MAA COAL CORPORATION,MORBI vs. INCOME TAX OFFICER, WARD - 1, MORBI, MORBI

ITA 834/RJT/2026Status: DisposedITAT Rajkot30 September 2026AY 2020-216 pages
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What did the Tribunal hold?

The Tribunal noted that the assessee failed to prove the cash transactions with the Qutone Group with documentary evidence. Following the ratio laid down by the Supreme Court in CIT v. Williamson Financial Services and the jurisdictional Gujarat High Court in PCIT v. Ms. Jay Kesar Bhavani Developers Pvt. Ltd., the Tribunal held that only the profit element embedded in unaccounted receipts can be brought to tax, not the entire receipts. The Tribunal directed the AO to make an addition to the tune of Rs. 2,37,500/- (10% of Rs. 23,75,000/-) by following the normal rate of income tax. This decision was rendered on the peculiar facts of the case and the smallness of the amount involved, and should not be construed as laying down propositions of law of general application. The issue of cross-examination was not explicitly decided but the Tribunal proceeded to decide the case on merits based on the available evidence and judicial precedents.

What were the facts?

The assessee, Maa Coal Corporation, filed its return for AY 2020-21. The Assessing Officer (AO) reopened the case under Section 147 based on information from a search and seizure operation on the 'Qutone group and others'. A pen drive seized during the search contained Tally data of unaccounted cash transactions of Qutone Ceramics Pvt Ltd for FY 2018-19 to FY 2022-23. The AO found that the assessee had undisclosed cash transactions of Rs. 23,75,000/- with the Qutone Group during FY 2019-20 (AY 2020-21). The AO treated this amount as unexplained money under Section 69A and added it to the assessee's total income. The CIT(A) confirmed this addition. The assessee appealed to the ITAT.

What were the issues?

1. Whether the addition of Rs. 23,75,000/- made by the AO and confirmed by the CIT(A) under Section 69A of the Income-tax Act, 1961, is sustainable in law, considering the assessee's contention that no opportunity for cross-examination was provided and that the assessee denied entering into any transactions with the Qutone Group? Assessee's arguments: The AO did not provide an opportunity for cross-examination, violating the principles of natural justice. The assessee denied having any transactions with the Qutone Group, and therefore, the addition should be deleted. Alternatively, if any transaction is considered, only the profit element should be estimated. Revenue's arguments: The Revenue primarily reiterated the AO's stand. Alternatively, the Revenue suggested an estimated addition at the rate of 20% of the cash transaction to protect its interest.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 147,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri Chetan Agarwal. Ld. AR
For Respondent: Shri Shishir Kumar, Ld. SR DR
Hearing: 30/07/2026Pronounced: 30/09/2026

Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2020-21, is directed against the order passed under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 13.04.2026 by the National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income Tax (Appeals) [in short ‘Ld.CIT(A)’] which in turn arises out of an assessment order passed by the Assessi

The order continues below.

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