When business sales are accepted and reflected in books, cash deposits representing these sales cannot be taxed as unexplained income under Section 68. Any doubt regarding the legitimacy of purchases should be addressed through a trading addition rather than treating total cash proceeds as unexplained credit.

ORDER

PER: RATHOD KAMLESH JAYANTBHAI, AM

On being aggrieved by the order of the National Faceless Appeal Centre, Delhi [ for short CIT(A)] dated 29/05/2025 the above named assessee preferred the present appeal. The dispute relates to the assessment year 2017-18. The said order of the ld. CIT(A) arises because the assessee has challenged the assessment order dated 26.12.2019 passed under section 143(3) of the Income Tax Act, [ for short “Act”] by ITO, Ward 3(2), Jaipur [ for short AO].

2. In this appeal, the assessee has raised following grounds: -

1. That on the facts and circumstances of the case the ld. CIT (Appeals) has grossly erred in confirming the addition of ₹44,61,000/- made by the Assessing Officer u/s 68 r.w.s 115BBE of the Income Tax Act, 1961, without properly appreciating the explanations, documents and evidences submitted by the appellant regarding the source of cash deposits.

2. That on the facts and circumstances of the case the ld. Assessing officer grossly erred in relying of the statement given by Shri Rambabu Samaria and treated the purchase and consequently sale as bogus and made addition of Rs 44,61,000/-. Deposit in the bank account during the demonetization period.

3. The appellant craves leave to add, alter, amend, or withdraw any of the above grounds of appeal at the time of hearing.

3. Succinctly, the fact as culled out from the records is that the assessee e-filed return of income on 7.11.2017 declaring total income at Rs. 12,53,650/-. The case was selected for scrutiny assessment under CASS and accordingly, notice u/s 143(2) of the IT Act was issued on 9.8.2018 fixing the hearing on 23.8.2018. In response thereto, assessee has filed reply on 23.8.2018. Thereafter, notice u/s 142(1) along with questionnaire was issued on 21.1.2019, 9.2.2019 & 4.9.2019. In response thereto, the assessee has uploaded his reply on portal. The replies were examined on test check basis. Record reveals that for the year under consideration the assessee is engaged in trading business in gold jewellery in the name & style of her proprietorship concern M/s Alka Gems and also partner in M/s Raj Rattan Jewellers and Khandaka Sons Jewellers.

For the year under consideration the assessee has declared total sales of Rs.80,54,292/- and declared net profit of Rs. 10,03,660/- and filed her ITR as per the provisions of section 44AD of the Act.

While assessment proceeding ld. AO noted that the assessee has maintained bank account with United Bank of India, Jaipur bearing account No. 1666050004145. He also observed that the assessee has made cash deposit of Rs. 44,61,000/- in Bank during the period 9.11.2016 to 30.12.2016. In the assessment proceeding the assessee was asked to furnish the immediate source of cash deposited in that bank account. In the assessee submitted that the source of cash deposit was out of sales proceeds made by the assessee and in response the assessee filed the copy of the cash book maintained by the assessee. Ld. AO examined the written submission and evidences filed by the assessee. While verifying the details so filed by the assessee ld. AO noted certain discrepancies in respect of explanation of sources of cash deposits and other related aspects were noticed. Ld. AO asked the assessee to furnish copy of purchase/sale bills for the period 1.4.2016 to 8.11.2016 along with details.

In response thereto, the assessee has furnished details of purchase / sales along with