UMIYA COLD STORAGE,SR. NO. 539, AT POST LIMBHOI vs. ITO, WARD-1, MODASA

ITA 167/AHD/2026Status: DisposedITAT Ahmedabad12 October 2026AY 2017-1811 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal decided as follows: Issue 1 (Section 69A - Cash Deposits): The Tribunal found that the assessee had provided explanations and documents regarding cash rental receipts from farmers during the harvesting season. However, the Assessing Officer noted discrepancies, including the timing of deposits, failure to establish farmer identity, lack of stock records, and mathematical errors in the cash book. The CIT(A) sustained the addition. The Tribunal noted that the issue of cash deposits is linked to the quantum of potatoes stored, which would impact loading and unloading charges. Consequently, this issue was remitted to the Assessing Officer for fresh consideration, allowing the assessee an opportunity to be heard. Ground No. 1 was allowed for statistical purposes. Issue 2 (Section 68 - Unsecured Loan): The Tribunal held that the assessee had discharged the initial onus under Section 68 by furnishing loan confirmations, PAN, and bank statements of the lender. Although the lender did not respond to Section 133(6) notices, the Tribunal found that the Assessing Officer failed to bring on record material to controvert the assessee's stand. The failure of the lender to respond to a notice under Section 133(6) cannot be the sole basis for addition when the assessee has provided documentary evidence. Therefore, the addition of Rs. 10,39,000 was deleted. Ground No. 2 was allowed. Issue 3 (Business Expenses): The Tribunal found merit in the assessee's contention that loading and unloading charges are essential operational expenses for a cold storage facility. Given that the issue of cash deposits (Ground 1) was remitted, which has a bearing on these charges, the Tribunal remitted this issue also to the Assessing Officer for fresh consideration. Ground No. 3 was allowed for statistical purposes. Issue 4 (Section 115BBE Tax Rate): Since Issues 1 to 3 were remitted back to the Assessing Officer, the issue of the applicability of the tax rate under Section 115BBE was rendered infructuous and dismissed. Ground No. 4 was dismissed. Operative Directions: Issues 1 and 3 were remitted to the Assessing Officer for fresh adjudication. Issue 2 was allowed with deletion of the addition. Issue 4 was dismissed as infructuous. The assessee was directed to address infirmities pointed out by the AO in set-aside proceedings, and the AO was directed to grant benefit to the extent the assessee's stand is supported by evidence.

What were the facts?

The assessee, Umiya Cold Storage, engaged in running a cold storage facility, filed its return for Assessment Year 2017-2018 declaring a loss. The Assessing Officer, under Section 143(3) r.w.s. 263 read with Section 144B, assessed total income at INR 81,10,700/-, making additions for unexplained cash deposits (Rs. 52,43,500), unexplained unsecured loan (Rs. 10,39,000), and disallowing business expenses (Rs. 18,28,200). The CIT(A) dismissed the assessee's appeal. The assessee appealed to the ITAT, Ahmedabad, with a delay of 84 days, which was condoned. The appeal challenges the CIT(A)'s order dated 19/08/2025.

What were the issues?

1. Whether the CIT(A) erred in sustaining the addition of Rs. 52,43,500 as unexplained cash deposits during the demonetization period under Section 69A of the Income Tax Act, 1961, despite the assessee providing explanations and supporting documents. 2. Whether the CIT(A) erred in affirming the addition of Rs. 10,39,000 as an unexplained unsecured loan from M/s Shankerlal & Co. under Section 68 read with Section 115BBE, despite the assessee providing documentation substantiating the lender's identity and source. 3. Whether the CIT(A) erred in confirming the disallowance of Rs. 18,28,200 for payments made to Sh. Chintan D. Choudhary and Sh. Harbanslal as unverified business expenses, despite the assessee providing sufficient explanation and evidence. 4. Whether the CIT(A) erred in sustaining the calculation of tax at 60 percent as per Section 115BBE for AY 2017-18, when the rate was 30 percent. Assessee's Contentions: - For Issue 1: The first year of operation generated cash rental receipts from local farmers, recorded in books, with supporting documents provided. - For Issue 2: Necessary documentation (loan confirmations, PAN, bank statements) was furnished to establish identity, creditworthiness, and genuineness of the loan. - For Issue 3: Payments were for legitimate business purposes, with self-made vouchers and TDS deducted. - For Issue 4: The tax rate for AY 2017-18 under Section 115BBE was 30 percent, not 60 percent. Revenue's Contentions: - For Issue 1: The assessee failed to establish the identity, creditworthiness, and genuineness of farmers, and the cash book was manipulated. Notices under Section 133(6) to third parties received no compliance. - For Issue 2: The lender did not respond to notices under Section 133(6). - For Issue 3: Payments were made against self-made vouchers, debited at year-end, with rate variance, and the contractor admitted to not maintaining books. TDS and Section 40A(3) were potential issues. - For Issue 4: Relied on assessment and appellate orders.

Which sections of the Income-tax Act were involved?

Section 69A,Section 68,Section 115BBE,Section 143(3),Section 263,Section 144B,Section 133(6),Section 131,Section 40A(3),Section 194C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, C” BENCH, AHMEDABAD

Per Rahul Chaudhary, Judicial Member:

1.

The present appeal has been preferred by the Assessee against the Order, dated 19/08/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] whereby the Learned CIT(A) had dismissedthe appeal against the Assessment Order, dated 25/03/2023, passed under Section 143(3)r.w.s263read with Section 144B of the Income Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2017-2018. 2. There is a delay of 84 days in filing the present appeal. In the affidavit filed along with application seeking condonation of delay it has been state

The order continues below.

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