ORDER

PER AMITABH SHUKLA, AM,

This appeal by the assessee is directed against the order of National Faceless Appeal Centre/Ld. Commissioner of Income Tax(Appeals), New Delhi [hereinafter referred to as ‘ld. CIT(A)] dated 25.06.2025 arising out of assessment order dated 28.12.2019 passed under section 143(3) of the Income Tax Act, 1961, for the Assessment Year 2017-18. The word ‘Act’ herein this order would mean Income Tax Act, 1961.

The assessee has raised following grounds of appeal :-

“1. That the learned CIT(A) erred on facts and on law in upholding the addition of Rs.6,34,53,500/- and Rs. 60,00,000/- as unexplained cash credits under section 68 of the Income Tax Act 1961, made in the assessment order dated 28.12.2019 under section 143(3) of the Act.

2. That the Id. CIT(A) erred on facts and on law in upholding the addition of Rs. 6,34,53,500/- made by AO holding the cash deposits made by the appellant in the bank account during demonetisation period as unexplained credit under section 68 of the Act, despite the fact that the said sum pertained to cash sales made by the appellant in the regular course of business during the relevant year.

2.1 That the learned CIT(A) erred in law and on facts in disbelieving the appellant's sales during October and November solely on the ground that they constituted 95% of the total turnover, without appreciating that the appellant is engaged in the jewellery business, wherein high value sales are customary during the festive period of Diwali and Dhanteras.

2.2. That the ld. CIT(A) erred in law and on facts in rejecting the appellant's sales for the months of October and November on the ground of non-submission of comparative figures, without appreciating that the relevant year was the appellant's first year of full-scale operations.

2.3. That the Id. CIT(A) erred in law and on facts in disbelieving the cash sales made on 08.11.2016 by treating them as abnormal, without appreciating that the spike in cash sales was a direct and natural consequence of the sudden announcement of demonetisation on the same date, which triggered a surge in public demand for high-value assets like jewellery.

2.4. That the ld. CIT(A) erred in law and on facts in rejecting the appellant's cash sales on 08.11.2016 by relying on conjectural assumptions regarding customer behavior and staff limitations, without appreciating that the appellant had 12 staff members actively handling operations, and that the transactions were duly recorded in the books of account.

2.5. That the ld. CIT(A) erred in law and on facts in drawing an adverse inference against the appellant for holding cash, merely due to a short delay in deposit, despite the fact that the source of cash was duly explained, being out of recorded sales on which tax had already been paid.

2.6. That the ld. CIT(A) erred in law and on facts in questioning the credibility of the appellant's books of account and in upholding the AO's action based merely on suspicion and conjecture, while ignoring that the Assessing Officer had, in fact, accepted the net profit as declared by the appellant in the duly audited financial statements.

2.7. That the ld. CIT(A) erred in law and on facts in placing reliance on the alleged stock variation noted by the Assessing Officer to discredit the appellant's explanation, without appreciating that the said variation was merely notional, arising from timing differences in recording purchases on 09.11.2016, which were duly reconciled in the regular course of business and did not reflect any suppression or inflation of stock.

2.8. That on the facts and circumstances of the case, the ld. CIT(A) erred both on facts and on law in upholding the said addition as unexplained cash credits under section 68 of the Act despite the fact that the said amount was already offered to tax and the appellant maintained the proper books of accounts which were subject to tax audit under section 44AB of the Act.

2.9. That the Id. CIT(A) and the AO erred both in