OMPRAKASH JAISWAL,INDORE V. ACIT-1(1), INDORE

ITA 443/IND/2024

AI Insights

The case involves Omprakash Jaiswal, a liquor business owner, who appealed against the orders of the AO and CIT(A) regarding three additions made to his income for the Assessment Year 2017-18 under sections 68 and 143(3) of the Income-tax Act, 1961. The additions were made on account of unexplained cash deposits, loans, and capital introduction. The ITAT found that the AO's rejection of the books was based on statistical analysis without any defects pointed out, and thus not justified. The ITAT also noted that the addition under section 68 was inappropriate as the books were not accepted. The ITAT admitted additional evidences for the loans and capital introduction, which led to the deletion of the addition regarding capital introduction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34556 (ITAT-INDORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Other Referred Cases: Kshetrapal Gold Private Limited Vs. ITO, Raj Kumar Vs. ITO-Ward 3(3), Amritsar
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORASSESSEEREFERREDTHEASSESSMENTORDERPASSED; FORTHEASSESSEEBEFOREUSWASTHATIN; FORTHEASSESSEECONTENDEDTHATFORTHEPURPOSESOFREJECTING; FORTHEASSESSEEPOINTEDOUTTHAT; INTHEFACTSOFTHE; FORTHEASSESSEETHATTHEREJECTIONOFBOOKSOFACCOUNTSWASBASEDONAMERE; FORTHEASSESSEETOMAINTAINSUCHCASHINHANDAND; FORTHEASSESSEETHATTHE; FORREVENUESUPPORTEDTHEORDEROFAOFORREJECTION; FORREVENUERESISTSTHISCLAIMOFASSESSEEWITHTHEREASONINGTHATTHE; FORREVENUELEFTTHISFORTHE; FORREVENUE; WEADMITTHEEVIDENCESFILEDBYASSESSEE; FORREVENUELEFTTHISISSUEFORTHEWISDOMOFBENCHWHILEADMITTINGIN; SHRIASHISHPORWAL
• Assessee Lawyers: SHRIS.S.SHEETAL; PRABHPREET SINGH SHEETAL; REDUCINGTHE
• Keywords: Set aside; Business income; Additional evidence; Revised return; Unexplained cash credit; Rejection of books of accounts; Income from undisclosed sources; Bogus purchase; Principle of natural justice; Bogus
• Section: 144; 143(3); 68; 13; 145; 145(3)

Judgement Text

"Page 1 of 18 आयकरअपीलीयअिधकरण, इंदौरɊायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER ITA No.443/Ind/2024 Assessment Year:2017-18 Omprakash Jaiswal, 112-A Suryadev Nagar, Indore बनाम/ Vs. ACIT 1(1), Indore (Assessee/Appellant) (Revenue/Respondent) PAN: ADGPJ0962K Assessee by Shri S.S. Sheetal & Prabhpreet Singh Sheetal, ARs Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 09.01.2025 Date of Pronouncement 24.02.2025 आदेश/ O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by order of first appeal dated 31.03.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 31.12.2019 passed by learned ACIT/DCIT-1(1), Indore [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on the grounds mentioned in Form No. 36. 2. The background facts leading to present appeal are such that the assessee-individual is engaged in liquor business. For AY 2017-18, the Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 2 of 18 assessee filed original return declaring a total income of Rs. 21,03,030/- followed by revised return declaring a total income of Rs. 21,05,530/-. The case was selected under scrutiny and finally the AO passed assessment- order dated 31.12.2019 u/s 143(3) after making three additions, viz. (i) addition of Rs. 1,18,51,500/- u/s 68 on account of unexplained deposit in Bank A/c, (ii) addition of Rs. 32,43,000/- u/s 68 on account of unexplained loans taken by assessee, and (iii) addition of Rs. 11,80,510/- u/s 68 on account of unexplained capital introduction. Aggrieved, the assessee carried matter in first appeal before CIT(A). 3. During first-appeal, the assessee made a detailed submission which is re-produced by CIT(A) in Para 4 of impugned order. However, the CIT(A) passed a very small order in Para 5, merely upholding AO’s order and dismissing assessee’s appeal as under: “5. Findings: The Grounds of appeal, the facts and circumstances of the case and the submissions of the assessee have been carefully considered. There is no material on record to warrant interference with the order of the AO. Grounds of appeal are accordingly dismissed. 6. As a result, the appeal is dismissed.” 4. Now, the assessee has come in next appeal before us assailing the orders of lower-authorities. 5. By means of various grounds, the assessee has challenged the three additions made by AO and upheld by CIT(A). Ld. Representatives of both Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 3 of 18 sides made their vehement submissions against and for the additions. We proceed to adjudicate the same in our subsequent discussions. Addition of Rs. 1,18,51,500/- on account of cash deposit in bank a/c: 6. The AO has made this addition in Para 3 (sub-paras 3.0 to 3.3 but wrongly numbered as 4.0 to 4.3 in assessment-order). During proceeding, the AO observed that the assessee deposited Rs. 3,19,05,000/- in various bank a/cs during demonetization period out of which deposit in demonetized/Specified Bank Notes (SBNs) was Rs. 2,56,25,000/-. The AO has extracted datewise details of such deposits in assessment-order. The AO asked the assessee to explain the source of deposits and in response the assessee filed explanation. Ultimately, the AO passed following order rejecting assessee’s explanation and making addition of Rs. 1,18,51,500/-: “From the above data analysis, following observations are made: 1. From the above data analysis, it is found that just prior to demonetization period, the percentage increase from July 2016 to October 2016 around 11% to 14% whereas increase in cash in hand is 89% to 132% which just contradictory. 2. In F.Y. 2015-16, assessee monthly cash sales is around 1.35 Cr to 1.5 Cr and cash in hand is also around 1.4 Cr to 1.45 Cr. But in F.Y. 2016-17, monthly cash sales are around 1.45 Crs to 1.70 Crs but cash balance is around 2.54 Crs to 3.09 Crs which is approximately 2 months sales of the assessee. There is no reason of maintaining so huge cash in hand. If it is accepted that being liquor contractor, he had to keep some cash for depositing duty then it is also not justifiable because duty cannot be more than monthly purchase and monthly sale and monthly sale is around 1.5 Crs. 3. Assessee has taken secured loan of Rs. 1,35,86,328 and debiting interest expenses of Rs. 14,73,614 and on the other hand assessee is maintaining Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 4 of 18 cash balance of Rs. 2.0 Crs. No prudent man will take secured loan on interest whereas on the other hand huge cash balance is lying idle. 4. The assessee has explained that assessee has deposited cash of Rs. 2,56,25,000/- in SBNs from his opening cash in hand of Rs. 2,55,69,371/- as on 09.11.2016. Hence, it is clear and evident that the assessee has deposited much more cash in SBN than the opening cash in hand as on 09.11.2016 which is not found to be justifiable. If we take average cash in hand and average cash sales, then average cash sales have increased 26.10% but cash hand is increased 72.35% and if weightage increase in cash sale is given, then 46.25% of (72.35 - 26.10 = 46.25) cash in hand is not justifiable because cash in hand of the business is actually cash receipts/sales of the business. Therefore Rs. 1,18,51,500 (46.25 % of Rs. 2,56,25,000) is the unrealistic cash in hand increased and shown by the assessee and the assessee has deposited the cash out of unrealistic and non-satisfactory cash in hand. In this regard, vide order sheet dated 09.12.2019, the Ld. Counsel of the assessee has been confronted the discrepancies found above vide order sheet 09.12.2019. On perusal of cash-book it has been found that the assessee has deposited cash in SBN in different dates from 10.11.2016 to 30.12.2016. The cash deposited shown by the assessee is not tally with stock and cash sales. Further the assessee failed to submit the justification of higher cash deposits as compared to the cash in hand. In view of the above vide order sheet dated 09.12.2019, the Ld. Counsel was duly confronted the cash book furnished by the assessee could not authentic and not reliable. Therefore, the books of accounts of the assessee is hereby rejected u/s 145(3) of the Act due to multiple defects these facts brought to the knowledge of Ld. Counsel of the assessee for which he has not any justification. In light of the above discussion, it is clear and evident that the assessee has not given any justification and source of unexplained cash deposits in SBN to the tune of Rs. 1,18,51,500/-. Therefore, an amount of Rs.1,18,51,500/- is treated as unexplained cash credit deposited in the bank account of the assessee and the same is hereby added back u/s 68 r.w.s. 115BBE of the Act to the total income of the Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 5 of 18 assessee for assessment year under consideration. Penalty u/s 271AAC of the Act is being initiated on this issue separately.” 7. During first-appeal, the assessee filed a detailed submission to CIT(A) but the CIT(A) has merely upheld AO’s order without giving independent adjudication. 8. Before us, Ld. AR for assessee referred the assessment-order passed by AO (as re-produced above) and submitted that the AO has just made a statistical analysis of the quantum of cash deposits, cash sales and cash balance held by assessee during current year (pre-demonetisation and post- demonetisation periods) with corresponding periods in preceding year and based on variations therein, rejected assessee’s books of account and made addition. This approach of AO is grossly wrong, illegal and unjustified. Having made this preliminary submission, Ld. AR raised two-fold contentions as under: (i) Firstly, it is submitted that the AO has merely proceeded on the basis of statistical analysis of dataset and rejected books of assessee without any valid basis. He submitted that the books of account were audited and the AO has not found any single defect or flaw therein. He submitted that the assessee is engaged in government-approved liquor trade and assessee’s purchases, sales and stocks are duly recorded in books and the AO has not pointed out any defect. Therefore, the rejection of books is not a correct action of AO. Ld. AR relied upon decision of ITAT, Ahmedabad in Kshetrapal Gold Private Limited Vs. ITO, ITA No. 105/Ind/2024, order Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 6 of 18 dated 22.10.2024 for AY 2017-18, relevant paras of order are re-produced below: “3. The brief facts relating to the case are that the assessee is a company engaged in the business of selling gold ornaments. During the impugned year, noting the fact that the assessee had deposited cash during demonetization period from 8th November 2016 to 30th December 2016 of Rs. 4,12,67,000/-, the case of the assessee was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS). The Assessing Officer rejected the books of accounts of the assessee noting huge anomaly and differences in the financial figures of sales and cash in hand available with the assessee in the impugned year as compared to in the preceding year; finding abnormal increase in cash sale made by the assessee just prior to demonetization, which cash he found was shown as deposited in the bank account of the assessee, and the cash deposits thus justified as representing the cash collected from sales made by the assessee. After rejecting the books of accounts of the assessee, the Assessing Officer went on to treat the entire cash deposits in the bank account of the assessee of Rs.4,12,67,000/- as from unexplained sources u/s 68 of the Act. 4. The assessee carried the matter in appeal before the ld. CIT(A) who upheld the rejection of books of accounts as also the addition made u/s 68 of the Act of the cash deposits in the bank account of the assessee of Rs.4,12,67,000/-. 5. Aggrieved by the order of the ld. CIT(A), the assessee has come up in appeal before the Tribunal raising the aforesaid grounds. 6. Ground Nos. 1 & 6 are general in nature and need no adjudication. 7. Ground No.2 raised by the assessee challenges the order of the ld. CIT(A) in upholding the action of the Assessing Officer in rejecting the books of the assessee in terms of the provisions of Section 145(3) of the Act. The arguments made by the ld. Counsel for the assessee before us was that in terms of the provisions of law in this regard i.e. Section 145(3) of the Act, the Assessing Officer could have rejected the books of accounts of the assessee only if he was not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting as provided in sub-section (1) of Section 145 of the Act has not been regularly followed by the assessee, or the income has not been computed in accordance with the standards notified under sub-section (2) of Section 145 of the Act. In this regard, our attention was drawn to the provisions of Section 145(3) of the Act as under:- \"145. (1) Income chargeable under the head \"Profits and gains of business or profession\" or \"Income from other sources\" shall, subject to the provisions of sub-section (2), be computed in accordance with either Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 7 of 18 cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the Official Gazette from time to time income computation and disclosure standards to be followed by any class of assessees or in respect of any class of income. (3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2), the Assessing Officer may make an assessment in the manner provided in section 144.\" 8. Ld. Counsel for the assessee contended that for the purposes of rejecting the books of accounts of the assessee, the Assessing Officer has to consider whether the assessee has regularly employed a method of accounting, and if 'yes', whether the annual profits can be properly deduced from the method employed and whether the accounts are correctly maintained. 9. Having so pointed out the position of law with regard to the rejection of books, the ld. Counsel for the assessee pointed out that, in the facts of the present case, none of the conditions as required by law were satisfied for rejecting the books of accounts of the assessee. That despite all the books of accounts, vouchers and other documents being produced before the Assessing Officer, neither were the same examined nor a single anomaly pointed out by them in it. That the only basis for rejecting the books of accounts of the assessee was on mere surmises and conjectures of the Assessing Officer. That the Assessing Officer merely studied the financial data of the assessee of the preceding year and the impugned year, and noted allegedly huge increase in cash sales made by the assessee, in cash in hand of the assessee prior to the demonetization and in cash deposited in the bank account of the assessee during demonetization period. That despite the justification submitted by the assessee with regard to the huge increase in cash sales in the impugned year by pointing out that the sales were backed by adequate purchases made by the assessee also and other reasons, the Assessing Officer merely on account of the abnormality in the alleged financial data noted by him held that by applying the principle of preponderance of probability, the books of accounts of the assessee were all made up and not correct, and huge cash sales were booked only to justify the cash deposits in the bank account of the assessee during the demonetization period. He pointed out that even the purchases of the assessee were held by the AO to be all cooked up. The ld. Counsel for the assessee contended that none of his findings with regard to the sales and purchases being bogus were backed with any evidence or investigation conducted by the Assessing Officer in this regard and this despite the fact that all the books of accounts and vouchers were placed before the Assessing Officer. That all Sales were backed with purchases made. That the Books of Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 8 of 18 accounts reflected sufficient stock with the assessee for making the sales. And without doubting any specific entries made in the Books, the AO, he stated, rejected the Books of accounts of the assessee on generalized observations that too totally unsubstantiated. He, therefore, contended that the rejection of books of accounts by the Assessing Officer was not in accordance with law and needed to be set aside. 10. Ld. DR, though was unable to controvert the contention of the ld. Counsel for the assessee that the rejection of books of accounts was based on a mere comparative analysis of the financial data of the assessee of the preceding year and the impugned year, more particularly that relating to sale made by the assessee and the cash in hand available with the assessee and not based on any defect found in the books maintained by the assessee; he, however, heavily relied on the order of the Assessing Officer and argued that rejection of the books of accounts by the Assessing Officer was correct and justified. 11. We have heard the contentions of both the parties and perused all the material available on record. The issue for adjudication is whether the Books of accounts of the assessee were rightly rejected by the AO u/s 145(32) of the Act in the facts of the case before us. 12. In terms of the provisions of section 145(3) of the Act, the AO can reject the Books of accounts of the assessee and make a best judgement assessment u/s 144 of the Act, if he is not satisfied with the correctness or completeness of the Books of accounts of the assessee. The relevant section is reproduced above in our order. 13. This dissatisfaction of the AO has to be vis a vis the correctness and completeness of the Books of the assessee for rejecting the same. And this power cannot be exercised in a subjective manner. The reason being that serious consequences follow the rejection of the Books of accounts of the assessee since it gives power to the AO to make a best judgement assessment. The AO surely cannot reject the Books on his own whims and fancies. He has to give basis for finding the Books unreliable and not capable of revealing the true financial picture of the assessee. Books of accounts can be rejected as unreliable if important transactions are omitted therefrom, or if proper particulars and vouchers are not forthcoming or there is an inherent lacuna in the system of accounting or where sales vouchers and stock registers were not maintained or where there were deficiencies and discrepancies in the books of accounts or where bogus purchases were recorded and opening and closing stock was not verifiable. As pointed out by the ld. Counsel for the assessee, in terms of provisions of Section 145(3) of the Act, the Assessing Officer is duty bound to find patent, latent and glaring defects in the books of accounts while rejecting the Books of the assessee. The reliance placed by the ld. Counsel for the assessee in the decision of the Hon'ble High Court of Gujarat in the case of CIT Vs. Vikram Plastics [1999] 239 ITR 161 (Guj.) clearly holds that for the purpose of rejecting the books of accounts of the assessee, discrepancies and defects in the same need to be pointed out. Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 9 of 18 14. In the facts of the present case, admittedly no defects or discrepancies have been pointed out. The rejection of books of accounts is merely on the basis of surmises and conjectures of the Assessing Officer which he has based on a mere financial analysis of the sales and cash data of the assessee for the impugned year and the immediately preceding year. He has noted the sales to have increased abnormally as also the cash in hand with the assessee. He has noted that in the absence of any expenses to be incurred in cash, there was no reason for the assessee to maintain such cash in hand and he presumed, therefore, that these were all bogus entries of cash sales with the only purpose of introducing the unaccounted income of the assessee for facilitating deposit of it in bank account of the assessee during the demonetization period. There is not a single whisper about any discrepancy noted by the Assessing Officer in the sales recorded by the assessee. All evidences relating to which were admittedly placed before the Assessing Officer. The assessee had also stated all sales to be duly corroborated with corresponding purchases made of the same. All evidences relating to the purchase was also placed before the Assessing Officer. The assessee had also presented his stock register for examination before the Assessing Officer, but not a single document or evidence was examined or investigated by the Assessing Officer. Admittedly, no discrepancy in the books of accounts maintained by the assessee was pointed out before rejecting the books of accounts, and since it is settled law that the rejection of books of accounts can take place only when the books are found to be maintained in such a manner that true profits cannot be ascertained therefrom, for which it is necessary for the Revenue Authorities to pinpoint the defects in the maintenance of the same. 15. We are in agreement with the ld. Counsel for the assessee that the rejection of books of accounts by the Assessing Officer in the present case was not in accordance with law. The act of the Assessing Officer, therefore, in rejecting the books of accounts of the assessee is therefore set aside. The ground No. 2 of the assessee's appeal is accordingly allowed.” Ld. AR submitted that the above decision of ITAT has dealt the facts identical to present issue of assessee and therefore the decision is directly applicable. Hence, in the light of decision, the AO is wrong in rejecting assessee’s books of account. (ii) Secondly, without prejudice to above submission and in the alternative, the Ld. AR raised an important legal contention. He contended that on one hand, the AO has rejected books of assessee and on other hand made Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 10 of 18 addition u/s 68. These are two contradictory actions of AO. He submitted that the addition u/s 68, as the language of section 68 itself reveals, can be made only when the books of account are accepted. Once the books of account maintained by assessee is treated as no longer in existence by rejecting those books u/s.145(3) of the Act, then for all purposes including for the purpose of section 68 of the Act, said books of account ceased to exist and no addition can be made u/s 68. This legal position is held by numerous judicial decisions. (iii) Thirdly, it is submitted that the assessee is engaged in liquor trade and in the line of assessee’s business, the sales is made in cash and major amount of cash is held and the assessee also did the same thing. Ld. AR submitted that the AO has applied his self-devised basis of finding ‘average cash balance’ and applying the same, computed unexplained cash deposit at Rs. 1,18,51,500/- which is totally irrational. He submitted that the assessee was holding cash balance of Rs. 2,55,69,371/- as on 09.11.2016 (at the time of declaration of demonetization) and out of cash so held, the assessee made deposit in Bank A/c during demonetization period. Therefore, the source of deposit is very much explained from opening balance so held and must be accepted. While arguing Ld. AR also made a pleading that the AO has, one on hand assessed the sales of assessee as “disclosed income” and on other hand treated the bank deposits made out of cash balance accumulated from very same sales as “undisclosed income”. This has Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 11 of 18 resulted in double taxation of same transactions/income in two different ways, which is not tenable. Ld. AR relied upon decision of ITAT, Amritsar in Raj Kumar Vs. ITO-Ward 3(3), Amritsar, ITA No. 195/Asr/2022 order dated 11.04.2023 holding as under: “12. We heard the rival submission and relied on the documents available in the record. That the ld. A.O. had not disputed, the purchases, quantitative stock and sales for the entire period except October & November. It is pertinent to mention here that the assessee has duly submitted books of accounts, sale & purchase register, confirmations, bank statements, expenses, parties from whom the purchase and to whom sales were made. However, the Ld. AO has alleged that the appellant has inflated sales for the month of October & November, 2016. The total sales declared by the assessee was to be tune of Rs. 1,58,06,636/- and Rs. 1,53,63,687/- respectively. However, the ld. Assessing Officer has computed the sales for the month of October & November 2016 at Rs. 28,06,536/- and Rs. 9,63,687/- respectively. The Ld. AO while doing such exercise has ignored the fact as to why a prudent businessman will make purchases to the tune of Rs. 3,09,69,406/- in the month of October, 2016 much before the date of demonetization in order to execute such meagre sale as computed by the AO. The assumption drawn by the AO in respect of estimating the sales is merely on assumption or presumption or surmises or conjectures. Therefore, the Ld. AO has made addition of Rs. 2,74,00,000/- in the hands of the assessee by reducing the actual sales for the month of October, & November 2016. The basis of rejection of books was not acceptable here. We respectfully relied on the order of jurisdictional High Court in the case of Ludhiana Steel Rolling Mills Ltd, supra. The Ld. AO has made such addition without discharging the burden of prove the correctness of addition. It is a settled law that once the adequate evidence/material has been provided which prima facie discharge the burden of the assessee in that case, the burden shifts on the revenue and the revenue has not discharged its onus in these circumstances. Here, no addition can be called for. In this regard, the respectfully reliance is placed on the following case laws: • K.P. Varghese vs ITO (1981) 7 Taxman 13 (SC) • A.S. Sivan Pillai vs. CIT (1958) 34 ITR 328 (Madras) • Roshan Di Hatti vs CIT 107 ITR 938 (SC) • CIT, Faridabad v. Laul Transport Corporation [2009] 180 Taxman 185 (Punjab & Haryana) 12.1 We also considered that the amount deposited in the bank account was out of sale of various items which had been held by the assessee as stock in trade and since the deposits in the bank account were out of sale of stock Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 12 of 18 therefore the stock of the assessee has depleted and the cash has come in respect of stock, such sales had been disclosed in the trading account against the purchase which had not been doubted, neither the opening and closing stock had been doubted. Therefore, nothing could have been doubted when the source of cash was well explained and was shown in the bank account. However the addition was made only on the basis of surmises without establishing any motive on the part of the assessee and without disturbing the closing stock as on 31/03/2017 which had been arrived at after reducing the sale in quantity of stock in trade. 12.2 Further, in our considered view, the AO has no right to calculate sales on hypothetical basis ignoring the evidence submitted during the course of assessment proceedings in the form of VAT return, purchase bills and quantitative details. Once the amount is declared as turn over cannot be called concealed income and be taxed doubly on same amount. We further relied on order of ITAT, Mumbai Jet Freight Logistics Ltd. v. Commissioner of Income-tax Appeal (NFAC). The addition U/s 68 is beyond jurisdiction of the ld. AO as the turnover is already reflected in the books of the assessee. So, the addition amount of Rs 2,74,00,000/- is quashed.” 9. Per contra, Ld. DR for revenue supported the order of AO for rejection of books as well as addition made by AO. Without prejudice, he also emphasized AO’s observation that when the opening balance was Rs. 2,55,69,371/-, how could the assessee make deposit as high as Rs. 2,56,25,000/- in SBNs during demonetization? Ld. DR went to submitting that it is also unrealistic that the opening balance of Rs. 2,55,69,371/- would be 100% in the form of SBNs of Rs. 500/- or Rs. 1,000/-. He submitted that the assessee has not filed any detail as to the break-up of currency notes of opening balance. 10. We have considered rival contentions of both sides and perused the orders of lower-authorities as well as the material held on record to which our attention has been drawn. The core issue involved here is the addition of Rs. 1,18,51,500/- made by AO on account of unexplained cash deposits in Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 13 of 18 bank a/c. A perusal of assessment-order passed by AO clearly reveals that the AO has basically made a trend analysis of assessee’s dataset of deposits, sales and cash balance and finding variations therein, rejected assessee’s books. But the books of assessee are audited and the AO has not found any single defect in books. Further, the assessee is a govt. approved liquor trader and the sales, purchases, stocks are duly recorded in books of account and the AO has not found any defect in the elements of sales, purchases and stocks also. Therefore, in the light of decision of ITAT, Ahmedabad in Kshetrapal Gold Private Limited (supra), the books of accounts cannot be rejected. The Ld. AR is also justified in making an alternative claim that if the books of account are rejected, then the AO had no authority to make addition u/s 68. The judicial view is such that section 68 applies only when the books of account are accepted. Also the contention raised by Ld. AR that once the AO has taxed sales as disclosed income, taxing the cash-deposits made out of such sales in bank a/c as undisclosed income results in double taxation which cannot happen, is supported by decision of Raj Kumar (supra). In principle, we agree with these views taken by judicial forums. However, when it comes to the source of deposits, the assessee claimed before AO that the opening balance as on 09.11.2016 was the source for depositing SBNs during demonetization period but the Ld. DR for revenue resists this claim of assessee with the reasoning that the assessee’s opening balance was Rs. 2,55,69,371/- from which the assessee could not deposit SBNs worth Rs. 2,56,25,000/- in bank. When we raised Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 14 of 18 this question to Ld. AR, the Ld. AR could not give a satisfactory reply. So far as the point raised by Ld. DR that the opening cash of Rs. 2,55,69,371/- as on 09.11.2016 cannot consist of SBNs in toto, we asked Ld. DR as to how to ascertain the component of SBNs but the Ld. DR could not point out any basis or means to arrive at such a fact. Therefore, we are left with a situation where only a cut-short method can be applied to close the dispute between parties. Admittedly, the SBNs would be in the demonetization of Rs. 1,000/- or Rs. 500/-. Therefore, out of opening balance of Rs. 2,55,69,371/- which is coming from Cash-Book of assessee, only a cash balance of Rs. 2,55,69,000/- can be in the multiple of Rs. 1,000/- or Rs. 500/-. Hence, we accept that the cash balance of Rs. 2,55,69,000/- can be accepted as source for making deposit of SBNs of Rs. 2,56,25,000/- and the difference/shortage of Rs. 56,000/- [Rs. 2,56,25,000 (-) Rs. 2,55,69,000] remains unexplained. In that view of matter, we direct the AO to modify assessment-order so as to keep the addition of Rs. 56,000/- only and delete excessive addition. The assessee accordingly succeeds partly in this ground. Addition of Rs. 32,43,000/- on account of unexplained loans: 11. The AO has made this addition in Para 4 of assessment-order. During proceeding, the AO observed that the assessee has taken unsecured loans from three lenders, viz. (i) Rs. 15,00,000/- from Smt. Shobha Sharma, (ii) Rs. 4,43,000/- from Shiv Prasad Jaiswal, and (iii) Rs. 13,00,000/- from Satish Jaiswal; aggregating to Rs. 32,43,000/- (the loan taken from Shiv Prasad Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 15 of 18 Jaiswal is Rs. 4,73,000/- but the AO has wrongly picked figure of Rs. 4,43,000/-). During proceeding, the AO asked assessee to furnish (i) A/c Confirmations and (ii) Bank Statements of the lenders. In response, the assessee filed only A/c Confirmations of lenders but failed to furnish ITRs and Bank Statements of lenders. Therefore, the AO expressed his dis- satisfaction that the assessee had taken loans from those lenders and added the same as unexplained credit u/s 68. 12. During first-appeal, the assessee filed a vehement submission to CIT(A). The assessee pointed out that the bank statement of Smt. Shobha Sharma was e-filed to AO on 30.12.2019 but the AO ignored same. Further, the assessee provided PAN of all lenders and addresses of Smt. Shobha Sharma and Shri Satish Jaiswal to AO. The assessee also submitted that he tried best to receive ITRs but the lenders were reluctant to provide the same [Para 15 of assessee’s submission as re-produced on Page No. 15 of order of CIT(A)]. However, the CIT(A) merely upheld AO’s order without giving independent adjudication. 13. Before us, the assessee has moved an application dated 24.10.2024 for admission of additional evidences as per Rule 29 of the ITAT Rules, 1963 submitting that the assessee could not obtain ITRs and Bank Statements of lenders since the lenders were not co-operative. Now, somehow the assessee has been able to collect these documents which are filed as Pages 1-10 in a separate Paper-Book. Ld. AR has also filed a copy of ITAT, Delhi in M/s Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 16 of 18 Luminous Technologies Pvt. Ltd. Vs. Addl. CIT, ITA No. 6996/Del/2017 order dated 30.05.2024 at Pages 13-17 of very same Paper-Book and prayed to admit additional evidences. Ld. DR for revenue left this for the wisdom of Bench while expressing that it would be appropriate to remand this issue to lower authorities. On perusal of order of ITAT, Delhi we find that the ITAT has relied upon several decisions of Hon’ble Supreme Court and Hon’ble High Courts and held that the additional evidences which have a direct bearing to adjudicate the controversy should be admitted keeping in view the principle of natural justice. Finally, the ITAT has allowed assessee’s application of additional evidences. In view of same and also considering the submission of Ld. DR for revenue, we admit the evidences filed by assessee and restore this issue at the level of AO for a fresh adjudication after considering these evidences. Needless to mention that while doing so, the AO shall give necessary opportunities to assessee and shall not be guided by his previous order in any manner. Consequently, this issue is allowed for statistical purpose. Addition of Rs. 11,80,510/- on account of unexplained introduction of capital: 14. The AO has made this addition in Para 5 of assessment-order. The facts of this issue are very limited and does not require much elaboration. The AO found that the assessee has credited a sum of Rs. 11,80,510/- in capital a/c for which the assessee’s explanation was such that it was a Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 17 of 18 refund of security received from M/s Som Distilleries Pvt. Limited. But the AO, though accepted that the assessee used to purchase goods from M/s Som Distilleries Pvt. Ltd. and make advance payments, observed that the assessee has not shown any advance in earlier year’s Balance-Sheet and passed credit entry in Capital A/c which is an accommodation entry. Accordingly, the AO rejected assessee’s submission. During first-appeal, the CIT(A) upheld AO’s order without any independent adjudication. 15. Before us, the assessee has filed additional evidences in the form of (i) A/c Confirmation issued by M/s Som Distilleries Pvt. Ltd. and (ii) Copy of A/c Payee cheque issued by M/s Som Distilleries Pvt. Ltd. by which the impugned refund of Rs. 11,80,510/- was given to assessee. These additional evidences are filed at Pages 11-12 of very same Paper-Book under the application dated 24.10.2024 as per Rule 29 of the ITAT Rules, 1963; the very same application as has been discussed and dealt in foregoing para. Ld. AR has prayed to delete addition by accepting these contemporary evidences. Ld. DR for revenue left this issue for the wisdom of Bench while admitting in open court that the receipt is duly supported by documents and it does not appear to be an accommodation entry. Taking into consideration the A/c Confirmation of M/s Som Distillieries Pvt. Ltd., Copy of cheque and the Submission of Ld. DR, we accept that the credit entry is a receipt from M/s Som Distillieries Pvt. Ltd. and not an accommodation entry as perceived by Omprakash Jaiswal ITA No. 443/Ind/2024 – AY 2017-18 Page 18 of 18 Ld. AO. Therefore, the addition made by AO on this count is deleted. This ground is allowed. 16. Resultantly, this appeal is partly allowed for statistical purpose. Order pronounced by putting on notice board as per Rule 34 of ITAT Rules, 1963 on 24/02/2025 Sd/- Sd/- (DINESH MOHAN SINHA) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/Dated : 24/02/2025 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore "