SANGEETHA ENTERPRISES,TAMIL NADU vs. CHE-W-(62)(91), CHENNAI

आदेश / O R D E R

PER MANU KUMAR GIRI, JM:

This appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as “CIT(A)”] dated 03.10.2025 for the Assessment Year 2017-18. 2. The assessee has raised the following grounds of appeal:

ITA No 3678/Chny/2025 (AY 2017-18) Sangeetha Enterprises Vs ITO Che-W-(62) (91) :: 2 :: considering the facts and circumstances of the case and settled position of law. 2. The learned CIT(A)-NFAC has erred in accepting the addition u/s 68 of the Income Tax Act, 1961 amounting to Rs. 50,30,000/- without considering the facts and circumstances of the case and settled position of law. The appellant craves leave to add, amend, alter or delete the said ground of appeal. 3. Facts of the case are that the assessee filed return of income for

AY 2017-18 declaring a loss of Rs.15,332/-. Based on information

received from the Investigation Wing regarding search and survey

action in the case of JMJ Group and connected entities including M/s

BhishmaAgro Food Products Pvt. Ltd. (BAFPPL), it was revealed that

certain loose sheets were impounded indicating alleged bogus

transactions with the assessee firm, M/s Sangeeta Enterprises.The

statement of accountant of BAFPPL and partner of the assessee firm

indicated that bogus sales/purchases amounting to

Rs.1,76,47,599/- were recorded during FY 2016-17. Based on such

information, the assessment was reopened u/s. 147 and completed

u/s. 147 r.w.s. 144B on 26.03.2022.

The Assessing Officer (AO) made the additions of Rs.1,76,47,599/-

u/s. 69 on account of alleged bogus purchases and Rs.50,30,000/-

u/s. 68 on account of unexplained cash deposits. For Bogus

Purchases of Rs.1,76,47,599/-, the AO relied on the statements

recorded during survey/search proceedings and impounded loose

ITA No 3678/Chny/2025 (AY 2017-18) Sangeetha Enterprises Vs ITO Che-W-(62) (91) :: 3 :: sheets showing transactions with the assessee. The partner of the

assessee had admitted to bogus entries during statement. The

assessee failed to furnish purchase bills, delivery challans, transport

details, confirmation from BAFPPL and explain credit balance

appearing in books. Accordingly, the AO treated the purchases as

unexplained investment and added the same u/s. 69. For cash

Deposits of Rs.50,30,000/-, it noted by the AO that cash deposits

were noticed in bank account as per Form 26AS. Assessee claimed

deposits were from past cash sales. However, no supporting

evidence such as cash memos, sales details and item-wise

recordswas furnished. Thus, the AO treated the deposits as

unexplained cash credit u/s. 68.

by the AO on both issues. He relied heavily on the statements

recorded under oath and impounded documents. He held that the

retraction of statement by partner was delayed and unsupported by

evidence. No proof of coercion was furnished. No documentary

evidence was submitted by assessee to rebut findings. He observed

that existence of creditor balance further supported unaccounted

purchases. Regardingcash deposits, he held that no business

activity was shown during the year. No evidence of past cash sales

ITA No 3678/Chny/2025 (AY 2017-18) Sangeetha Enterprises Vs ITO Che-W-(62) (91) :: 4 :: was furnished. No justification for holding large cash balances. Thus,

he confirmed both additions.

Tribunalcontended that no purchases were made during the year.

Alleged purchases represent opening balance. Statements recorded

during survey were incorrect and obtained under coercion which has

been subsequently retracted. No corroborative evidence was

brought by AO. He also contended that VAT/GST returns and

financials support no transactions during the year. Clarification by

accountant suggested genuine business model of over-the-counter

sales. With respect to cash deposits, he contended that deposits

were out of opening cash balance from earlier years and cash

generated from counter sales in past years. Books of accounts were

maintained.

and submitted that statements recorded during search/survey have

strong evidentiary value. Assessee failed to discharge onus. No

documentary evidence and confirmations filed. Retraction of

statement was belated and unsupported by evidence. Existence of

creditor balance proves undisclosed transactions. Cash deposits

remained unexplained due to lack of supporting evidence.

ITA No 3678/Chny/2025 (AY 2017-18) Sangeetha Enterprises Vs ITO Che-W-(62) (91) :: 5 :: 7. We have heard the rival submissions and perused the material

available on record and paper book filed. Regarding addition on

account of Bogus Purchases, we observes that the addition is based

on the statements recorded during survey/search and impounded

documents clearly indicating bogus entries. The assessee has failed

to produce purchase bills, transport documents or confirmations.

Assessee also failed to reconcile creditor balances appearing in

books. We also find that the retraction of statement was made after

considerable delay and the same was not supported by any

evidence of coercion. It is a settled position that mere retraction

without cogent evidence is not sufficient to discard earlier

statements. Further, the existence of outstanding liability towards

BAFPPL corroborates the findings of the AO.Accordingly, we find no

infirmity in the order of the CIT(A) in confirming the addition of

Rs.1,76,47,599/- u/s. 69 of the Act. Regarding addition on account

ofaddition on account of Cash deposits, wenotes that the assessee

claimed deposits from past cash sales but no documentary evidence

was furnished and also no cash book or sales records substantiating

claim were produced. No justification was provided for holding

substantial cash without business activity during the year. Thus, the

ITA No 3678/Chny/2025 (AY 2017-18) Sangeetha Enterprises Vs ITO Che-W-(62) (91) :: 6 :: assessee failed to discharge the burden of proof u/s. 68 of the

Act.Accordingly, the addition of Rs.50,30,000/- is rightly sustained. 8. In view of the above, the order of the CIT(A) is upheld and both

additions made by the AO are sustained.