JAISHIRAM SUGAR AND AGRO PRODUCTS LIMITED,PUNE vs. JOINT COMMISSIONER OF INCOME TAX, CENTRAL, RANGE-2,PUNE, PUNE

PDF · subscribers
ITA 777/PUN/2023Status: DisposedITAT Pune09 September 2026AY 2018-1925 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored both the disallowance of expenses and the addition of share capital to the Assessing Officer's file. This was done to allow the assessee to furnish additional evidence and for the AO to re-examine the issues.

What were the facts?

The assessee company claimed a loss of Rs. 5,69,95,760/- and introduced fresh share capital of Rs. 32,50,00,000/-. The Assessing Officer disallowed the loss for lack of substantiation and added the share capital as unexplained. The CIT(A) upheld these additions.

What were the issues?

Whether the disallowance of expenses and addition of share capital were justified without proper opportunity to the assessee to furnish evidence. Whether additional evidence should be admitted.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(1),Section 142(1),Section 144,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI R. K. PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Suhas P. Bora and Sampada Ingale
For Respondent: Shri Mithun Shete, CIT-DR

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.777/PUN/2023 Assessment year : 2018-19 Jai Shri Ram Sugar and Agro Products Limited JCIT, Central 10/12, St. Crispins Home, Karve Road, Vs. Range-2, Pune Pune – 411004 PAN: AABCJ6396A (Appellant) (Respondent) Assessee by : Shri Suhas P. Bora and Sampada Ingale Department by : Shri Mithun Shete, CIT-DR Date of hearing : 27-08-2026 Date of pronouncement : 09-09-2026 O R D E R PER R.K. PANDA, VP:

This appeal filed by the assessee is directed against the order dated 09.05.2023 of the Ld. CIT(A), Pune-12 relating to assessment year 2018-19.

2.

Facts of the case, in brief, are that the assessee is a company set up with the objective to establish a sugar factory, earning income from sale of sugar and its by- products and co-generated electricity sales. A search and seizure action u/s 132(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was conducted in the Navale and Neemco group of cases on 26.07.2017 during which the assessee company was also covered u/s 132 of the Act. During the course of search various incriminating documents were found and seized. The assessee company had filed its original return of income on 15.10.2018 disclosing loss of Rs.5,69,95,760/-.

2 ITA No.777/PUN/2023

The return was processed u/s 143(1) of the Act. The case was selected for scrutiny under CASS for the following reasons: (a) Default in TDS & Disallowance for such default (b) Investments / Advances / Loans (c) Business Loss

3.

Notice u/s 143(2) of the Act was issued on 05.02.2019. Subsequently, questionnaires dated 05.02.2019, 04.07.2019 and 24.09.2019 were issued and served on the assessee along with the notice u/s 142(1) of the Act calling for various details. Since there was no response from the side of the assessee, the Assessing Officer proceeded to complete the assessment u/s 144 of the Act.

4.

During the course of assessment proceedings the Assessing Officer noted that the assessee has disclosed loss of Rs.5,69,95,760/- in the return filed on 15.10.2018. Since the assessee failed to furnish the requisite details for claiming the expenses, the Assessing Officer disallowed the loss claimed at Rs.5,69,95,760/- holding that these are un-substantiated expenses.

5.

The Assessing Officer during the course of assessment proceedings further noted that the assessee company has introduced fresh share capital of Rs.32,50,00,000/- from the following persons the details of which are as under: Sr No Name of the person No of shares issued Amount of share capital contributed a. Neemco Spinners Ltd 6,73,600 Rs.6,73,60,000/- b. Neemco Traders Ltd 23,10,900 Rs.23,10,90,000/- c. Neemco Advertising & 2,40,000 Rs.2,40,00,000/- Entertainment Ltd d. Maruti N Navale (HUF) 25,500 Rs.25,50,000/- Total 32,50,000 Rs.32,50,00,000/-

3 ITA No.777/PUN/2023

6.

Since the assessee failed to offer any explanation about the nature and source of amount of Rs.32,50,00,000/-, failed to substantiate the identity and creditworthiness of the persons who contributed the share capital and failed to substantiate the genuineness of the transaction, the Assessing Officer applying the provisions of section 68, made addition of the same as unexplained share capital. The Assessing Officer accordingly determined the total income of the assessee at Rs.32,50,00,000/-.

7.

In appeal, the Ld. CIT(A) upheld the additions made by the Assessing Officer. So far as the disallowance of expenses is concerned, the Ld. CIT(A) following his order for assessment year 2016-17 upheld the disallowance of claim of loss of Rs.5,69,95,760/- made by the Assessing Officer in the order passed u/s 144 of the Act.

8.

So far as the addition of Rs.32,50,00,000/- made by the Assessing Officer u/s 68 of the Act being the unexplained share capital is concerned, the Ld. CIT(A) upheld the same by observing as under:

4 ITA No.777/PUN/2023

5 ITA No.777/PUN/2023

6 ITA No.777/PUN/2023

7 ITA No.777/PUN/2023

8 ITA No.777/PUN/2023

9 ITA No.777/PUN/2023

10 ITA No.777/PUN/2023

11 ITA No.777/PUN/2023

12 ITA No.777/PUN/2023

13 ITA No.777/PUN/2023

14 ITA No.777/PUN/2023

15 ITA No.777/PUN/2023

16 ITA No.777/PUN/2023

17 ITA No.777/PUN/2023

9.

Aggrieved with such order of the Ld. CIT(A) the assessee is in appeal before the Tribunal by raising the following grounds:

18 ITA No.777/PUN/2023

The following grounds are taken without prejudice to each other - On facts and in law 1. The learned CIT(A) has erred in not appreciating the contention of the appellant that the assessment order passed U/Sec. 144 of the Act is bad in law since the same has been passed without giving proper opportunity to the appellant and is against the principles of natural justice and also not in consonance with the conditions required to be followed for Best Judgment Assessments. 2. The learned CIT(A) has erred in confirming the action of the learned AO regarding rejection of loss of Rs.5,69,95,760/- without appreciating the valid submissions made by the appellant only on the ground that the appellant has failed to justify the claim of huge loss in the return of income, disregarding the submissions made by the appellant. 3. The learned CIT(A) has erred in not appreciating the following contentions raised by the appellant while confirming the loss of Rs.5,69,95,760/-: a. The accounts of the appellant are audited by the chartered accountant under The Companies Act, 2013 and The Income Tax Act, 1961 and hence the authenticity of the same should not be doubted unless any, prima facie, irregularities are noticed by the AO. b. It is a fundamental principle that one need not take any assumptions and presumption in the taxing statutes. In order to reject the books, the AO should bring out that there has been a clear infringement of any accounting standard or accounting principles and prove the same by the way of concrete and material evidences and not merely on the basis of some assumptions and presumptions. c. It is an undisputed law of the land that suspicion, however strong, cannot take place of evidences and proofs and addition can be made only on the basis of relevant material and concrete evidences and not on the basis of mere surmises, conjectures, suspicion, presumptions, or assumptions. d. Sugarcane price, quantity of sugarcane and area, quantum of monthly sugar sales and price for the same are decided through Government controls. Thus, essentially purchase price, sale price and stocks all are regulated & controlled by the government and as a result, the company has little control over the losses it incurs. e. Completely ignored the submissions given for justification of loss during the course of appellate proceedings. 4. Without prejudice to our above grounds, the learned CIT(A) while confirming rejection of loss has further erred in not allowing claim of depreciation and unabsorbed depreciation which is a legitimate claim

19 ITA No.777/PUN/2023

under the Act and especially when the AO as well CIT(A) have accepted the sales which means that they are not doubting the manufacturing of sugar by using of the plant and machinery and other assets. 5. The learned CIT(A) while confirming the action of the learned AO regarding addition of Rs.32,50,00,000/- as unexplained share capital U/Sec.68 of the Act has erred in not appreciating the correct facts of the case, disregarding the submissions made by the appellant and on the basis of mere surmises, conjectures, suspicion, presumptions, or assumptions. 6. The learned CIT(A) while confirming the action of the learned AO regarding addition of Rs.32,50,00,000/- as unexplained share capital U/Sec.68 of the Act has erred in not appreciating the following important facts: 6.1. In the case of Neemco Spinners Limited - addition of Rs.6,73,60,000/- as unexplained share capital U/Sec.68 of the Act: a. That the conclusion drawn by the CIT(A) that transfer entry dated 14.12.2017 cannot be missed in the bank statement is incorrect since the actual date of transaction was 14.09.2017. b. That the fresh certified copy of statement of account no. 143 from the bank officials for the period 01.09.2017 to 30.09.2017 wherein the said transaction of Rs.7,80,00,000/- is reflected was submitted during the remand proceedings. c. That the conclusion drawn by the CIT(A) that the bank statement copy filed along with rejoinder dated 17.01.2023 is not certified by the bank as claimed in the submission is incorrect since it is actually a certified copy. d. That the learned CIT(A) as well as learned AO have erred in relying upon the copy of statement of account no. 143 for the period 01.12.2017 to 31.12.2017 and concluding that the transfer entry dated 14.12.2017 cannot be missed in the bank statement irrespective of date-format used in the statement without considering the fact that said statement was enclosed only with reference to amount transferred by Neemco Traders Ltd to the appellant for share application money and it was not related to the said transaction of Rs.7,80,00,000/- since same was carried out on 14.09.2017. e. That all the transactions are through banking channel only and the payees have source in its bank account for making the payments which has been proved by the appellant. f. That Neemco Spinners Ltd. is also assessed by the same AO for AY 2018-19 also and the AO has not raised any doubt as regards transfer of the amounts by Neemco Spinners Ltd. to the appellant.

20 ITA No.777/PUN/2023

6.2. In the case of Neemco Traders Limited addition of Rs.23,10,90,000/- as unexplained share capital U/Sec.68 of the Act: a. That the learned AO has raised doubt because the funds are received by Neemco Traders Ltd. from STES or group companies or M. N. Navale (HUF). b. That all the transactions are through banking channel only and the payees (including Neemco Traders Ltd.) have source in its bank account for making the payments which has been proved by the appellant. 6.3. In the case of Neemco Advertising & Entertainment Ltd. addition of Rs.2,40,00,000/- as unexplained share capital U/Sec.68 of the Act: a. That the learned AO has raised doubt because the funds are received from Neemco Traders Ltd. and before such transfer Neemco Traders Ltd. has received funds from M N Navale (HUF) which are on account of cash deposit in bank account of M N Navale (HUF). However, all of them (including Neemco Advertising & Entertainment Ltd.) are assessed by the same AO for AY 2018-19 also and the AO has not raised any doubt as regards transfer of the amounts by these parties to the appellant. b. That all the transactions are through banking channel only and the payees have source in its bank account for making the payments which has been proved by the appellant. 6.4. In the case of M N Navale (HUF) addition of Rs.12,50,000/- as unexplained share capital U/Sec.68 of the Act: a. That M N Navale (HUF) has made investment in the appellant company of Rs.12,50,000/- by utilizing the funds received from Neemco Hotels & Resorts Ltd., Neemco Spinners Ltd. and by way of Cash Deposits in the bank account from where the payment was made. b. That during the assessment proceedings of M N Navale (HUF) for AY 2018-19, the learned AO has made addition of Rs.4,45,11,882/- U/Sec.69A of the Act towards unexplained cash deposits in the bank accounts and further has not made addition in respect of amounts received from group companies referred in Para a. c. That all the transactions are through banking channel only and the payees (including M. N. Navale (HUF)) have source in its bank account for making the payments which has been proved by the appellant 7. The appellant craves leave to add, alter, amend, or delete any of the above grounds of appeal.

21 ITA No.777/PUN/2023

10.

The assessee has also filed certain additional grounds. However, during the course of hearing, the Ld. Counsel for the assessee did not press those additional grounds for which the Ld. DR has no objection. Accordingly, the same are dismissed as ‘not pressed’.

11.

The Ld. Counsel for the assessee filed an application for admission of additional evidences which read as under: 1. The above referred appellant is moving this application under Rule 29 of the Appellate Tribunal Rules, 1963 to admit the additional evidence contained in following Paper Books:

Paper Book No. Page No. 8 1313 to 1481 9 1482 to 1698 10 1699 to 1916 11 1917 to 2173 12 2174 to 2520 13 2521 to 2587 14 2588 to 2761 2. The Ld. Assessing Officer (AO) had vide order dated 05.12.2019 had disallowed loss of Rs.5,69,95,760/- in the case of appellant company. The appellant company had furnished all the documents before the Ld. Commissioner (Appeals) (CIT(A)) as well as the learned AO in the remand proceedings in response to his letter dated 03.09.2021 and 15.07.2021 vide letter dated 08.09.2021 (Refer Page No. 143 to 401 of Paper Book No.2) and letter dated 17.08.2021 (Refer Page No.402 to 491 of Paper Book No.2) 3. In the remand proceedings, in the letter dated 08.09.2021, the assessee has categorically submitted that "In case any additional evidences are required the AO is requested to please specifically inform so that same can also be provided." This request was made due to voluminous record of vouchers in respect of Cane Purchases, Harvesting & Transportation Expenses, Interest Expenditure and Details of Fixed Assets. 4. Although the assessee had provided sufficient documents pertaining to the genuineness of expenses claimed, the disallowance of loss claimed by the Assessing Officer is confirmed by the Commissioner (Appeals) on the ground that the assessee has not provided the books of accounts and relevant evidences.

22 ITA No.777/PUN/2023

5.

Therefore, the appellant is submitting the sample copies of the supporting of these expenses as additional evidence since it has a direct bearing on the issue in appeal. 6. The appellant could not produce the documents referred to in the Paper Book No.8 to 14 as the said documents were not submitted since the AO has not specific about the same even though the appellant in his letter dated 08.09.2021 has made a specific request to the AO. 7. The Appellant prays that in the interest of justice the additional evidences may be admitted and the issue may be decided after considering the additional evidences. The Appellant relies on the ratio laid by the Hon'ble Supreme Court in the case of Tek Ram v. CIT (2013) 357 ITR 133 wherein it was held that where documents filed by assessee before Court had some relevance, same should be considered while deciding appeal.”

12.

So far as the grounds challenging the disallowance of expenses is concerned, he submitted that the Tribunal in assessee’s own case for the preceding year has already restored the issue to the file of the Assessing Officer, therefore, he has no objection if the matter is restored to the file of the Assessing Officer for verification of the details and allow the claim of expneses.

13.

So far as the addition of Rs.32,50,00,000/- made by the Assessing Officer u/s 68 of the Act is concerned, he submitted that in view of the additional evidence filed which go to the root of the matter, he has no objection if the matter is restored to the file of the Assessing Officer.

14.

The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A).

15.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf

23 ITA No.777/PUN/2023

of the assessee. We have also considered the various decisions cited before us. So far as the first issue i.e. disallowance of expenses of Rs.5,69,95,760/- is concerned, we find the Assessing Officer disallowed the claim of loss since the assessee failed to submit any details substantiating the nature of expenses. We find the Ld. CIT(A), following his order for assessment year 2016-17, upheld the disallowance made by the Assessing Officer. We find the Tribunal in assessee’s own case vide ITA Nos.780 & 781/PUN/2023 order dated 22.09.2023 for assessment years 2016- 17 and 2017-18 has restored the issue to the file of the Assessing Officer with certain directions. We, therefore, following the decision of the Tribunal in assessee’s own case for the preceding years restore the issue of disallowance of expenses to the file of the Assessing Officer with similar directions. Needless to say the Assessing Officer shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The first issue raised by the assessee is accordingly allowed for statistical purposes.

16.

So far as the second issue i.e. addition of Rs.32,50,00,000/- made by the Assessing Officer u/s 68 of the Act is concerned, we find the Ld. Counsel for the assessee has filed voluminous additional evidences in the application filed under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. Since these evidences go to the root of the matter, therefore, we admit the additional evidences and restore the matter to the file of the Assessing Officer with a direction to go through these additional evidences and decide the issue afresh and in accordance

24 ITA No.777/PUN/2023

with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The second issue raised by the assessee is accordingly allowed for statistical purposes.

17.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open Court on 9th September, 2026.

Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 9th September, 2026 GCVSR Digitally signed by Gajjala Gajjala Chinna Chinna Venkata Subba Reddy Venkata Subba Reddy Date: 2026.09.09 14:31:14 +05'30' आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; प्रत्यर्थी / The Respondent 2. 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘A’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

25 ITA No.777/PUN/2023

S.No. Details Date Initials Designation 1 Draft dictated on 07.09.2026 Sr. PS/PS 2 Draft placed before author 07.09.2026 Sr. PS/PS Draft proposed & placed before 3 JM/AM the Second Member Draft discussed/approved by 4 AM/AM Second Member Approved Draft comes to the 5 Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to 9 the Office Superintendent Date on which file goes to the 10 A.R. 11 Date of Dispatch of order

More judgments on Section 132

All 14,598 judgments and leading authorities on Section 132 →

Recent GST High Court judgments

Search GST case law →