A.K.SONI HOSIERY MILLS PRIVATE LIMITED,LUDHIANA vs. OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX CIR II(1),JCIT-II/LDH, LUDHIANA

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ITA 206/CHANDI/2026Status: DisposedITAT Chandigarh05 August 2026AY 2017-183 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, while noting the assessee's non-compliance, decided to provide another opportunity for hearing. The impugned order was set aside, and the matter was restored to the CIT(A) for fresh adjudication.

What were the facts?

The assessee deposited Rs. 29.94 lakhs in Specified Bank Notes during demonetization. The Assessing Officer added this as unexplained cash credit and made an adhoc disallowance of expenses due to a significant drop in revenue. The CIT(A) confirmed these additions.

What were the issues?

Whether the cash deposits were unexplained cash credits and if the adhoc disallowance of expenses was justified, given the assessee's non-compliance.

Which sections of the Income-tax Act were involved?

Section 68,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, CHANDIGARH

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI RAJESH DAMODARLAL SHARMA, JM

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 22.03.2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] on best judgment basis u/s 144 of the Act on 20.12.2019. At the time of hearing, none

appeared for assessee. The Ld. Sr. DR pleaded for the dismissal of the appeal. 2. From case records, it emerges that the assessee is engaged in manufacturing of cloth. The assessee deposited cash of Rs. 29.94 Lacks in Specified Bank Notes (SBNs) during demonetization period and accordingly, the assessee was required to substantiate the source of the same. However, the assessee remained largely non-compliant. Therefore, the deposits were added as unexplained cash credit u/s 68. The Ld. AO also made adhoc disallowance of expenses for Rs.50 Lacs on the ground that sales / revenue, in this year, reduced by almost 50% in comparison to earlier year. The Ld. CIT(A) confirmed the assessment for the same very reasons, Aggrieved, the assessee is in further appeal before us. 3. Keeping in mind the principles of natural justice, we deem it fit to provide another opportunity of hearing to the assessee to substantiate its case. Accordingly, the impugned order is set aside and the matter is restored back to the file of Ld. CIT(A) for de novo adjudication with a direction to the assessee to plead and prove its case forthwith. 4. The appeal stands allowed for statistical purposes. Order pronounced on 5th August, 2026

-Sd- -Sd- (RAJESH DAMODARLAL SHARMA) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AS Dated: 05-08-2026

आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

ASSISTANT REGISTRAR

ITAT CHANDIGARH

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