th us su b mitt ed th at th e ing re di en ts of Sec ti on 6 9A ar e not me t in the pr ese nt cas e a nd t hu s ad di ti on s ma de ar e out si de t h e s an ct io n of la w. ITA No.1591/Del/2023 10 15. On a ppra is al of f acts on rec or d, we ob ser ve th at t he AO ha s not a dv er se l y co m me nte d on t he d et ail s of s ale s, p ur c has es a nd sto cks bo th i n te r ms of qu an tit y a n d a mou nt a nd t he part y-w i se sal es /p ur cha se e tc. Th e AO h as al so acc ep te d t he s ale s dec la re d b y the as se ss ee. As a s equ el to s uc h u nd is put ed f act s, we ar e co mpe ll ed to thi nk t hat ca sh in ha nd de cl are d in th e b oo ks is bac ke d b y doc u men ta r y e vid e nce s. T he as se ss e e b ei ng in K ir ya n a b us in es s wh ere lar ge cas h t r ans ac ti on s ar e ge n era ll y in vo lv ed , th e so ur ce of cas h in ha nd dr aw s c on si der ab le st re ngt h. T he pu rc ha se s mad e a re sta te d to be t hro ug h ba nk in g ch an nel wh ich f ur th er s tr en gth en s th e aud it ed f i na nc ial a cco un ts . B es id es , we se e n o s e mbl a nce in t he vie w ta ke n b y t he AO t ha t on l y a ve rag e ba lan ce of ca sh in h an d nee ds t o be g ive n c red it. Fo r doi n g s o the c as h bo ok n ece ssa ri l y h as to b e di sc ard ed . T he b oo ks of ac co u nt ar e a d mitt ed l y n ot re je ct ed . The sa le s, pu rc ha ses an d s to ck s h a ve b ee n a cc ep ted . Th us , t he pre re qu is ite s of S e cti on 6 9A d o not app ea r t o ha ve b ee n f ulf i lle d. Se ver al ju dg me nt s ha ve be en qu ot ed on be ha lf of th e ass es se e t o con te nd th at rej ec tio n of b oo ks is nec es sa r y to i nd ul ge i n s uc h add it io n. T he ac ti o n of th e AO in o ur vi ew , as ri gh tl y c o nte nd ed o n beh alf of the as se s see has re su lte d i n do ubl e a ddi tion s w hic h i s no t per mi ss ib le i n la w . We th us s ee n o rati on al e in co nf ir min g th e add it io ns to th e e xt ent of Rs .1,32,67,4 67/- t ow ar ds un ex p lai ne d c as h un der Se ct io n 6 9 A in th e f act s of th e ca se b y g ran ti ng cre di t o nl y to war ds av er age ca sh bal an ce rat he r t han ac tu al cas h i n han d a t t he rel ev an t p oi nt of ti me. 16. Ho we ver i n t he v ein , we no te th at as ag ai ns t t he s ale of Rs .7, 46 ,9 0, 13 1/-, t he a ss es se e h as de c lar ed a n et pr of it r a tio of 0. 9 % as ag ai ns t th e i mm edi at el y pr ev io us F .Y. 20 17-1 8 wh ere aga in st t he tur no ve r of Rs .2 ,0 2,8 3, 09 5/-, t he n et prof it rat io st an ds at 3. 43 %. Th us, t he re is a d r ast ic f all i n th e n e t p rof i t r at io v is-à-vis e ar lie r ITA No.1591/Del/2023 11 ye a r. H en ce , in t h e bal an ce of th in g s, ad di ti on al b us in ess i nc o me @ 2. 53 % be in g dif f ere nc e in n et p rof it rati o of tur no ver o f 7.46 cr or e wh ich sta nd s at Rs. 18, 89 ,6 60 /- c al ls f o r add it io n at tri b uta ble t o ca sh sal es i n qu es ti on . T hu s, th e ad di ti on s t o the e xt en t of Rs. 18, 89 ,6 60 /- is r et ai ne d a nd th e re mai ni ng a mou nt of Rs .1, 13 ,7 7, 80 7/- is de let ed . The o rd er of t he C I T( A) an d AO a re m odif i ed t o t hi s ex te nt. 17. In th e res ul t, t he ap pea l of th e as se ss ee is p ar tl y a ll ow ed . Order pronounced in the open Court on 25 th July, 2024. Sd/- Sd/- [YOGESH KUMAR US] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25 th July, 2024 Prabhat Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR Assistant Registrar