MUSADDILAL JEWELLERS EXPORTERS PVT. LTD,HYDERABAD vs. ACIT,CENTRAL CIRCLE-3(1), HYDERABAD

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No. 2320/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2017-18) M/s. Musaddilal Vs. Assistant Commissioner Jewellers Exporters Pvt. of Income Tax Ltd Central Circle 3(1) Hyderabad Hyderabad PAN: AAECM4985B (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: Adv. Tejprakash Toshniwal राज� व �ारा/Revenue by: Shri Uppaluri Meena, Sr. AR सुनवाई की तारीख/Date of hearing: 08/06/2026 घोषणा की तारीख/Pronouncement: 03/07/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Musaddial Jewellers Exporters Private Limited (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)-11, Hyderabad (“Ld. CIT(A)”) dated 24.10.2025 for the A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal:

demonetization period. The Ld. AR submitted that during the assessment proceedings, the assessee could not effectively comply with the show-cause notice dated 06.12.2019 issued by the Ld. AO as the assessee could not come to know about the said notice immediately. It was further submitted that during the remand proceedings also, the assessee could not properly comply with the notices issued by the Ld. AO on 06.04.2021 and 08.09.2021 owing to the difficulties prevailing during the Covid period. The Ld. AR further submitted that the assessee has now filed additional evidence along with an application under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. The additional evidence consists of copies of stock registers, sale invoices, ledger accounts and complete cash book of the assessee. It was submitted that the said documents directly relate to the issue involved in the appeal and go to the root of the matter. Therefore, the additional evidence may kindly be admitted and one more opportunity may be granted to the assessee to substantiate the source of cash deposits before the Ld. AO. 6. Per contra, The Learned Departmental Representative (“Ld. DR”) strongly relied upon the orders of the lower authorities. Inviting our attention to para no. 3 of the assessment order, the Ld. DR submitted that the Ld. AO had issued notice under section 142(1) of the Act dated 06.11.2019 requiring the assessee to explain the source of cash deposits. However, the assessee failed to respond to the said notice. Thereafter, another notice under section 142(1) of the Act, dated 27.11.2019 was issued. In response thereto, the assessee merely furnished copy of return of income, computation, balance sheet, profit and loss account, audit report and bank

statements but failed to furnish any evidence regarding the source of cash deposits. Subsequently, a further notice dated 06.12.2019 was issued, which also remained uncomplied with. Therefore, according to the Ld. DR, the Ld. AO was justified in making the impugned addition. 7. The Ld. DR further invited our attention to para no. 6.2.2 of the order of the Ld. CIT(A) and submitted that even during the remand proceedings, the assessee failed to furnish complete details despite notices dated 06.04.2021 and 08.09.2021. It was further submitted that the remand report was forwarded by the Ld. CIT(A) to the assessee on 22.04.2024 seeking comments, but the assessee again failed to comply. Accordingly, the addition was rightly confirmed by the Ld. CIT(A). 8. The Ld. DR further submitted that the assessee repeatedly failed to comply with notices issued by both the lower authorities and did not furnish complete cash book, comparative details of sales, cash receipts and cash deposits. Therefore, the assessee failed to establish the source of cash deposits. The Ld. DR also objected to the admission of additional evidence on the ground that sufficient opportunities had already been granted before the lower authorities. Accordingly, the Ld. DR prayed before the Bench to uphold the order of the lower authorities. 9. We have heard the rival submissions and perused the material available on record. The solitary issue involved in the present appeal relates to the addition of ₹2,32,58,600/- made under section 68 of the Act on account of cash deposits made during the demonetization period. We find from the

record that the assessee could not furnish complete documentary evidence before the Ld. AO during the assessment proceedings. We further find that even during the remand proceedings before the Ld. CIT(A), the assessee could not place complete supporting documents on record. Before us, the assessee has filed an application under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 seeking admission of additional evidence comprising stock registers, copies of sale invoices, ledger accounts and complete cash book. On perusal of the said documents, we find that the additional evidence sought to be produced by the assessee directly relates to the issue under consideration and goes to the root of the matter. In our considered opinion, adjudication of the issue involved in the appeal would not be possible without examination of these documents. Accordingly, in the interest of substantial justice, we admit the additional evidence filed by the assessee. At the same time, we find merit in the contention of the Ld. DR that these documents were not produced before the Ld. AO and therefore have not been subjected to verification by the Department. The genuineness and evidentiary value of the documents now produced by the assessee require proper examination and verification at the level of the Ld. AO. Considering the totality of facts and circumstances of the case, we deem it appropriate to set aside the impugned order of the Ld. CIT(A) on this issue and restore the matter to the file of the Ld. AO for fresh adjudication. The Ld. AO shall examine the additional evidence filed by the assessee and decide the issue afresh in accordance with law after providing adequate opportunity of being heard to the assessee. The assessee shall furnish all documents, explanations and supporting evidence

that may be called for by the Ld. AO for substantiating the source of cash deposits made during the demonetization period. The Ld. AO shall also be at liberty to require any further information, documents or evidence considered necessary for proper verification of the claim of the assessee. However, we cannot ignore the fact that despite several opportunities granted during assessment proceedings, remand proceedings and appellate proceedings, the assessee failed to furnish the relevant material before the lower authorities, resulting in unnecessary prolongation of litigation and wastage of judicial as well as departmental resources. Therefore, while restoring the matter to the file of the Ld. AO, we deem it fit to impose a cost of ₹25,000/- (Rupees Twenty-Five Thousands only) upon the assessee. The assessee is directed to deposit the said amount of ₹25,000/- with the Prime Minister’s National Relief Fund within thirty (30) days from the date of receipt of this order and furnish proof of such payment before the Ld. AO during the set-aside proceedings. Subject to the said directions, the issue is restored to the file of the Ld. AO for fresh adjudication. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 3rd July, 2026. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 3rd July, 2026. Vinodan/sps

Copy to:

S.No Addresses 1 M/s. MUSADDILAL JEWELLERS’ EXPORTERS PRIVATE LIMITED 6-3-679, ELITE PLAZA ,PANJAGUTTA, HYDERABAD 500082 2 Assistant Commissioner of Income Tax Central Circle 3(1) Aayakar Bhavan, Basheerbagh, Hyderabad 3 Pr. CIT – Central, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File

By Order Digitally signed by TUMMALACHARLA TUMMALACHARLA LAKSHMI NARAYANA DN: cn=TUMMALACHARLA LAKSHMI LAKSHMI NARAYANA, c=IN, o=INCOME TAX APPELLATE TRIBUNAL, ou=INCOME TAX NARAYANA APPELLATE TRIBUNAL, CHENNAI BENCH Date: 2026.07.03 11:55:46 +05'30'