ITO, PHALODI V. VARSHA MILLS, KHICHAN

ITA 197/JODH/2024

AI Insights

The case involves the Income Tax Department appealing against the order of the CIT(A) which had deleted additions made by the Assessing Officer (AO) under Sections 69A and 28 of the Income Tax Act. The additions were initially made on account of unexplained cash deposits during the demonetization period and revaluation of closing stock of guar gum, respectively. The CIT(A) found that the cash deposits were from legitimate business activities and the stock was valued correctly as per accounting standards. The Tribunal agreed with the CIT(A)'s findings, emphasizing the need for concrete evidence to challenge the entries in the assessee's books and the adherence to accounting standards in stock valuation.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841384 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 29-03-2024
• Other Referred Cases: Laxmichand Baijnath vs CIT, Sanjeev Motwani I.T.A.No.682/Mum/2023, Indian Rare Earths Ltd (2015) 375 ITR 276 (Bombay), IBM India Ltd (2015) 230 Taxman 544 (Karnataka), Hindustan Newsprint Ltd (ITA no 174 of 2014), Sequent Scientific Ltd, Thane Vs. Asst. CIT Rg 3(3), Mumbai bearing ITA Nos. 4902 & 5263/Mum/2013
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUNI PAL VIRTUAL
• Assessee Lawyers: KAPIL HIRANI; VIRTUAL; PROVING
• Keywords: Set aside; Tax effect
• Section: 28

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE DR. MITHA LAL MEENA, HON’BLE ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, HON’BLE JUDICIAL MEMBER ITA No. 197/Jodh/2024 (Assessment Year – 2017-18) ITO Phalodi Varsha Mills, Khichan E-51, Industrial Estate, Khichan, Phalodi, Jodhpur – 342308 Pan No.: AAIFV 9450 D Assessee by Shri Kapil Hirani, Advocate (Virtual) Revenue by Smt. Runi Pal – CIT-DR (Virtual) Date of Hearing 29.01.2026. Date of Pronouncement 26.02.2026. ORDER DR. MITHA LAL MEENA, A.M.: This appeal is filed by Revenue against the order of National Faceless Appeal Centre, Delhi [hereinafter referred to as NFAC/CIT(A)] dated 07.02.2024 with respect to Assessment Year 2017-18 challenging therein decision of the Ld. CIT(A) in deleting the addition made u/s 69A on account of un-explained cash deposits during demonetization period and by invoking Provisions of Section 145(3) of the Act. 2. The revenue has raised the following grounds of appeal: 1. “Whether in the facts and circumstances of the case, ld. CIT(A) is justified in deleting the addition of Rs. 2,79,03,981/- made by AO by invoking provisions of section 145(3) when assesse failed to submit documentary evidences in support of NRV of guar gum adopted by the assesse, in absence of which correct picture and true profits of assesse firm could not be ascertained from books of accounts Printed from counselvise.com 2 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 2. Whether in the facts and circumstances of the case, Id. CIT(A) is justified in deleting the addition of Rs. 3,36,49,500/- made u/s 69A on account of unexplained cash deposits during demonetization period by ignoring the fact that assesse failed to explain the rationale behind depositing the cash at Mumbai bank branches in multiple shots which was claimed to be generated from cash sales effected during the pre- demonetization period at Phalodi situated nearly 1100 away when assessee has its ICICI Bank account at Phalodi itself. 3. That the tax effect involved in this case is above the limit” 3. The department has challenged that the Ld. CIT(A) was not justified in deleting the addition of Rs. 2,79,03,981/- made by the AO by invoking provisions of Section 145(3) of the Act on account of valuation by rejecting NRV of stock of guar gum. 4. Briefly the facts of the case are that the appellant assessee is a firm which is engaged in the trading and manufacturing of agricultural products and food items. In the year consideration, the assessee had deposited an amount of Rs. 3,36,49,500/- in its bank account during the period from 09.11.2016 to 25.11.2016. The appellant explained before the Assessing Officer (in short the AO) that the said cash amount was generated out of the cash sales made by the appellant. The Ld. AO being not satisfied with the submissions of the appellant assessee proceeded to make high pitched assessment u/s 145(3) of the Act by invoking the Provisions of Section 145(3) of the Act with additions of Rs. 2,79,03,981/- for stock valuation by rejecting the NRV of guar gum adopted Printed from counselvise.com 3 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 by the assessee and Rs. 3,39,49,500/- u/s 69A on account of un-explained cash deposits during demonetization period. 5. Assessee being aggrieved with the assessment order preferred an appeal before the Ld. CIT(A) who has granted relief to the assessee by observing as under: 1. The assessing officer has stated in page no 2 of the assessment order that as per cash book so submitted by the assessee, the same is out of cash sales. However this was considered as unexplained money u/s 69A because the cash was deposited in Mumbai instead of place of business, i.e Phalodi. The appellant submitted that the bank account at Phalodi turned into an NPA (Non performing asset) due to bad market conditions and decrease in rate of guar gum in the year 2015 consequent to which the bank took possession over appellant's factory premises and house on 29.09.2016. After the bank took possession of factory and house premises of the appellant, the appellant due to no alternative place of residence, along with its family shifted to Mumbai. Moreover, the bank account being an NPA, the appellant was unable to deposit the sum into bank account. This is the cause why appellant deposited the cash in bank accounts at Mumbai. Supreme Court in the case of Laxmichand Baijnath vs CIT in 35 ITR 416 held that, amount credited in business books can normally be presumed as related to business. Payments received from various customers cannot be doubted until contrary material is brought on record. To treat a receipt as unexplained income the AO needs to be in possession of some material indicating that the assessee has received certain amounts which have not Printed from counselvise.com 4 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 been reflected in the books of account. Receipts recorded in the books of accounts were already part of the income which was already credited in P&L account. In the present case of the appellant, the sum so deposited in the bank account has already been recorded in the books of accounts as cash sales in respect of which the appellant submitted the sale bills, delivery challans, sale register and stock register before A.O. When the sum has been credited in the books of accounts maintained by the appellant, the A.O. cannot resort to making addition u/s 69A of the Act. Hence it is held that cash sales which is shown as income and is duly entered in the regular books of accounts cannot be taxed under section 69A. As a result, ground no 2 is allowed. 2. Ground No. 3 raised is against the addition u/s 28 of the Act on net profit from business & profession Rs.2,79,03,981. The assessing officer held that the assessee failed to submit documentary evidence in support of valuation of guar gum. The assessee neither submitted any evidence in support of NRV nor produce the bills of purchase in support of cost price though this office specifically asked for the same. In view of the above, the assessee failed to substantiate the valuation so adopted for the stock of guar gum and as per show cause issued The NRV value of guar gum as on 31.03.2017 is taken as Rs. 82.58 per kg (taken from an internet website). Accordingly, it was concluded that the figures of valuation of closing stock is incorrect. Therefore, books of accounts of the assessee were rejected invoking the provisions of section 145(3) of I. T. Act. The assessing officer re-drew the trading, manufacturing and P&L account as proposed in the show cause based on the NRV Printed from counselvise.com 5 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 value of guar gum as on 31.03.2017. Accordingly, the net profit from business & profession was estimated as Rs. 2,79,03,981. 2.1 In this case the appellant has submitted that the factory and raw material stock were seized by bank authorities and the stock was damaged due to lack of care. The assessing officer held that valuation of closing stock is incorrect. Therefore, books of accounts of the assessee were rejected invoking the provisions of section 145(3) of I. T. Act and the net profit from business & profession was increased on the basis of re- valued closing stock. The closing stock was valued by the assessing officer as per values available on internet instead of valuation of inventory as per accounting standards. AS-2 on 'valuation of inventory' issued by the ICAI mandates that inventories should be valued at lower of cost or net realisable value. In this case the appellant has duly disclosed in the tax audit report, method of valuation of inventories at cost or net realisable value, whichever is lower, following the principles of Accounting standard 2 for the year under consideration. AS-2 also provides that the cost of inventories may not be recoverable if those inventories are damaged or if their selling prices have declined. 2.1.1 ITAT Mumbai held in the case of Sanjeev Motwani I.T.A.No.682/Mum/2023 (A.Y. 2013-14), that Valuing the closing stock at cost or market value is a recognized accounting principle. There is one more principle, i.e., the Principle of Prudence, as per which, all known losses should be provided for, even if it is not actually incurred. The wisdom of the assessee in reducing the value of closing stock (work in progress) should be covered under the Principle of Prudence also and the said action of the assessee stands vindicated by the future events. Accordingly, the tribunal held that Printed from counselvise.com 6 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 there is no reason to disbelieve the value of closing work in progress disclosed by the assessee and directed the AO to accept the value of closing work in progress declared by the assessee and delete the consequential addition made. The Bombay High Court in the case of Indian Rare Earths Ltd (2015) 375 ITR 276 (Bombay) considered the issue of non-moving stores and spares which corroded over a period of time due to wear and tear, written off in the subject year and held that where assessee's non moving stores and spares were corroded over a period of time due to wear and tear, assessee would be entitled to write off same in profit and loss account the Income Tax Act. High Court of Karnataka in IBM India Ltd (2015) 230 Taxman 544 (Karnataka) and High Court of Kerala in Hindustan Newsprint Ltd (ITA no 174 of 2014) has allowed similar devaluation of obsolete stock and spares following Accounting Standard- 2 issued by the Institute of Chartered Accountants of India. 2.1.2 Moreover, the power to reject books of accounts is to be exercised only when the books are found incorrect or incomplete for determining the true and correct profits earned by the assessee. In the present case, the only basis for rejecting the books of accounts is wrong details in the stock register. No other defect has been pointed out by the assessing officer for rejecting the books of accounts. However, it is seen that appellant's tax audit report has followed principles of Accounting standard 2 regarding method of valuation of inventories. Appellant has provided specific reasons for claiming the write off of value of Guar Gum inventory and the process of identification of damaged stock is backed by technical analysis. Hence it is held that non maintenance of stock register is not a sufficient reason in this case for exercising the power of rejecting the books. As discussed above, as per principle of prudence, all Printed from counselvise.com 7 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 known losses should be provided for the valuation of closing stock. In any case, it is an accepted position of law that the re-valuation of assets in the books of the assessee does not lead to generation of income as no transaction has been taken up with an outside party. In other words a person cannot make profit from himself by merely making some entries in the stock book. Hence, it is held that the addition of Rs.2,79,03,981 made by the AO u/s 28 by revaluing closing stock is unwarranted. As a result, ground no 3 is allowed. 6. The Ld. CIT DR for the Department while supporting the assessment order stated that the AO has invoked provisions of Section 145(3) because the assessee failed to submit documentary evidences in support of NRV of guar gum adopted by the assessee and in the absence of which correct picture and true profit of the assessee firm could not be ascertained from the books of accounts. She argued that the AO has issued a show cause notice to the assessee and in compliance, the assessee has merely submitted that due to rain and careless, the stock of guar gum was spoiled. The stock had also caught the germs and bacteria. However, contrary to assessee’s submission, as mentioned in the table of trading account of guar gum, the assessee itself shows the same quantity of closing stock as it was of opening stock. She contended that the AO has reghtly alleged that if the guar gum spoils then why it had reported the same stock figure. Further, the assessee had not submitted documentary evidence in respect of his contention. The assessee submitted a Printed from counselvise.com 8 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 copy of a letter wherein theft of his household items and use of personal things like TV, bedsheets, kitchen equipment was mentioned, but in this letter, nowhere mentioned about the deterioration of stock of guar gum. The DR contended that assessee had failed completly to submit documentary evidence in support of valuation of guar gum. The assessee neither submitted any evidence in support of NRV nor produces the bills of purchase in support of cost price though the AO has specifically asked for the same. She pleaded that the findings of the AO may be sustained. 7. Ld. Counsel in defence vehemently supported the order of the Ld. CIT(A) by referring various documents enclosed with the paper book comprises with 1181 pages. 8. The Ld. AR has submitted that opening stock of the guar gum for the year under consideration was Rs. 3,24,12,781/- for 5,89,323.29 kgs, (quantity) as there was no sales of guar gum. Thus, the quantity of guar gum at the beginning of the year and at the end of the year remained the same i.e. the stock level was being maintained at Rs. 5,89,323.29 kgs. The Ld. AR submitted that the appellant assessee has been maintaining complete records of stock movement and duly submitted the same before AO during the course of assessment proceedings. The AR further submitted that due to unavoidable circumstances, the appellant’s bank account at Phalodi got NPA in the year Printed from counselvise.com 9 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 2015 due to which the bank took over the possession of appellant’s factory and house premises on 29.09.2016. It is submitted that at the time of seizure, the only stock of guar gum of 5,89,323.29 kgs was lying in the godown. 8.1 Thus, the AR contended that the possession of appellant’s factory premises was taken over by the bank. During this period, on 22.12.2016, the appellant requested test check of its goods kept at the premises wherein the appellant found that due to rains and negligence on the part of bank officials, the stock of guar gum got spoiled. Further, the stock got decomposed due to germs and bacteria. The AR argued that during the year under consideration, the stock of the guar gum got damaged due to carelessness of bank officials who took charge over the possession of the factory premises and as a result the same no longer remained in the condition to be sold at NRV in the market. The only way left was to convert it into Churi/Korma after certain processing and mix it with stock of by-products to realise some value. The AR further submitted that as on 31.03.2017, the average rate of Churi/Korma was Rs. 34- 35 per kg and thus the appellant adopted the same rate for valuing the closing stock of spoiled guar gum and accordingly, for this specific reason the appellant has claimed the write off of value of guar gum inventory. The AR argued that the process of identification of damaged stock is backed by technical analysis and judgment of the management based on commercial Printed from counselvise.com 10 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 considerations. Thus, the AO’s observation that the appellant could not explain as to how the stock is damaged or its selling price is declined is not justified as appellant has discharged its burden by providing explanation and necessary documents vide its reply dated 13.12.2019 to AO’s show cause notice (APB Page No. 75 to 84). It is also submitted by the AR that as per the AS-2 on ‘valuation of inventory’ issued by the ICAI mandates, the inventories may be valued at lower of cost of net realisable value. The appellant’s accounting policy for valuation of inventory is thus in line with the requirements of AS-2. The AR submitted that appellant could sell the damaged guar gum stock as Churi/Korma and has realised the amount of Rs. 2,02,69,593/- which has been offered to tax and the method of valuation is consistently followed in the earlier as well as subsequent years. Further, the AO was not justified in method of valuation of stock when the appellant has duly disclosed in the tax audit report regarding following the principles of Accounting Standard 2 conventional method of valuation of inventories at ‘cost or net realisable value, whichever is lower’ for the year under consideration. Accordingly, he argued that under the given facts and circumstances, the stock of guar gum got damaged and could not be sold at the rate prevailing in the market for damaged guar gum stock. The appellant after some processing could convert the damaged stock into Churi/Korma and could realise the saleable value of Printed from counselvise.com 11 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 Churi/Korma only. He pleaded to delete addition by relying on the judgment of Mumbai Tribunal in the case of Sequent Scientific Ltd, Thane Vs. Asst. CIT Rg 3(3), Mumbai bearing ITA Nos. 4902 & 5263/Mum/2013 wherein it was held as follows: \"We are of the considered view that the CIT(A) while arriving at the aforesaid view had lost sight of the fact that the assessee who is engaged in the business of manufacturing of bulk drugs, speciality chemicals and formulations, had specifically explained the reason for having written off the said inventories. We are persuaded to be in agreement with the claim of the assessee that certain items being in the nature of pharmaceutical formulations, chemicals etc., due to their peculiar nature had a shelf life of even less than one year, prone to getting damaged due to changes in the environment and would also be rendered as obsolete due to change in technology. We are of the considered view that the lower authorities merely by adopting a general view had summarily rejected the claim of the assessee, without even pointing out a single instance as to how and on what basis the said claim in respect of items of an age of less than one year was not to be accepted. We are also not persuaded to be in agreement with the view of the lower authorities that the claim of the assessee that certain proprietary goods which were purchased against specific orders of a customer had to be written off as the sale transactions did not materialize, was not to be accepted because the conduct of the assessee did not reveal business prudence on his part. We are of the considered view that the allowability of the aforesaid claim of the assessee would not be dependant on the satisfaction of the test of business prudence of the assessee. We are of a strong conviction that now when there was Printed from counselvise.com 12 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 every justification on the part of the assessee to have reassessed the value of the inventory and thereafter written off the items acquired on the amalgamation of M/s Sequent Scientific Ltd, and valued the same as per its conventional method of valuation at the lower of cost or net realisable value, therefore, are of the considered view that the revenue had failed to dislodge the said claim of the assessee by proving to the contrary on the basis of any concrete evidence, thus are unable to persuade ourselves to subscribe to the view of the CIT(A) that the writing off the inventory of Rs.1,85,37,248/- which was less than one year of age was not to be accepted. We thus in the backdrop of our aforesaid observations, not finding ourselves as being in agreement with the view taken by the CIT(A) that the claim of the assessee for writing off the inventory of Rs.1,85,37,248/- was not to be accepted, therefore, set aside his order to the said extent and delete the addition of Rs. 1,85,37,248/- sustained by him. The Ground of appeal No. 1 raised by the assessee is allowed\". 9. Heard both the sides and perused the material on record, written submissions and case law cited before us. Admittedly, the appellant is a manufacturer and trader of agricultural products mainly the guar gum and the by-products generated from the manufacturing activity i.e. Churi and Korma. It is seen that during the year under consideration, the factory and the raw material of stock was seized by the bank authorities and the stock of guar gum got damaged due to carelessness of bank officials who took charge over the possession of factory premises and consequently the same was no longer remained in the condition to be sold at NRV in the market. It is further seen Printed from counselvise.com 13 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 that the AO has observed that the value of closing stock was incorrect by alleging that assessee has failed to submit documentary evidence in support of NRV of guar gum adopted by the assessee by ignoring the valuation method adopted by the assessee on inventory as per Accounting Standard – 2 (AS-2) adopted by the assessee as per the ICAI mandate that the inventory should be lower or cost or net realisable value, whichever is lower. 10. The Ld. CIT(A) has observed that appellant has adopted conventional method of inventory as per the Accounting Standard-2 (AS-2) on valuation of inventory issued by ICAI mandate and deleted the addition made by the AO in an arbitrary manner. The Ld. CIT(A) stated that the AO ignored the fact that the said system of valuation of stock and stock inventories have been duly disclosed in the tax audit reports, and that method of inventories at cost of net realisable value whichever is lower is as per the principles of Accounting Standard-2 for the year under consideration. It is noted that AS-2 also provides that cost of inventories may not be recoverable if those inventories are damaged or if their sale prices have been declined. The Ld. CIT(A) has also placed reliance on the decision of ITAT Mumbai in the case of Sanjeev Motwani in ITA No. 682/Mum/2023 (A.Y. 2013-14) wherein it was held that valuing the closing stock at market value is a recognized accounting principle. The CIT(A) has further placed reliance on Hon’ble Bombay High Court in the case of Indian Printed from counselvise.com 14 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 Rare Earths Ltd (supra) wherein considering the issue of non-moving stores and spares which corroded over a period of time due to wear and tear written off in the subject year and held that where assessee’s non moving stores and spares were corroded over a period of time due to wear and tear, assessee would be entitled to write off same in profit and loss account for the Income Tax Act. 11. In the backdrop of the aforesaid discussion, we find ourselves in agreement with the view taken by the CIT(A) that the claim of the assessee that inventories are not recoverable if those inventories are damaged or if selling prices have declined. Accordingly, the writing off inventory of Rs. 2,79,03,981/- was to be accepted. 12. Accordingly, we hold that the Ld. CIT(A) has been justified in deleting the addition of Rs. 2,79,03,981/- made by the AO u/s 28 by revaluing closing stock. Thus, Ground No. 1 of the Department is rejected. 13. In Ground No. 2, the Revenue has challenged deletion of addition of Rs. 3,36,49,500/- made u/s 69A on account of un-explained cash deposit during demonetization period. 14. The Ld. DR has submitted that CIT(A) was not justified in deleting the addition of Rs. 3,36,49,500/- made u/s 69A on account of un-explained cash Printed from counselvise.com 15 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 deposit during the demonetization period by ignoring the fact that the assessee failed to explain the rationale behind depositing the cash at Mumbai bank branches in multiple shots which was claimed to be generated from cash sales effected during the pre-demonetization period at Phalodi situated nearly 1100 km away when assessee has its ICICI Bank account at Phalodi itself she has supported the assessment order. 15. Ld. Counsel for the assessee has placed reliance on the decision of the Ld. CIT(A). The AR submitted that the cash deposit in the appellant’s bank account has been made out of cash sales duly accounted for in the cash book maintained as per audited books of accounts. The Ld. AO has rejected the claim of the assessee merely on the ground that the said cash was deposited in Mumbai branch instead of the place of business i.e. Phalodi. 16. The AR argued that since the bank account of the assessee at Phalodi turned into a NPA (Non performing assets), due to bad market conditions and decreased rate of guar gum in the year 2015. Consequently, the bank took over the appellant’s factory premises and house premises on 29.09.2016 under changed circumstances, the appellant had left with no place of residence and he along with his family shifted to Mumbai. The Ld. AR argued that the bank account at Phalodi being a NPA, the appellant was unable to deposit the cash amount realised out of the cash sales into its bank account at Phalodi. This was Printed from counselvise.com 16 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 the primary cause why the appellant had to deposit the cash in the bank account at Mumbai. In support, he placed reliance on the judgment of Hon’ble Supreme Court in the case of Laxmichand baijnath Vs. CIT in 35 ITR 416. 17. We have heard both the sides, perused the material and given thoughtful consideration to the issue of cash deposit during demonetization period by the appellant assessee in its bank account at Phalodi. Admittedly, appellant bank account at Phalodi turned into a NPA (non performing asset) due to market condition and decrease in the rate of guar gum in the year 2015 and consequently, the bank took over possession of appellant’s factory and house premises on 29.09.2016 thereafter the appellant along with family has been shifted to Mumbai as he has no other alternative place of residence. The appellant has deposited the aforesaid cash amount into the account at Mumbai. We find merit in the contention of the assessee and the fundamental cause why the appellant deposited the cash in its bank accounts at Mumbai. 18. In compliance to the query of the AO, the appellant submitted that the majority of buyers of the appellant comprises of farmers and apparently the nature of business and customers in the present case where almost entire sale to be made in cash. The Ld. AR argued that in such a business which are usually cash rich are required to maintain this much amount of cash to maintain liquidated and facilitated flow of funds for purchase and sales transactions as Printed from counselvise.com 17 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 the appellant assessee purchases guar gum directly from the farmers or intermediaries and the majority of the transactions are held in cash only. In view of that matter, the appellant assessee was required to maintain huge quantum of cash to maintain daily needs of this nature of business of manufacturing and it has to keep such balance of cash in hand. 19. In the present case, the payment received from farmers, customers cannot be doubted until and unless contrary materials are brought on record by the Assessing Officer to treat a receipt as un-explained. The AO needs possession of materials indicating that the AO has received certain amounts which has not been reflected in the books of accounts. In the present case, the sum so deposited in the bank account has already been recorded as cash sales in the books of account and the appellant submitted the sale bills, delivery challans, sale register and stock register were submitted before the AO. 20. In our view, when the sum has been credited in the books of accounts maintained by the appellant assessee, the AO cannot restore to make addition u/s 69A of the Act. Again, the appellant assessee has duly accounted for the cash sales in the audited books of account and also the assessee has shown income on such cash sales, the AO cannot charge tax u/s 69A of the Act. Thus, the Ld. CIT(A) had justified in deleting the addition by appreciating the merits of the case. Printed from counselvise.com 18 ITA No. 197/Jodh/2024 Asst. Year: 2017-18 21. Considering the factual matrix of the case, and the decision of the Hon’bel Apex Court in case of Laxmichand Baijnath (supra), we upheld the decision of Ld. CIT(A) in deleting the addition of Rs. 3,36,49,500/-. Thus, Ground No. 2 of the Department is rejected. 22. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 26/02/2026. Sd/- Sd/- (SUDHIR PAREEK) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 26/02/2026. Nimisha Sr. PS True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File BY ORDER, (Asstt. Registrar), ITAT, Jodhpur Printed from counselvise.com "