TRINCAS COMMOTRADE (P) LTD ,KOLKATA vs. INCOME TAX OFFICER, WARD - 8(2), KOLKATA

On the facts and in the circumstances of the case, NFAC erred in confirming addition u/s.69 of the Income-tax Act, 1961, treating time deposits of Rs.3,61,50,000/- to be unexplained.

On the facts and in the circumstances of the case, NFAC erred in not considering material on record by way of documentary evidence. The Assessee seeks leave to add to, modify, forego, amend, or otherwise alter all or any of the grounds of appeal as raised herein."

Brief facts of the case are that for AY 2018-19, the assessee had filed its return of income on 31.10.2018 declaring total income of ₹11,501/-. The Assessing Officer (hereinafter referred to as Ld. 'AO') observed from the Departmental ITS data that the assessee had made time deposits amounting to ₹3,61,50,000/- with Kotak Mahindra Bank Limited. As the assessee failed to furnish details or to explain the nature and source of the said deposits during the assessment proceedings, the Ld. AO treated the entire amount of ₹3,61,50,000/- as unexplained deposits and added it to the income of the assessee u/s 69 of the Act and the assessment was completed u/s 143(3) of the Act on 27.01.2021 as the total income of ₹3,61,61,500/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who examined the assessee's claim that the deposits were sweep-in fixed deposits from a current account and that a major portion of ₹3,00,00,000/- was an advance received from Orris Infrastructure Pvt. Ltd. for the sale of agricultural land. However, the Ld. CIT(A) noted that the assessee had failed to furnish corroborative evidence such as ledger accounts, sale agreements, or confirmations from the concerned parties, and that the names of the depositors were not reflected in the assessee's books of account or balance sheet. He, therefore, held that the nature and source of the deposits remained unsubstantiated, upheld the addition of ₹3,61,50,000/- made u/s 69 of the Act by the Ld. AO and dismissed the appeal of the assessee.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. It was submitted that the time deposit of ITA No(s). 2434/KOL/2025 Assessment Year(s) 2018-19 ₹3,61,50,000/- was added as per paras 2, 3 and 4 of the assessment order as the assessee had not filed any submission. Our attention was drawn to the assessment order para 5.2 which mentions the show cause notice dated 13.01.2021 and also to page 6 of the order of the Ld. CIT(A) in support of the claim that the reply was filed on 21.01.2021 which has been overlooked by the Ld. AO. As per para 2 on page 6 of the appeal order, the assessee had a current account and the FDs were credited out of sweep-in transfers of excess amounts over a threshold limit and the details were also provided to the Ld. AO. The Ld. CIT(A) on page 12 para 8.3.2 has mentioned the acknowledgement of the reply dated 21.01.2021 filed before him and on page 21 to 30 of the paper book, the balance sheet and the profit and loss account have been enclosed giving details of the real estate investment in which the amount borrowed was invested. Page 29 of the paper book, schedule 10 contains details of cash and cash equivalents and page 30 also has details of interest income while pages 31 onward of the paper book contain the bank statement. It was requested as per paper book page 64 that the additional evidence being filed now may be accepted under Rule 29 of the ITAT Rules, 1963 as they go to the root of the matter. The additional documents which have been filed before the Tribunal are the bank statement for the period 01.01.2014 to 31.03.2018, copy of agreement dated 17.02.2018 entered into between the assessee and M/s Orris Infrastructure (Pvt.) Ltd., confirmation from them and the bank statement for the period 17.02.2018 to 19.02.2018 of M/s Orris Infrastructure (Pvt.) Ltd., and it is stated in the application filed that the evidence are relevant to explain the credits as identified by NFAC, in respect of which adverse inference stands drawn without ever asking the assessee to explain the same. It is stated that the evidence go to the ITA No(s). 2434/KOL/2025 Assessment Year(s) 2018-19 root of the matter and the reason for non-filing of details before the Ld. AO/NFAC are stated to be that before the Ld. AO, the assessee was seeking merely to explain that alleged “time-deposits” forming subject matter of enquiry were merely due to the hybrid nature of the Assessee’s bank account. During first appeal, NFAC referred several credit entries in the bank statement on an individual basis, and held them to be unexplained, without ever calling upon the assessee to explain any individual credit. The first time the assessee found the need to explain transactions qua M/s. Orris Infrastructure (P) Ltd., M/s. Momna Infrabuild (P) Ltd., Mr. Rajendra Kumar Gupta, Mr. Pankaj Arora, & M/s. Nano Trading (P) Ltd., was upon receipt of the impugned order dated 24.09.2025. 6. The Ld. DR submitted that the assessee had failed to explain the source of the deposit which was liable to be added and the addition was rightly confirmed by the appellate authority; to which the Ld. AR submitted that during the course of the appeal proceedings, seven notices were received but in none of the notices, proof of the credits was asked by the appellate authority. The Ld. DR drew out attention to page 35 of the paper book relating to credit balance of more than ₹3 Crore in the bank account for which the assessee had furnished the source as sale of agricultural land. The Ld. AR submitted that the matter may be remanded to the Ld. AO as the assessee has sufficient evidence for the relief claimed which could not be filed earlier.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). In the interest of justice and fair play it was considered by the Bench that the request of the assessee to set aside the case before the Ld. AO may be allowed so that a proper opportunity of being heard may be provided. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter before the Ld. AO for making the reassessment de novo. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 24th June, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 24.06.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order