AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 1542
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.... per CBDT instructions [F.No.225/157/2017/ITA.II] 3. That on the facts and in the circumstances of the case, the Id CIT(A) grossly erred in upholding application of provisions of section 145(3) of the Act and thereby confirming rejection of the audited books of accounts as regularly maintained for business without any specific reason assigned by him. 4. That on the facts and in the circumstances of the case, the Id CIT(A) grossly erred in confirming addition made under section 69A of the Income Tax Act, after rejection of books of accounts under section 145, is not justifiable in law. 5. That on the facts and in the circumstances of the case, the Id CIT(A) grossly erred in upholding arbitrary observation that the appellant has not satisfactorily explained the source of cash deposits of Rs. 91,88,000/- in bank account during the demonetization period in specified bank notes, without appreciating legal & valid documentary evidences which proves nature and source of such business transactions. 6. That on the facts and in the circumstances of the case, the Id CIT(A) grossly erred in sustaining addition of Rs 91,88,000/- in respect of cash deposits in....
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....e Ld. AR that a technical error on the part of AO that a notice under Section 143(2) was not issued in a specific format prescribed by the CBDT, rendered the assessment order bad in law or void-ab-initio. Our view gets support from the similar observation given by Coordinate Bench in ITA No. 840/Jodh/2025 in case of Lal Chand Choudhary Vs. ACIT/DCIT Circle Barmer dated 09.04.2026. 3.3 In the above view, we are not inclined to agree with the contentions raised by the Ld. AR that the notice under Section 143(2) was not issued in prescribed format as per CBDT instruction, rendered the assessment order void-ab-initio. In our view the minor technical error pointed out in the notice issued under Section 143(2) of the Act in the format prescribed by CBDT would not render the entire assessment order bad in law. Accordingly, the ground no. 1 and 2 of the assessee are rejected. 4. In ground No. 3, the assessee has challenged the application of provision of Section 145(3) of the Act, 1961 and thereby confirming the rejection of audited books of accounts. The AO while passing the assessment order has rejected the audited the books of accounts under Section 145(3) of the Act by observing ....
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....there was no addition made in the head of business income so the rejection of the books of accounts is not relevant to the addition made under Section 69A of the Act. He pleaded that addition made by AO under Section 69A may be sustained. 4.4. We have heard both the sides and perused the material on record. 4.5. Admittedly, the AO has rejected the books of accounts for the reason that he has pointed out discrepancy in the maintenance of the cash books with respect of huge inconsistency in the cash sales and queries remained non-complied by the assessee, particularly the cash sales recorded during the period of demonetization. Since no addition has made by the AO under the head business income, so the issue of rejection of books of accounts is not of much relevance, however, since assessee failed to explained the discrepancy pointed out by the AO with respect of the maintenance of the cash book, and hence the AO has sufficient ground for making addition under Section 69A of the Act. However, applicability of Section 145(3) of the Act for rejection of audited books without assigning specific reasons is not justified. Thus, ground no. 3 is allowed. 5. In ground no. 4 to 8, th....
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....41,26,409/- in January 2017 and cash sale of Rs. 3,81,911/- out of total sale of Rs. 15,63,110/- in March, 2017. The AO concluded that there was no satisfactory explanation regarding source of cash deposited on 08-11-2016 amounting to Rs. 95,00,000/-. The AO also noted that as per the cash book there was cash balance of Rs. 3,12,082/-, therefore the AO allowed benefit of cash of Rs. 3,12,082/- and thereafter made an addition of Rs. 91,88,000/- u/s 69A of the Act. 8.3.2 The appellant has reiterated that the cash was deposited out of cash sale of gold made by the appellant. The cash sale was recorded in the books of the account. The AO accepted stock of gold lying with the appellant then sales made by the appellant could not be treated as bogus sales. The appellant has relied upon various decisions in which it was held that, sales has been offered for taxation the income could not be taxed again. 8.3.3 The appellant has tried to make out of the case that the AO has considered cash sales bogus sales made by the appellant. However, the AO was concerned with the cash deposited by the appellant during the demonetization period. The AO has noted that even though the appe....
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....n may be deleted. 5.3 The Ld. DR on the other hand has submitted that the AO has pointed out many irregularities and in-consistencies in the cash book produced by the assessee. The Ld. DR further submitted that the assessee has failed to explained satisfactorily the source of cash deposits in his bank account during the demonetization period, though the appellant tried to explained the source of cash out of sale of gold, but it has not been supported by any documentary evidence and the business transactions were not supported by factual evidence on record as observed by the Ld. CIT(A) in the impugned order. The DR pleaded that the impugned order may be sustained. 5.4 We have heard both the sides and perusal of the record and case laws cited. It is noted that the Ld. CIT(A) has not been satisfied by the explanation furnished by the assessee as regards to the source of cash deposits of Rs. 91,88,000/- in the bank account during the demonetization period in SBN currency notes. 5.5 It is evident from the record that the assessee is failed to explain source of cash deposit in its bank account during demonetization period with documentary evidences regarding the available stock ....