GANESH CONSUMERS PRODUCTS LTD. (ERSTWHILE GANESH GRAINS LTD.),KOLKATA vs. D.C.I.T., CC - 1(4),, KOLKATA

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ITSSA 6/KOL/2026Status: DisposedITAT Kolkata24 April 2026AY 2013-20145 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the sole reason for disallowance under Section 40A(3) was the cash payment of Rs. 1,33,21,362/- (as per assessee's submission) for wheat purchases exceeding the prescribed limit. The assessee had submitted its purchase register, reconciled with books, and cash book reconciled with bank statements. The assessee also highlighted discrepancies, noting that the purchase register did not contain entries for purchases from Sri Anil Ghosh and Sri Ashish Ghosh, whose names were mentioned by the AO. The CIT(A) had held that the assessee failed to provide cogent evidence to disprove the AO's observations and failed to substantiate the identity of the payees. Considering the facts, submissions, and for the interest of justice, the Tribunal decided to restore the appeal to the file of the AO for fresh consideration and proper examination of the documents filed by the assessee. The orders of the lower authorities were set aside, and the appeal was remitted back to the AO. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Ganesh Consumers Products Ltd. (erstwhile Ganesh Grains Ltd.), is in appeal against the order dated 30.12.2025 of the CIT(A), which upheld the addition made by the Assessing Officer (AO) under Section 153A read with Section 143(3) of the Income-tax Act, 1961, for the Assessment Year 2013-14. A search and seizure operation was conducted on 21.11.2013. The AO disallowed Rs. 1,25,74,092/- on account of cash purchases of wheat exceeding Rs. 20,000/- per transaction, in contravention of Section 40A(3) of the Act, as the assessee failed to provide documents for suppliers. The CIT(A) dismissed the assessee's appeal.

What were the issues?

1. Whether the CIT(A) and AO erred in making an addition of Rs. 1,33,21,362/- (as stated by the assessee, though the AO's disallowance was Rs. 1,25,74,092/-) by observing that payments exceeding Rs. 20,000/- in a single day were made in cash to traders, when all payments were allegedly made through account payee cheque/RTGS and reflected in books and bank statements, thereby violating Section 40A(3) of the Act. Assessee's contention: The assessee argued that all payments were made through banking channels and reflected in its books and bank statements. It further contended that the AO did not examine the entries in the wheat purchases register and creditors ledger in conjunction with the bank statements. The assessee also pointed out that the purchase register did not contain entries for purchases from Sri Anil Ghosh and Sri Ashish Ghosh, whose names were mentioned by the AO. The assessee requested the matter be remitted back to the AO for proper examination. Revenue's contention: The Revenue's representative supported the impugned order but did not object to remitting the appeal to the AO for proper verification.

Which sections of the Income-tax Act were involved?

Section 40A(3),Section 153A,Section 143(3),Section 139(1)

AI-generated summary — verify with the full judgment below

Before: Shri Rajesh Kumar, AccountantMember & Shri Pradip Kumar Choubey, JudicialMember

0IN THE INCOMETAX APPELLATE TRIBUNAL “B” BENCH AT KOLKATA Before Shri Rajesh Kumar, AccountantMember and Shri Pradip Kumar Choubey, JudicialMember IT(SS)A No.6/Kol/2026 Assessment Year: 2013-14 Ganesh Consumers Products Ltd., .………………………………….……….……Appellant (Erstwhile Ganesh Grains Ltd.) [PAN: AABCG8539N] vs. D.C.I.T., CC- 1(4)………….…………………….....……...…..………………….Respondent Aayakar Bhawan Poorva, Shanti Palli, 110, E.M. Bypass, Kasba, Kolkata- 700107 Appearances by: Shri Miraj D. Shah, A.R., appeared on behalf of the appellant. Dr. Anup Biswas, CIT, DR.,appeared on behalf of the Respondent. Date of concluding the hearing : April 07, 2026 Date of pronouncing the order : 24 April. , 2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 30.12.2025 of the Income Tax Department [‘CIT(A)’] passed under Section 153Ar.w.s143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2. The brief facts of the case of the assessee is that a search and seizure operation in the residential, office, business premises of the Ganesh Group of cases were conducted on 21.11.2013 and on subsequent dates and in course of search and seizure operation cash, jewellery, books of accounts, documents and others assets forms were seized/impounded or inventories. Proceeding U/s 153(A) were intended and in response to the said notice, assessee vide letter submitted to treat the original return file u/s 139(1) as the return in compliance to the

IT(SS) A.6/Kol/2025 Assessment Year- 2013-14 notice u/s 153A.The return of income filed in response to notice u/s 153A was selected or scrutiny and notice u/s 142(1) along with questionnaire was issued and duly served upon the assessee. The case of the assessee was discussed and heard and AO found that business activities of the Ganesh Group such as manufacturing, trading and grinding as conducted by three companies namely M/s Ganesh Grains Limited, M/s. Shree Venkatesh Agro Foods Pvt. Ltd. and M/s. Govardhan Agri Flour Mills Pvt. Ltd. The Ld. AO made an addition of Rs. 3,752/- after perusal of the tax audit report and further finds that during the search and seizure operation documents reveals that purchase raw material for its business i.e wheat in cash exceeded Rs. 20,000/- and the assessee has claimed to have made purchase exceeding Rs. 20,000/- only from farmers, however, no documents, bill, voucher containing name, and address of the supplier of cash purchased are mentioned by the assessee. The Ld. AO after considering the submission and the documents filed by the assessee finds that assessee has purchase wheat in cash in excess of Rs. 20,000/- other than cross- cheque and demand draft i.e in contravention to Section 40A(3) of the Act and disallowed an amount of Rs. 1,25,74,092/-and added the same in the income of the assessee.

Aggrieved by the said order, assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been dismissed.

3.

The Ld. AR has challenged the very impugned order thereby submitting that Ld. CIT(A) as well as Assessing Officers have erred in making addition of Rs. 1,33,21,362/- by observing that no evidence was brought on record by the Assessing Officers to establish that payment exceeding Rs. 20,000/- in a single day were made in cash to any trader ignoring that all the payments to the alleged parties were made through account, pay cheque/RTGS duly reflected in the regular books of

IT(SS) A.6/Kol/2025 Assessment Year- 2013-14 account and bank statements. The Ld. AR further submits that Ld. AO has not examined the entries in true perspective as it is required to examine the entries recorded in the wheat purchases register and creditors ledger as well as payments reflected in the bank statement.The learned AR in order to substantiate his contention submits that purchase register did not contain any entry for purchases made from Sri Anil Ghosh and Sri Ashish Ghosh though in the assessment order name of such persons has been mentioned by the AO. The Ld. AR prayed that matter in appeal be remitted back to the file of the AO for proper examination as it is a case of verification and proper scrutiny of the documents filed by the assessee.

The Ld. DR though supports the impugned order but did not raise any objection in remitting the appeal of the assessee to the file of the AO for proper verification.

4.

Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order, we find that in the present case sole reason for disallowance u/s 40A(3) of the Act was for cash payment of Rs. 1,33,21,362/- for purchase of wheat in excess of the prescribed limit. The assessee had submitted its purchase register duly reconcile with books and cash book duly reconciled with bank statement which is required to examine the entries recorded in the wheat purchase register and creditors ledger were the payments from the bank statement. The assessee has pointed out the discrepancies in the order of the AO by submitting that register which did not contain any entry for purchase made from Sri. Anil Ghosh, Sri Ashish Ghosh as named of the AO in assessment order in serial no. 5&6. Looking at the order passed by the CIT(A) we find that CIT(A) in its finding has held that appellant has not come forward with any cogent evidence to disprove the observation and conclusion made to disallow the cash expanses u/s

IT(SS) A.6/Kol/2025 Assessment Year- 2013-14 40A(3). The CIT(A)has further observed that assessee has failed to substantiate the claim with reference to the identities of actual of such payments made by it.

5.

Going over the facts of the case and considering the submission made by the assessee and for the interest of justice we are inclined to restore the appeal of the assessee to the file of AO for fresh order after proper verification of the documents filed by the assessee. The order of the lower authorities are hereby set aside and appeal of the assessee is remitted back to the file of AO for fresh consideration and proper examination of the documents.

As a result, the appeal of the assessee has been allowed for the statistical purpose.

Kolkata, the 24th April , 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated:.. 24.04.2026. DC Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR),

//True copy// By order Assistant Registrar, Kolkata Benches

IT(SS) A.6/Kol/2025 Assessment Year- 2013-14

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