ACIT, RANCHI vs. CLASSIC COAL CONSTRUCTION PRIVATE LIMITED, RANCHI

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER AND SMT. RAJANI GUDURI, JUDICIAL MEMBER I.T.A. No. 354/RAN/2026 (Assessment Year: 2018-19) (Physical Hearing) A.C.I.T., Classic Coal Construction Private Ranchi, Limited, Vs. 1st Floor, Sarnam Complex, 401, Pulsar Plaza, Line Tank Road, Dibdih, Harmu Bypass Road, Ranchi-834001 (Jharkhand) Ranchi-834001 PAN No. AABCC 6786 F Appellant/ Revenue Respondent/ Assessee

Department represented by Shri Sandipan Khan, Sr.DR Assessee represented by None Date of hearing 05/10/2026 Date of pronouncement 14/10/2026

O R D E R PER: BENCH 1. This appeal by the revenue is directed against the order of the ld. CIT(A), Patna-3, Patna dated 26/03/2026 for the Assessment Year (AY) 2018-19. 2. Facts of the case, in brief, are that the assessee's company M/s Classic Coal Constructions Private Limited was a non-filer for the A.Y. 2018-19. Information was made available to the Assessing Officer on insight portal (RMS-NMS) that though the assessee has made certain transactions, it has not filed its return of income for the year under consideration, the details of the transactions are given as under:

I.T.A. No. 354/RAN/2026 ACIT Vs Classic Coal Construction P Ltd. Sr. No. Information Amount 1. TDS-194I(b)-TDS Statement-Rent 14,62,500/- 2. TDS-194C-TDS Statement-Payments to 14,84,11,662/- contractors (Section 194C) 3. TDS-194C-TDS Statement-Interest other 57,20,560/- than interest on securities (Section 194A) 4. TCS-206J-TCS Statement-Minerals, being 1,44,14,591/- coal on lignite or iron ore (Section 206C) 5. SFT-003(R)-Cash Withdrawals (including 2,49,40,034/- through bearer's cheque) in current Account 6. SFT-003(P)-Cash Deposits in current 2,87,92,300/- account

Consequently, a notice under Section 148 of the Income Tax Act, 1961 (in short, the Act) was issued to the assessee on 05/05/2022 after following due procedure of law as provided under Section 148A(b) and 148A(d) of the Act. In pursuance to that, the assessee filed return of income on 31/08/2022 declaring a total income at ₹ 68,10,140/-. Subsequently, statutory notices under Section 143(2) and 142(1) of the Act were issued from time to time to the assessee as per the assessment order. The assessee was also issued show cause notice on 19/02/2024 asking the assessee to show cause and explain as to why ₹ 2,49,40,034/- in the nature of cash expenditure as reflected in the bank account of the assessee in the nature of contractual income as claimed by the assessee should not be treated as unexplained expenditure under Section 69C r.w.s 115BBE of the Act. However, despite given several opportunities of being heard, the assessee did not respond to the show cause notice, the Assessing Officer, therefore, concluded that the assessee has nothing to say in this regard. It is also found in the paragraph No. 7 of the

I.T.A. No. 354/RAN/2026 ACIT Vs Classic Coal Construction P Ltd. assessment order that the Assessing Officer has recorded that the assessee in its submission dated 16/03/2018 has explained that the cash withdrawals for ₹ 2,49,40,034/- was for executing the work and meeting day to day activities, however, the withdrawals could not be substantiated with ledger accounts, bills, vouchers or to whom the payment was made. The Assessing Officer, therefore, treated this amount as unexplained expenditure as per provisions of Section 69C read with section 115BBE of the Act. The Assessing Officer further added a sum of ₹ 94,35,515/- being 5% of the total receipts of ₹ 18,87,10,310/- as shown in the return as income for the relevant assessment year on the ground that certain discrepancies were found in the audited report filed during the course of scrutiny proceedings which was not filed alongwith original return and the schedules and notes to Profit and Loss account and balance sheet, computation of income was not filed. The Assessing Officer, thus, by applying the provisions of Section 145(3) of the Act, rejected the books of account and the audit report of the assessee and estimated the income at 5% of the total receipts. 3. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) vide the impugned order dated 26/03/2026 partly allowed the appeal of the assessee by deleting the addition of Rs. 2,49,40,034/- made under Section 69C of the Act and upheld the estimation of income at 5% on the gross receipt on the ground that once the profit is estimated, it inherently takes into account possible leakages, deficiencies and unverifiable expenses in the books of account. The ld. CIT(A)

I.T.A. No. 354/RAN/2026 ACIT Vs Classic Coal Construction P Ltd. further held that, hence making an additional disallowance for the same set of transactions would amount to double taxation. 4. Further aggrieved by the order of the ld. CIT(A), the revenue is in appeal before this Tribunal by taking following grounds of appeal: "1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 2,49,40,034/-made under section 69C despite the assessee's failure to substantiate the sources of cash expenditure and utilization for business purposes with supporting evidence during the assessment proceedings. 2. Whether the Ld. CIT(A) erred in deleting the addition by relying upon documents not produced before the Assessing Officer without proper verification under Rule 46A and by holding that the addition under section 69C would result in double taxation, without appreciating that section 690 and estimation of income under section 145(3) operate independently. 3. That the order of the Ld. CIT (A) being erroneous in law and on facts to be vacated and the order/notice of the A.O. be restored. 4. That the applicant craves leave to add, alter, delete, and modify the grounds of appeal before the Hon'ble ITAT." 5. During the appellate proceedings before us, no one appeared on behalf of the assessee but the ld. Sr.DR represented on behalf of the revenue. 6. During the course of hearing before us, regarding the first ground of appeal, it was submitted by the ld. Sr.DR that the Assessing Officer has provided several opportunities of being heard to the assessee but the assessee failed to explain the source of the deposits made in the bank account amounting to Rs. 2,49,40,034/-. The assessee also did not file audit report at the time of submission of the ITR in response to the notice under Section 148 of the Act. Even in the audit report submitted subsequently, the schedules and notes to P&L account and balance sheet were not filed in the audit report. The

I.T.A. No. 354/RAN/2026 ACIT Vs Classic Coal Construction P Ltd. computation of income was also not filed by the assessee. The assessee also did not produce any bills and vouchers to substantiate the actual expenditure made by the assessee and therefore, the Assessing Officer has rightly disallowed the entire sum of Rs. 2,49,40,034/- as unexplained expenditure under Section 69C of the Act and rightly taxed the same at the rate prescribed under Section 115BBE of the Act. The ld. Sr.DR further submitted that onus casts upon the assessee to establish the genuineness of the expenditure lies with the assessee and the assessee has not discharged the same and therefore, the Assessing Officer has rightly disallowed the same. The ld. Sr.DR further submitted that the ld. CIT(A) was not correct in appreciating this fact and simply deleted the addition which needs to be reversed. 7. Regarding the second ground of appeal, the ld. Sr.DR pointed out that the ld. CIT(A) has deleted the addition by relying on the documents which was not produced before the Assessing Officer without proper verification under Rule 46A and holding that the addition under Section 69C would result in double taxation without appreciating the fact that Section 69C of the Act operates independent of Section 145(3) of the Act and since nothing was produced and explained before the Assessing Officer, the deletion of addition by the ld. CIT(A) cannot be upheld. 8. We have considered the submissions of the ld. Sr.DR and also perused the material available on record and the impugned order passed by the ld. CIT(A) and we find that the ld. CIT(A) was right in holding that once the profit was estimated, it takes into account possible leakages, deficiencies and

I.T.A. No. 354/RAN/2026 ACIT Vs Classic Coal Construction P Ltd. unverifiable expenses recorded in the books and therefore, making additional disallowance on the same set of facts would amount to double taxation. We agree with the findings of the ld. CIT(A) that once the profit is estimated, then the entire expenditure is covered in that estimation, therefore, there is no reason to differ with the order of the ld. CIT(A) and we find that there is no infirmity in the order of the ld. CIT(A) which requires any interference. Accordingly we uphold the order of the ld. CIT(A). 9. In the result, appeal of the revenue stands dismissed. Order pronounced in open court on 14/10/2026.

Sd/- Sd/- (RAJANI GUDURI) (RATNESH NANDAN SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBER Ranchi, Dated:14/10/2026 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File

Sr. Private Secretary, ITAT, Ranchi