SHALIMAR COLOURS (INDIA) PRIVATE LIMITED,PATNA vs. DC/AC CIRCLE 2 PATNA, PATNA

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ITA 555/PAT/2025Status: DisposedITAT Patna30 April 2026AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the AO had not examined the issue in light of relevant CBDT and RBI notifications. Following a coordinate bench's decision in a similar case, the Tribunal remitted the issue back to the AO for fresh adjudication.

What were the facts?

The assessee company deposited Rs. 27,50,000 in cash during the demonetization period. The Assessing Officer (AO) added this amount under Section 69A as unexplained money, while the CIT(A) confirmed the addition. The assessee claimed to have received the cash from three business associates.

What were the issues?

Whether the cash deposit of Rs. 27,50,000 during demonetization is unexplained money, and if the AO properly considered all relevant notifications and evidence.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(2),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SMC BENCH, PATNA

Hearing: 23.04.2026Pronounced: 30.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PATNA (VIRTUAL HEARING AT KOLKATA) SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER SHRI SONJOY SARMA, JUDICIAL MEMBER

ITA No. 555/PAT/2025 Assessment Year : 2017-18

Shalimar Colours (India) Vs. DC/AC, Circle-2, Patna, Private Limited, Lok Nayak Bhawan, Dak Sarmerakothi , Jamal Road, Banglow Road, Patna - Patna - 711360 800001 [PAN: AAECS7139P] APPELLANT RESPONDENT

Assessee by : None (Adjournment petition filed) Revenue by : Sh. Manab Adak, JCIT

Date of hearing : 23.04.2026 Date of Pronouncement : 30.04.2026

O R D E R PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

This is an appeal filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “the Ld. CIT(A)] dated

2 ITA Nos. 555/PAT/2025 Shalimar Colours (India) Pvt. Ltd. 11.09.2025, DIN & order No. ITBA/NFAC/S/250/2025- 26/10806302751(1) on the following grounds of appeal:

“Ground 01. For that the impugned order passed by the Ld. AO as well as Ld. CIT(A), insofar as it is adverse to the Appellant, is arbitrary & illegal is liable to be reversed as such. 02. That the Assessment Order and Appeal Order confirming the addition of Rs. 27,50,000 under Section 69A as unexplained money are flawed, as they overlook the substantial evidence furnished by the assessee. The assessee had duly disclosed the names, PANs, and addresses of the three business associates from whom the 1 cash of Rs. 27,50,000 was received during the demonetization period, as evident from the Reply to Cash Transaction 2016. Notably, neither the Ld. AO nor the Ld. CIT(A) deemed it necessary to cross-verify the authenticity of these transactions with the said business associates. Given the prima facie evidence, the Ld. AO's allegation of unexplained money under Section 69A is baseless, rendering the Assessment Order and Ld. CIT(A) Order confirming the addition of Rs. 27,50,000 as bad in law.” 2. At the outset of hearing, we noted that the appeal filed by the assessee is time barred by 60 days. In this regard, the assessee filed an affidavit for condoning the delay dated 28.11.2021. It has been stated that the reasons for delay in filing appeal with sufficient cause.

3.

On going through the above reasons/explanations, we noted that the assessee had reasonable cause for not filing the appeal within the specified time. Therefore, in line of the judgment of Collector, Land Acquisition vs Mst. Katiji, (1987) 167 ITR 171 (SC), we condone the delay and the appeal is taking for adjudication.

4.

Briefly stated the facts of the case are that the assessee is a Private Limited Company and derives income from business of fertilizers, chemicals and paints business. The assessee filed its return of income of Rs. 83,20,647/-. The case was selected for scrutiny under CASS.

3 ITA Nos. 555/PAT/2025 Shalimar Colours (India) Pvt. Ltd. Accordingly, notice u/s 143(2) of the Act dated 10.08.2018 was issued and duly served upon the assessee. Subsequently, other statutory notices were issued to the assessee but there was no response from the assessee side. The AO issued notice to the bank for calling information u/s 133(6) of the Act from Krishnapuri Branch and obtained bank statement and KYC details and details of cash deposits during demonetisation period in current A/c No. 3147944526 and it was observed that during demonetisation period from 11.11.2016 to 30.11.2016 the total cash deposit was Rs. 27,50,000/- and pre demonetisation period was Rs. 6,00,100/- in the SBNs the AO after referring to various judgments added the entire cash deposit u/s 69A of the Act and the income was assessed at Rs. 33,50,100/-.

5.

Aggrieved from the above order, the assessee filed appeal before the Ld. CIT(A). After considering the submission of the assessee he deleted Rs. 6,00,100/- and confirmed the addition of Rs. 27,50,000/- which was cash deposited during demonetisation period in the SBI current account in SBNs.

6.

Aggrieved from the order of the Ld.CIT(A), the assessee is in appeal before the ITAT.

7.

None present on behalf of the assessee (adjournment petition filed) and the case was heard qua the Ld. DR.

4 ITA Nos. 555/PAT/2025 Shalimar Colours (India) Pvt. Ltd. 8. The Ld. DR relied on the order of lower authorities and submitted that during demonetisation period the assessee has deposited cash at Rs. 27,50,000/- in SBI which was not explained and it is not clear whether it is included in the turnover of the assessee. These cash deposits are abnormal compared to the whole year of the cash transaction done by the assessee. During the course of appellate proceedings, the assessee could not furnish any cogent documents.

9.

Considering the facts of the case and observation of the lower authorities, the assessee could not explain the legitimate source cash deposits of Rs. 27,50,000/- during demonetisation period as noted by the AO in Page No. 3 of his order and assessment was completed on the basis of information available before him. In the appellate proceedings, we noted that sale proceeds of Rs. 39,13,192/- but the AO has not examined the issue I the light of the various notification/circular issued by the CBDT and Govt. of India/RBI. Therefore, relying on the judgement of coordinate Bench of the Tribunal in the case of Bhoopalam Marketing Services vs ITO in ITA No. 375/BANG/2022 in which similar issue has been dealt and remitted back to AO . Respectfully following the above judgement we are remitting this issue back to the file of AO in the light of the above judgment. The assessee is directed to cooperate with the department for early disposal of the case and the AO is directed to decide the issue as per law after giving a reasonable opportunity of being heard

5 ITA Nos. 555/PAT/2025 Shalimar Colours (India) Pvt. Ltd. to the assessee. The assessee is directed to substantiate its case with cogent documents in support of its claim and not seek unnecessary adjournments for early disposal of the case. In case of failure, no second leniency shall be granted to the assessee.

10.

In the result, appeal of the assessee is partly allowed for statistical purposes.

Order pronounced on 30.04.2026. Sd/- Sd/- (Sonjoy Sarma) (Laxmi Prasad Sahu) Judicial Member Accountant Member Dated: 30.04.2026 AK, Sr. P.S. Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR)

//True copy// By order

Assistant Registrar, Kolkata Benches

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