TAV POLY PLAST,BHIWADI vs. DEPUTY COMMISSIONER OF INCOME TAX,, ALWAR

PDF · subscribers
ITA 1679/JPR/2025Status: DisposedITAT Jaipur08 June 2026AY 2018-196 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition for unrecorded sales was not sustainable as the assessee had already offered this income in its return. The stock shortage addition was also deleted as it was covered by the unaccounted sales. The unexplained expenses were allowed telescopic benefit from the offered income, and the Section 40A(3) addition was deleted as the expenditure was not claimed in the P&L account.

What were the facts?

During a survey, the assessee surrendered unrecorded sales and stock shortage. The Assessing Officer (AO) made additions based on these surrenders and for unexplained expenses and cash payments violating Section 40A(3). The assessee appealed against these additions.

What were the issues?

Whether additions made by the AO based on survey surrenders and for violations of Section 40A(3) are sustainable when the income was already accounted for or not claimed as an expenditure.

Which sections of the Income-tax Act were involved?

Section 133A,Section 69C,Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “A” BENCH, JAIPUR

For Appellant: Shri S. L. Poddar, Advocate &, Shri Harsh Poddar, Advocate
Hearing: 24.03.2026Pronounced: 08.06.2026

P a g e | 1 ITA No. 1679/JPR/2025 Tav Poly Plast vs. DCIT IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “A” BENCH, JAIPUR

BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER

ITA No. 1679/JPR/2025 (Assessment Year:2018-19) Tav Poly Plast Vs. Deputy Commissioner of F-251, RIICO Industrial Income Tax Area, Bhiwadi, Kaharani Central Circle, C R 301019 Building, Moti Doongri Road, Alwar, Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No: AAKFT6844M Appellant .. Respondent Appellant by : Shri S. L. Poddar, Advocate & Shri Harsh Poddar, Advocate Respondent by : Sh. Gaurav Awasthi, JCIT Date of Hearing 24.03.2026 Date of Pronouncement 08.06.2026

O R D E R Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), Jaipur-4 (hereinafter referred to as “the Ld. CIT(A)”) dated 18.11.2025 u/s 250 of the Income Tax Act,1961 (hereinafter referred to as “the Act”).

P a g e | 2 ITA No. 1679/JPR/2025 Tav Poly Plast vs. DCIT 2. The assessee in his appeal has taken the following grounds of appeal:-

“1. Under the facts and Circumstances of the case the learned CIT(A) has erred in passing the order without considering the facts and document submitted by the assesse. 2. Under the facts and Circumstances of the case the learned CIT(A) has erred In confirming the addition of Rs. 67,00,481/- made by the Learned Assessing Officer on account of unrecorded sales found during the course of survey which has already been accounted for in the books of accounts and considered by the asessee in the P&L A/c. 3. Under the facts and Circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 2,00,000/- made by the Learned Assessing Officer on account of difference in stock which was only valuation difference. 4. Under the facts and Circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 10,00,000/- made by the Learned Assessing Officer u/s 69C of the Income Tax Act, 1961 for unexplained expenses. 5. Under the facts and Circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 53,97,615/- made by the Learned Assessing Officer u/s 40A(3) of the Income Tax Act, 1961 under the given circumstances. 6. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing.” 3. Ground No.1 is general in nature.

4.

Vide ground No.2, the assessee has agitated against the addition of Rs.67,00,481/- made by the AO on account of unrecorded sales and surrendered by the assessee during survey proceedings.

5.

The brief facts, relevant to the issue, are that a survey action u/s 133A of the Act was carried out at the business premise of the assessee firm. During the course of survey, certain incriminating materials were found, which allegedly contained the details of cash sales. During survey action, the

P a g e | 3 ITA No. 1679/JPR/2025 Tav Poly Plast vs. DCIT statement of the partner of the assessee, Shri Anuj Saxena was recorded, during which, he agreed to surrender the entire sales of Rs.67,00,481/- as worked out by the survey authorities. The case of the AO is that the assessee, having disclosed the said income during survey proceedings, has not offered said income in the income tax return. He observed that surrender made by the assessee during the survey action was binding upon the assessee. He, accordingly, made the addition of the said amount of Rs.67,00,481/- into the income of the assessee.

6.

The assessee, thus, has come up in appeal before us.

7.

We have heard the rival contentions and gone through the records.

8.

The Ld. Counsel for the assessee has submitted that the assessee had kept its promise of offering for taxation the surrendered income of Rs.67,00,481/- in the return of income filed on 31.10.2018. He has submitted that the said income was included in the books of accounts under the head ‘other income’ and was offered for taxation. The Ld. Counsel for the assessee in this respect has relied upon the copy of the return of income, audited accounts of the assessee and copy of P&L account of the assessee. The Ld. Counsel for the assessee has further submitted that the AO has again added the said amount into the income of the assessee, which amounts to double taxation of the said amount. Ld. Counsel has further submitted, though, only the profit element was required to be added in respect of the unaccounted sales and not the entire sales, however, the assessee has honored its commitment by offering the entire amount of unaccounted sales of Rs.67,00,481/- as income of the assessee in the return of income.

P a g e | 4 ITA No. 1679/JPR/2025 Tav Poly Plast vs. DCIT 9. The Ld. DR could not rebut the aforesaid facts in the file. In view of this, there is no justification on the part of the AO to again make the addition of the same amount, which has duly been offered for taxation by the assessee in the return of income. Therefore, the impugned addition is not sustainable and the same is ordered to be deleted.

10.

Vide ground no.3, the assessee has agitated addition of Rs.2Lakhs made by the AO on account of shortage of stock. The AO observed that during survey action, the assessee has offered amount of Rs.2Lakhs on account of shortage of stock, treating the same as having been sold out of books.

11.

The Ld. Counsel for the assessee has submitted that when the assessee has already offered for taxation the entire unaccounted sales, there was no question of estimating any profit on shortage of stock. When the case of the AO is that the assessee had made unaccounted sales, it is likely that there will be a shortage of stock, therefore, under the circumstances, the addition of the said amount of Rs.2Lakhs is not sustainable being already covered in the income offered on account of unaccounted sales. The impugned addition is, therefore, not sustainable. The same is, accordingly, ordered to be deleted.

12.

Vide ground no.4, the assessee has contested the addition of Rs.10Lakhs made by the AO u/s 69C of the Act on account unexplained expenditure. The AO observed, that during survey action, the assessee had separately surrendered amount of Rs.10Lakhs on account of unaccounted labour expenses. However, the Ld. AR has submitted that there was no evidence that the assessee has incurred such expenditure. That the Department had obtained the statement of surrender of Rs.10Lakhs on

P a g e | 5 ITA No. 1679/JPR/2025 Tav Poly Plast vs. DCIT account of unexplained expenditure, under coercion and pressure. He has submitted that the addition has been made purely on the basis of statement of the partner of the assessee firm, without any supporting evidence. Without going to the aforesaid contention of the Ld. AR, we find that the assessee has already offered an amount of Rs.67 Lakhs for taxation on account of cash sales. Under the circumstances, the assessee can be given telescopic benefit of any unaccounted expenditure of Rs.10Lakhs treating the same have been incurred out of the said income offered for taxation. In view of this, the impugned addition is not sustainable and the same is, accordingly, ordered to be deleted.

13.

Vide ground no.5, the assessee has contested against the confirmation of addition of Rs.53,97,615/- made by the AO u/s.40A(3) of the Act. The AO has made the impugned addition observing that the assessee had incurred expenditure for purchases etc. in cash, in violation of the provisions of Section 40A(3) of the Act. Therefore, he made addition of the aforesaid amount of Rs.53,97,615/-.

14.

The Ld. CIT(A) confirmed the addition so made by the AO.

15.

Before us, the Ld. Counsel for the assessee has submitted that as per the provisions of Section 40A(3) of the Act, the disallowance of the expenditure made in cash, above the prescribed monetary limit of Rs.10,000/-, can be made. However, since, the assessee has not claimed the said expenditure in the P&L account, there is no question of making any disallowance of the said expenditure and, hence, no addition was warranted in this case. The provisions of Section 40A(3) of the Act, for the sake of ready reference, are reproduced hereunder:

P a g e | 6 ITA No. 1679/JPR/2025 Tav Poly Plast vs. DCIT “40A(3): Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, (exceeds ten thousand rupees, no deduction shall be allowed in respect of such expenditure.” 16. A perusal of the above aforesaid statutory provisions would reveal that if the assessee has claimed an expenditure, however, the said expenditure has been incurred in cash over and above the prescribed limit of Rs.10,000/-, then no deduction of such expenditure shall be allowed to the assessee. However, in this case, when the assessee, itself, has not claimed any deduction of the said expenditure, there is no question of making further addition. Therefore, the aforesaid addition made by the AO is not legally sustainable and, hence, same is ordered to be deleted.

17.

In the result, impugned additions made by the AO are ordered to be deleted. The appeal of the assessee stands allowed.

Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 08 .06.2026

Sd/- Sd/- (Ratnesh Nandan Sahay) (Sanjay Garg) Accountant Member Judicial Member Dated 08.06.2026 SKSinha, Sr. PS Copy forwarded to: True Copy 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order,

Asst. Registrar ITAT, Jaipur

More judgments on Section 133A

All 5,893 judgments and leading authorities on Section 133A →

Recent GST High Court judgments

Search GST case law →