DCIT, CIRCLE-3(1)(1), BANGALORE vs. GETFAST PHARMACEUTICALS PRIVATE LIMITED, BANGALORE

ITA 1881/BANG/2026Status: DisposedITAT Bangalore09 October 2026AY 2017-1810 pages
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What did the Tribunal hold?

The Tribunal found that the initial scrutiny assessment was completed by accepting the returned income without any categorical findings or a speaking order from the AO, suggesting a lack of application of mind. Therefore, the reopening of the assessment under section 148 was considered justifiable. Regarding the addition of Rs. 2,88,53,733, the Tribunal noted that the CIT(A) deleted the addition solely based on the profit ratio provided by the assessee, accepting the assessee's claim of selling below cost as a startup strategy. The Tribunal disagreed with this reasoning, stating that a pharmaceutical manufacturer selling below cost is not acceptable and that the CIT(A) did not pass a speaking order. Consequently, the Tribunal set aside the CIT(A)'s order on this issue. Concerning the addition of Rs. 42,48,416 under section 69C, the Tribunal observed that the CIT(A) made a casual observation without elaborate findings or examining evidence, stating the expenditure was misplaced and untenable. The Tribunal noted that no proper reconciliation was provided, and the ledger accounts did not contain sales entries. Finding no proper documentary evidence produced, the Tribunal set aside the CIT(A)'s order on this issue, upholding the AO's order. The assessee's cross-objections were dismissed as already adjudicated.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2017-18, which deleted additions made by the Assessing Officer (AO). The assessee, Getfast Pharmaceuticals Private Limited, initially filed a return declaring a loss of Rs. 5,03,90,360. The AO reopened the assessment under section 147 r.w.s. 144B. The AO added Rs. 2,88,53,733 as unexplained income, linking it to alleged unaccounted sales and cash deposits. Additionally, Rs. 42,48,416 was added as unexplained investment under section 69C for payments made to M/s. Healthvista India Pvt. Ltd. without corresponding declared purchases. The CIT(A) deleted both additions, leading to the Revenue's appeal. The assessee also filed cross-objections challenging the reopening notice.

What were the issues?

1. Whether the CIT(A) erred in deleting the addition of Rs. 2,88,53,733 made by the AO under section 68 as unexplained cash deposits/sales, without properly appreciating the facts and circumstances, and whether the absence of rejection of books of account precludes the AO from making such an addition? - Revenue's contention: The CIT(A) erred in deleting the addition, as the assessee could not satisfactorily explain the nature and source of substantial cash deposits, and the provisions of section 68 operate independently. Mere production of books does not establish genuineness of cash transactions. - Assessee's contention: The AO reopened the assessment based on a change of opinion. During scrutiny, all documents were examined and returned income was accepted. The AO erroneously aggregated ledgers, leading to the addition of Rs. 42 lakhs. 2. Whether the CIT(A) erred in deleting the addition of Rs. 42,48,416 made by the AO under section 69C read with section 115BBE as unexplained expenditure, without properly appreciating the facts and circumstances? - Revenue's contention: The CIT(A) failed to appreciate that the assessee did not furnish satisfactory evidence to substantiate the source of expenditure, thereby attracting section 69C, and the addition was not ad-hoc but based on the assessee's failure to prove the source of expenditure. - Assessee's contention: The AO erroneously aggregated ledgers of M/s. Healthvista India Pvt. Ltd. and the assessee, and the addition of Rs. 42 lakhs was made incorrectly.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 143(2),Section 142(1),Section 148A(b),Section 148,Section 68,Section 69C,Section 115BBE,Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: BALAKRISHNAN S & SHRI SANDEEP SINGH KARHAIL

For Respondent: Shri. Tata Krishna Advocate
Pronounced: 09.10.2026

Heard together (2 matters)

ITA 1881/BANG/2026
CO 32/BANG/2026

Read from the judgment's own cause title. This page is filed under one of them.

PER BALAKRISHNAN S, ACCOUNTANT MEMBER:

This appeal is filed by the Revenue against the order of L

The order continues below.

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