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2024 (2) TMI 1230 - ITAT DELHIAddition u/s 68 r.w. section 115BBE - unexplained cash deposits in the bank account - CIT(A) confirmed addition without disturbing the book results - HELD THAT:- AO did not accept the source of cash deposited in the month of October to November, 2016 on the basis that there was no historical basis for such deposits. Admittedly, the accounts of the assessee have been accepted by the lower authorities. CIT(A) has confirmed the finding of the AO without disturbing the book results. Under these facts and circumstances of the case, it can be safely inferred that the AO has accepted the sales of the assessee. The natural corollary would be that AO accepted the sales made in cash also. Hence, the source of cash deposits ought to have been treated as explained. AO has not commented on purchases. Undisputedly manufacturing and trading activity would be based on sale and purchase. If the purchases are treated as genuine and stock is also accepted then treating the sales as bogus is not logical. CIT(A) did not advert to submission that no error was found in the stock of the assessee. Once the assessee has recorded the sales in its books and there is no adverse finding qua stock and purchases are made. In my considered view, invoking the provision of section 68 would not be justified. It is not case of inflated purchases but AO treated cash sales being bogus without disturbing the book results. We therefore, hold that authorities below have committed error in making impugned addition without bringing any adverse material in respect of purchases and stock of assessee. Appeal of the assessee is allowed.
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