TaxTMI 
TaxTMI 
2026 (9) TMI 483
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....he affidavit filed by the assessee. Having regard to the reasons stated therein, the fact that the delay involved is only 24 days, and there being no serious objection from the Revenue for condonation of such delay, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the stipulated period. Accordingly, in the interest of substantial justice, the delay of 24 days in filing the appeal is condoned and the appeal is admitted for adjudication on merits. 4. The assessee has raised the following grounds of appeal: 5. The brief facts of the case are that the assessee is a company engaged in the business of manufacturing and trading of wheat flour. A search and seizure operation under section 132 of the Income-tax Act, 1961 ("the Act") was carried out in the case of M/s Jitender Roller Flour Mills Group on 02.05.2018. The premises of the assessee were also covered under the search operation. The assessee filed its return of income for Assessment Year 2019-20 on 24.12.2019 declaring total income of Rs. 1,08,96,640/- under the normal provisions of the Act and book profit of Rs. 1,10,53,717/- under section 115JB of the Act. The case of the a....
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.... the Amritsar Bench of the Tribunal in the case of Shreeji Bihariji Colonisers Vs. ACIT in ITA Nos. 48 & 49/ASR/2023 for A.Ys. 2018-19 and 2019-20 dated 22.07.2024 and the decision of the Delhi Bench of the Tribunal in the case of Arun Kumar Mittal Vs. ACIT in ITA No. 2970/Del/2022 for AY 2019-20 dated 20.12.2023. 7.1 The Ld. AR further submitted that the approval letter contains factual errors, inasmuch as it refers to additional income as per return filed under section 153A of the Act whereas, in fact, it was the addition proposed in the draft assessment order. It was submitted that such factual inaccuracies demonstrate complete non-application of mind by the approving authority. 7.2 It was further argued that the approving authority has not made any reference to the assessment records examined by him before granting approval and therefore the approval has been granted mechanically without application of mind. 7.3 The Ld. AR also submitted that para no. 3 of the approval letter demonstrates that the approval granted under section 153D of the Act is conditional in nature. In support of the said proposition, reliance was placed on the decision of the Raipur Bench of the Tr....
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....dicial precedents relied upon by the assessee. We find that all the decisions relied upon by the assessee were rendered prior to the insertion of section 292BC of the Act by the Finance Act, 2026 w.e.f. 1.4.2021. In this regard, we have gone through the provisions of section 292BC of the Act, which is to the following effect: "Circumstances in which approvals by income-tax authority not to be invalid. 292BC. Notwithstanding anything contained in this Act or in any judgment, order or decree of any Court, for the removal of doubts, it is hereby clarified that any approval given by an income-tax authority in relation to any assessment, reassessment or re-computation proceedings under this Act shall be deemed to be administrative and supervisory in nature and shall not be invalid or shall not be deemed to be invalid by reason of any insufficiency of the reasons recorded or by reason of any defect in the form or manner of its authentication or communication including whether digital signature have been appended to such approval or not, where such approval is granted electronically." 9.1 On perusal of the provisions of section 292BC of the Act, we find that the legis....
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....re advisory in nature and not mandatory. The approving authority has neither directed reconsideration of the additions proposed in the draft assessment order nor withheld the grant of approval pending verification of any issue. The observations merely relate to consequential matters concerning applicability of tax rate and penalty proceedings. It is not the case of the assessee that after the approval under section 153D of the Act, there is any change in the final assessment order passed by the Ld. AO as compared to the draft assessment order which require fresh approval under section 153D of the Act. Therefore, the same cannot be construed as conditions precedent for grant of approval under section 153D of the Act. We have also gone through the decisions relied upon by the assessee in the cases of Nimesh Patel Vs. DCIT (supra), Mainee Steel Works Pvt. Ltd. Vs. DCIT (supra) and Rishabh Buildwell Pvt. Ltd. & Others Vs. DCIT (supra). On perusal of the said decisions, we find that those decisions were rendered in the backdrop of facts where the directions issued by the approving authority were found to be conditional in nature and the approval itself was held to be dependent upon fulf....
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....The grievance of the assessee is that the Ld. AO has made addition of Rs. 67,43,098/- under section 69 of the Act whereas the Ld. CIT(A) has treated the same as an addition falling under section 69A of the Act. In this regard, we have carefully gone through para nos. 3 to 3.6 of the assessment order, which is to the following effect: 13. On perusal of the above, we find that the Ld. AO has categorically recorded that during the course of search, excess cash amounting to Rs. 67,43,098/- was found at the business premises of the assessee over and above the cash balance reflected in the books of account. Thus, the nature of the addition made by the Ld. AO is clearly that of unexplained money found in possession of the assessee. No doubt, the Ld. AO has referred to section 69 of the Act while making the addition. However, it is evident from the discussion contained in the assessment order that the addition pertains to unexplained cash found during the course of search, which is otherwise covered by the provisions of section 69A of the Act. Therefore, the mistake committed by the Ld. AO is only with regard to quoting of the section and not with regard to the nature of the addition it....
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....eceived cash of Rs. 70,00,000/- on sale of scrap. Out of the said amount, Shri Kanishk Gupta had withdrawn Rs. 70,00,000/- in cash from M/s Supreme Agro. Thereafter, Shri Kanishk Gupta advanced Rs. 50,00,000/- on 31.10.2017 and Rs. 20,00,000/- on 09.08.2017 to Shri B. Venkata Rami Reddy as advance for purchase of Villas Nos. 39 and 40 situated at Aditya Casa Grande, Narsingi, Hyderabad. It was further submitted that the proposed purchase transaction did not materialize and consequently Shri B. Venkata Rami Reddy refunded the advance amount of Rs. 70,00,000/- to Shri Kanishk Gupta. Accordingly, it was contended that the excess cash found during the course of search represented the amount refunded by Shri B. Venkata Rami Reddy to Shri Kanishk Gupta and therefore the same could not be treated as unexplained cash belonging to the assessee-company. Accordingly, the Ld. AR submitted that the entire source of cash stood explained and therefore the addition of Rs. 67,43,098/- deserves to be deleted. 15. Per contra, the Ld. DR strongly relied upon the orders of the lower authorities. The Ld. DR first submitted that if the cash actually belonged to Shri Kanishk Gupta in his individual cap....
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....t in the statement recorded immediately after the search, Shri Kanishk Gupta had accepted the excess cash as undisclosed income of the assessee-company. Therefore, the subsequent explanation furnished by the assessee is only an afterthought devised to explain the excess cash found during the course of search. Accordingly, the Ld. DR submitted that the addition made by the Ld. AO deserves to be sustained. 16. We have heard the rival submissions and perused the material available on record. The issue involved in Ground Nos. 1 and 2 relates to the addition of Rs. 67,43,098/- made on account of excess cash found during the course of search. The primary contention of the assessee is that the excess cash belonged to Shri Kanishk Gupta and represented the amount refunded by Shri B. Venkata Rami Reddy against advances earlier given for purchase of villas. In this regard, we have carefully gone through para no. 3.4 of the assessment order, which is reproduced herein above, wherein the Ld. AO has reproduced the cash book of M/s Supreme Agro for 31.03.2018 and the receipts relied upon by the assessee. On perusal of the same, we find that the advances of Rs. 50,00,000/- and Rs. 20,00,000/- ....
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....er of the assessee-company. This fact further weakens the explanation that sought to be advanced by the assessee. 16.3 We have also gone through the reply given by Shri Kanishk Gupta to the Q. No. 9 in his statement recorded on 03.05.2018 during the course of search, which is to the following effect: "Q.9. 1 am showing you the page number 1 in the folder containing loose sheets seized vide Annexure A/CAPPL/OFF/01 containing cash balance statement as on 2 May, 2018 of Rs. 12,37,402/-. However, we have found the cash of Rs. 79,80,500/-. Please explain the sources of cash of Rs. 50,00,04/- found in the locker kept in your chamber and Rs. 29,30,500/- found in the almirah of your cashier Sti Dasarath, Also Explain the excess cash found in your office premises. Ans. I accept that the amount of Rs. 50,00,000/- found in the locker kept in my chamber is an old undisclosed business income. I also accept that the amount of Rs. 17,43,098/- kept in the almirah of Sri Dasarath is an old undisclosed business income." 16.4 On perusal of the above, we find that Shri Kanishk Gupta accepted the excess cash found during the course of search and offered the same as undisclosed i....
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....ned shortage is insignificant and represents a normal business occurrence. Accordingly, it was prayed that the addition made by the Ld. AO and sustained by the Ld. CIT(A) be deleted. 18. Per contra, the Ld. DR, supported the orders of the lower authorities. It was submitted that the assessee failed to substantiate its claim with any documentary evidence, quantitative records or scientific working regarding the alleged process loss, wastage or stock lying in the manufacturing process. It was contended that mere oral submissions without supporting evidence cannot be accepted. Accordingly, the Ld. DR prayed that the addition made by the Ld. AO be sustained. 19. We have heard the rival submissions and perused the material available on record. The undisputed facts are that during the course of search proceedings, the Revenue Authorities found shortage in the physical stock of wheat and bran as compared to the stock reflected in the books of account. Simultaneously, excess stock was found in respect of Rawa, Atta and Maida. The Ld. AO adjusted the excess quantity against the shortage quantity and determined a net shortage of 31.77 metric tons. The said shortage was valued at Rs. 18....
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.... above, the Learned Commissioner (Appeals) erred in invoking the provision of Section 69A to sustain the addition made u/s 69 without giving an opportunity of being heard to Appellant before invoking the provision of Section 69A. 4) That the Learned Commissioner (Appeals) erred in confirming the addition of Rs.5,83,932/- made towards alleged Unaccounted Sales. 5) That without prejudice to above Grounds, the Assessment Order passed u/s 143(3) r/w Section 153A is bad in law as the approval given u/s 153D for passing such Order was not in accordance with law which renders the approval and the Assessment Order Invalid. 6) That the Appellant craves leave doadd AGRoe RocecieteteLiny Grounds of Appeal. Hyderabad. Date: 20.06.2025 G Director Appellant. Ronak Gupta, Director Document 2 3. Asst record in I volumes returned herewith, Applicability of tax rates u/s 115BBE, penalty proceedings u/s 270A and 271AAC may please be checked before passing order. 11.1 Document 3 3.2 The issue was put before the assessee during the course of hearings. In response, the assessee submitted that the Directors of the assessee company are also partners in a firm M/s Supreme....