During the course of scrutiny proceedings, the assessee had explained before the AO that the cash deposits made in its bank account pertains to cash sales made during the demonetization period. However, the AO alleged that it was an abnormal increase in cash sales which was not in trend with the immediately previous AY sales and made an addition to the total income, which was upheld by the CIT(A). The ITAT observed that the lower authorities had accepted the books of accounts and statutory record of sale-tax department like Vat-15 and Vat-20 without pin-pointing any defect in it and further accepted the GP ratio declared by the assessee. However, he suo moto reduced the GP percentage out of disputed bogus sales which was reduced from the returned income. The ITAT held that the AO cannot partly accept the books of accounts and partly reject the same. The AO cannot sit on the chair of the assessee to decide the sales as per his choice to categorize into bogus sales and non-bogus sales. It therefore held that the cash deposits in bank represent the sales which the assessee has rightly offered for tax after going through the books of accounts. (AY. 2017-18)