DCIT CENTRAL CIRCLE -AMRAVATI, NAGPUR vs. RADHIKA VEGETABLE OILS PVT. LTD., VISAKHAPATNAM

The sole issue raised by the Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition of Rs.1,21,72,000/- made by the Ld. Assessing Officer (AO) u/s. 69A of the Act.

Brief facts of the case are that assessee is a private limited company, engaged in the business of manufacturing of palm oil. It has filed its return of income for the AY 2022-23 declaring income of Rs.5,35,09,880/- on 31.10.2022. A search and seizure action u/s. 132 was conducted in assessee’s group at Visakhapatnam on 25.08.2021 and certain loose papers and note-pads were found and seized. Consequent to search action, case was selected for compulsory scrutiny. Statutory notices u/s. 143(2) & 142(1) of the Act were issued and served upon the assessee. In response to the notice, assessee furnished various details including bank statement, profit & loss account, 2 secured loans and the details of interest received etc. After considering the details submitted by the assessee, Ld. AO completed the assessment u/s.143(3) making addition of Rs. 1,21,72,000/- on account of unexplained money u/s. 69A of the Act.

Aggrieved with the order of Ld. AO, assessee preferred appeal before the Ld. CIT(A), who observed that in earlier years for A.Ys. 2019-20 & 2021-22 the Hon'ble ITAT upheld the order of Ld. CIT(A) to tax only the average gross profit embedded in the unaccounted sales. Ld. CIT(A) further observed that Ld. AO has not brought on record any additional or absolutely new facts during the current year which would differentiate the facts of the earlier years and compel him to traverse in a different path. Therefore, following the decisions of Hon'ble ITAT in previous A.Ys. 2020-21 & 2021-22, he directed the Ld. AO to restrict the addition to 11.64% of unrecorded cash sales of Rs. 1,21,72,000/-

Dissatisfied and aggrieved with the order of Ld. CIT(A), Revenue is in appeal before this Tribunal. Ld. Departmental Representative (DR) relied upon the assessment order passed by the Ld. AO. It was submitted that during the course of search and seizure proceedings conducted u/s. 132 of the Act, certain incriminating loose papers and note-pads were found and seized which clearly evidenced unrecorded cash sales carried on by the assessee outside the regular books of account. He further submitted that assessee failed to satisfactorily explain the nature and source of such unaccounted receipts before the Ld. AO. Therefore, Ld. AO rightly treated the amount of Rs.1,21,72,000/- as unexplained money u/s. 69A of the Act. Learned DR further contended that Ld. CIT(A) erred in restricting the addition merely to gross profit at 11.64% by following the orders of earlier years without independently appreciating the facts and evidences pertaining to the current assessment year. According to the learned DR, the seized material clearly established the generation of unaccounted cash outside the books and therefore the entire amount was liable to be assessed as unexplained income u/s. 69A of the Act. Accordingly, he prayed that the order of the Ld. AO be restored. However, he failed to pinpoint about any infirmities in the decision of this bench relied upon.

On the contrary, learned counsel for the assessee strongly supported the order passed by the Ld. CIT(A). It was submitted that the issue involved in the present appeal is squarely covered by the orders of the Hon’ble ITAT in assessee’s own case for the earlier assessment years, wherein under exactly identical facts and circumstances, the Tribunal upheld the estimation of only profit element embedded in the alleged unaccounted sales instead of sustaining the entire addition u/s. 69A of the Act. He further submitted that the addition made by the Ld. AO was solely based on certain loose sheets and note-pads seized during the course of search proceedings and there was no independent material to establish that the entire alleged cash sales represent the unexplained money liable to be taxed u/s. 69A of the Act. It was argued that once sales are accepted, corresponding purchases and business expenditure cannot be ignored and only the profit element embedded in such sales could be brought to tax. It was further submitted that the Ld. CIT(A), after considering the decisions of the Tribunal in assessee’s own case for A.Ys. 2020-21, 2021-22 and 2022-23, rightly directed the Ld. AO to restrict the addition to 11.64% being the average gross profit rate on the alleged unrecorded cash sales of Rs.1,21,72,000/- and the Revenue has not brought on record any distinguishing facts or circumstantial evidence in the year under consideration as compared to earlier years. Therefore, the order of the Ld. CIT(A) being consistent with the views countenanced by the very same bench wherein Hon'ble AM was a member of the Corum and was also the author, particularly in view of the fact that these orders were never overturned by any higher authority, deserves to be upheld.

We have heard rival contentions of both the parties and perused the material available on record. We find that an identical issue had come up for consideration before this Tribunal in assessee’s own case in ITA No. 236/Nag/2023 for Assessment Year 2021-22 and also ITA No.17/Nag/2024 for Assessment Year 2019-20. The Coordinate Bench of the Tribunal, vide order dated 30.10.2024, dismissed the appeal of the Revenue by holding as under:–

Since the issue involved in the present appeal is squarely covered by the aforesaid decision of the Coordinate Bench of the Tribunal rendered in assessee’s own case for the earlier assessment years, which has been further strengthened by the orders of Hon'ble High Courts of Madhya Pradesh & Gujarat and no distinguishable facts have been brought on record by the Revenue, we find no infirmity in the order passed by the Ld. CIT(A) and which requires no interference from our end. Accordingly, the order of the Ld. CIT(A) is upheld and the grounds raised by the Revenue are dismissed by placing reliance on the maxim of stare decisis and the rule of consistency judicial discipline and propriety, as enunciated in Ashok Leyland Ltd. vs. State of Tamil Nadu [(2004) 3 SCC 144]. 8

In the result, appeal filed by the Revenue is dismissed.