M/S. JEPPIAAR FISHING HARBOUR MUTTOM PVT. LTD.,CHENNAI vs. DCIT, CENTRAL CIRCLE-1(3), CHENNAI

PER BENCH:

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 2 :: The captioned cross appeals have been filed by the Assessee and Revenue are against the separate orders of even date 29.07.2025 of the Ld. Commissioner of Income-tax (Appeals) CIT (A), Chennai-18 for the assessment year (A.Ys.) 2017-18 & 2017-18. 2. The assessee has filed the following grounds of appeal in ITA No. 2363/Chny/2025 (AY:2017-18) arising from the proceedings u/s.143(3) as under: 1. The Order of the Commissioner of Tax (Appeals) is contrary to law, facts and circumstances of the case. 2. For that the Learned Commissioner of Income Tax (Appeals) had erred in confirming the addition made u/s 68 rws 115 BBEE of the Act to the tune of Rs. 39,67,139- as ‘unexplained credits’ towards increase in Sundry Creditors during the relevant previous year. 3. For that the Learned Commissioner of Income Tax (Appeals) failed to appreciate that the addition in dispute made u/s 68 of the Act pertained to credit entries relating to purchases made in the ordinary course of business forming part of Audited books of accounts and as such was not 'unexplained credits'. 4. For that the Learned Commissioner of Income Tax (Appeals) erred in confirming the levy of higher tax rate @ 60% u/s 115BBE of the Act without appreciating the fact that the relevant amendment leading to such higher tax rates was not applicable for the subject AY 2017-18. 5. For that the Learned Commissioner of Income Tax (Appeals) erred in confirming the levy of Interest u/s 234B of the Act, in consequence to the above mentioned addition made.

For these grounds and such other grounds that may be adduced before or during the hearing of the appeal, it is prayed that the Hon'ble Tribunal may be pleased to delete the additions made and/or provide such other relief as this Hon'ble Tribunal may deem fit.

Unexplained credit of Rs. 1,47,51,734/- pertaining to 15 "Fish Creditors" (i) The Ld. CIT(A) has erred while declaring the credit of Rs. 1,47,51,734 as explained on grounds that payments made to these creditors by the assessee is proof of transactions between

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 3 :: them and the discrepancy between the payable and paid are due to running accounts maintained by these creditors with the assessee while there is no documentary proof to substantiate this prospect. (ii) The Ld. CIT(A) has failed to consider that the creditors will not generally settle a credit balance if paid less than the amount payable unless the actual payable is less than what was shown in books or unless the actual payable is written off by the creditor. (iii) The Ld.CIT(A) has failed to consider that in the case of the assessee there is no proof that the credits of the assessee was written off by the creditors and therefore the difference between payable and paid in respect of these 15 creditors are not explained conclusively.

Unexplained credit of Rs.5,25,84,387/- pertaining to rest of the "Fish Creditors" (iv) The Ld.CIT(A) has erred while deciding that the addition of "Bogus Purchases" made by the AO to a tune of Rs.5.50 Crs, during the re-assessment proceedings. explains the unexplained credit of Rs. 5.25 Cr pertaining to the "fish Creditors". (v) The Ld.CIT(A) has failed to consider that the addition of Rs.5.50 Cr made by the AO is on account of "Unexplained Money" u/s 69A and not on account of "Bogus Purchase and therefore one cannot be considered as a source for the other. (vi) The Ld.CIT(A) has failed to consider that the AO, during the re- assessment proceedings, had not accepted the source of the cash of Rs.5.50 Crs and had added the same to the income of the assessee as "Unexplained Money" u/s 69A and that the assessee has not explained the source of cash satisfactorily during any stage of the re-assessment proceeding. Addition of Rs. 1,21,96,749/-current liabilities as unexplained credit u/s 68 (vii) The Ld.CIT(A) erred while deleting the addition of Rs. 1,21,96,749/- by accepting evidence submitted by the assessee during appeal proceedings without providing easonable opportunity to the Assessing Officer to examine the evidences and rebut the same as is required u/r 46A(3) of the Income Tax Rule. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored.

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 4 :: 2. For that the re-opening of assessment u/s 147 of the Income Tax Act, 1961 is bad in law. Without prejudice to the above: 3. For that the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition to the tune of Rs. 18,40,932/- made u/s 69A rws 115BBE of the Act towards cash deposits made during the demonetization period. 4. For that the Learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the said cash deposits in dispute having arisen out of the operational revenue of the appellant company had already been offered to tax and that bringing it to tax again u/s 115BBE of the Act at higher tax rates shall tantamount to taxing the same sum twice against the principles of natural justice. 5. For that the Learned Commissioner of Income Tax (Appeals) erred in confirming the levy of higher tax rate @ 60% u/s 115BBE of the Act without appreciating the fact that the relevant amendment leading to such higher tax rates was not applicable for the subject AY 2017-18. 6. For that the Learned Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 5,55,00,000/- made as 'business income' for the relevant previous year. 7. For that the Learned Commissioner of Income Tax (Appeals) erred in enhancing the Taxable income of the appellant by a sum of Rs. 1,55,00,000/- towards 'undisclosed income' under the facts and circumstances of the case.

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 5 :: (ii) The Ld.CIT(A) had failed to consider that without the details of SBN and Non-SBN notes held by the assessee before demonetization, it will be only a conjecture to arrive at a conclusion that the cash deposited by the assessee was out of recorded cash sales. Issue-2: - Addition Rs.5,55,00,000/- as Unexplained Money u/s 69A: (iii) The Ld. CIT(A) has erred while deciding that the unexplained cash transaction between the Director and the GM of the assesee company was on account of addition of "Bogus Purchases made by the assessee and hence should be a disallowable business expenditure. (iv) The Ld.CIT(A) has failed to consider that the source of the cash is still not explained satisfactorily by the assessee and that the AO has not accepted the source of the cash as overstated purchases during the re-assessment proceedings. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored.

ITA Nos. 2363 & 2364/Chny/2025 (Assessee's Appeals) ITA Nos. 2694 & 2695/Chny/2025 (Revenue's Appeals) Assessment Year : 2017-18

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 6 :: completed on 29.03.2022 making additions of Rs.94,20,790/- u/s. 69A read with section 115BBE and Rs.5,55,00,000/- u/s. 69A. The ld.CIT(A), by separate order of even date 29.07.2025, partly allowed the appeals. Against the said orders, both the assessee and the Revenue are in appeal before us. 6.2 FINDINGS OF THE AO AND LD.CIT(A) – APPEAL ARISING FROM ORDER U/S 143(3)

A. Addition towards Sundry Creditors – Rs.20,51,00,566/-

The Assessing Officer observed that the assessee had shown substantial increase in sundry creditors and had failed to produce confirmations and supporting evidences during assessment proceedings. Accordingly, the entire increase in creditors amounting to Rs.20,51,00,566/- was treated as unexplained cash credit u/s. 68 of the Act. Before the ld.CIT(A), the assessee furnished ledger accounts, confirmations, purchase records and other evidences. After obtaining remand report and conducting verification, the ld.CIT(A) held that except for an amount of Rs.39,67,139/- relating to certain non-fish creditors, the balances stood explained. Accordingly, addition of Rs.20,11,33,427/- was deleted and only Rs.39,67,139/- was sustained.

B. Addition towards Other Current Liabilities – Rs.9,91,96,749/-

The AO treated balances reflected under "Other Current Liabilities" as unexplained credits u/s. 68. The ld.CIT(A), after examining ledger accounts, bank statements, confirmations and income tax particulars of the concerned parties,

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 7 :: held that identity, genuineness and creditworthiness stood established and deleted the entire addition.

6.3 FINDINGS OF THE AO AND CIT(A) – APPEAL ARISING FROM REASSESSMENT U/S 147 OF THE ACT

A. Cash Deposits during Demonetization – Rs.94,20,790/-

The AO treated the entire cash deposits made during the demonetization period as unexplained money u/s. 69A read with section 115BBE. The ld.CIT(A), after examining cash book, sales records and cash reconciliation statements, accepted explanation for Rs.75,79,858/- and sustained only Rs.18,40,932/-. B. Addition of Rs.5,55,00,000/- The Assessing Officer treated the amount as unexplained money u/s. 69A based on survey statements, WhatsApp chats and seized materials. The ld.CIT(A) held that the amount represented inflation of fish purchases reflected in the books and therefore could not be taxed u/s. 69A of the Act. However, he sustained the amount as business income arising from inflated purchases. C. Enhancement of Rs.1,55,00,000/- The ld.CIT(A), invoking powers u/s. 251 of the Act, enhanced the assessment by Rs.1,55,00,000/- holding that the same represented undisclosed receipts from parking, toll and mess collections.

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 8 :: 1.1. M/s.Jeppiaar Fishing Harbour Muttom Private Limited (“the assessee”) is a Company, engaged in the business of Fishing, operation of fish hatcheries/ fish farms and service activities incidental to fishing. 1.2. The Assessee had filed its return of income for AY 2017-18 on 30.10.2017 admitting a total loss of Rs.3,92,97,696/-. 1.3. The case was processed at CPC on 30.04.2018 and was later selected for scrutiny under CASS and assessment u/s 143(3) of the Income Tax Act (“the Act”) was completed on 31.12.2019 by making the following additions: • Addition u/s.68 of the Act towards Increase in Sundry Creditors balance outstanding, amounting to Rs.20,51,00,566/- and • Addition u/s.68 of the Act towards ‘Other Current Liabilities’ amounting to Rs.9,91,96,746/-. Thereby assessing the total income at Rs.30,42,97,315/- and had raised a demand of Rs.31,26,17,648/-. 1.4. Aggrieved by the above assessment order, the Assessee had filed an appeal before the Commissioner of Income Tax (Appeals) – 18, Chennai on 20.01.2020. 1.5. Subsequently, the Learned Assessing Officer had noticed from AIMS module in ITBA data that the assessee company had made cash deposits of Rs. 94,20,790/- during the demonetization period between 09.11.2016 to 30.12.2016 and alleging that the assessee had not disclosed such cash deposits in its return of income for the relevant AY 2017-18, had considered it to be a fit case for reopening u/s 147 of the Act. 1.6. Accordingly, after obtaining the approval of the competent authority as prescribed u/s 151, a notice u/s 148 was issued on 29.03.2021 and the assessee filed the return of income on 05.04.2021 admitting a loss of Rs. 3,92,97,696/- for the said AY. Then notice u/s 143(2) dated 02.07.2021 was issued to the assessee and the reasons for reopening were provided. On receipt of the reasons, the assessee had filed its objections to the same. The Learned Assessing Officer had issued an order dated 28.07.2021 for disposal of the objections raised. The assessee company had made further submissions in this regard. 1.7. Subsequently, a show cause notice dated 11.03.2022 was issued to the assessee wherein the assessee was requested to show cause as to why the allegedly undisclosed income of Rs. 5,55,00,000/-, according to the Learned Assessing Officer, arising out of the admission made by a director of the assessee company in connection with the search and survey operations conducted in the group concerns of the assessee company including the assessee company, ought not be brought to tax. The due reply objecting to the same being it was admitted without referring to the books of accounts and copies of impounded materials was filed by the assessee. 1.8. The Learned Assessing Officer had then passed the assessment order dated 29.03.2022 u/s 147 of the Income Tax Act making the following additions:

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 9 :: • Rs. 94,20,790/- towards the cash deposits made during the demonetization period treating it as taxable as ‘Unexplained money’ u/s 69A rws 115BBE of the Act. • Rs. 5,55,00,000/- as ‘Unexplained money’ u/s 69A of the Act. Thereby, assessing the total income at Rs.36,92,18,105/- and had raised a demand of Rs.37,73,58,740/-. 1.9. Aggrieved by the above actions of the Assessing Officer, the Assessee filed an appeal before the Commissioner of Income Tax (Appeals) – 18, Chennai (“CIT(A)”) on 20.01.2020 against the order dated 31.12.2019 passed u/s.143(3) of the Act and on 19.04.2022 against the Order dated 29.03.2022 passed u/s. 143(3) r.w.s 147 of the Act. 1.10. The Learned CIT(A), vide common order dated 29.07.2025, decided the appeal arising from the orders passed u/s.143(3) and 143(3) r.w.s 147 as follows: 1.10.1. Appeal against order passed u/s.143(3) of the Act: • Addition u/s.68 of the Act towards increase in sundry creditors balance amounting to Rs.20,51,00,566/-: The CIT(A), after the remand report proceedings and independent verification,: o Sustained the addition of Rs.39,67,139/- towards Non-Fish Creditors. o Deleted the balance addition of Rs.20,11,33,427/- towards other creditors including Fish creditors. • Addition u/s.68 of the Act towards other current liabilities amounting to Rs.9,91,96,749/-: The CIT(A), after the remand report proceedings and independent verification, deleted the entire addition of Rs.9,91,96,749/- made by the Assessing Officer. 1.10.2. Appeal against order u/s.147 of the Act : • Addition u/s.69A of the Act towards cash deposit of Rs.94,20,790/- o Sustained the addition of Rs.18,40,932/- and o Deleted the addition of Rs.75,79,858/- • Addition u/s.69A of the Act amounting to Rs.5,55,00,000/-: The CIT(A) held that the said addition could not be brought to tax under section 69A and recharacterized the addition of Rs.5,55,00,000/- as business income arising from disallowance of inflated purchases while sustaining the addition. • Enhancement by CIT(A) amounting to Rs.1,55,00,000/-: The CIT(A), on analysing WhatsApp chats and statements, opined that the total cash movement during the year was about Rs.7.05 crores, of which Rs.5.55 crores was covered by overstated fish purchases already brought to tax, and held that the balance Rs.1,55,00,000/- represented separate unrecorded business receipts relating to parking, mess and toll collections not forming part of the purchase inflation, and in exercise of his powers under section 251 of the Act,

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 10 :: had enhanced the assessee company’s taxable income by Rs.1,55,00,000/- as ‘undisclosed business income’. 1.11. Aggrieved by the above actions of the CIT(A), the Assessee had filed an appeal before the Hon’ble Income Tax Appellate Tribunal, Chennai Bench on 28.08.2025 in ITA Nos. 2363 & 2364/CHNY/2025 for the issues decided by the CIT(A) against the Assessee and the Department had filed an appeal before the Hon’ble ITAT, Chennai Bench on 29.09.2025 in ITA Nos. 2694 & 2695/CHNY/2025 for the issues decided by the CIT(A) in favour of the Assessee with respect to the Assessment Orders passed u/s 143(3) and 147 of the Act. In this regard, it is submitted as under: Appeal arising from 143(3) order dated 31.12.2019 : 2. Assessee Appeal in ITA No.2363/CHNY/2025 2.1. Addition u/s.68 towards increase in sundry creditors – Non-Fish Creditors – Rs.39,67,139/- 2.1.1. Department’s Contention 2.1.1.1. The Learned Assessing Officer had made an addition of Rs.20,51,00,566/- being the increase in sundry creditors as compared to the preceding year on the ground that the assessee had failed to furnish supporting evidences such as ledger accounts, confirmations and other documentary proofs in respect of such creditors during the course of assessment proceedings, and accordingly treated the same as unexplained cash credits under section 68 of the Act. 2.1.1.2. The Learned CIT(A), after admitting additional evidences and calling for a remand report, examined the details furnished by the assessee. In respect of non-fish creditors, the Learned CIT(A) observed that in the case of certain creditors, particularly M/s. Angel Agency and Chandru Fuels, the assessee was not able to substantiate portions of the outstanding balances with supporting bills, vouchers or confirmations. (kindly refer Para 11.4 to 11.6 of the CIT(A) order) 2.1.1.3. The Learned CIT(A) noted that in the case of M/s. Angel Agency, against a total outstanding of Rs.46,52,612/-, only Rs.24,24,212/- could be reconciled and the balance of Rs.22,28,400/- remained unsubstantiated. Similarly, in the case of Chandru Fuels, the entire amount of Rs.16,94,750/- remained unreconciled. Accordingly, aggregating such unreconciled differences, the Learned CIT(A) sustained an addition of Rs.39,67,139/- as unexplained u/s.68 of the Act. 2.1.2. Assessee’s Submissions 2.1.2.1. It is submitted that the amount of Rs.39,67,139/- represents genuine trade creditors arising in the ordinary course of its business and pertains mainly to fuel suppliers such as M/s. Angel Agency and Chandru Fuels, whose accounts have been regularly reflected in the assessee’s books. The corresponding purchases of fuel are duly recorded and debited to the Profit & Loss Account and have not been disallowed or doubted in the

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 11 :: assessment made under section 143(3) of the Act. Once the purchase transactions are accepted as genuine and form part of the trading results, the related outstanding balances cannot be selectively treated as unexplained cash credits under section 68 in the absence of any finding that the purchases are bogus. 2.1.2.2. For M/s. Angel Agency, complete ledger accounts for FY 2016‑17 and 2017‑18 (Paperbook Page Nos.1–2 and 10–11) show regular diesel purchases and payments, and the corresponding purchase bills for FY 2016‑17 (Paperbook Page Nos. 3–9) and confirmation of balance as at 31.03.2017 (Paperbook Page No.12) fully support the closing credit, with the respective purchase bills relating to the credit balance outstanding at the year end being placed on record. Similarly, in the case of Chandru Fuels, the confirmation of account balance as at 31.03.2017 confirming the outstanding balance at Rs.16,94,750/- (Papaerbook Page No. 13) read with the assessee’s fuel‑purchase pattern demonstrates that the impugned amount is nothing but a trade credit in the ordinary course of business. 2.1.2.3. The Learned CIT(A) himself notes in Paras 11.4 to 11.6 that the dispute is only with reference to alleged “unreconciled” portions of the outstanding in these two accounts and not with the existence or identity of the parties. Once the creditor’s identity, the underlying purchases and the running nature of the account are admitted, a mere difference in reconciliation or an inability to match every entry to the last rupee cannot, by itself, trigger an addition under section 68 when the trading results have been accepted. 2.1.2.4. It is further submitted that the Learned CIT(A) has, on the same set of evidence and Remand Report, had accepted the genuineness of all other non-fish trade creditors and deleted the balance addition of Rs.20,11,33,427/-, as recorded in Para 11.1 to 11.3 of the order. There is no separate adverse material brought on record to single out these two parties for differential treatment; the sustenance of Rs.39,67,139/- is thus inconsistent with the overall factual finding that the trade creditor profile is genuine. 2.1.2.5. Without prejudice, even assuming but not admitting that any marginal quantitative difference remains in reconciliation, such difference, if at all, can only be regarded as part of the trading account and would merge with the overall trading results; it cannot be taxed again as an “unexplained cash credit” over and above accepted purchases. 2.1.2.6. Based on the above, it is most humbly prayed before Your Authority that the addition made in the assessment and sustained by the CIT(A) to the extent of Rs. 39,67,139/- may kindly be deleted. 3. Department Appeal in ITA No.2694/CHNY/2025 3.1. Addition u/s.68 of the Act towards increase in Sundry Creditors – 15 Fish Creditors (Rs.1,47,51,734/-) and Balance Fish Creditors (Rs.5,25,84,387/-) 3.1.1. Department’s Contention 3.1.1.1. The Department challenges the relief granted by the Learned CIT(A) in respect of Fish creditors, contending that the deletion of additions relating to (i) 15 Fish creditors aggregating to Rs.1,47,51,734/-, and (ii) the

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 12 :: balance fish creditors of Rs.5,25,84,387/-, is not justified on the facts or in law. The Department relies on the Remand Report findings that a large number of fish creditors did not respond to notices issued by the ADIT (Inv.), Tirunelveli, several notices were returned unserved, and none of the fishermen/boat owners were filing returns of income or maintaining regular books of account. 3.1.1.2. With respect to the 15 fish creditors, the Department argues that although they appeared in response to summons and confirmed outstanding balances of Rs.1,47,51,734/- and produced bank statements, the credits in their bank accounts did not match, entry-wise, with the closing balances shown by the assessee, and therefore the genuineness of the credit balances and the creditors’ capacity remain unproven. The Department submits that the Learned CIT(A) erred in placing undue reliance on such confirmations and bank statements and in directing that no adverse view be taken on these creditors (Para 11.3 of the CIT(A) order). 3.1.1.3. In relation to the balance fish creditors of Rs.5,25,84,387/-, the Department contends that the Learned CIT(A) wrongly applied the principle of telescoping by linking these balances to the separate addition of Rs.5.55 crores on account of overstated fish purchases. According to the Department, unexplained credits appearing as sundry creditors are distinct from disallowance of inflated purchases and require independent satisfaction of the three ingredients of section 68 – identity, creditworthiness and genuineness – which, it is alleged, the assessee has failed to discharge for these creditors. The Department, therefore, prays that the additions originally made by the Assessing Officer in respect of fish creditors be restored. 3.1.2. Assessee’s Submissions 3.1.2.1. In this regard, it is submitted that the relief granted by the Learned CIT(A) in respect of fish creditors is based on detailed factual verification, including remand proceedings, also involving independent examination of the creditors, and does not call for interference. The assessee’s business model necessarily involves dealing with fishermen and boat owners who supply fish on credit and receive periodic payments; the corresponding purchases have been accepted as genuine and have not been disallowed in the assessment under section 143(3) of the Act. Once the trading transactions are accepted, the Department cannot, without cogent contrary evidence, treat the resulting creditor balances as ‘unexplained’ under section 68. 3.1.2.2. With respect to the 15 fish creditors aggregating to Rs.1,47,51,734/-, the Learned CIT(A) has recorded in Para 11.3 of his order that these parties appeared before the Assessing Officer in response to summons under section 131, their sworn statements confirming the amounts due from the assessee were recorded, and they produced bank statements showing receipt of payments from the assessee. The Department’s objection that specific bank credits do not arithmetically tally with the closing balances ignores the nature of running accounts in the fish trade where advances, supplies and settlements occur continuously; once identity, business nexus and actual fund flows are established from independent sources, the requirements of section 68 stand fulfilled and there is no residual basis to treat these balances as unexplained.

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 13 :: 3.1.2.3. As regards the balance fish creditors of Rs.5,25,84,387/-, the assessee reiterates that these balances are inseparable from the overstatement of fish purchases admitted during survey and reassessment. It is a fact that inflated purchases shall give rise to inflated creditors and the ‘unexplained’ creditors relate only to those overstated purchases. 3.1.2.4. The sworn statements of the General Manager and the Director of the assessee company (relied on by the CIT(A) in Paras 8 and 11.6–11.8 of his Order and forming part of Paperbook Page Nos. 74–99 and 100–116) clearly establish that purchases reflected in the return (Rs.207.98 crores) exceeded actual fish purchases (Rs.202.44 crores) by about Rs.5.54 crores, which the assessee has accepted to be disallowed as inflated purchases and which has been brought to tax as additional business income of the assessee company in reassessment. On that basis, the CIT(A) has rightly quantified the unreconciled fish creditors at Rs.5,25,84,387/-, and had correctly held in Paras 11.6–11.8 that this figure is fully covered by, and subsumed in, the admitted additional income of Rs.5.55 crores and no separate addition under section 68 can survive. 3.1.2.5. It is a settled proposition that the same income cannot be taxed twice under different provisions. Here, the Department seeks to tax the same cash cycle once as disallowance of inflated fish purchases (Rs.5.55 crores) and again as unexplained creditors (Rs.5,25,84,387/-); the CIT(A)’s telescoping direction in Paras 11.7–11.8 correctly prevents this double taxation. 3.1.2.6. In view of these factual and legal findings, the assessee respectfully submits that the Department’s grounds in ITA No. 2694/CHNY/2025 challenging deletion of additions relating to fish creditors are devoid of merit and the relief granted by the CIT(A) deserves to be upheld in full. 3.2. Addition u/s.68 of the Act towards Other Current Liabilities – Jeppiaar and Remibai Jeppiaar – Rs.1,21,96,749/- 3.2.1. Department’s Contention 3.2.1.1. The Department disputes the relief granted by the Learned CIT(A) in respect of the balances standing in the names of “Jeppiaar” and “Remibai Jeppiaar” aggregating to Rs.1,21,96,749/-, which form part of “Other Current Liabilities”. The Assessing Officer had originally treated the entire “Others – Current Liabilities” of Rs.9,91,96,749/- (Jeppiaar Milk Products Pvt. Ltd., Jeppiaar and Remibai Jeppiaar) as unexplained cash credits under section 68 for want of ledgers and confirmations during assessment. 3.2.1.2. While the loan from Jeppiaar Milk Products Pvt. Ltd. of Rs.8,70,00,000/- stands accepted through remand proceedings, the Department contends that the Learned CIT(A), vide Para 12 of his Order, erred in deleting the addition to the extent of Rs.1,21,96,749/- in the names of Jeppiaar and Remibai Jeppiaar by relying on alleged additional evidence (ledgers, bank statements and ITRs) furnished for the first time before him. It is argued that such additional evidence was admitted in violation of Rule 46A(3) of the Income Tax Rules, without affording a proper opportunity to the Assessing Officer to examine and rebut the same.

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 14 :: 3.2.1.3. On merits, the Department’s stand is that the mere fact that these creditors are group individuals/promoters does not by itself prove their creditworthiness or the genuineness of the advances; in the absence of clear source-wise explanation for the outstanding balances, the sum of Rs.1,21,96,749/- should be restored as unexplained cash credits under section 68. 3.2.2. Assessee’s Submissions 3.2.2.1. The assessee submits that the disputed sum of Rs.1,21,96,749/- represents genuine loan/advance balances standing in the names of two identifiable individuals, Shri Jeppiaar (Rs.57,36,749/-) and Smt Remibai Jeppiaar (Rs.64,60,000/-), who are promoters of the group, including that of the assessee company. Their identity and relationship with the assessee are undisputed and have been acknowledged throughout the proceedings. 3.2.2.2. The ledger accounts of “Jeppiaar” and “Remibai Jeppiaar” in the assessee’s books forms part of Paperbook Pages 156–157 filed before Your Authority. These ledgers clearly show the opening balances brought forward, the transactions during the year through banking channels (in the case of Shri Jeppiaar) and the closing balances of Rs.57,36,749/- and Rs.64,60,000/- respectively as on 31.03.2017, which precisely match the figures recorded by the Learned CIT(A) in Para 12.1 of the appellate order. 3.2.2.3. From the said ledgers, it is evident that in the case of Smt Remibai Jeppiaar, the entire closing balance of Rs.64,60,000/- is an opening brought-forward credit with no fresh credits during the previous year relevant to AY 2017-18, and that in the case of Shri Jeppiaar, fresh credits during the year are duly reflected and reconciled in the running account culminating in the closing balance of Rs.57,36,749/-. The nature of these accounts is, therefore, that of continuing loan/trade advance accounts and not unexplained one-off cash credits. 3.2.2.4. In addition to the said ledger extracts, the assessee had produced before the CIT(A) the bank statements and income-tax returns of the said creditors, as noted in Para 12.1 of the appellate order, to demonstrate that the transactions are routed through normal banking channels and that the creditors possess sufficient income and capital base to support the outstanding balances. 3.2.2.5. As regards the Rule 46A objection, it is submitted that the above mentioned documents were submitted in response to the notice issued by the Learned CIT(A), calling for such details and was not forming part of the ‘Additional evidence’ filed before him that was subjected to Remand proceedings. Hence, there is no breach of Rule 46A(3) of the Act. 3.2.2.6. In these facts, where (i) identity of the creditors (promoters with PAN and regular returns), (ii) genuineness of the balances as per the ledgers (PB 156–157), and (iii) creditworthiness as per their returns/financials examined by the CIT(A) all stand established and have been scrutinized, the conditions of section 68 are clearly satisfied. 3.2.2.7. Based on the above, it is most humbly prayed before Your Authority that the deletion of Rs.1,21,96,749/- in respect of “Other Current

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 15 :: Liabilities – Jeppiaar and Remibai Jeppiaar” be upheld and the Department’s ground in ITA No.2694/CHNY/2025 be dismissed. Appeal arising from Order u/s.147 of the Act dated 29.03.2022 4. Assessee Appeal in ITA No.2364/CHNY/2025 4.1. Reopening of Assessment u/s.147 of the Act is bad in law 4.1.1. The assessee’s assessment for AY 2017-18 was completed under section 143(3) of the Act on 31.12.2019 determining total income at Rs.30,42,97,315/-, after detailed scrutiny of the return and records then available with the Department. 4.1.2. The reasons recorded for reopening (communicated with notice dated 02.07.2021 – Paper Book Page nos. 23–26) show that the sole basis for invoking section 147 is the fact that the assessee deposited cash aggregating to Rs.94,20,790/- during the demonetisation period (09.11.2016 to 30.12.2016), as reflected in the very return of income for AY 2017-18 filed u/s 139(1) on 30.10.2017 and in the Note no. 22 to the Audited Financial Statements submitted during the assessment proceedings. No new external information, investigation, survey/search material or third-party statement is referred to in the reasons. 4.1.3. The reopening notice u/s 148 dated 29.03.2021 has thus been issued within four years purely on a re-appraisal of the same primary facts already before the Assessing Officer at the time of the original scrutiny assessment. In the absence of any fresh tangible material coming to the AO’s possession post-assessment, such re-appraisal amounts to nothing but a change of opinion, which is outside the scope of section 147. 4.1.4. Courts have consistently held that reassessment based only on a different/another view of the same material is invalid. The principle that a completed scrutiny assessment cannot be reopened merely to review an earlier view, without new material, has been reiterated in decisions such as:  CIT vs. Bhanji Lavji (1971) 79 ITR 582 (SC) – change of opinion does not confer jurisdiction to reopen;  PCIT vs. Haldia Petrochemicals Ltd. 148 taxmann.com 127 (Cal.) – reassessment bad where AO only re-appraises material already in the books without any new information;  PCIT vs. Santech Solutions (P.) Ltd. 97 taxmann.com 179 (Mad.) – when original assessment considered the issue and no fresh material is available, reopening is purely a change of opinion and invalid. 4.1.5. In the assessee’s case, all primary facts regarding cash deposits – the Return of Income for AY 2017-18, Audited Financial Statements for the FY 2016-17, ‘Cash Transactions 2016’ report submitted to the Department as mandated – were already on record and could have been, and in substance were, examined in the original scrutiny u/s 143(3) of the Act. There is no reference in the recorded reasons (Paperbook Page Nos.23–26) to any new information, investigation report, search/survey material or third-party statement having come to the notice of the Assessing Officer

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 16 :: post-assessment. On these admitted facts and in the light of the decisions in this regard, it is submitted that the present reopening is nothing but a re-appraisal of the same material and a mere change of opinion, which is impermissible under section 147 of the Act. 4.1.6. Based on the above, it is most humbly prayed before Your Authority that the impugned reassessment may kindly be quashed as null and void. 4.2. Addition u/s.69A of the Act – Cash Deposits during demonetization – Rs.18,40,932/- sustained by CIT(A) 4.2.1. Department’s Contention 4.2.1.1. The Learned Assessing Officer observed from the AIMS module that the assessee had deposited cash of Rs.94,20,790/- in its bank account between 09.11.2016 and 30.12.2016 during the demonetisation period, noted that no such deposits were disclosed in the return nor any particulars of specified bank notes were furnished, and therefore treated the entire amount as unexplained money under section 69A r.w.s. 115BBE of the Act. 4.2.1.2. The Learned CIT(A), vide para 17.2 of his Order, after verification of cash balance as on 08.11.2016 and reconciliation of party-wise cash deposits with the sales ledger, sustained only Rs.18,40,932/- in the cases of Berchmans Ubald (Rs.3,00,000/-) and DX Sea Foods (Rs.15,40,932/- ), holding that those names were not figuring in the sales ledger, and deleted the balance Rs.75,79,858/-. The above reconciliation of cash deposits, the figure of Rs.94,20,790/-, and the identification of the sustained component of Rs.18,40,932/- are also reflected in the cash-transaction documents and cash- deposit break-ups which forms part of Paperbook Pages 158-160 and pages 160 -170, including the ‘Cash Transactions 2016’ report and party-wise cash- deposit details during the demonetisation period that had been submitted during the assessment proceedings. 4.2.2. Assessee’s Submissions 4.2.2.1. It is submitted that the assessee’s reconciliation shows that even the sustained sum of Rs.18,40,932/- is part of regular business cash already embedded in turnover. The mapping of cash deposits to sales in the cases of DX Sea Foods and Ubalt / Ubald Raj Pattam is borne out by the sales ledgers (Paperbook Page Nos. 49–64 and 65–73) read with the ‘Cash Transactions 2016’ report (Paperbook Page Nos. 158–159) and the detailed ‘Details of Cash Deposits during the period of demonetisation’ (Paperbook Page Nos. 160–169), while the denomination‑wise compilation at Paperbook Page No. 170 shows that the deposits are a consolidation of business cash, not unexplained receipts. The Audited Financial Statements of the Assessee company (Paperbook Page Nos. 174-189), through Note No. 22 included therein, reflect the ‘Disclosure of transaction in demonetized notes and other notes during the period 08.11.2016 and 30.12.2016’ as mandated by the Companies Act, 2013 then. 4.2.2.2. The CIT(A) had failed to appreciate the fact that the parties in dispute were reflected under their individual names in lieu of their Trade name in the sales ledger as evidenced by the documents submitted as mentioned above (ie) ‘Dx Sea foods’ mentioned by the CIT(A) had been mentioned under the name ‘Alex Wilson – Dx Sea Foods’ in the sales ledger, that also appears

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 17 :: in the ‘List of non-PAN customers’ being the source of such cash deposits (Paperbook Page Nos. 190-192) submitted during the assessment proceedings. 4.2.2.3. Once the Learned CIT(A) has accepted that there was a cash balance of Rs.73,21,000/- as on 08.11.2016 and that the remaining deposits of Rs.75,79,858/- are explained by cash sales / collections, the residual Rs.18,40,932/- cannot be isolated and taxed again as unexplained when the corresponding receipts have already been offered as ‘Operating Revenue’ to tax, thereby taxing the same sum twice, that too at higher rates u/s 115BBE of the Act, in violation of the principles of natural justice. The dispute, at best, is only one of description / party-name mismatch and not of existence of business cash itself. 4.2.2.4. It is further submitted that bringing to tax business cash twice— once as part of turnover and again under section 69A r.w.s. 115BBE—results in double taxation of the same receipts. Without prejudice, even if any addition were to survive, the same should not be subjected to penal taxation under section 115BBE when the receipts are inherently connected with business operations already reflected in the books and offered to tax. 4.2.2.5. Based on the above, it is most humbly prayed before Your Authroity that the addition of Rs.18,40,932/- sustained by the CIT(A) towards cash deposits during demonetisation period be deleted in full. 4.2.2.6. In this regard, we further rely on the decisions of the Hon’ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd [2010] 195 Taxman 117 (Bombay), Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd vs. CIT [2011] 12 taxmann.com 74 (Delhi) and PCIT vs. Naveen Infradevelopers & Engineers (P) Ltd [2025] 181 taxmann.com 315 (Bombay), copies of which forms part of Paperbook Page Nos. 27 to 48, to submit that when a reassessment is initiated on a specific ground (here, alleged escapement in respect of cash deposits of Rs.94,20,790/-), and the very foundation of such ground substantially fails, the Department cannot sustain independent additions on altogether different issues not forming part of the recorded reasons (such as alleged ‘unexplained money’ of Rs.5.55 crores or alleged separate receipts of Rs.1.55 crores made through enhancement) without recording separate reasons and issuing a fresh notice u/s.148 of the Act. 4.3. Addition of Rs.5,55,00,000/- sustained by CIT(A) as business income arising from inflated purchases 4.3.1. Department’s Contention 4.3.1.1. The Learned Assessing Officer, relying on statements recorded during survey and WhatsApp chats and loose sheets seized, concluded that Rs.5,55,00,000/- represented unexplained cash generated outside the books and circulated between the assessee and the Director, and although the General Manager spoke of overstated fish purchases to this extent, the Assessing Officer treated the amount as unexplained money under section 69A and taxed it under section 115BBE. The relevant sworn statements and seized materials are placed at Paperbook Page Nos. 74–99 & 100–116.

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 18 :: 4.3.1.2. The Learned CIT(A) examined the impounded loose sheets comparing actual and returned details of fish purchases and found that purchases debited in the return were Rs.207.98 crores as against actual purchases of Rs.202.44 crores, giving a difference of about Rs.5.55 crores. He, vide Para 20 of his Order, held that this difference represented overstatement of purchases recorded in the books and could not be brought to tax as unexplained money under section 69A, and accordingly re- characterised the addition as ‘business income’ arising from disallowance of inflated purchases, while sustaining the quantum. 4.3.2. Assessee’s Submissions 4.3.2.1. At the outset, it is submitted that the impugned addition of Rs.5,55,00,000/- does not emanate from the reasons recorded for reopening the assessment and therefore falls outside the scope of proceedings under section 147. The reassessment was initiated on the specific issue of alleged unexplained cash deposits during demonetisation, and the addition relating to alleged purchase inflation is wholly distinct from the recorded reasons. 4.3.2.2. Once the primary issue forming the basis of reopening is substantially deleted by the CIT(A), and as submitted by the assessee deserves to be deleted in full, the Assessing Officer cannot sustain an independent addition of Rs.5,55,00,000/- dehors the reasons recorded. Reassessment cannot be used as a general review mechanism to make unrelated additions on every matter that comes to the Assessing Officer’s notice, where the assessment u/s 143(3) of the Act had been completed vide Order dated 31.12.2019, while such sworn statements of the General Manager Mr. R.Karthik giving rise to the said addition in dispute of Rs. 5,55,00,000/- had been recorded on 09.11.2019 (Paperbook page nos. 74 – 99) (ie) well before 31.12.2019 when the Assessment Order u/s 143(3) of the Act was passed. 4.3.2.3. Reliance in this regard is placed on the following decisions : 4.3.2.3.1. Decision of Hon’ble Bombay High Court in CIT vs. Jet Airways (I) Ltd [2010] 195 Taxman 117 (Bombay) (Paperbook page nos. 27 – 35) 4.3.2.3.2. Decision of Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd vs. CIT [2011] 12 taxmann.com 74 (Delhi) (Paperbook page nos. 36 – 44) 4.3.2.3.3. Decision of Hon’ble Delhi High Court in the case of PCIT vs. Naveen Infradevelopers & Engineers (P) Ltd [2025] 181 taxmann.com 315 (Bombay) (Paperbook page nos. 45 – 48) 4.3.2.4. Based on the above, it is most humbly prayed before Your Authority that addition of Rs.5,55,00,000/- sustained by the CIT(A) as business income be deleted in full. 4.4. Enhancement by CIT(A) – Rs.1,55,00,000/- 4.4.1. CIT(A)’s Contention 4.4.1.1. The Learned CIT(A), on analysing WhatsApp chats and statements, found that the total cash movement during the year was about

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 19 :: Rs.7.05 crores, of which Rs.5.55 crores was covered by overstated fish purchases already brought to tax, and held that the balance Rs.1,55,00,000/- represented separate unrecorded business receipts relating to parking, mess and toll collections not forming part of the purchase inflation. In exercise of powers under section 251, vide para 21 of his Order, the CIT(A) enhanced the assessee’s taxable income by Rs.1,55,00,000/- towards ‘undisclosed business income’. The relevant sworn statements are placed at Paperbook Page Nos. 74–99 & 100–116.

4.4.2. Assessee’s Submissions 4.4.2.1. In this regard, it is submitted that the CIT(A), in the appellate proceedings arising from such reassessment, cannot go beyond the reasons recorded or travel outside the boundaries of the subject matter of reassessment. 4.4.2.2. It is further submitted that where the revenue seeks to tax income from a new source—which had not been subject to enquiry or adjudication during assessment—the appropriate remedy lies under sections 147/148 or section 263, provided the statutory conditions are met. This legal position was affirmed by the Hon’ble Delhi High Court in CIT v. Union Tyres [(1999) 107 Taxman 447 (Delhi)], where it was held that the appellate authority does not possess parallel jurisdiction to invoke a fresh source of income under the garb of enhancement when the matter is squarely covered by other provisions of the Act. 4.4.2.3. Further, at the outset, it is submitted that the admission made by the Director Shri Marie Johnson was towards understatement of income on a wholesome basis, irrespective of the source, for the subject AY 2017-18 that had been the source for the cash that was transferred from the Harbour to Chennai Office across the FYs 2016-17 to 2019-20. 4.4.2.4. Shri Karthik, the General Manager of the assessee company, vide his answer to Query Nos. 26, 27 and 35 in his sworn statement recorded on 09.11.2019 u/s.133A(3)(iii) of the Act (Paperbook page nos. 74-99), had also conceded that the cash transfers were made across the years as stated above while also accepting that understatement of income was to the tune of ₹5,54,30,422/- in the FY 2016-17. 4.4.2.5. It is submitted that the enhancement of Rs.1,55,00,000/- results in double taxation of the same cash cycle already captured in the figure of Rs.5,55,00,000/- and in the subsequent telescoping granted against creditors. The enhancement is based on the same statements and WhatsApp messages and does not rest on any independent corroborative material establishing separate, unrecorded receipts of Rs.1.55 crores. 4.4.2.6. There is no specific quantification in the seized materials of parking, mess or toll collections of Rs.1.55 crores; the enhancement is made merely by taking the difference between total cash movement of Rs.7.05 crores and the sum of Rs.5.55 crores already treated as purchase inflation. Such inferential enhancement, unsupported by independent books-versus- seized material reconciliation, merely based on one part of the sworn

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 20 :: statements recorded without considering the statements in toto, is unsustainable. 4.4.2.7. The same evidentiary base cannot be repeatedly used to create multiple layers of additions. Unless there is distinct and separate material showing an independent stream of suppressed receipts of Rs.1.55 crores, the enhancement cannot survive. 4.4.2.8. Hence, it is reiterated that : • the understatement of income in the subject AY 2017-18 was only to the tune of Rs. 5,54,30,422/- ; • it arose from overbooking purchases while giving credit to suppliers over and above the cash required for the relevant previous year at Rs. 1,55,00,000/-; • was the source of cash generated and transferred in the subsequent Assessment years to the Chennai Office and • Rs. 1,55,00,000/- enhanced forms part of the Rs. 5,54,30,422/- admitted towards understatement of income by the assessee company whereby there is no need for further enhancement. 4.4.2.9. Based on the above, it is most humbly prayed before Your Authority that the enhancement of Rs.1,55,00,000/- made by CIT(A) be deleted in full. 5. Department Appeal in ITA No. 2695/CHNY/2025 5.1. Addition u/s.69A of the Act – Cash Deposits during demonetization – Department challenges the deletion of Rs.75,79,858/- 5.1.1. Department’s Contention 5.1.1.1. The Department contends that the Learned CIT(A) erred in deleting Rs.75,79,858/- out of the total addition of Rs.94,20,790/- made under section 69A towards cash deposits during the demonetisation period. The CIT(A) accepted the assessee’s explanation merely on the basis of book cash balance and internal reconciliation, without verifying whether the alleged cash on hand as on 08.11.2016 comprised specified bank notes or other denominations. 5.1.1.2. The Department argues that, in the absence of denomination- wise details of cash held prior to demonetisation, any conclusion that the deposits came from disclosed sources is conjectural. It therefore prays that the full addition of Rs.94,20,790/- under section 69A be restored. 5.1.2. Assessee’s Submissions 5.1.2.1. It is submitted that the Learned CIT(A), after detailed verification of the cash book, day-to-day cash sales and party-wise cash collections, recorded a categorical finding that there was a book cash balance of Rs.73,21,000/- as on 08.11.2016 and that, except for the amounts relating to Berchmans Ubald and DX Sea Foods aggregating to Rs.18,40,932/-, all other deposits stand reconciled with recorded business receipts. These are findings of fact based on primary records and have not been displaced by any contrary material. The assessee’s explanation is fully borne from the ‘Cash Transactions 2016’ report which forms part of Paperbook Pages 158–159,

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 21 :: the detailed ‘Details of Cash Deposits during the period of demonetisation’ which forms part of Paperbook Pages 160–169, and the denomination-wise summary which forms part of Paperbook Page 170, which together reconcile the deposits of Rs.94,20,790/- with book cash and recorded sale collections. 5.1.2.2. Once the existence of opening cash balance on 08.11.2016 is accepted and the linkage between cash sales / collections and subsequent deposits is established, what is relevant is whether the cash as per books is real, arises from disclosed turnover and is available to explain the deposits, and the Learned CIT(A) has answered that question in favour of the assessee after verification. 5.1.2.3. The Department has not shown that the assessee’s recorded turnover is inflated, that any particular cash sale is bogus, or that any seized material indicates separate unaccounted cash beyond what the books disclose. In these circumstances, the deletion of Rs.75,79,858/- by the CIT(A), after sustaining Rs.18,40,932/- allegedly where the assessee could not reconcile specific parties, is a balanced and reasoned conclusion that does not warrant interference. In particular, the parties in dispute are reflected in the sales ledgers which forms part of Paperbook Pages 49–64 (Alex-Wilson-DX Sea Foods) and 65–73 (Ubalt Raj Pattam), which were also filed before the CIT(A) in support of the reconciliation as stated in the preceding paragraphs. 5.1.2.4. Based on the above, it is most humbly prayed before Your Authority that the Department’s ground in this regard be dismissed. 5.2. Re-characterisation of Rs.5,55,00,000/- from section 69A to business income. 5.2.1. Department’s contention 5.2.1.1. The Department contends that the Learned CIT(A) erred in converting what the Assessing Officer had treated as unexplained cash under section 69A into a case of inflated purchases and business income. According to the Revenue, relying on survey statements, WhatsApp chats and loose sheets, the Assessing Officer had correctly concluded that Rs.5,55,00,000/- represented unexplained cash transactions between the Director and the General Manager outside the books and taxed the same under section 69A r.w.s. 115BBE. 5.2.1.2. The source of the cash remains unexplained and that the Assessing Officer never accepted purchase inflation as the source for the cash. By re-characterising the amount as disallowance of inflated purchases and treating it as business income, the CIT(A), according to the Department, diluted the rigour of section 69A and section 115BBE. The Department therefore prays that the character of Rs.5,55,00,000/- as unexplained money under section 69A be restored. 5.2.2. Assessee’s Submissions 5.2.2.1. It is submitted that the CIT(A)’s re-characterisation of the sum of Rs.5,55,00,000/- as business income from disallowance of inflated purchases is firmly grounded in the seized material itself. The impounded loose sheets compare actual fish purchases with purchases recorded in the return and show that while actual purchases were about Rs.202.44 crores, purchases

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 22 :: debited in the books were Rs.207.98 crores, giving a difference of approximately Rs.5.55 crores. This difference, on the face of it, represents overstatement of purchases in the books and not unexplained money found outside the accounts. 5.2.2.2. In such a situation, the correct legal treatment, if any addition is to survive, is to disallow the inflated portion of purchases and bring it to tax as business income, as the CIT(A) has done, instead of invoking section 69A which applies where money is found which is not recorded in the books. Here, the very allegation is that the books contain excess purchases; therefore the addition, if any, must logically be by way of disallowance of that excess and not by deeming the amount to be unexplained money. 5.2.2.3. Moreover, the same figure of Rs.5.55 crores has been applied to grant telescoping relief in respect of creditors, particularly fish creditors in dispute, as recorded in Paras 11.6 to 11.8 of the CIT(A)’s order. 5.2.2.4. Without prejudice to the assessee’s own appeal that even this business-income characterisation should not survive in reassessment for jurisdictional reasons, it is submitted that there is no legal or factual basis to restore section 69A treatment to the said sum in dispute. 5.2.2.5. Based on the above, it is most humbly prayed before Your Authority that the Department’s challenge to the CIT(A)’s re-characterisation may kindly be dismissed. 6. Common Submissions for Assessee Appeals in ITA Nos. 2363 & 2364/CHNY/2025 Without prejudice to the other grounds, it is submitted that the applicability of the amended section 115BBE of the Act for AY 2017-18 is itself a debatable issue, with respect to the enhancement of rate to 60% by the Taxation Laws (Second Amendment) Act, 2016. 6.1. In the assessee’s case, both the original assessment u/s 143(3) and the reassessment u/s 147 for AY 2017-18 involve additions sought to be brought within the scope of section 115BBE. The amendment to section 115BBE, enhancing the rate from 30% to 60%, was brought in by the Taxation Laws (Second Amendment) Act, 2016 on 15.12.2016 and is stated to apply from AY 2017-18. However, as held by the Hon’ble Supreme Court in Karimtharuvi Tea Estate Ltd. v. State of Kerala 60 ITR 262 (SC), an amendment that comes into force after 1st April of the financial year cannot be applied to the entire year; the law as on 1st April governs the assessment for that year. 6.2. The Hon’ble Madras High Court (Madurai Bench) in S.M.I.L.E. Microfinance Limited v. ACIT (WP(MD) No. 2078 of 2020, order dated 19.11.2024) has, after analysing the Statement of Objects and Reasons and the scheme of the amendment, categorically held that the enhanced rate of 60% under section 115BBE can apply only prospectively to transactions from 01.04.2017 onwards and not to transactions prior to that cut-off date, for which only the pre-amended rate of 30% can be applied. The Court has specifically

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 23 :: observed that the legislative intent was to deal with future attempts to convert black money “again”, and that the higher rate cannot be fastened on pre-01.04.2017 transactions. 6.3. Considering the above, it is respectfully submitted that if any additions are to be maintained, the tax rate should be limited to 30%, rather than the levied 60%. 7. Prayer for Appeals arising from order u/s.143(3) dated 31.12.2019 7.1. Considering the above submissions, it is most humbly prayed before Your Authority to:  Assessee Appeal in ITA No.2363/CHNY/2025 – delete the addition sustained by the CIT(A)  Department Appeal in ITA No.2694/CHNY/2025 - dismiss the Department’s appeal and/or provide such other relief as Your Authority may deem fit, for which act of justice, the assessee shall ever remain grateful. 8. Prayer for Appeals arising from order u/s.147 dated 29.03.2022 8.1. Considering the above submissions, it is most humbly prayed before Your Authority to:  Assessee Appeal in ITA No.2364/CHNY/2025 – quash the reopened assessment as null and void/ delete the additions sustained by CIT(A) and delete the enhancement made by CIT(A)  Department Appeal in ITA No.2695/CHNY/2025 – dismiss the Department’s appeal and/or provide such other relief as Your Authority may deem fit, for which act of justice, the assessee shall ever remain grateful.

In ITA No.2363/Chny/2025, the ld.AR for the assessee submitted that the sum of Rs.39,67,139/- represented genuine trade creditors arising from accepted business purchases. Once purchases were accepted and no adverse finding was recorded against the trading results, the corresponding outstanding balances could not be treated as unexplained cash credits u/s. 68. Confirmations, ledger accounts and purchase bills were furnished before the authorities.

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 24 :: In ITA No.2364/Chny/2025, challenging reassessment, the assessee submitted that the reopening was based solely on cash deposits which were already disclosed in the return of income, audited financial statements and demonetization disclosures furnished during original scrutiny proceedings. No fresh tangible material had come into possession of the AO after completion of assessment u/s. 143(3) of the Act. Therefore, the reopening was merely based on change of opinion. The assessee further submitted that once the very basis of reopening failed, additions of Rs.5.55 crores and enhancement of Rs.1.55 crores, which did not form part of recorded reasons, could not survive.

Appeal arising of the assessment order under section 143(3) in ITA no 2363/Chny/2025: 1. Grounds of Appeal of Assessee: Addition u/s 68 towards the unexplained increase in the sundry creditors: 1.1 In the assessment order u/s 143(3) of the Act, addition of Rs.20,51,00,566 towards unexplained increase in sundry creditors. In the appeal proceedings, remand report was called for by the CIT(A) and the assessing officer has verified by the submissions of the assessee. Based on the remand report and the submissions of the assessee, the learned CIT(A) has confirmed the addition of Rs. 39,67,139 on account of the unexplained sundry creditors. 1.2 In the page no. 18 of the order of the CIT (A) the remand report of assessing officer reproduced clearly shows fish creditors of Rs.39,67,139 was not reconciled which includes Rs 22,28,400 from M/s Angel agencies and Rs. 16,94,750 from M/s Chandra fuels. The CIT(A) in para 11.4 has stated the appellant was not able to prove the transaction of value Rs.39,67,139 and the same was not explained with voucher/bills. Just because the outstanding balance was confirmed by m/s Chandra fuels it does not explain the transaction. Further, the bills/voucher submitted with regard to M/s Angel agencies before the honob'le ITAT requires verification. 2. Grounds of Appeal of Department: Addition u/s 68 towards the unexplained increase in the sundry creditors: 2.1 In addition to the unreconciled fish creditors balance, the fish creditors of value Rs 1,47,51,734 were deleted by the CIT(A) as the confirmations were submitted by the parties. However, the

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 25 :: confirmation of account without voucher/bills and documents evidences cannot be accepted. Further the CIT(A) failed to appreciate that the payments are not exactly matching the closing balance. 2.2 The CIT(A) in para 11.7, has given credit for addition made during the reassessment proceedings towards the additional income of Rs 5.55 crores against the fish creditors of Rs 5.25 crores which was not explained by the appellant. 2.3 In the statement of the director Shri. Marie Johnson recorded u/s 131 of the Act during the course of survey proceeding, the assesse has accepted that Rs 5.55 crores has been admitted as additional income on account of the excess cash which was moved from Muttom to Chennai. Therefore, the decision of CIT(A) to grant credit for the additional income against the fish creditors is incorrect.

2.4 The assessee has pointed that the amount to be disallowed as inflated purchases was offered as the additional income. 2.5 However, the appellant could act establish the cash which was transported AY 2017-18, AY 2018-19, AY 2019-20 was arising from the inflated purchases as inflated purchases doesn't directly result in cash. The appellant has failed to establish the source for the unexplained income of Rs.5.55 crores which was offered to explain cash transferred from mutton to Chennai. Therefore, the unexplained fish creditors of Rs. 5.25 crores which stands unexplained as per the remand report is to be treated as unexplained cash credits u/s 68 of the IT Act. 3. Grounds of Appeal of Department: Addition u/s 68 towards unexplained other current liabilities: 3.1 In the assessment order u/s 143(3) of the Act, addition of Rs.9,91,96,749 towards unexplained other current liabilities. In the appeal proceedings, remand report was called for by the CIT(A) and the assessing officer has verified by the submissions of the assessee. Based on the remand report and the submissions of the assessee, the learned CIT(A) has deleted the addition made on account of the unexplained other current liabilities. In the remand report submitted the assessing officer has mentioned that no explanation was provided with regarding the transaction of value Rs.1,21,96,749. The learned CIT(A) has mentioned that ledger copies explaining the same was submitted by the assessee during the appellate proceedings. 3.2 However, the assessing officer was not provided the opportunity to verify the document submitted in the names of Jeppiar & Remibai Jeppiar amounting to Rs 1,21,96,749. The learned CIT(A) ought to have given an opportunity to the assessing officer to verify the additional evidences submitted during the appellant proceeding. Therefore, the decision of the learned CIT(A) to delete the addition made on account of current liabilities is incorrect and requires to be set aside to the assessing officer for further verification. Appeal arising of the reassessment order under section 147 in ITA no 2364/Chny/2025:

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 26 :: 4. Grounds of Appeal of Assessee: Reopening of assessment is not valid: 4.1 In the para 16.2.1 of the CIT(A) order, the learned CIT(A) has mentioned that no specific question was put forward to the appellant on the issue of cash deport during the original assessment proceeding. It was also brought to the record by the CIT(A) that that the appellant has not furnished the full details required in the questionnaire during the assessment proceeding. 4.2 Therefore, there is no full disclosure by the appellant during the assessment proceeding and there was prima-facie case of escapement of income. Hence, the reopening of assessment on the ground of the cash deposits during demonstration period is valid and the reopening of the assessment is valid. 4.3 Further in para 16.2.3, the CIT(A) has clearly mentioned since, the appellant had claimed credit for the addition of additional income of Rs 5.55 crores towards the explaining the creditor balances added in the regular assessment, the appellant cannot question the reopening on technical ground, when the addition of additional income admitted was brought to tax and telescoping of this condition was allowed by the CIT(A). Hence, the decision to hold the reopening of assessment as valid is correct. 5. Grounds of appeal of department: Additon towards total cash deposits during the demonetization period An addition u/s 69 of the Act towards the cash deposit of Rs. 94,20,790 was made by the assessing officer and the learned CIT(A) has confirmed the addition only to the extent of Rs.18,40,932. The cash ledger/sales ledger of the assessee showing the cash balance is not reliable on the cash was regularly moved for mutton to Chennai. Therefore, the claim of the appellant that the cash balance explains the source of cash deposits made during demonetization period cannot be accepted. 5.2 The CIT(A) has incorrectly accepted the sales ledger submitted by the appellant. As pointed by the CIT(A), the person claimed as source of cash deposits of value of Rs.18,40,932 were not forming part of the sales ledger which again proves that the cash ledger cannot be a reliable explanation for the source of the cash deposits. Therefore, the addition a cash deposit of Rs. 94,20,790 u/s 69 of the Act by the assessing officer is correct. 6. Grounds of appeal of Assessee: Additon towards cash deposits during the demonetization period sustained by CIT(A) order of Rs.18,40,932: 6.1 With regard to the ground that the cash deposit of Rs. 18,40,932 stands explained is not acceptable as the CIT(A) has clearly verified the sales ledger, which is the evidence for the cash balance and identified that the parties claimed as the source of cash deposits were not even a party in the sales ledger. Hence the argument of the appellant is incorrect and without any basis. 6.2 The ground of appellant that if the issue of addition on cash deposit during demonetization period is deleted, which is the only reason of reopening, the addition of Rs 5.55 crore on account of unexplained money stands to be deleted as the reopening of the

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 27 :: assessment becomes bad in law is not acceptable as for the reasons submitted above, the addition on the cash deposits during demonetization period addition is correct and the same is to be upheld. 7. Grounds of appeal of department: Additon towards unexplained money of Rs.5,55,00,000: 7.1 The CIT(A) in para 11.7, has given credit for addition made during the reassessment proceedings towards the additional income of Rs 5.55 crores against the fish creditors of Rs 5.25 crores which was not explained by the appellant and confirmed the addition made by the assessing officer as disallowable business expenditure. 7.2 However the learned CIT(A) has failed to note that the addition of Rs.5.55 crores was made with regard to the cash moved from muttom to Chennai and the same was offered as additional income by the director to explain the unexplained cash transferred by the assesse. Therefore, the decision of the learned CIT(A) to treat the addition made on account of unexplained money u/s 69A as the disallowable business expenditure arising due to inflated purchases is not acceptable. 8. Grounds of Appeal of Assessee: Enhancement of addition of Rs.1,55,00,000 by the Learned CIT(A): 8.1 Without prejudice to the above arguments the following submissions are made with regard to the enhancement of income of Rs. 1.55 Cr by the learned CIT(A) on account of case transferred from mutton to Chennai. 8.2 When the assesse is trying to explain the inflation of sundry creditors which is not explained in the original assessment through the additional income of Rs. 5.55 Cr added in the reassessment proceeding, the appellant cannot claim the benefits for the case transferred also from the same. 8.3 During the F.Y. 2016-17, Rs. 1.55 Cr. transferred from muttom to Chennai. The appellant has claimed the inflation of sundry creditors as source for the cash. In para 21.7 of CIT(A) the Learned CIT(A) has pointed that "once it was claimed and accepted that the increase in creditors' balance was adjusted against the overstated purchases during the year, there remains no balance or scope for further generation of cash out of these overstated purchases". 8.4 Further in Para 21.8 of the order of CIT(A), the learned CIT(A) has stated that, it is also a fact on record that WhatsApp messages were found from Sri. Karthik regarding sending cash from Muttom to Chennai, the sources for the said cash were explained as undisclosed cash receipts from other avenues operated at Harbour. The General Manager and Director have never retracted from the aspect of cash transfers as were quantified assessment year-wise based on survey findings, and finally the fact that the overall cash transferred was standing at Rs 7.05 crore, far exceeding the admission of overstated purchases of Rs 5.55 crores. Therefore, if the claim of the assessee to explain the inflation of sundry creditors which is not explained in the original assessment through the additional income of Rs. 5.55 Cr added in the reassessment

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 28 :: proceeding is accepted by the Hon'ble ITAT the enhancement of the income by the learned CIT(A) has to be sustained.

The ld. DR for the Revenue supported the assessment orders and contended that the assessee had failed to establish genuineness and creditworthiness of various creditors. It was argued that several fish creditors were not traceable and did not maintain books of account. With regard to reassessment, the Revenue contended that the cash deposits during demonetization constituted information suggesting escapement of income and therefore reopening was valid. The Revenue further submitted that the ld.CIT(A) erred in deleting major portions of additions relating to fish creditors and cash deposits and in re-characterizing the addition of Rs.5.55 crores as business income. 11. Our adjudication:

A. Validity of Reopening u/s. 147 of the Act:

We have considered the rival submissions, perused the assessment orders, the impugned orders of the ld. CIT(A), remand reports, material available on record and the judicial precedents cited before us. We have also carefully considered the reasons recorded for reopening. The reasons recorded are as under: The assessee, M/s Jeppiar Fishing Harbour Muttom Private Limited, a company doing business in trading sector. During the FY 2016-17 relevant to AY 2017-18, it is seen from AIMS module in ITBA data that the assessee made cash deposits of Rs.94,20,790/- during de- monetization period between 09-11-2016 to 30-12-2016. The assessee filed the return of income on 30-10-2017, with returned loss of (-) Rs. 3,92,97,696. The return of income was processed at central processing centre on 30-04-2018. Scrutiny assessment was completed on 31-12-2019, determining assessed income of Rs.30,42,97,315. It is seen from the return of income filed on 13-

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 29 :: 04-2018 that the assessee has made cash deposits of Rs.94,20,790/- during the demonetization period i.e., between 09- 11-2016 to 30-12-2016 and the assessee filed the loss return of (-) Rs. 3,92,97,696. This gives rise to the belief that the cash deposits of the assessee is from undisclosed sources. Thus, cash deposits remains unexplained. Therefore, I have reason to believe that income has escaped assessment for AY 2017-18 within the meaning of explanation to section 147 of the IT Act, 1961. Hence this is a fit case for reopening u/s. 147 of the IT Act, 1961. Since the issue relating to validity of reassessment goes to the root of the matter, we first take up the assessee's challenge to the reopening of assessment in ITA No.2364/Chny/2025. The original assessment for AY 2017-18 was completed u/s. 143(3) of the Act on 31.12.2019. Subsequently, notice u/s. 148 dated 29.03.2021 was issued. A perusal of the reasons recorded shows that the sole basis for reopening was the alleged escapement of income on account of cash deposits aggregating to Rs.94,20,790/- made during the demonetisation period. The contention of the Revenue is that the issue of cash deposits was not specifically examined during the original assessment proceedings and therefore the reopening cannot be regarded as a case of change of opinion. We are unable to accept the said contention. 12. It is an undisputed fact that the cash deposits formed part of the books of account maintained by the assessee. The return of income, audited financial statements, statutory disclosures relating to demonetisation transactions and the books of account were available before the AO during the original scrutiny proceedings. The reasons recorded do not refer to any fresh information, investigation report, third-party statement, survey material or any tangible material coming into possession of the AO subsequent to completion of the assessment u/s.143(3). The Revenue has not brought on

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 30 :: record any fresh tangible material which came into possession of the AO subsequent to completion of the original assessment. The law is well settled that even where a particular aspect is not specifically discussed in the assessment order, reassessment cannot be resorted to merely for conducting a fishing or roving enquiry on material already available on record. The jurisdiction u/s. 147 is not a power of review. In the absence of fresh tangible material, reassessment based on reappraisal of existing material amounts to a mere change of opinion. 13. The reasons recorded in the present case reveal that the AO merely revisited information already available in the departmental records and sought to draw a different inference regarding the cash deposits. Such exercise falls outside the permissible scope of section 147 of the Act. We also find force in the contention of the assessee that the survey statements and materials relied upon by the Assessing Officer for making the separate addition of Rs.5.55 crores were available even prior to completion of the original assessment u/s.143(3). The statement of Shri R. Karthik was recorded on 09.11.2019, whereas the original assessment was completed only on 31.12.2019. Therefore, even such material cannot be regarded as fresh tangible material coming into existence subsequent to the original assessment. The Apex Court in Calcutta Discount Company Limited v. Income-Tax Officer, Companies District I, Calcutta and another reported in 1960 (11) TMI 8 – Supreme Court, wherein, it is held as follows; “It must, therefore, be held that the Income tax Officer who issued the notices had not before him any non-disclosure of a material fact and so he could have no material before him for believing that there had been any material non-disclosure by reason of which an underassessment had taken place. We are, therefore, bound to hold that the conditions precedent to the

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 31 :: exercise of jurisdiction under section 34 of the Income-tax Act did not exist and the Income-tax Officer had therefore no jurisdiction to issue the impugned notices under section 34 in respect of the years 1942-43, 1943-44 and 1944-45 after the expiry of four years.” 14. The judgment of the Hon’ble Jurisdictional High Court in the case of Mobis India Ltd. vs. Deputy Commissioner of Income-tax, LTU - II, Chennai [2018] 90 taxmann.com 389 (Madras)/[2020] 421 ITR 463 (Madras)[24-01-2018] which held that for reopening of the assessment fresh material is required. 15. Similarly, the Hon’ble Jurisdictional High Court in the case of Bapalal & Co. Exports vs. Joint Commissioner of Income-tax (OSD) [2008] 170 Taxman 131 (Madras)/[2007] 289 ITR 37 (Madras)/[2007] 208 CTR 330 (Madras)[08-09-2006] held as under: 10. Having dealt with the relevant provisions of the Income-tax Act, let me now proceed to analyse the various case law necessary for deciding this appeal and they are as under :

(i) In the judgment of the Supreme Court in the case of Andhra Bank Ltd. (supra), it was held as under :

". . . Once it is found that the change in the method of accounting was knowingly allowed by the Income-tax Officer after taking into account all the relevant facts, it is not permissible for the Income- tax Officer, or his successor, to reopen the assessment at a later point of time under section 147(b) of the Income-tax Act unless any information comes from an extraneous source. Further, we fail to see what is the 'information' available to the Income-tax Officer in this case on the basis of which he is seeking to reopen the assessments under clause (b) of section 147. We find none. Indeed, this appears to be a case of mere change of opinion. The principles enunciated in Kalyanji Mavji [1976] 102 ITR 287 (SC) cannot save the impugned action of the Income-tax Officer." (p. 450)

(ii) The Supreme Court, in its decision in the case of GKN Driveshafts (India) Ltd. (supra), observed as follows :

"We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under section 148 of the Income-tax Act is issued, the proper course of action

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 32 :: for the noticee is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years." (p. 20)

(iii) In yet another decision of the Supreme Court in the case of Ram Bai (supra) it was held as follows :

"We have already mentioned that the Income-tax Officer sought sanction of the Commissioner to reopen the matter. That was by a communication dated 17-3-1973, in which the relevant part read as follows :

'In this case, the assessee owned 16 acres 33 cents in Nacharam village near Hyderabad. This was acquired by the Government with effect from 27-10-1964. The assessee was awarded a final compensation of Rs. 2,10,361 on 7-7-1967. The land in question is not agricultural land and has not been subjected to agricultural operations. The capital gains are chargeable to income-tax. The value as on 1-1-1954, is estimated at Rs. 1,000 per acre and the total value of the entire land as on 1-1-1954, would be about Rs. 16,500. Thus, the assessee made a net capital gain of Rs. 1,93,860. Besides the amount of interest that accrued year to year will have to be included as a protective basis. The assessee has filed a return disclosing an income of Rs. 3,599 being interest on belated compensation on 17-2-1972. As this has been filed beyond the period prescribed under section 139(4), the return has been treated as invalid and filed. I have, therefore, reason to believe that the income chargeable to tax has escaped for the assessment year 1965-66 and that such escapement was by reason of omission or failure on the part of the assessee to make a valid return under section 139 for the assessment year 1965- 66. I request the Commissioner to accord sanction for reopening the assessment under section 147(a).'

Apart from the said communication, there is nothing on record to disclose the material on which the Income-tax Officer decided to reopen the assessment. He has made an assertion in the said communication that the land in question was not subjected to agricultural operation and that he had reason to believe, the income chargeable to tax had escaped for the assessment year 1965-66 by reason of omission or failure on the part of the assessee to make a valid return. But for such assertion, no reference has been made to any material on the basis of which he proceeded to invoke the provisions of section 147(a) of the Act.

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 33 :: Even the assertion as such was a bare one without any reference to the materials on the basis of which he made the said assertion." (p. 700)

(iv) The Supreme Court, in its judgment in the case of Comunidado of Chicalim (supra), held as below :

"We are afraid that the High Court was in error on both counts. It is trite law that when an assessee challenges a notice to reopen under section 147 on the ground that no reasons under section 148 had been recorded or disclosed, the court must call for and examine the reasons, and, in fact, ordinarily, the reasons are set out by the respondents to the writ petition in their counter. The High Court also did not appreciate that if the appellant had already been served with a notice under section 148 and had complied therewith by filing a return, it was entitled to contend that no second notice lay, and also to submit that, in any event, the second notice was barred by time." (p. 272)

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 34 :: neither chosen to adduce any reason nor found any fresh material to reopen the assessment.

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 35 :: B. Addition of Rs.39,67,139/- u/s. 68 of the Act: 17. We shall now deal with the cross appeals arising from the original assessment completed under section 143(3). The sole surviving grievance of the assessee in ITA No.2363/Chny/2025 is against sustenance of addition of Rs.39,67,139/- under section 68 relating to balances standing in the names of M/s. Angel Agency and Chandru Fuels. The undisputed factual position is that the impugned amounts represent trade creditors arising out of purchases recorded in the regular books of account. The purchases themselves have not been doubted by the Assessing Officer. The trading results have been accepted. Before the ld. CIT(A) the assessee furnished ledger accounts, purchase bills, confirmations and supporting documents. The ld. CIT(A) sustained the addition mainly on the ground that certain portions of the balances could not be fully reconciled with supporting vouchers. In our considered view, once the underlying purchases have been accepted and no finding has been recorded that the purchases are bogus, the corresponding outstanding trade liabilities cannot be assessed as unexplained cash credits merely because some reconciliation differences remain. Section 68 is attracted where the nature and source of a credit entry remain unexplained. In the present case, the source of the credit is the purchase transactions recorded in the books themselves. The identity of the parties is not in dispute. Confirmations have also been furnished. At best, the issue raised by the Revenue pertains to reconciliation of balances and not to the existence of unexplained credits. We therefore hold that the addition of Rs.39,67,139/- sustained by the ld. CIT(A) is not justified. The same is directed to be deleted. Accordingly, ITA No.2363/Chny/2025 filed by the assessee is allowed.

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 36 :: 18. Coming to the Revenue's appeal in ITA No.2694/Chny/2025, we find that the ld. CIT(A) has granted relief only after obtaining a detailed remand report and conducting extensive verification. In respect of 15 fish creditors aggregating to Rs.1,47,51,734/-, summons were issued, statements were recorded and the parties confirmed the transactions. Merely because payments made subsequently did not exactly tally with the year-end balances cannot lead to the conclusion that the liabilities were fictitious, particularly when the business is conducted through running accounts involving continuous purchases, settlements and adjustments. As regards the balance fish creditors of Rs.5,25,84,387/-, the ld. CIT(A) recorded a categorical finding that the said balances were intrinsically connected with the inflated fish purchases of Rs.5.55 crores which stood admitted by the assessee and brought to tax. We find no infirmity in the view taken by the ld. CIT(A) that the same amount cannot again be subjected to tax under section 68. The principle against double taxation of the same amount clearly applies. The Revenue's argument that the source of the additional income of Rs.5.55 crores was not established does not advance its case. Once the Department itself has brought the said amount to tax, the corresponding creditor balances arising from the same transaction stream cannot again be separately assessed as unexplained credits. 19. In respect of other current liabilities amounting to Rs.1,21,96,749/-, we find that the ld. CIT(A) examined the ledger accounts, bank statements and income-tax particulars of Shri Jeppiaar and Smt. Remibai Jeppiaar and recorded a finding regarding identity, genuineness and creditworthiness. The Revenue has not demonstrated before us any specific prejudice caused on account of alleged violation of Rule 46A. Further, the records show

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 37 :: that remand proceedings were conducted extensively and the ld. CIT(A) had called for relevant details during the appellate proceedings. No material has been placed before us to rebut the factual findings recorded by the ld. CIT(A). We therefore see no reason to interfere with the deletion granted by him. Accordingly, ITA No.2694/Chny/2025 filed by the Revenue is dismissed. 20. Therefore, we hold as under: (i) ITA No.2363/Chny/2025 filed by the assessee is allowed. (ii) ITA No.2364/Chny/2025 filed by the assessee is allowed and the reassessment proceedings initiated u/s. 147 are quashed. (iii) ITA No.2694/Chny/2025 filed by the Revenue is dismissed. (iv) ITA No.2695/Chny/2025 filed by the Revenue is dismissed. 21. SA No. 94/Chny/2026 is dismissed as infructuous since we have decided the appeals itself.

Order pronounced in the open court on the 16th day of June 2026, in Chennai.

Sd/- Sd/- (प�ावती एस) (मनु कुमार िग#र) (PADMAVATHY S) (MANU KUMAR GIRI) लेखा सद"या/ACCOUNTANT MEMBER #या�यक सद"य/JUDICIAL MEMBER

ITA No 2363 & 2364/Chny/2025 (AY 2017-18) & ITA No. 2694 & 2695 Chny/2025 (A. Y. 2017) M/s Jeppiaar Fishing Harbour Muttom Pvt Ltd. Vs DCIT CC 1(3) :: 38 :: चे#नई/Chennai, %दनांक/Dated: 16th June, 2026. SNDP, Sr. PS

आदेश क� &�त'ल(प अ)े(षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF