SVP GLOBAL TEXTILES LIMITED ,MUMBAI vs. ASST. CIT CENTRAL CIRCLE 8(2), MUMBAI

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ITA 616/MUM/2026Status: DisposedITAT Mumbai30 April 2026AY 2017-184 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee failed to provide explanations before the lower authorities and the CIT(A) passed an ex-parte order. The Tribunal granted the assessee one more opportunity to present its case before the CIT(A) for a decision on merits.

What were the facts?

The assessee's case was reopened due to cash deposits and withdrawals in a bank account. The Assessing Officer disallowed expenses of Rs. 2,55,81,772/- under Section 40A(3) for cash payments exceeding Rs. 20,000/- in a day.

What were the issues?

Whether the disallowance under Section 40A(3) was justified and whether the assessee was denied natural justice by the ex-parte order of the CIT(A).

Which sections of the Income-tax Act were involved?

Section 40A(3),Section 143(3),Section 147,Section 148,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: AND SHRI MAKARAND VASANT MAHADEOKAR, AM

For Appellant: Mr. Madhur Agarwal, AR, Shri R.A. Dhyani, CIT-DR
Pronounced: 30.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI

BEFORE MS. KAVITHA RAJAGOPAL, JM AND SHRI MAKARAND VASANT MAHADEOKAR, AM ITA No.616/Mum/2026 (Assessment Year: 2017-18)

M/s. SVP Global Textiles The Asst. Commissioner of Limited, Income Tax, Vs. 97, Maker Tower F, Central Circle 8(2) Colaba S.O., 6th Floor, Aayakar Bhavan, Mumbai-400005 Mumbai-400020 PAN: AACCS2582C (Appellant) : (Respondent)

Assessee by : Mr. Madhur Agarwal, AR : Shri R.A. Dhyani, CIT-DR Respondent by

: 27.04.2026 Date of Hearing Date of Pronouncement : 30.04.2026

O R D E R Per Kavitha Rajagopal, JM:

This appeal is filed by the assessee challenging the order of the Learned

Commissioner of Income Tax (Appeals) [‘Ld. CIT(A)’ for short] passed u/s 250 of the

Income Tax Act, 1961 (“the Act” for short) relevant to assessment year (“AY” for short)

2017-18.

2.

The assessee has raised the following grounds of appeal:

“1. The Ld. CIT(A) has erred in confirming the addition of Rs.2,55,81,772/- in the impugned Reassessment Order u/s 143(3) r.w.s. 147 of the Income Tax Act (the Act) u/s 40A(3) of the Act.

2.

The Ld. CIT(A) has erred in not holding that the reopening proceedings initiated u/s 148 of the Act is bad-in-law. The appellant prays that the re-opening proceedings may kindly be treated as bad-in-law and quashed.”

ITA No.616/Mum/2026 M/s. SVP Global Textiles Limited 3. Brief facts of the case are that the assessee had filed its return of income dated

02.11.2018 declaring total income at Rs.20,21,67,752/-. Pursuant to the search and seizure

operation u/s 132 of the Act conducted in the case of Shri Vallabh Pittie Group (SVB

Group) dated 22.08.2017 assessment u/s 144 r.w.s. 153A of the Act was completed in the

case of assessee company on 26.02.2021 where the Ld. Assessing Officer (“Ld. AO” for

short) determined the total income at Rs.44,24,19,990/-. Based on the information that the

assessee had opened a bank account number 29960200000694 in Bank of Baroda on

04.06.2016 in which cash was deposited amounting to Rs.47.76 Lakhs and cash withdrawal

of Rs.271.11 Lakhs, the assessee’s case was reopened vide notice u/s 148 of the Act dated

28.06.2021. In response to the same, the assessee filed its return of income dated 17.08

2022. Notices u/s 143(2) & 142(1) of the Act were duly issued and served upon the

assessee. The Ld. AO then passed the assessment order dated 29.05.2023 u/s 143(3) r.w.s.

147 of the Act determining the total loss at Rs.14,04,30,498/- after making an addition on

account of disallowance u/s 40A(3) of the Act amounting to Rs.2,55,81,772/- towards cash

payment made by the assessee as unexplained which was disallowed u/s 40A(3) of the Act.

4.

Aggrieved, the assessee was in appeal before the first appellate authority who vide

an ex-parte order dated 21.11.2025 dismissed the appeal filed by the assessee.

5.

Aggrieved, the assessee is in appeal before us challenging the impugned order of

the Ld. CIT(A).

6.

We have heard the rival submissions and perused the materials available on record.

It is observed that on the basis of verification of the bank account and the cash book

ITA No.616/Mum/2026 M/s. SVP Global Textiles Limited furnished by the assessee, the assessee company is said to have incurred expenditure

towards payment to various persons in cash which was more than Rs.20,000/- in a day

which was in violation of the provisions of section 40A(3) of the Act. The Ld. AO made

an addition of the said cash payment made by the assessee towards the expenditure

amounting to Rs.2,55,81,772/- on the ground that the assessee has violated the provisions

of section 40A(3) of the Act which facilitates for disallowance of expenses where payment

or aggregate payments in a day exceeds Rs.20,000/- which is made otherwise than by

account payee cheque or account payee bank draft or by electronic clearing system. The

assessee has failed to furnish any explanation towards the same before the Ld. AO. During

the first appellate proceeding notices were issued on various dates for which the assessee

remained non-compliant, basis which the Ld. CIT(A) upheld the addition by an ex-parte

order.

7.

The Ld. Authorised Representative (“Ld. AR” for short) for the assessee prayed that

the assessee be given one more opportunity to present its case before the first appellate

authority which was vehemently opposed by the Ld. Departmental Representative (“Ld.

DR” for short) for the Revenue.

8.

On perusal of the rival contentions, we deem it fit to extend the assessee with one

more opportunity to present its case before the first appellate authority by adhering to the

principles of natural justice and in the interest of justice dispensation. The assessee is

strictly directed to comply with the proceeding before the first appellate authority without

any undue delay from its side. The Ld. CIT(A) is directed to decide the issue on the basis

of the submission of the assessee and on merits of the case and in accordance with law.

ITA No.616/Mum/2026 M/s. SVP Global Textiles Limited 9. In the result, the appeal filed by the assessee is hereby allowed for statistical

purpose.

Order pronounced in the open court on 30.04.2026

Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 30.04.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai

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