YOROZU JBM AUTOMOTIVE TAMIL NADU PRIVATE LIMITED,CHENNAI vs. ASSISTANT/ DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE WARD 3(3) CHE, CHENNAI, CHENNAI

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ITA 15/CHNY/2026Status: DisposedITAT Chennai15 June 2026AY 2022-237 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted additional evidence submitted by the assessee under Rule 29 of the Appellate Tribunal Rules, 1963. Considering the substantial bearing of this evidence and the fact that the assessee cooperated on other issues, the matter was restored to the AO for fresh adjudication.

What were the facts?

The assessee, a private limited company, filed a return of income declaring Nil income. The case was selected for scrutiny due to high liabilities compared to low income. The Assessing Officer (AO) made an addition of Rs. 70,77,81,813/- on account of liabilities, which was confirmed by the CIT(A).

What were the issues?

Whether the addition on account of high liabilities was justified, and whether additional evidence should be admitted at the appellate stage.

Which sections of the Income-tax Act were involved?

Section 41(1),Section 144B,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: HONOURABLE SHRI ABY T. VARKEY & SHRI GAGAN GOYAL

Hearing: 10.06.2026Pronounced: 15.06.2026

आयकर अपीलीय अधिकरण ’सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री एबी टी. वर्की, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 15/Chny/2026 ननिाारण वर्ा /Assessment Years: 2022-23 Yorozu JBM Automotive Tamil Nadu v. The Deputy Commissioner of Private Limited. Income Tax, Plot Nos. B5 & B6, SIPCOT Industrial Corporate Ward-3(3), Park, Sriperumbudur S.O, Kanchipuram, Chennai. Tamil Nadu-602 105. . [PAN: AAACY4647A]

(अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. R. Sivaraman, Advocate, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Mr. Guru Prasad, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 10.06.2026 घोषणाकीतारीख /Date of Pronouncement : 15.06.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: GROUNDS OF APPEAL

1.

Ground 1 - General Grounds 1.1 Yorozu JBM Automotive Tamil Nadu Private Limited ('YJAT' or the Company' or 'the Appellant') aggrieved by the order dated 04 November 2025, passed by the Commissioner of Income Tax, National Faceless Appeal Centre ('Ld. CIT(A)') under section 250 of the Income-tax Act 1961 ('the Act') submits that the additions confirmed in the order by the Ld. CIT(A) Is contrary to the law, facts and circumstances of the case and hence liable to be deleted. The detailed grounds of appeal, including the position in law and facts is set out in the ensuing paragraphs.

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ITA No.15/Chny/2026 (2022-23) Yorozu JBM Automotive Tamil Nadu Pvt. Ltd.

2.

Ground 2- The Ld. CIT (A) has erred in law by confirming an adhoc disallowance of liabilities as on 31 March 2022

2.1 The Ld. CIT(A) has erred in law and on facts in confirming an addition of the total liabilities of the Appellant as on 31 March 2022 made the Ld. Assessing officer and rejecting the book of accounts of the Appellant on an adhoc basis.

2.2 The Ld. CIT (A) has erred in law by not considering that the liabilities have been incurred pursuant to transactions in the ordinary course of business and for running its operations.

2.3 The Ld. CIT(A) has failed to appreciate the nature of liabilities outstanding as on the balance sheet date and has not considered that the same are not written-off and duly payable by the Appellant in the ordinary course of business and as a result do not represent any income of the Appellant for the subject AY.

2.4 The Ld. CIT (A) has failed to appreciate that the books of accounts of the Appellant have been duly audited by a statutory auditor and hence the disallowance of liabilities as unexplained liabilities is erroneous and bad in law.

3.

Ground 3 the Ld. CIT (A) erred in not-granting brought forward business loss and unabsorbed depreciation relating to earlier AYS

3.1. Without prejudice to the above grounds, the Ld. CIT (A) erred in not adjusting brought forward business loss and unabsorbed depreciation relating to earlier AY while computing total income.

4.

The Appellant craves leave to add to, alter, amend, modify or withdraw all or any of the above ground(s) of appeal either at the time of the hearing or before the hearing of this appeal.

2.

The brief fasts of the case are that the assessee is private limited company filed its return of income declaring income at Nil. Subsequently, the case of the assessee got selected for Scrutiny under CASS for the following reasons:

1.

International transactions(s) in respect of intangible property (T.P. Risk Parameter). 2. Mismatch in expenditure by way of penalty or fine for violation of any law for the time being in force. 3. Large value of international transactions in the nature of intangible property and intra group services (T.P. Risk Parameter).

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ITA No.15/Chny/2026 (2022-23) Yorozu JBM Automotive Tamil Nadu Pvt. Ltd. 4. Lower amount disallowed u/s. 40(a) (i) in ITR in comparison to default found u/s. 200A as per data received from CIT (CPC-TDS). 5. High liabilities as compared to low income / receipts. 6. Default in either deduction of tax or payment of tax so deducted. 3. We have gone through the order of the AO and observed that the assessee is a big automobile parts manufacturer and having collaboration with the biggest giant Korean automobile company and engaged in manufacture and sale of suspension parts catering to the needs of big automobile multinational companies in India like Nissan motor India Pvt. Ltd and Renault Nissan automotive India Pvt. Ltd. The total paid up capital of the company as per auditor financial results produced is Rs. 400 Crs. and as per P&L account during the year under consideration the assessee spent Rs. 19, 67, 38, 137/- as salary to the staff.

4.

During the assessment proceedings, other than point no. 5 mentioned (Supra) the assessee duly complied with the questioners / enquiries raised by the AO. But, there was no response by the assessee to explain point no. 5 despite of ample opportunity given to the assessee. Moreover, there is no legitimate reason assigned by the assessee to explain for non-compliance on this matter. Ultimately, following the procedure as prescribed u/s. 144B of the Act, a variation was proposed by the AO to the tune of Rs. 70, 77, 81, 813/- and final addition of the same amount was made. The assessee being aggrieved, preferred an appeal before the Ld. CIT (A), who in turn dismissed the appeal of the assessee as the assessee again failed to produce relevant information. Based on these facts, it can be safely concluded that the assessee miserably failed to comply with the requirement of the assessment and appellate proceedings for the reasons best known to it. Now the assessee being aggrieved with the order of the Ld. CIT (A) preferred the present appeal before us. Page 3 of 7

ITA No.15/Chny/2026 (2022-23) Yorozu JBM Automotive Tamil Nadu Pvt. Ltd. 5. We have gone through the order of the AO, the order of the Ld. CIT (A) and the grounds taken by the assessee. It is observed that ground no.1 is general in nature and the ground no.3 the Ld. CIT (A) has already directed the AO with relevant directions. Hence, both the grounds are liable to be dismissed. As far as substantive ground no. 2 is concerned the same is also liable to be dismissed as the assessee itself never came across with a relevant information before the AO and the Ld. CIT (A) and that is why the assessee needs to file an application in terms of Rule 29 of the Appellate Tribunal Rules, 1963. Here, it is pertinent to mentioned that none of the grounds taken by the assessee are eligible to be adjudicated except the application filed by the assessee in terms of Rule 29 of Appellate Tribunal Rules, 1963.

6.

Now, based on the above facts, this tribunal has to verify only the application filed by the assessee in terms of Rule 29 of the Appellate Tribunal Rules, 1963. For ready reference Rule 29 of the Appellate Tribunal Rules, 1963 is being reproduced herein below as under: Rule - 29, Income-Tax (Appellate Tribunal) Rules, 1963 Production of additional evidence before the Tribunal. 29. The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or , if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.

Now, in the light of the provisions of the Rule 29 of the Appellate Tribunal Rules, 1963, it can be concluded that there are no rights vested with the assessee to file even an application before the Bench. Rather, it is the prerogative of the bench to Order for production of any document or witness to be examined.

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ITA No.15/Chny/2026 (2022-23) Yorozu JBM Automotive Tamil Nadu Pvt. Ltd. 7. In the case as discussed (supra) vide para 3 & 4, there was ample opportunities given to the assessee by the AO and the Ld. CIT (A), but in vein. The assessee never came forward with the relevant documents/explanations. This apart, Rule 18(4) of the Income-tax (Appellate Tribunal) Rules, 1963 is also referable. That Rule provides that if any party desires to file additional evidence, then the same shall be filed by way of a separate paper book containing such particulars as are referred to in sub-rule (3) accompanied by an application stating the reasons for filing such additional evidence. If rule 18(4) is read with Rule 29, there cannot be any difficulty in holding that in terms of Rule 29, an additional evidence can also be produced by the assessee on an application, provided the Tribunal should satisfy as to the reasons before entertaining such additional evidence and the Tribunal should also afford sufficient opportunity to the Revenue to rebut those additional evidence.

8.

That apart, there was no specific objection raised by the Revenue at the time when the application was filed and the Revenue, in fact, had allowed the Tribunal to entertain such application. In this context, we may also refer to the observation of the Tribunal that the Revenue did not contradict any of the averments made by the assessee in the petition seeking for production of additional evidence. The Tribunal also observed that the Revenue had not questioned the veracity of the documents and the particulars filed by the assessee. In the given facts of the case, the Tribunal is considered to be the first appellate authority, as far as the issue involved in the present matter is concerned, i.e. Addition of Rs. 70,77,81,813/- on account of liabilities u/s. 41(1) of the Act. It is true that before the documents filed by way of additional evidence were considered, the Revenue had the opportunity to refute those documents. Nevertheless, in terms of Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 a provision of opportunity is contemplated and, in our opinion, such opportunity shall be given to the Assessing Officer. Rebuttal must be only by the Assessing Officer, who will be in a better position to verify the genuineness of those documents and accordingly, he may accept or may not accept the case of the assessee. In the event certain doubts are entertained on the basis of the documents produced as additional evidence, it would be only proper for the Tribunal to remit the matter.

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ITA No.15/Chny/2026 (2022-23) Yorozu JBM Automotive Tamil Nadu Pvt. Ltd. 9. We found the reason assigned by the assessee for not filing the same before the authorities below reasonable and allow to submit the same before us and accepted also. The additional evidences submitted by the assessee are duly accepted. We have given a thoughtful consideration, and are of the considered view, that as the information as has been filed by the assessee before us as additional evidence would have substantial bearing on the adjudication of the issue in hand, therefore, the same merits to be admitted. We, thus, in terms of our aforesaid observations admit the additional evidence placed on our record by the assessee under Rule 29 of the Income-Tax Appellate Tribunal Rules, 1963.

10.

The above findings are based on the fact that the assessee, fully cooperated during the assessment proceedings before the AO and the Ld. CIT (A) on the following issues examined by the AO as under:

1.

International transactions(s) in respect of intangible property (T.P. Risk Parameter). 2. Mismatch in expenditure by way of penalty or fine for violation of any law for the time being in force. 3. Large value of international transactions in the nature of intangible property and intra group services (T.P. Risk Parameter). 4. Lower amount disallowed u/s. 40(a) (i) in ITR in comparison to default found u/s. 200A as per data received from CIT (CPC-TDS). 5. High liabilities as compared to low income / receipts (Issue under dispute). 6. Default in either deduction of tax or payment of tax so deducted. The only issue which was not responded by the assessee is point no. 5, which although, we are also not able to understand that why not attended by the assessee. But as the amount involved is substantial and on other issues there is no adverse finding against the assessee, this bench is of the view that a holistic view is to be taken for determination of real income and a benefit of doubt is to be given to the assessee.

11.

In the result, matter is restored back to the file of the JAO with a direction to the assessee that it must ensure its full cooperation without seeking any adjournment and come forward with complete details and relevant workings required

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ITA No.15/Chny/2026 (2022-23) Yorozu JBM Automotive Tamil Nadu Pvt. Ltd. to settle the issue. Need not to say, the AO will provide a reasonable opportunity of being heard to the assessee as per law.

12.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on the 15th day of June, 2026, in Chennai.

Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 15th June, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR 5. गार्ड फाईल/GF K Digitally signed by K BABU Date: BABU 2026.06.17 11:48:17 +05'30'

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