TaxTMI 
TaxTMI 
2026 (6) TMI 1257
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....ed as under: "1. The Learned CIT(A) erred in confirming the action of L.d. AO in treating sundry creditors reported in the audited Balance Sheet amounting to Rs. 14,13,12,472/-as unexplained cash credits um 60 of the IT Act 2. The Learned CIT(A) ought to have appreciated that when the purchases, sales and the resultant profit declared by assessee in his return of income was accepted, the corresponding trade creditors, which arises from credit purchases, cannot be treated as non-genuine. 3. Without prejudice to the above grounds, Learned CIT(A) ought to have appreciated that out of the total amount of Sundry creditors of Rs. 14,13,12,472/- treated by Ld.AO as unexplained Rs. 1,49,63,543/- pertains to opening balances, which cannot be added as unexplained credits in the impugned year, considering the provisions of section 68 of the IT Act. 4. The Learned CIT(A) erred in confirming the interest under Section 234A and Section 234B which is consequential to the additions made above. 5. For these and such other grounds, that may be urged at the time of hearing of subject appeal, the appellant prays before the Hon'ble ITAT that the above ad....
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....e A.O. despite providing sufficient opportunities through notices issued under Section 142(1) of the Act. The assessee furnished only partial information and failed to substantiate the transactions reflected in the impounded material as well as entries in the books of account with necessary documentary evidences. Therefore, the A.O. proceeded to complete the assessment ex-parte under Section 144 r.w.s. 147 of the Act. 6. The A.O., on the basis of the impounded material and the information available on record, treated the alleged cash payments of Rs. 1,20,00,000/- to M/s. GYRR Industries as unexplained expenditure under Section 69C of the Act, on the ground that the assessee failed to explain the source of such payments. Further, the A.O. disallowed 10% of the expenses claimed in the Profit & Loss account for want of supporting bills and vouchers. The A.O. also made addition towards sundry creditors amounting to Rs. 14,13,12,472/- under Section 68 of the Act, as the assessee failed to establish identity, creditworthiness and genuineness of the creditors by furnishing confirmations and other relevant details. Accordingly, the A.O. determined total income at Rs. 15,66,05,656/- as a....
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....ance and in remarks column - specify the nature of transactions with the party. In response, the assessee submitted only copy of ledger extract detailing the breakup of sundry creditors outstanding as on 31.03.2016 without providing complete details like PAN, complete address, nature of transactions, confirmation letters of the creditors and the income tax assessment particulars. Therefore, the A.O. treated the entire amount of sundry creditors as unexplained cash credit and taxed under section 68 of the Income Tax Act, 1961. On appeal, the Ld. CIT(A), for the reasons stated in their appellate order dated 04.09.2025 and also by following certain judicial precedents, including the decision of Hon'ble Supreme Court in the case of Ramchandra Singh Vs. CIT reported in (2024) 466 ITR 260 (SC), rejected the explanation of the assessee and upheld the addition made by the A.O. towards the sundry creditors under section 68 of the Income Tax Act, 1961. 12. The learned counsel for the assessee, Ms. K. Hemalatha, C.A. and Shri B. Ramakrishnan, C.A. submitted that, the Ld. CIT(A) erred in sustaining additions made by the A.O. towards sundry creditors under section 68 of the Income Tax Act, 1....
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....ors, the A.O. has rightly made addition towards sundry creditors under section 68 of the Income Tax Act, 1961. The Ld. CIT(A), after considering the relevant facts, has rightly sustained the addition made by the A.O. Therefore, they submitted that, the addition made by the A.O. should be upheld. 14. We have heard both parties, perused the material available on record, and had gone through the orders passed by the authorities below. There is no dispute with regard to the fact that the assessment proceedings in the present case has been reopened on the basis of a survey conducted under section 133A of the Act, in the business premises of the assessee, where certain incriminating material was found and impounded which reveals certain transactions of the assessee outside the books of accounts maintained for the relevant assessment years. During the course of survey under Section 133A of the Act, the assessee could not satisfactorily explain the transactions recorded in the excel sheets which pertain to the sundry creditors and debtors and for this reason, the assessee has come forward to offer additional income in the hands of the assessee and also Kamakshi International. During the....
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....year and closing balance, the arguments of the assessee cannot be accepted that too on the basis of total sundry creditors appearing in the balance sheet of the previous financial year and the current financial year. Further from the balance sheet filed by the assessee for two financial years, it cannot be ascertained as to whether the sundry debtors appearing in the balance-sheet as on 31.03.2016 is fully brought forward from the earlier financial year or fresh credit taken by the assessee during the financial year. Therefore, it is for the assessee to file complete details of creditors, including the opening balance, transactions during the year and closing balance so as to verify whether the credits appearing in the balance sheet are fresh credits taken during the year are brought forward from the earlier financial years. Since the assessee has failed to file complete details of transactions with creditors, in our considered view, there is no error in the reasons given by the Ld. CIT(A) to reject the explanation of the assessee. Further, since the assessee has made an argument in light of balance of two financial years and claimed that few credits are brought forward from earlie....
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.... non-genuine and made addition under section 68 of the Income Tax Act, 1961. 21. The Ld. counsel for the assessee submitted that the Ld. CIT(A) erred in sustaining the additions made by the A.O. towards unsecured loans for Rs. 1,34,31,017/- without appreciating the fact that out of the total outstanding loans of Rs. 1,34,31,017/-, an amount of Rs. 1,27,24,680/- pertains to the opening balance outstanding as on 01.04.2016. In this regard, they relied upon the decision of Hon'ble High Court of Gujarat in the case of CIT vs. Jagatkumar Satishbhai Patel reported in (2014) 45 taxmann.com 441 (Guj) and also the decision of ITAT, Mumbai Bench in the case of Sai Shiva Educational Trust Vs. ITO reported in (2025) 174 taxmann.com 806 (Mumbai - Trib.). 22. The Ld. CIT-DR, on the other hand, supporting the order of the Ld. CIT(A), submitted that, once again the assessee failed to file basic details like name and complete details of loan creditors and their PAN numbers, ITRs and confirmation letters, and in the absence of basic details, the A.O. has rightly assessed the same as unexplained unsecured loans under section 68 of the Income Tax Act, 1961. The Ld. CIT(A), after considering the ....
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....pt filing balance sheet of two years, the arguments of the assessee cannot be accepted. However, since the assessee claims that the outstanding unsecured loans, includes opening balance of Rs. 1,27,24,680/- from earlier financial year, in our considered view, to verify the facts with regard to the period of credit in the books of accounts of the assessee, the matter needs to be set aside to the file of the A.O. Thus, we set aside the order of the Ld. CIT(A) on this issue and restore the issue back to the file of the A.O. The A.O. is directed to verify the claim of the assessee in light of evidences that may be filed during the course of proceedings to explain his case. 25. In the result, the appeal filed by the assessee for AY 2017-18 is allowed for statistical purposes. ITA No. 1952/Hyd/2025 for A.Y. 2018-19 26. The first issue that came up for our consideration from ground no. 2. of the assessee's appeal is challenging the validity of reassessment under section 147 of the Income Tax Act, 1961, in light of approval under section 151 of the Act. 27. The Ld. counsel for the assessee submitted that the assessee had not challenged the legality of the reassessment proceedin....
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....e of Deloittee Consulting India (P). Ltd Vs. Assessment Unit, Income Tax Department, NFAC, Delhi reported in (2025), 178 taxmann.com 781 (Telangana) and also the decision of Hon'ble Delhi High Court in the case of Vikram Kapahi Vs. ACIT reported in (2025) 170 taxmann.com 592 (Delhi). The Ld. counsel for the assessee also relied upon the decision of ITAT, Hyderabad in the case of Sanjeev Kumar Nalam Vs. ITP in ITA No. 669/Hyd/2025 dated 19.12.2025. 28. The Ld. CIT-DR, on the other hand, submitted that there is no merit in the legal ground taken by the assessee challenging the validity of the notice issued under section 148 of the Act, in light of approval granted under section 151 of the Act, by the Principal CIT (Central), Visakhapatnam, because in the present case, the assessment has been reopened within three years from the end of the relevant assessment year by passing an order under section 148A(d) of the Act, on 29.03.2022 and notice under section 148 of the Act, has been issued on 31.03.2022. The subsequent order passed by the A.O. under section 148A(d), dated 30.03.2023 and notice issued under section 148 of the Act, dated 31.03.2023 is only in compliance with the directi....
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....148 of the Act, for reopening of the assessment. The provisions of section 149 of the Act, deal with time limit for issuance of notice under section 148 of the Act. Similarly, provisions of section 151 of the Act, deal with prior sanction from the specified authority for issuance of notice under section 148A(d) and 148 of the Act. As per section 151 of the Act, specified authority for the purpose of section 148 and 148A shall be Principal CIT or Principal Director, if three years or less than three years have elapsed from the end of the relevant assessment year. Further, in case if more than three years have elapsed from the end of the relevant assessment year, then the specified authority for the purpose of section 148 and 148A of the Act, shall be Principal Chief Commissioner or Principal Director General. 31. In the present case, notice under section 148A(b) of the Act was issued on 14.03.2022 after obtaining approval from the specified authority i.e., Pr. CIT (Central), Visakhapatnam, under section 151 of the Act. In response to notice under section 148A(b) of the Act, the assessee contested the issue vide letter dated 25.03.2022. The A.O. had passed the order under section ....
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....pproval under section 151 of the Act, should have been taken from the Principal Chief Commissioner of Income Tax, for the simple reason that the subsequent order passed by the A.O. under section 148A(d) of the Act, is not an order passed by the A.O. in pursuance of a fresh notice issued under section 148A(b) of the Act. Further, the A.O. has passed order under section 148A(d) of the Act, as per the directions of the Hon'ble High Court after providing the impounded material to the assessee for its compliance and therefore, in our considered view, the subsequent order passed by the A.O. under section 148A(d) of the Act, is only in continuation to the notice issued under section 148A(b) of the Act, and not on the basis of fresh reassessment proceedings initiated under section 148A of the Act. Further, in the present case, the A.O. has issued notice under section 148A(b) of the Act, followed by order under section 148A(d) and issued notice under section 148 of the Act, before 31.03.2022 and therefore, in our considered view, the assessment has been reopened within three years from the end of the relevant assessment year and thus, for the purpose of section 151 of the Act, the specified....
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.... the end of the relevant assessment year and consequently approval should have been taken from the Principal Chief Commissioner of Income Tax is contrary to the facts available on record and thus, cannot be accepted. Thus, we reject the legal ground taken by the assessee. 34. The next issue that came up for our consideration from ground nos. 3 to 5 of the assessee's appeal is addition towards sundry creditors appearing in the balance sheet of Rs. 10,00,52,104/- under section 68 as unexplained cash credits. 35. We find that, an identical issue has been considered by us in assessee's own case in ITA No. 1950/Hyd/2025 for A.Y. 2016-17. But for the figures, the facts and issues involved in this appeal are identical with the facts and issues for AY 2016-17. The reasons given by us in the preceding paragraphs 14 and 15 shall mutatis mutandis apply to this appeal as well. Therefore, for similar reasons, set aside the order of Ld. CIT(A) on this issue and restore the issue back to the file of A.O. The A.O. is directed to verify the claim of assessee and decide the issue in line with our findings given in the A.Y. 2016-17. 36. In the result, the appeal filed by the assessee for A.Y....
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....d during the course of survey as unexplained investment. 40. Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A) and challenged the additions made by the A.O. towards difference in sundry debtors and argued that the additions made by the A.O. on the basis of loose sheets cannot be sustained because loose sheets found during the course of survey and the authenticity and veracity of the loose sheets cannot be established. The assessee further contended that the amount arrived by the A.O. as alleged discrepancy between the notings in the loose sheets vis-à-vis books of accounts of the assessee was rightly arrived in the order passed in the case of Kamakshi International at Rs. 11.42 crores as against Rs. 16.55 crore in completing the assessment of the assessee. 41. The Ld. CIT(A), after considering the submissions of the assessee, rejected the arguments challenging the addition made on the basis of loose sheets. In the statement recorded during the course of survey, the assessee admitted that sundry debtors pertains to group concern and further the assessee has reconciled the above entries appearing in the loose sheets vis-à-vis b....
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....admission alone is not sufficient to make additions without there being any further evidences as held by various Hon'ble Courts, including the decision of Hon'ble Supreme Court in the case of CBI Vs. V.C. Shukla reported in (1998) taxmann.com 2155 (SC). The assessee has also relied on the following decisions: 1. Nagarjuna Construction Co. Ltd. Vs. DCIT reported in (2012) 23 taxmann.com 239 (Hyderabad - Trib.). 2. ACIT Vs. Navaratna Estates in ITA No. 618/Viz/2018 (Visakhapatnam - Trib.). 3. Mohammed Ibrahim Mohideen Vs. ACIT reported in (2024) 168 taxmann.com 385 (Bangalore - Trib.). 4. Chandamma Vs. ITO reported in (2015) 61 taxmann.com 77 (Patna - Trib.). 45. The Ld. CIT-DR, on the other hand, supporting the order of Ld. CIT(A) submitted that, the arguments of the Ld. counsel for the assessee that list of debtors found during the course of survey is a 'dumb document', cannot be accepted going by the findings recorded by the Ld. CIT(A), where the Ld. CIT(A) stated that the assessee himself has reconciled the list to the assessee's books of accounts of Kamakshi International and Kamakshi Aqua Feeds. Once a document is identified by the assesse....
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....he loose sheets found during the course of survey being the list of sundry debtors is the list of debtors maintained for the assessee group for its business transactions for all entities and the same has been reconciled with reference to the audited books of accounts. Therefore, once certain entries in the loose sheets are matched with audited books of accounts, then remaining unreconciled entries in the loose sheets should be treated as unexplained transactions of the assessee. Therefore, in our considered view, there is no error in the reasons given by the Ld. CIT(A) to arrive at difference amount of sundry debtors at Rs. 11.42 crore. Thus, we are inclined to uphold the findings of the Ld. CIT(A). 47. Coming back to the estimation of net profit at 8% on the difference amount of Rs. 11.42 crore. The A.O. made addition of Rs. 16.55 crore on the ground that it is unexplained investment of the assessee. The Ld. CIT(A) treated the difference amount of sundry debtors as business turnover of the assessee and estimated 8% net profit. In our considered view, the reasons given by the Ld. CIT(A) to treat the difference amount of sundry debtors as business receipts of the assessee is in a....
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....he list of debtors found during the course of survey and audited books of accounts of both the concerns. Thus, we are inclined to uphold the findings of the Ld. CIT(A) and dismiss ground nos. 2 and 3 raised by the assessee. 50. In the result, the appeal of the assessee is partly allowed for statistical purposes. ITA No. 1956/Hyd/2025 for A.Y. 2019-20 (M/s. Kamakshi International) 51. The only issue that came up for our consideration from ground nos. 2 and 3 of assessee's appeal is addition towards additional income admitted during the course of survey on ad hoc basis and not offered in the return of income for Rs. 25,00,000/-. 52. During the course of survey, a list of sundry debtors was found which contains sundry debtors balance of Kamakshi Aqua Feeds and Kamakshi International. A statement was recorded from the partner of Kamakshi Group with reference to list of sundry debtors found during the course of survey, where the assessee reconciled the list of debtors with the books of accounts of both the concerns and finally offered additional income of Rs. 75,00,000/- in the case of Shri Audhinarayana Reddy Papireddy for AY 2019-20. "The A.O. made addition of Rs. 25,00,00....
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....epancies in sundry debtors, however, not admitted the said additional income in the return of income filed for the year under consideration. The A.O. made addition towards unreconciled amount of sundry debtors of Rs. 16.90 crore and also made separate addition in respect of part of the additional income offered by the assessee, amounting to Rs. 25,00,000/-, out of Rs. 75,00,000/- admitted during the course of survey. In other words, the A.O. made addition towards the amount of unreconciled sundry debtors and also made addition towards additional income offered by the assessee during the course of survey. The additional income offered by the assessee at Rs. 75,00,000/-, out of which Rs. 25,00,000/- has been added by the A.O., is in respect of discrepancies in sundry debtors as per the list of debtors found during the course of survey and audited books of accounts. Since the A.O. has made addition towards total amount of unreconciled sundry debtors as per the list of sundry debtors and the Ld. CIT(A) has accepted the amount quantified by the A.O. and estimated net profit at 8%, in our considered view, the additional income offered by the assessee towards discrepancies in sundry debto....