SOUTHERN AGRIFURANE INDUSTRIES PVT. LTD.,CHENNAI vs. ACIT, CENTRAL CIRCLE-2(2), CHENNAI

आयकर अपीलीय अिधकरण, ’सी’ ायपीठ,चेई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH: CHENNAI

ी एबी टी. वक
, ाियक सद एवं
एवं
एवं
एवं
ी अिमताभ शुा, लेखा सद के सम

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER

आयकर अपीलसं./ITA Nos. 1817 to 1819/Chny/2025
िनधारण वष/Assessment Years: 2020-21 to 2022-23

The DCIT,
Central Circle-2(2),
Chennai.

v.
M/s. Southern Agrifurane –
Industries Pvt. Ltd.,
MGM Centre No.1,
9th Cross Street,
Dr. Radhakrishnan Salai,
Mylapore,
Chennai – 600 004. [PAN: AAGCS 9705 F]
(अपीलाथ/Appellant)

(यथ/Respondent)

आयकरअपीलसं./ITA Nos.1550 to 1552/Chny/2025
िनधारणवष/Assessment Years: 2020-21 to 2022-23
M/s. Southern Agrifurane –
Industries Pvt. Ltd.,
MGM Centre No.1,
9th Cross Street,
Dr. Radhakrishnan Salai, Mylapore,
Chennai – 600 004. v.
The DCIT,
Central Circle-2(2),
Chennai.

[PAN: AAGCS 9705 F]

(अपीलाथ/Appellant)

(यथ/Respondent)

Department by :
Mrs. C. Yamuna, CIT &
Mr. Bipin, CIT
Assessee by :
Mr. N. Arjun Raj, Advocate
सुनवाईकतार ख/Date of Hearing
:
08.10.2025
घोषणाकतार ख /Date of Pronouncement
:
21.11.2025

PER BENCH:

These appeals p against the order of the 19, (hereinafter referred for the Assessment Ye
2022-23 u/s. 250 of the ‘the Act‘).
2. Briefly stated the private limited comp manufacturing and sale
2021-22 & 2022-23, the the Act declaring total and Rs.34,98,31,681/- conducted upon SNJ G same, the business pre where incriminating m analysis of the seized
Bottles, it was inferred the assessee by provi
During the pendency of u/s 153C of the Act, a s
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::2 ::

आदेश / O R D E R referred by the assessee and the e Learned Commissioner of Income d to as ‘Ld.CIT(A)‘), Chennai, all dat ears (hereinafter referred to as ‘AY e Income Tax Act, 1961 (hereinafte e facts of the case are that, the any which is engaged in the e of Indian made foreign liquor. Fo e assessee had filed return(s) of inc income of Rs.53,36,75,280/-, Rs.
respectively. It is noted that, a sea
Group on 06-08-2019 and in conne emises of M/s Crystal Bottles was aterial relating to the assessee w material found from the premises that, they had facilitated inflation ding bogus invoices of purchase f the assessment proceedings whic search u/s 132 of the Act was cond o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
e Revenue are Tax (Appeals)- ted 04.04.2025
Y‘) 2020-21 to r referred to as assessee is a e business of r AYs 2020-21, ome u/s 139 of 47,04,60,043/- arch action was ection with the s also searched was seized. On of M/s Crystal of expenses of of old bottles.
ch was initiated ucted upon the assessee on 15-06-202
books of accounts, docu etc. was found and seiz alia contained details debiting bogus purcha transportation & logistic income-tax assessment complete scrutiny by is assessment(s) were com
AYs
2020-21,
2021-
108,50,73,297/-, Rs following addition(s)/dis
Sl
No Particul
1
Addition on a/c of old b
2
Disallowance of data ce
3
Addition on a/c of un scrap
4
Addition on a/c of bogu
3. It is noted that aboveadditions/disallow forthe sake of convenien
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::3 ::

22, in the course of which several uments & electronic data, loose shee zed. According to the AO, the seized of suppression of income by the ases from vendors of old liquo cs services. Consequent to the sea ts for AYs 2020-21 to 2022-23 wa ssue of notice(s) u/s 143(2) of th mpleted u/s 143(3) assessing the t
-22
&
2022-23
at Rs
95,03
94,94,33,711/- respectively, afte sallowance(s).
ars
2020-21
202
bottle purchases
41,11,59,615
56,41
enter expenses
55,64,877
61
naccounted sale of NA
42
us CSR contribution
NA
4,00
the reasoning given by the AO f wances were verbatim same across nce, and to avoid repetition of facts o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
materials viz., ets, note books d material inter e assessee by or bottles and arch action, the as selected for he Act and the total income for ,99,772/-,
Rs r making the (in Rs.)
21-22
2022-23
,82,236
58,23,45,992
,36,677
1,29,61,697
,94,341
42,94,341
,00,000
NA for making the all AYs. Hence,
; we deem it fit to adjudicate each of together.
4. As noted above, t us and therefore with discuss the facts relatin so rendered shall mutat the assessment order f authorities had seized premises of Shri S Vara which contained an Ex
‘ENA Schedule’. These e
ANN/ARS/SAFL/Loose S excel file comprised of purchase of old bottles is noted to have tabula of the assessment orde wise details of the old b contained the date of invoice amount, GST, o to contain date-wise co vendors. According to t
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::4 ::

the common issues across all the first issue is common across all the consent of both the parties, w g to AY 2020-21 as the lead case a tis mutandis apply to all other AYs. H for AY 2020-21, it is noted that th a silver color pen drive from atharaj, Deputy Manager of the ass xcel File comprising of several exce excel sheets were printed and seize
Sheets/S-1, Pages 1 to 66. It is n five(5)sheets which comprised of d for three-month period in the year ted sample data from this excel file er. It is seen that, this data comp bottles purchased from certain vendo invoice, manner of payment, da ther charges & total. Another excel olumn-wise notings of several figur the AO, these excel files were actua o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
AYs before us the AYs before we take up and and our findings
Having perused e Investigating the residential essee company el sheets titled ed as Annexure noted that, this data relating to r 2020. The AO e at Para 4.1.4
rised of month ors. It inter alia ate of cheque, sheet, is noted res against five ally a summary of the bogus invoices o that the date-wise deta them. It is observed th statement(s) obtained
Varatharaj [from whose
Augsutine Paulraj. The ‘Others’ in the excel f vendors for facilitating b the cash which was to cheques paid to them extracted the data of o
SAP software along wit
According to the AO, t bottles for which genu vendors were also pr expenses of the assess ledgers, which according bottle purchases and opinion, the actual old
Receipt Note (herein af bogus old bottle purcha bogus purchases, the b
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::5 ::

obtained by the assessee from thes ails were the notings of cash amo at, this analogy of the Revenue wa from key employees of the assess e possession the pen drive was fo ese employees had explained tha file represented the commission re bogus invoices and that the column o be returned back by the vendo m in lieu of bogus invoices. The old-bottle supplier-wise purchase le th their off-set accounts of old bo hough these vendors were actually uine invoices were being raised, b oviding bogus invoices to facilita see. This inference was drawn from g to the AO, contained entries both bogus old bottle purchases. In bottles purchased were accompa fter ‘GRN/GRNs’) whereas the same ases. The AO accordingly deduced t bills were processed without GRN o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
se vendors and ounts due from as based on the see i.e., Shri S ound] and Shri at, the column etained by the ‘Total’ denoted ors against the AO thereafter dgers from the ottle purchases.
y supplying old but these same ate inflation of m the purchase for genuine old the Revenue’s nied by Goods e was lacking in that, in case of entry. The AO thereafter elaborately d assessee upon purchas invoices in light of the staff. The AO inferred t there was no movemen
According to AO, the a bottle suppliers in lie invoices after deductin facilitating such bogus have undertaken samp
Department which are r for sale. According to supplied by the Excise D bottles consumed in p purchases booked in th bottles utilized as per t excess number of old b bogus purchases. The reproduced the stateme
S Varatharaj, Shri Augs the assessment order, w did not carry seal or G
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::6 ::

iscussed the accounting processes f se of old bottles with screenshots o statements obtained from the ac that wherever the purchases invoice t from top to bottom for accounting assessee would simply collect cash u of payments made towards b ng commission retained by these bills. To support his theory, the A le analysis of holograms label sup required to be used on the final bot
AO, ideally the total number of h
Department should match with the t production. The AO however obse he SAP software was much higher t the hologram details and thus conc bottle purchases as per SAP actua ereafter, the AO is noted to ha ents of several employees of the ass utine Paulraj etc., recorded across s wherein they had admitted that, the GRN details were bogus purchases o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
followed by the of SAP system, ccounts & audit es were bogus, g and payment.
h from the old ogus purchase e suppliers for AO is noted to plied by Excise ttles dispatched hologram labels total number of erved that, the than the actual cluded that, the lly represented ve extensively sessee viz., Shri several dates in e invoices which .It is observed that, Shri Austine Paulr were inter alia providing actual supply of old b
Rs.390 crores for the vendors would return ba such bogus invoices aft utilized to meet other reproduced the stateme
M Anand who had confi
Shri Austine Paulraj. Th set out the findings un these suppliers. To sum corroborated the statem inflation of expenses by summarized the evidenc at Para 8 of his order, w
“During the cou unearthed with re
M/s SAFL:
a) During the co
DGM (Finance) maintaining mont of purchase of old in a silver colour evidences found i
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::7 ::

raj had identified eight (8) regular g these bogus invoices to the assess bottles and quantified the bogus t past ten years. According to the e ack the cash in lieu of the payment ter deducting their commission and r cash expenses of the assessee.
ent of the Managing Director of the rmed the statements given by Shri hereafter, the AO at Para 6 of his or earthed upon conducting search/su m up, according to the AO, these sup ments of the employee(s) that they y providing bogus invoices. The AO is ces unearthed with respect to old b which is extracted below:- urse of search, the following evidences espect to bogus old bottle purchase invoice ourse of search at the residence of Shri.
M/s SAFL, it was found that he was s th wise details of bogus expenses, booked d bottles, in an excel workbook named "EN r pen drive (Neel Max 32 GB). He has e in an elaborate manner, the modus operan o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
r suppliers who see, apart from transactions at employees, the s made against such cash was . The AO also assessee, Shri
S Varatharaj &
rder elaborately urvey action on ppliers had also y had facilitated s found to have ottle purchases s have been es booked by S.Varatharaj, systematically d in the guise
NA Schedule"
explained the ndi of booking the bogus expen bottle purchases received back the The evidences fou
Ans. Sir, As I unaccounted inco entries. M/s Sout
Invoices for purc
Ramachandra Bo
International Priv
Limited, M/s Crys
Sri Pachaivazhaia
The modus opera invoices to M/s S bottles. In turn, bogus invoices.
withdrawn cash payments corresp their commission
M/s Lotus Bottle
GLR Holdings, M/
Koval Sri Ganapa have raised bogu
SAFL for purchas this process, M/s bottle suppliers h in the years in wh offer this unacco for taxation for F.
Further,
M/s
A accommodation
Narendra Jain. T
36.42 crore for t claimed bogus C institutions for cl mediated by shri.
Hence, in order
Rs.230,00,00,000
entities for variou
However, as of unaccounted inco
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::8 ::

nses and accepted that M/s SAFL booke s against payments through banking e amount corresponding to the bogus invo und at his residence reveal stated earlier, I accept that we were ome through bogus invoices and by acc thern Agrifurane industries Pvt. Ltd has h hase old liquor bottles from its suppliers v ottle Stores, M/s Lotus Bottle Supplier vate Limited, M/s GLR Holdings, M/s GLR Ho stal Bottles, M/s Kovai Sri Ganapathy Trad amman Traders for the FY 2012-13 to FY 20
andi is that the old bottle suppliers have Southern Agrifurane Pvt. Ltd for purchase o
M/s SAFL has initiated RTGS payments a After receiving the RTGS, the bottle s from bank accounts and handed ove ponding to bogus bills, to Shri. M. Raman n. I accept that M/s Sree Ramachandra B
Suppliers, M/s Niha International Private
/s GLR Holding Private Limited, M/s Crysta athy Traders and M/s Sri Pochaivazhaiam us invoices to the tune of Rs. 390,72,59, se of old bottles for the FY 2012-13 to FY
SAFL had generated unaccounted cash inc have earned certain percentage of commi hich they have raised bogus invoices, I acce unted cash income generated through bo
.Y. 2012-13 to F.Y. 2022-23. Anand
Transport
Pvt.
Ltd.
has boo expenses in the name entities introduc
The company has raised unaccounted in the FY 2013-14 to FY 2017-18. Further, M
CSR expenses through accommodation en laiming bogus CSR expenses and this tra
. Narendra Jain.
r to avoid litigation and buy peace I
0/- as undisclosed income earned thr us financial years and I will pay the taxes now I could not derive year wise exact ome earned in each entity. I request yo o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
ed bogus old channel and oices in cash.
e generating commodation hooked bogus viz. M/s Sree rs, M/s Niha olding Private ders and M/s
022-23. raised bogus of cleaned old against these suppliers had er the cash, n after taking
Bottle Stores,
Limited, M/s l Bottles, M/s mman Traders
061/- to M/s
Y 2022-23. In come and the ssion income ept that I will gus invoices, oked bogus ced by Shri.
come of Rs.
M/s SAFL has try providing nsaction was hereby offer rough above s accordingly.
quantum of ou to provide two-week time t basic value of in suppliers for raisi b) Shri. Augustin sworn statement, booked bogus/ ex
FY 2012-13 to FY which were not a c) Shri.M.Mani, A old bottle purcha directions of Sh genuine invoices details and purch
GRN details in rem d) Based on the evidences found,
Act at the busine no purchase orde of Shri. Augustin
Shri. Augustine bogus invoices to the bogus invoic from his depositio purchase was "al bogus purchase was "consumptio course of search purchases were s e) Shri.J.Ramesh deposed in his s processed by inte as purchase orde pass and another documents. Furth
Paulraj, he had documents for pa f) The cashier o accepted that he every month from lockers maintaine
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::9 ::

to arrive that M/s SAFL had paid 8% co voice, le without GST and TDS/TCS, to t ng bogus old purchase invoices.
ne Paulraj Vice President (Finance) M/s SA
, recorded at his residence, deposed that M xcess invoicing to the tune of Rs.390,72,5
Y 2022-23 to meet certain hidden overhea llowable expenses under I.T. Act.
Accounts Officer at M/s.SAFL, testified that ase invoices without GRN in SAP softwar hri. Augustine Paulraj. He also clarified received at the factory processed in SAP hase order number, whereas the bogus inv marks section of SAP.
e clarifications provided by Shri.S.Varath vide his sworn statement recorded u/s 1
ss premises of M/s SAFL, it is gathered tha ers raised for bogus purchases and as per e Paulraj, the bogus invoices were directly
Paulraj. Shri. Augustine Paulraj in turn h o Shri. S.Varatharaj and Shri. Mani, who h es manually in "A/P Invoice" module of S on it is seen that 'off-set account name' giv llocation account" and 'off-set account nam was "Stock-pack-Mtrl-Bottle" and for ear on- bottles" and "cost of goods sold-FG"
, the ledgers of 'off-set accounts' of bog seized vide annexure: ANN/TM/SAFL/LS/S-2
h, Chief Manager of Internal Audit in sworn statement that two types of invoic ernal audit unit, one with supporting docu ers, supplier bills, GRN from store, DC, S r type of bills were not having any of thes her, he stated that on the instruction of Sh d approved the invoices without any ayment.
of M/s SAFL, Shri.M.Raman, in his swor collected a sum of Rs.2 to 3 Crores (app m the old bottle suppliers and kept the cas ed with M/s Kothari Safe Deposits Ltd. Su o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
ommission on he old bottle
AFL, vide his
M/s SAFL had 59,061/- from ad expenses, he processed re under the that, those had the GRN voices had no haraj on the 132(4) of the at there were the direction y delivered to had sent the ad processed
SAP. Further, ven for actual me' given for rlier years, it . During the us old bottle
2 to 5-9. MGM Group, ces had been uments, such Security gate se supporting hri. Augustine y supporting rn statement prox.) in cash sh in the safe uch cash was seized vide annex search, a se
ANN/AS/MGMC/L details of cash co
M/s SAFL receive g) From the state on his direction S the same for aut turn had forward approval,
Shri.
Shri.S.Varatharaj approval. After t office processed corresponding am suppliers and in o monthly report t residence. Furthe
Augustine Paulra
Shri.M.Raman fo hand written not received from th
'modus operandi'
Augustine Paulraj involved in raisin and collecting the h) Based on the search, a sworn from Shri.Manuel categorically acc purchases agains the amount cor confirming the de
Paulraj and Shr responsible for bo and collecting cas i) Shri.Gottam R
Traders, deposed invoices against amount correspo accepted by Shr
Finance) M/S SAF
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::10 ::

xure: ANN/AK/MGM/Cash/Seizure. During et of loose sheets seized vide
S/S-1, which were written by him and ollected from old bottle suppliers. This est d back cash from the old bottle suppliers.
ement of Shri. Augustine Paulraj, it was g
Shri.M.Mani raised bogus invoices in SAP a horization of Shri.S.Varatharaj and Shri.S.
ded the invoices physically to him for ap
Augustine
Paulraj had sent them
, who forwarded the same to Shri. Rame he approval of audit team, Shri.M.Mani fr the payments towards the bogus invoi mount in cash was received by Shri. Ram order to track this payment, Shri. Varathara owards such bogus payment, which was er, from his statement it is also gathere aj handed over the monthly payment r payment tracking which also was seize ting of Shri. M Raman with respect to th he supplier. It is pertinent to mention h of raising bogus old bottle purchase expla j has been accepted by all the key people ng and processing of bogus invoices, maki e corresponding cash from the suppliers.
findings and evidences gathered during t statement u/s 132(4) of I.T. Act, 1961 w l Gnana Muthu Anand, MD, M/s SAFL, wh cepted that M/s SAFL had booked bogu st payment through banking channel and r rresponding to bogus bills, in cash. F epositions made by Shri. S Varatharaj, Sh ri. M Raman, he testified that these ooking this bogus expense, maintaining pay sh from the old battle suppliers.
Rami Reddy, Proprietor of M/s. Sree D d on oath that he raised bogus old bot cheque payment to M/s SAFL and return onding to bogus invoices in cash. The i. Bandi Venkat Kumar, Deputy Manager
FL.

o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
the course of annexure:
d having the tablished that gathered that nd forwarded
Varatharaj in pproval. After m back to esh for audit rom accounts ices and the man from the aj prepared a seized at his ed that Shri.
ts report to ed along with he payments here that the ained by Shri.
e of M/s SAFL ng payments the course of was recorded herein he had us old bottle received back urther, after hri. Augustine people were yment details
Durga Devee ttle purchase ned back the e same was (Accounts &

j) The ex-group was aware of the through excess b k) During the co
M/s SAFL, Shri. Y consumption dat dispatch details data given by t consumed for pro provided by Shri.
it is established b amount of bogus l) Shri.M.Raman provided the na handed over cas statement provid
Shri. Augustine P testified that 6%
to old bottle supp
GST induction an the commission w
Shri. Manuel Gna
Shri.S.Vartharaj, statements of va booked bogus pu
2012-13 to FY 20
MGM group to the m) The comparat by Shri.Y.Victor provided by Sh maintained by S and actual books that M/s SAFL ha above actual purc n) The evidence business premise
Lotus Bottle Supp
M/s SAFL and invoices in cash established that purchases in ra
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::11 ::

president of MGM, Shri.P.S.Mahadevan tes e fact that M/s SAFL was generating unac illing to meet certain business compulsions ourse of search proceedings at the produc
Y Victor Vasantha Kumar provided the ho ta, which is exactly matching with pro provided by Shri. Sanjeev Yash Roy. This these two people are the actual numbe oduction. But, on comparison of SAP data w
. Y.Victor Vasantha Kumar and Shri. Sanje beyond doubt that assessee company had expensed in the guise of old bottle purchas
, in his sworn statement recorded on me of the persons of old bottle supplie sh to him. This is exactly matching wit ed by the key persons of old bottle suppl
Paulraj in his sworn statement recorded on commission on the base value of invoice plier for raising bogus invoices and further t nd due to continuous demand from the bot was revised from 6% to 8% w.e.f 01.08.2
ana Muthu Anand, after reconfirming the Shri. Augustine Paulraj and Shri. M rious old bottle suppliers, had accepted th urchases to the tune of Rs.390,72,59,06
022-23 and offered the undisclosed incom e tune of Rs.230 crores for FYs:2012-13 to ive analysis of hologram consumption dat
Vasantha kumar, production and disp ri. Sanjeev Yash Roy, old bottle utiliz hri K.Parathasarathy at factory premises of accounts of M/s SAFL, it is established b ad booked bogus old bottle purchase invoi chases.
found during the course of search procee es of M/s Lotus Bottle Suppliers, establish pliers had raised bogus old bottle purchas returned back the amount correspondin after taking its commission. Further, th the entity had booked bogus bough andom names and bogus purchase in o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
stified that he counted cash s.
ction plant of ologram label oduction and s shows that er of bottles with the data eev Yash Roy, booked huge ses.
10.08.2022, ers who had th the sworn iers. Further, n 02.09.2022
was provided testified after ttle suppliers,
017. Further, statement of Raman and hat M/s SAFL
61/- from FY me earned by 2022-23. a maintained patch details zation details of M/s SAFL beyond doubt ces over and edings at the hed that M/s e Invoices to ng to bogus he evidences t note cash nvoices from accommodation p
M/s SAFL. Shri. N same was accep
Lotus Bottle Su statement given
Varatharaj and purchase invoices the FYs: 2012-13
income to tax.
o) The evidence business premise
Pvt. Ltd. and M/s
Smt. Sornavalli, bogus old bottle payments and re cash, after taking bogus sale made note cash purcha had accepted the statements of S
S.Varatharaj. On the course of sea
Shri. S.Varathara books are exact workbook, which corresponding to production regist quantified that 74
to M/s SAFL for F the factory prem
K Parthasarathy W
Niha group, book proves that. Niha
Shri. S Rajendra bogus old bottle
2012-13 to 2022
taxation.
p) From the state gathered during t
M/s Sri Pachaivaz the entity had rai amount of bogus provided by Shri
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::12 ::

parties in order to compensate the bogus s
ND Venkatesan has accepted the above m pted on oath by Shri. R Palanivelu, Prop ppliers. Further, Shri. R Palanivelu reco by Shri. Augustine Paulraj, Shri. M Raman stated that his entity has raised bogu s to the tune of Rs.123,44,01,832/- to M/s
3 to 2022-23 and offered the undisclosed found during the course of search procee es of M/s Niha International Pvt. Ltd., M/s s GLR Holding and the sworn statement re accountant, established that these entitie purchase invoices to M/s SAFL against che eturned the amount corresponding to bogu g their commission. Further, in order to com to M/s SAFL, these entities had booked b ases in random cities name. Further, Shri.
e deposition made by Smt. Sornavalli and c
Shri. Augustine Paulraj, Shri. M Rama comparison of cash book of Niha group s rch with "ENA Schedule" excel workbook m aj, it is found that the cash payment entrie tly matching with cash receipt entries shows that the entities had returned back bogus invoices in cash to M/s SAFL. Furth ter maintained at cleaning facility of Niha
4,03,824 number of old bottles were clea
FY 2021-22, which is matching with details ises of SAFL utilised for production, mainta
Whereas the total number of old bottle pu ked in M/s SAFL for the year was 6,83.3
a group entities had raised bogus sale invo an accepted on oath that Niha group en
Invoices the tune of Rs.69,78,04,742/- du
-23 and offered the undisclosed commissio ement of Shri. Murugan and Shri. B Siva the course of search action at the business zhiamman Traders, it is established beyon ised bogus invoices to M/s SAFL. Further, t s invoices raised by M/s Sri Pachaivazhiam i. R Murugan is exactly matching with b o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
sales made to odus and the rietor of M/s onfirmed the n and Shri. S us old bottle s SAFL during d commission edings at the GLR Holding ecorded from es had raised eque or RTGS us invoices in mpensate the bogus bought
S Rajendran confirmed the n and Shri.
seized during maintained by es of the cash in the excel k the amount her, from the a Group, it is ned and sent s of old bottle ained by Shri urchases from 39,600 which ices. Further, ntities raised uring the FYs:
on income for and evidence s premises of nd doubt that the year wise mman Traders bogus invoice ledger, 'Stock-Pa
SAFL. The numbe
Traders to M/s S excel sheets foun of old bottle utilis at the factory pre purchases from M for these financia
This proved that old bottle purch payments to the 2022-23 and retu invoices), after de q) The evidence
Bottles and M/s K bogus old bottle payments and re cash after deduct that these entitie random names in Further, the ex established that actual bottles su with predetermin established that involcesto M/s
Rs.13,70,60,915/
2012-13 to 2022- r) During the co
M/s.Sree Ramach
Muralidharan dep they had prepare bottles to M/s SA of the firm, testi bottles and susta he engaged M/s
M/s SAFL and invoices in cash a the statement of Raman, on oath invoices to M/s S
2012-13 to 2022
earned through a ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::13 ::

ck MtrI-Bottle', extracted from the SAP sof er of old bottles supplied by M/s Sri Pacha
SAFL for FY 2019-20 and 2020-21, extrac nd in HP metal 16GB pen drive, is matching sed for production, maintained by Shri. K P emises of SAFL. Whereas the total number
M/s Sri Pachaivazhiamman Traders, booked al years was much more than the above q
M/s Sri Pachaivazhiamman Traders had hase invoices to M/s SAFL against RT e tune of Rs.26,29,58,828/- for the FYs urned back this amount in cash(correspond educting its commission.
gathered at the business premises of KSGT, it was established that these entitie purchase invoices to M/s SAFL against ch eturned the amount corresponding to bogu ting their commission. Further, the evidenc es had booked bogus bought note cash n order to compensate bogus sales made xcel sheets found from Smt. K Kastu these entities had raised bogus invoices pplied to M/s SAFL and prepared bogus b ned combination of quantities and rate. Th
M/s Crystal Battles and M/s KSGT r
SAFL for purchase of old bottles to /- and Rs.12,89,04,614/- respectively f
-23. urse of search proceeding at the business handra Bottle Stores, Shri. Arun Kumar K posed that on the instruction of the partner ed bogus delivery challan and invoices fo
AFL Further, Shri. K Krishna Kumar, one of fied that in order to receive contract for ined revenue and on the direction of Shri.S
SRBS In raising bogus old bottle purchas returned back the amount correspondin after deducting its commission. Further, aft
Shri. S Varatharaj, Shri. Augustine Paulra he accepted that the firm had raised bog
SAFL to the tune of Rs. 144,61,26,131 du
2-23 and offered the unaccounted commi ccommodation entries for taxation.

o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
ftware of M/s ivazhiamman cted from the g with details
Parthasarathy r of old bottle d in M/s SAFL quantification.
raised bogus
TGS/ cheque s:2019-20 to ding to bogus
M/s Crystal es had raised heques/RTGS us invoices in ce established purchases in to M/s SAFL.
uri's desktop in excess of bought notes herefore, It is raised bogus the tune of for the FYs:
s premises of K and Shri. S rs of the firm or sale of old f the partners supply of old
S. Varatharaj, e Invoices to ng to bogus er confirming j and Shri. M gus old bottle ring the FYs:
ssion income

w of the above discussions and eviden e of search, it is categorically established t us old bottle purchase invoices in its regu h old bottle suppliers, against RTGS / cheq ck the amount corresponding to bogus inv uppliers after giving them 6% to 8% of com bove findings, the AO is noted to h us old bottle purchases, as quantifie his assessment order, in all the im y the order(s) of the AO, the asse
CIT(A). It is seen that, the Ld ssions put forth by the assessee d ultimately rejected the books of a ed the profits at 10% of the tu of the Ld. CIT(A), both the assesse oth the parties, perused the finding red the material placed before us. I d in the business of manufacture and in relation to this business are note accounting software. The facts a urse of search, a pen drive was f loyee which inter alia contained an f five excel sheets which contained o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
nce gathered hat M/s SAFL ular books of que payments voices in cash mmission…”
have added the d by him in the pugned year(s) essee preferred d. CIT(A) after in light of the accounts of the urnover. Being ee and Revenue gs of the lower
It is noted that, d sale of liquor.
d to have been as noted above found from the excel file. This d tabulation of purchases made from period of 2020. The Ld read on stand-alone ba the assessment order, i have deduced that, the entries of bogus purcha purchases by the asse consisted of date-wise the invoiced amount, G his opinion, cannot be a through the same, ther excel sheets, if consid assessee had inflated t these suppliers.
7. It is however noti from the statement(s assessee, particularly M
Mr. Augustine Paulraj (
MGM Anand (Director) w bogus purchases from Further, Mr. Varatharaj
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::15 ::

five different vendors pertaining t d. AR showed us that, if these exc asis, which has also been extensive it shall be observed that, no pruden e details of purchases noted there ses or receipt of unaccounted cash essee. Rather, he pointed out tha and bill-wise details of the purcha
ST, date of payment, cheque detail alleged to be incriminating in natur re is merit in the assessee’s content ered alone, cannot be said to su their expenses by booking bogus p iced that, the case made out by the s) recorded from several emplo
Mr. Varatharaj (Dy. General Manag
(Vice President), Mr. M. Raman (Ca wherein they had inter alia admitted the regular old bottle suppliers of from whose possession this excel o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
to three-month cel sheet(s) are ely extracted in nt person could ein represented in lieu of bogus at, the entries ases along with s etc., which in e. Having gone tion that, these ggest that the purchases from e AO emanated yee(s) of the ger – Finance), ashier) and Mr.
d to have made f the assessee.
file was found had averred that, the de bogus purchases. Rely these vendors, apart fro also raising bogus invo payments made in lieu o these vendors in cash. I invoices, the Revenue h the assessee. The purc the AO into two cate supported by GRN deta only invoices were reco movement of goods. In extensive analysis of h upon the statement(s) o the course of the sear
CIT, DR thus wants us analysis made out by th that the old bottle pur indeed bogus.
8. After considering that, the foundational b
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::16 ::

etails of purchases noted therein we ying on these statements, the AO om making genuine supplies to the oices at the behest of the assesse of such bogus invoices was being re
It is observed that, to identify the p had analyzed the accounting entries chases made from these vendors w egories viz., (a) genuine supplie ils in the software and (b) bogus su orded without GRN because there n support of this inference, the AO hologram utilization across the ye obtained from the key persons of th rch/survey action conducted upon to consider all these material, sta he AO cumulatively, which according rchases to the tune as quantified b the gamut of facts placed before basis of the impugned addition wa o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
ere summary of O deduced that assessee, were e and that the eturned back by urported bogus being made by were divided by es which were upplies wherein was no actual also undertook ears and relied hese vendors in them. The Ld.
atement(s) and g to her, proved by the AO was us, it is noted s the excel file comprising of fivesheet only for a three-month that, when the Invest explain the contents of invoices tabulated in th brought to our notice th file was minimal comp assessee. The Ld. AR proceeding on an assum purchases across all m the figures found noted estimating the bogus p contended that, the ent on surmises and estima themselves did not sug bottle suppliers were bo them. Hence, in the fac the assessee’s submiss notings to allege bogus weak footing.
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::17 ::

ts which contained details of old bo period in the year 2020. The Ld.
tigating authorities required Shri this excel file, he had averred tha is excel file comprised of bogus pu hat, the quantum of purchases note pared to the aggregate purchases
R accordingly claimed that, the A mption that the assessee was makin onths in all the years and, thereb d for the three-month period in the urchases across all the years, was tire exercise conducted by the AO ations. As noted by us above, thes ggest that the invoices raised by t ogus or that the assessee received cts and circumstance of this case, th sion that the AO’s action of extra s purchases across all the impugned o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
ottle purchases
AR pointed out
Varatharaj to at the details of rchases. It was ed in this excel s made by the AO’s action of g similar bogus y extrapolating year 2020 and unjustified. He was predicated e excel files by the regular old back cash from here is merit in apolating these d AYs was on a 9. It is also not in d genuine old bottle supp bottles to the assessee the purchases made fro
AO. It is seen by us th not found in the accou
Revenue. What the AO the entries found in th software and thereafter regarding the purchases case that, the notings fo of 2020 correlated wit therefore it was assume all the years was bog assessee furnished a w liquor business and the and old bottles. He s generally goes for 5 to bottle is procured for cycles. Consequently, th quality and understand chipped etc. and when
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::18 ::

dispute that, the vendors in questio pliers and that they were regularly
. The Ld. AR has rightly pointed ou om them had been accepted to be at, only those purchases where GR unting software were alleged to be has done is that, he first attempt he excel files with the accounting r highlighted the accounting anoma s with GRNs and without GRNs. It is ound in the excel sheet for the three th purchase entries having no GR ed that all the purchases which lacke us. At the time of hearing, the L written note explaining the modus o e activity involving purchase of bo submitted that, ordinarily the ne
6 cycles as old bottles and therefor usage, the bottles may belong t he old bottles so received may not dably some bottles may be cove n they are double washed & ins o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
on were indeed y supplying old ut that, most of genuine by the RN details were e bogus by the ted to correlate entries in SAP alies discovered s the Revenue’s e-month period
RN details and ed GRNs across
Ld. AR for the operandi of the oth new bottles ew bottle used re when the old to different life be of the same red with dust, pected, at the factory, more rejections of these old bottles w inspected washed quan quantity chipped, dust requirements). Accordin inspected, verified and therefore the Goods R minimal wastage was through the details of t quantities of wastage a this category was indee by the assessee regard the statement(s) obtain so far as the second ca depending on product immediately bottles are to dump the uninspecte the factory to expedit accepted quantity durin receipt of goods, the a such purchases and the was thus submitted th
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::19 ::

s would occur. It was explained tha was also divisible into two categ ntity with accepted quality and ( t and partially washed bottles ( ng to the Ld. AR, the first category of accepted quality was accepted
Receipt Note (GRN) was immediat expected in the production proces these first categories of purchases nd the final utilization to show that ed minimal. It is seen that, the ex ding the inspected purchases is also ned from the factory staff at the tim tegory was concerned, the Ld. AR s ion requirements and order(s), e required due to which these vendo ed, chipped, dust and partially wash e the entire production process.
ng production is not ascertainable assessee claimed that it would not e same were routed through KWWH at, the concerned accounts staff w o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
t, the purchase gories viz., (i) ii) uninspected for emergency y being already on receipt and tely raised, as ss. He took us along with the the wastage in planation given o supported by me of search. In submitted that, many a times ors are insisted hed bottles into As the exact at the time of t raise GRN for H warehouse. It would maintain separate tabulation for final usable old bottle reconciled and appropri explained this entire uninspected bottles thro of wastage generally fo submitted that, since th and it is the assessee usually press for imm bottles, which is paid
Accordingly, the accou purchases so that exc demanded back, wher damaged. The Ld. AR carried out by the AO wastage in utilization o implausible. He pointed actual loss suffered wit preceding paragraphs a bottle purchases was made out by the asses instances was due to ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::20 ::

these uninspected purchases so t s identified from the lot, the nu ate GRNs can be raised in the syste activity of purchase of both ough the SAP entries and also prov ound in different stages of product hese old bottle suppliers are unorga which makes these emergency p mediately release of payments to d by the assessee through ban unts staff maintains separate reco cess payments made to these su re uninspected bottles are found further pointed out that, the holo proceeded on the assumption th of old bottles, which according to d out that, the AO had omitted t th respect to the old bottles as di and therefore his analysis of estima incomplete and skewed. The case ssee is that, the non-recording of G the complexities in the business o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
that, when the umbers can be em. The Ld. AR inspected and ided the details tion. He further anized segment purchases, they wards the old nking channel.
ords for these ppliers can be to be mostly ogram analysis hat there is no him is totally to consider the iscussed in the ting excess old e sought to be GRNs in certain s pursued, the difficulties in the acc emergency requiremen unjustified on the AO’s
GRN details were bogus
10. Having considered agree with the AO tha assessee would show t invoices from their old contained in the excel therefore it is not safe made across ten years data for three months assuming that same mo been followed in all countenanced, particula the assessee’s premis according to us, at first non-recording of GRNs be plausible. At the sa employees had admitte
We are aware that, sta
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::21 ::

counting of old bottle purchases nts etc. According to him ther s part to baldly allege that, all pur s.
d the above submissions, we cann at, the material seized from the p that the assessee was indulging in d bottle suppliers across all the ye sheet is found to be an anecdot to use it as the basis to allege that was bogus. The AO’s action of ex s found in an excel sheet across odus operandi (non-recording of GR the years, in our opinion, cann arly in absence of any direct eviden ses to support such a propositi t blush, the explanation given by th relating to their emergency purcha ame time however, it is observed ed that, the purchases without GRN atements alone cannot be the basis o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
including for refore, it was rchases lacking not conclusively premises of the availing bogus ears. The data tal sample and t the purchases xtrapolating the ten years and Ns) would have ot be entirely nce found from ion. Moreover, he assessee for ases is found to d that, the key
Ns were bogus.
s to justify any addition(s) but having value in the given facts we observe that, even t the version of the emp issued without GRNs w statements did suppo statements were not t cross-examination whic and the Hon’ble Apex C
127 DTR 241/281 CTR 2
right to cross-examine results in violation of n which renders the orde the old bottle suppli accommodation entry p vendors and most of th to be legitimate by the purchases made from accompanied by seal or purchases lacking GRNs and suppliers, does rai our considered opinion
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::22 ::

perused the contents thereof, th of the present case, cannot be rule these suppliers in their statement(s) ployee(s) and admitted that the pu were bogus. According to us, the rt the AO’s case, but it is see tested by affording the assessee ch considerably diminishes their ev
Court in Andaman Timber Industries
241 (SC) held that failure to give th e witnesses whose statements ar atural justice and such omission is r a nullity. We are also conscious o ers were not found to be she providers. Instead, they were adm he purchases made from them were e AO. The dispute before us relates m these genuine suppliers wh r GRNs. The fallacies pointed out by s coupled with the statement(s) of se doubt on the veracity of these therefore, there is indeed more th o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
heir persuasive ed out. Further,
) had confirmed rchase invoices ese third-party en that, these opportunity of videntiary value vs CCE [2015]
he assessee the re relied upon s a serious flaw of the fact that, ell entities or ittedly genuine e also accepted s to only those ich were not y the AO in the the employees purchases. In an what meets the eye, but at the sam the entire value of pur bogus and be entirely ad
11. This may yet be adding the entire valu would give an incongruo business would be abno find is not appropriate i
CIT(A) is noted to have of the operating profit m was observed that, no assessee comparatively impugned addition is numbers, which is not p the case of the Revenu but it is crucial to no corresponding value of expenditure, in the cou days across several pr
Bench, the Ld. CIT, DR the panchnamas draw
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::23 ::

e time, there is no conclusive eviden rchases which lacked GRNs can be dded to the total income of the asse viewed from another angle. If the e of alleged bogus purchases is u ous picture in as much as the gross ormally high in the range of 35% to n the facts and circumstances of th e analyzed the profitability of the as margins of similar players in the liq ot only was the profits being re y higher than the industry standa upheld, then it would result in possible in this line of business. Mo ue is that, the entire value of purch te that, the search team had fai unaccounted asset or unexplained rse of search which was conducted remises of the assessee. At the d for the Revenue has placed on reco n at different premises of the as o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
nce basis which e treated to be essee.
AO’s action of upheld, then it profit from this 42%, which we e case. The Ld.
ssessee in light uor industry. It eported by the rds, but if the absurd profit oreover, though hases is bogus, led to unearth investment or across several irection of this ord copies of all ssessee group.

Having perused the sam
Rs.2.5 crores was foun unaccounted asset or authorities. Hence, it inflated expenses by R back cash, when neit corresponding asset or i
12. Overall therefore, there are indeed disc highlighted by the low entire value of purch suppliers were bogus.
acknowledged before maintaining the books accounting anomalies c entries, which requires pointed out that the A these accounting deficie initiated penal action imperative for us to cla books of accounts cann
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::24 ::

me, it is observed that, only cash nd & seized from different premises r investment was found by the would be ludicrous to allege that Rs.390 crores across several years ther the alleged cash received investment was unearthed in the co
, we are in agreement with the Ld crepancies in the books of accou er authorities, but it cannot be a ases lacking GRNs, made from The Ld. AR for the assessee h us that, there were accounting s of accounts, but he contende cannot be ipso facto assumed to be s strict proof of mens-rea, which AO in the assessment order erron encies to tantamount to false entri u/s 271AAD of the Act. At this arify that the accounting deficienci not be equated with falsification of o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
aggregating to s and no other e Investigating t the assessee s and received back nor any ourse of search.
d. CIT(A) that, unts as rightly lleged that the these genuine as also tacitly anomalies in ed that, these e falsification of is absent. He neously treated es and thereby juncture, it is ies seen in the f entries in the books of accounts. In o statements recorded du addition(s) in the hands conclusive proof to alleg
In our view, the case o the AO in the assessme seized records. Hence, that such conclusions d entries in books of acc that, there are deficien
Assessee leading to the income considering the assessee. We find th juri ictional High Court
(187 Taxman 188), business as that of the relation to their old bo
Court had denounced purchases and instead decision (supra), we co there were accounting entries were not prope
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::25 ::

our opinion, in a given case, if co uring the course of the search can be s of the assessee, but it cannot alo ge falsification of entries in the boo of falsification of entries sought to b ent order cannot be said to be estab it is observed in the given facts d drawn by the Assessing Officer on counts is untenable. Having said so ncies in the books of accounts mai e difficulties in determining the cor complex nature of the business car at this similar aspect was cons t in the case of Empee Distilleries which was also involved in the e assessee and similar allegation w ottle purchases. It is seen that, th the AO’s action of adding the e estimated the disallowance at 10%
untenance the Ld CIT(A) action to deficiencies in the books of accou erly handled, (ii) standard account o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
rroborated, the e used to make one be taken as oks of accounts.
be made out by blished from the discussed supra falsification of o, we maintain intained by the rect assessable rried out by the sidered by the s Ltd Vs. ACIT same line of was levelled in e Hon’ble High entire value of %. Following the the extent that nts viz (i) SAP ting procedures were not fully followed a documentation, and the Ld. CIT(A) in rejecting t the assessee. The relev by us supra, are as und
“6.2.19
During with the repres explanation of th the purchase of purchased routin bottle undergo re that the bottles regulatory compli still in good con reused. The bot condition. Bottles
Bottles that pass
This ensures tha inside the bottle liquids, labels, mechanical wash any bacteria or c water, steam, o packaging. Afte dried to avoid any 6.2.20
In this fragile, break, re bottles available f estimates. In su appellant compa sourcing addition situations. This w to fulfil the daily event happening emergency purch meet its busines these kinds of p
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::26 ::

and (iii) the purchases without GRN erefore on these counts sustain th the books of accounts and estimatin vant findings of Ld.CIT(A) as partly er:- the course of the appellate proceedings, t sentatives of the appellant company, he actual events and the accounting proce old bottles from the vendors. The old ely in the regular course of business. The econditioning for reuse, involves several ste meet industry standards for hygiene, iance. The bottles are sorted to separate th ndition from those that are damaged an ttles undergo an inspection process to s with cracks, chips, or other defects ar the inspection are cleaned and sanitized b at there are no foreign substances or c es.The bottles are washed to remove an or external dirt. This is usually done ing process. The bottles are then sanitize ontaminants. This is typically done using h or chemical sanitizers that are safe fo er cleaning and sanitizing, the bottles ar y moisture retention that could affect the n s process, there are instances where the b esulting in a significant reduction in the for refilling. This, in turn, impacts the overa uch situations, to meet the marketing d ny is compelled to replace the rejected nal old bottles from their vendors on was done by overlooking the usual purchas y production requirements. In view of t in this line of business, the AR has co hases effected by the appellant company ss requirements. Therefore, it has been purchases cannot be termed as “bogus”

o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
s lacked proper e action of the ng the profits of y countenanced the AR, along provided an ess related to d bottles are use of these eps to ensure safety, and hose that are nd cannot be assess their re discarded.
before re-use.
contamination ny remaining e through a ed to remove high-pressure r food-grade re thoroughly new contents.
bottles, being e number of all production demand, the d bottles by n emergency se procedures his recurrent ntended that was only to claimed that and further claimed that the for the AY 2020-
AY(s) 2021-22 &
justified. Further, were properly de credited. Also, th were also consum though the bott procedures which consumed in prod
6.2.21
The u submission, supp during the course involved in the b on emergency ba undersigned that process or sour reflected as debit manual entry in without GRN nu debits were made the same were rejected in toto.
anomalies in as m as “Stock_PackM
Sold-FG," On o reasonable const the appellant com
6.2.22
Further
Investigation Offi appellant compa through alleged unaccounted app conducted in the entities including were also subje approximate amo appellant during on record that ne identify the corre in the form of a unaccounted inve has treated the p
As per the dis
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::27 ::

disallowance of Rs. 3,13,75,315/- & Rs. 37
21 and Rs.56,41,82,236/- & Rs. 58,23,45
2022-23 in the hands of the appellant co
, the AR stated that, the alleged Old Bott ebited to stock account and issues for pro e AR stated that, the bottles that were said med in production. Further, the AR submitt tles were purchased without following h are said to be bogus, whereas in reality duction requiring no disallowance.
undersigned has carefully considered porting documents and arguments advance e of appellate proceedings, with respect to ottle purchase in the regular course as we asis. As seen from the documents presente t the purchase of bottles either following rced on emergency basis without GRN, t entry in stock in the SAP Software, altho the SAP software in the case of bottle mbers. The appellant’s contention is th e for both kind of purchases in the SAP, ev consumed in the production and henc
On the other hand, there seems to b much as classification of incorrect offset a trl Bottle”, “Consumption-Bottles" and "C observing these accounting anomalies, rued that the books does not reflect the t mpany.
r, the undersigned observes that icer nor the AO has made any specific find any has utilised the unaccounted incom bogus purchases of old bottles in t lication of such income. During the course case of the appellant company and all oth g the Managing Director and other key ected to search, the search team q ount of Rs. 392 Crores as bogus purchases the FY(s) 2012-13 to 2022-23. It is signifi either the Investigation officer nor the AO esponding application of the quantified bog ny unaccounted asset or unaccounted ex estments. As evident in the assessment o purchases being held as bogus and disallow scussion made supra, the appellant w o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
7,97,84,300/-
,992/-for the mpany is not tle purchases oduction were d to be bogus ted that even the regular y, these were the written ed by the AR o the process ell as sourced ed before the g the normal
, both were ough it was a es purchased at the stock vidences that e cannot be e accounting account such ost of Goods it can be true affairs of neither the dings that the me generated the form of of the search her connected persons who uantified an made by the icant to bring were able to us purchases xpenditure or order, the AO wed the same.
was able to demonstrate the regular purchase overlooking the r the evidences fou not utilised for bu
6.2.23
As evid the AO treated
37,97,84,300/- f
58,23,45,992/-fo purchases as inc disallowance of a the resultant ne cannot be achiev
The AR has draw appellant compa comparing with c
6.2.24
The un supra, is of the determined due t cannot be accu accounts. The no proper documen substantiates the Therefore, the bo under Section 14
 Inconsistent a offset accounts fo
 Handling of SA documentation (e
 Failure to com purchases.
 The inability t which significantly
6.2.25
Based current books of the true taxable as per the provis the authority to taxable income t company for the set right the iss
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::28 ::

necessity to purchase old bottles by ove e procedures. Therefore, the purchase egular procedure also requires to be regula und, it cannot be ruled out that, there exist usiness purposes too.
dent in the order passed by the AO, it can d the amount(s) of Rs. 3, 13,75,3
for the AY 2020-21 and Rs.56,41,82,2
r the AY(s) 2021-22 & 2022-23 being come of the appellant. The AR contended alleged bogus purchases made by the AO i et profit would be an unreasonable net ved in the kind of business of the appella wn the attention of the undersigned to the any had already admitted a higher n ompanies in the same line of business.
ndersigned on account of the detailed disc e view that as the actual profits cannot to these discrepancies in the books, the ta rately determined based on the curre on-compliance with basic accounting nor ntation and accurate entry of invoi e claim that the books do not reflect t ooks of accounts in this case should indeed
5(3) for the following reasons:
accounting treatments, such as the use or bogus transactions.
AP entries to process invoices without val e.g., missing GRN, no purchase orders).
mply with standard accounting procedures to substantiate purchases with proper do y impacts the reliability of the accounts.
on the above factors, the undersigned ho accounts cannot be considered reliable for income for the relevant assessment year sions of section 145(3) of the Act, the und reject these books of accounts and de to ascertain the true taxable income of t year under consideration. The undersigned sues related in determination of the pr o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
erlooking the es made by arised. As per ted purchases be seen that 15/- & Rs.
236/- & Rs.
g the bogus d that if the s considered, profit which ant company.
fact that the et profit by cussion made t be reliably xable income nt books of rms, such as ces, further true income.
d be rejected of incorrect id supporting s for genuine ocumentation, olds that the r determining rs. Therefore, dersigned has etermine the the appellant d, in order to rofit element embedded in s accordance to sec
6.2.26
At this rendered by the Venkteshwar Sug
Hon’ble High Co upholding the rej when the same a judgment is extra
“12. For the ass shown the G.P. r previous assessm consideration, the (Appeals) discus manufacturing co the G.P. rate at comparison to e account were no the consumable justification for r
Officer Once the before the Assess which he determi the previous asse relief and in the to give any furth fact. The Tribuna down in the cas
Estate Duty [2002

such purchases rejects the books of ction 145(3) of the Act.
s juncture it is appropriate to rely upon t e Hon’ble Allahabad High Court in the gar Mills v. CIT(A) (2012) 341 ITR 588 (All) ourt has concurred with the decision of jection of books of account maintained by are not properly maintained. The relevant acted below for ready reference:
essment year under consideration, the a rate 16.20 per cent. as against 33.44 per ment year. Thus, during the assessment e G.P. rate was low. The Commissioner o ssed the facts and circumstances perta ost and selling price. The Assessing Offic
27 per cent. on the estimated sale, whic earlier year i.e. 33.44 per cent. When t t properly maintained and the vouchers items were not available for verification, rejection of the books of accounts by th e books of account rejected, then there sing Officer except to estimate the sale an ined by taking by comparative figure of the essment year. The Tribunal has already give facts and circumstances of the case, there er relief specially when the estimation is a al is a final fact finding authority as per t se of Kamala Ganapathy Subramaniam v.
2] 253 ITR 692/121 Taxman 615 (SC) .
nt case, the addition is made on the est on of fact as per the ratio laid down in the gistrar, ITAT [2011] 336 ITR 149 (Orissa) at the application of G.P. rate on estima
The hon'ble Supreme Court in the case o als Co. Ltd . [2003] 261 ITR 275/130 T hat valuation of raw material for the purpo a question of fact. Similar views were exp he above, no substantial question of law ed order. Hence, we find no reason to inter o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
accounts in the decisions case of Shri
) wherein the the ITAT in the assessee t para of the assessee has r cent. in the t year under of Income-tax ining to the er has taken ch is lower in the books of pertaining to then we find he Assessing is no option nd G. P. rate e assessee for en the partial e is no scope a question of the ratio laid
. Collector of timate basis, case of Utkal
, wherein it ate basis is a of CIT v. Indo
Taxman 179
ose of tax on pressed in the is emerging rfere with the impugned order p with reasons men

“9. As per above with the method mercantile. Such accounting stand time. In the abse the sales of the a sold at a lower r the details. Thus of rice has rightly

“We would have had maintained accounts being f certain trades, sp impracticable and the accounts hav special circumsta assessee. The as stock accounts i inference that the true and correct stage that the gro

Therefore, in ou estimate which w
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::30 ::

passed by the Tribunal which is hereby sus ntioned therein.”
he Hon’ble Punjab & Haryana High Court in lls v. CIT (2023) 153 taxmann.com 686
mation made, by rejecting the books of ac absence of details of stock. The relevant acted below for ready reference:
Section, the income has to be computed i d of accountancy followed by an assessee h method has to be followed keeping dard notified by the Central Government ence of qualitative details, it is quite difficu assessee. The higher quality of a rice can rate in the bills. There was flaw in the ma s, the addition of Rs. 2,00,000/- on acc y been made.
dated 28-3-2013 (A-3) passed by Income- garh Bench 'F does not require any interfe dition the Hon’ble Calcutta High Court in oy v. CIT (1994) 206 ITR 306 (Cal) has h stock accounts is a substantial defect e accounts were maintained in a manner fro t profits were not deducible. Relevant acted below for ready reference:
been impressed with the contentions if the stock book showing stock tally. In th fool proof, no addition could be warrante pecially in the retail market, where stock d the assessee can reasonably advance t ve been maintained in the best manner po ances of the case. But such is not the c ssessee deals in wholesale spices. Failure is a substantial defect in the accounts j e accounts are maintained in a manner fro profits are not deducible. Nor is it conte oss profit rate shown is the market norm.
ur view, the Tribunal was right in hold was made in the case and the addition m o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
stained along n the case of 6 (P&H) has ccount of the t para of the in accordance e i.e. cash or in view the from time to lt to examine be shown as aintenance of count of sale tax Appellate rence by this the case of held that non justifying an om which the para of the the assessee hat case, the ed. There are tally may be the plea that ossible in the case with the e to maintain justifying an om which the ended at any ding that the made on such estimate was qui the factors the ca assessee's rate o cent. is a finding

ite reasonable and fair taking a cumulativ ase presents. Moreover, the Tribunal's find of gross profit is below the market rate whi of fact which the assessee has not challeng on’ble juri ictional High Court has held in [2017] 84 taxmann.com 52 (Madras) has e of expenses was not justified without s under Section 145(3).
juri ictional tribunal vide its order dated 09.08.2023 has upheld the dec
Income Tax (Appeal) in rejecting the book
/s. Beach Mineraals Company. The ratio quarely applicable to the facts of the Appella ding rendered at para 12 supra, w tion of the profits. It is seen that igure between the parties and th on, it would be suitable to ado to the turnover reported in the au ssable income of the assessee. For t he comparative analysis of other s verage profits earned by the assess seen that, similarly placed entities
Enterprises Pvt Ltd, Shiva Tiller rgins in the range of 1% to 6% a ssee ranged between AYs 2019-2
7.69%. The Ld. AR further pleaded o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
ve view of all ding that the ich is ten per ged.”
n the case of held that the rejecting the in ITA
No cision of the ks of accounts of the above ant’s case.”
e now turn our the turnover is herefore in our opt and apply dited financials this, the Ld. AR similarly placed see itself in the s such as KALS s Pvt Ltd had and the profits
20 to 2022-23
that, there was a significant reduction i nationwide lockdown im which affected both the of IMFL (Indian Made Fo and therefore wants us find that, the Ld. CIT(A) with the contentions of juri ictional High Court
(supra), he had estima
Ld. CIT(A) are noted to “6.2.31 Now, a before the under the profits that c for the purpose expenses relating

n profit margins in this industry on mposed during the breakout of CO production as well as sales reductio oreign Liquor) by the purchasing ag to estimate the profits at 8% of th
) had examined the foregoing figure the assessee and having regard to t in the case of Empee Distilleries ated the profit at 10%. The relevant be as under:- after having rejected the books of accoun rsigned is, the next question that arise is an be attributable as income of the appell of taxation with respect to the disallowan g the purchase of old bottles.
juncture, it is significant to rely upon th tribunal in the case of ACIT Central Cir tilleries Ltd (a company that is in the s of the appellant company) vide its order in ,686,629,684,630, 688/Mds/2007 dated ble ITAT Chennai has held as under.
nsider the appeals of the Revenue and the year 1999-2000 in I.T.A. No. 507/Mds/200
07 respectively. Similar to the assessmen issue raised by the Revenue as well as by d assessment year 1999-2000 is the additi t the purchase of old bottles. The Assessin ance and addition of Rs.3,58,19,987/- whic
/- by the CIT(Appeals). The CIT(Appeals)
10% of the purchase of old bottles, as don r 1998-99. The issue is discussed by th r in para 5 of his order. The facts and c issue are just the same considered for o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
account of the OVID pandemic on in the prices ency, TASMAC, e turnover. We es & data along the decision of s Ltd Vs. ACIT t findings of the nts, the issue what will be ant company nce of bogus e decision of cle -1(2) Vs.
same line of ITA No. 506,
29.08.2008
e assessee for 07 and I.T.A.
t year 1998- the assessee ion made and ng Officer has ch is modified has modified ne for earlier he IN COME circumstances r the earlier assessment year have upheld the o year 1998-99, th our findings and the decision of CI by the Revenue a 6.2.33
Further
Empee Distillerie
188 (Madras) has expenditure as un

“In respect of expenditure of th was disputed be huge inflation ha company, who of proved by the au had been made b questioned the authorities that t such, there was n assessee. The pr
Commissioner (A cent as on the h material that it w bottles with accu would meet the e assessee barring

r 1998-99. On a careful consideration of t order of the CIT(Appeals) for the preceding hereby confirming the disallowance of 10
order for the said earlier assessment yea
IT (Appeals) on the point and reject the gr as well as by the assessee”.
r, the Hon’ble Madras High Court in the abo s Ltd Vs. ACIT, Central Circle1(2) [2010]
s held as under with respect to the inflation nder.
the first question, the inflation of th he old bottles, though for the sake of cla fore the authorities, yet the fact remaine ad been accepted by the managing dir ffered a sum of Rs. 74.50 lakhs for taxation thorities below that a very huge purchase by the assessee through its employees. Ho employees had categorically admitted they were forced to sign on the dotted l no proof for such huge purchase forthcom roof adduced had been rejected as stated ppeals) had rejected the claim of wastage higher side, however, it was found with was not possible to quantify the purchase in urate precision and the disallowance of ends of justice, and granted the relief in f the 10 per cent of disallowance.”
light of the decision of the juri ictional Hi ecision taken for the earlier years by the un er(s) passed u/s 250 of the Act for the AY
19-20, the undersigned is of the vie the extent of 10% would meet the ends profit percentage in the business of manuf ade Foreign Liquor (IMFL) can vary signif ors, including the type of liquor, brand ency, distribution strategies, and regulator se of appellate proceedings, the AR has et profit to turnover ratio as admitted in e appellant company for the AY(s) 2020-21
e same is reproduced here as under.

o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
the issue, we g assessment
%. Following ar, we uphold rounds raised ove case M/s.
]187 Taxman n of purchase he purchase aim the relief ed that such rector of the n. It was also of old bottles owever, when before the lines and, as ming from the d above. The e of 4.50 per the available nflation of old
10 per cent favour of the gh Court and ndersigned in Y(s) 2017-18, ew that the of justice. At facturing and icantly based positioning, ry conditions.
provided the the financial
1 to 2022-23,

Sl
No.
Particulars as reported u/s 139
of the Act
20
1
Gross turnover
40
2
Gross profit reported
10
3
Net
Profit reported as per books
21
4
% of net profit
5.3

Average % of net profit

ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::34 ::

19-20
2020-21
2021-22
19755197
4948770663/-
433116441
18627340
1342904502
123679183
6197529
380487732
326693496
38
7.69
7.54
6.31
R, during the course of the appellate proc ere was a fall in profit for the relevant rticularly AY 2022-23, on account of th ed during the breakout of COVID pan e production as well as sales reduction in de Foreign Liquor) by the purchasing agen ficant reduction in the profit margin for the 022-23. On account of this profit reduction nsideration of a reduced percentage whi the AY 2022-23, rather than the estimated earlier years in the appellant company's careful examination of this issue raised appellant's financial statements, observ
433,97,34,105/- for the year in question ous years. In light of this, it is held that th the price reduction by TASMAC has mater ncome is not substantiated by the financ onsidered.
on the above, it is observed that the avera for AYs 2019-20 to 2022-231 stands at 6. oks of accounts, the undersigned by o
(s) and in order to ensure equity and fairn average rate of 10% of gross turnove e considered as the net profit. Accordingly be considered in the hands of the appellant consideration are quantified as under:- o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
2022-23
5
4339734105
6
1119511678
200910922
4.63
ceedings, has t assessment e nationwide demic which the prices of ncy, TASMAC, e FY 2021-22, n, the AR has le estimating d 10 % of the s case. The , including a ves that the is consistent he plea raised rially affected cial data and ge net profit-
31%. Having bserving the ness, is of the er would be y, the balance t company for Sl
No.
Particulars as reported u/s 139 of the Act
2
1
Gross turnover
4
2
Gross profit reported
1
3
Net Profit reported as per books
3
4
% of net profit
7
5. Balance that requires to be considered
1
6. % of turnover to be considered in the hands of the appellant
2
4
=
6.2.37
Thus, disallowances of 10,65,46,645/- &
purchases of old the AO in the ass consideration. Ac the issue of disal bottles for the y allowed and the A bogus old bottle p
Sl No.
AY
Amoun toward bottle p
Rs.)
1
2020-21
Rs. 41,

(Rs.37,
+
Rs.3,13

2
2021-22
Rs.56,4
3. 2022-23
Rs.58,2

ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::35 ::

2020-21
2021-22
494,87,70,663/-
433,11,64,415/-
134,29,04,502/-
123,67,91,836/-
38,04,87,732/-
32,66,93,496/-
7.69
7.54
10-7.69= 2.31%

10-7.54=2.46%
2.31%
of 494,87,70,663
=Rs.11,43,16,602/-
2.46%
of 433,11,64,415
=Rs.10,65,46,645
/- for the AY(s) 2020-21,2021-22 & 2
expenditure to the extent of Rs. 11,43,
& Rs.23,30,43,721/- only needs to conside bottles as against the disallowances cont sessment order(s) passed by the AO for the ccordingly, all the grounds raised by the ap llowance of expenditure towards bogus pu ears under consideration are hereby trea
AO is directed to delete the addition made o purchases as under.
nt added s bogus old purchases. ( In Amount sustained as per the discussions
( in Rs.)
Am de
(in ,11,59,615
,97,84,300 /-
3,75,315/-)

Rs.11,43,16,602/-

Rs
41,82,236/-
Rs.10,65,46,645/-
Rs
23,45,992/-
Rs.23,30,43,721/-
Rs o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
2022-23
433,97,34,105/-
111,95,11,678/-
20,09,10,922/-
4.63

10-4.63=5.37%
5.37
%
of 433,97,34,105

=Rs.23,30,43,721/
-
2022-23 the 16,602/- Rs.
ered as bogus templated by e years under ppellant upon rchase of old ted as partly on account of mount to be eleted n Rs.) s. 29,68,43,013/- s. 45,76,35,591/- s. 34,93,02,271/-

the Ld. CIT(A) had rightly follo the above decision (supra) for rejec mating the profits of the assessee on to interfere with the same. S ase of AY 2020-21 is common in A findings shall be followed mutatis m
2 & 2022-23 as well. Hence, all the e Revenue on this issue in AYs 2020
next two issues viz., disallowance on account of sale of scrap is conc rder of Ld. CIT(A) urged that, even the disallowance of this item of e ap ought to be separately adjudicat s to be separately added to the estim s however, once the books of accou ions of section 145of the Act and f judgment as per the provisions of ate is made in substitution of the b d in accordance with the provision aid down in section29 of the Act. Co o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
owed the ratio cting the books e at 10%. We
Since the facts
AYs 2021-22 &
mutandis in the grounds raised
-21 to 2022-23
S. Moorthy, (ITAT N under:-
"If books of ac estimated by ap expenses necessa profit is estima unexplained com considering the re addition towards commission u/s rejected u/s 145(
16. For the above re
Revenue. In light of th order of the Ld. CIT(A) income of the assessee
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::37 ::

re referred to in sections 30 to 43D aken into account while making suc s regard may be made to the deci
Court in the case of Indwell Cons nd Hon’ble Allahabad High Court in t shidhar (229 ITR 229). Likewise unexplained cash credit u/s 68
books of accounts have been reject on of the coordinate Bench in the ca
No. 3091/CHNY/2019) wherein count of the assessee are rejected an pplying certain profit rate, it would take arily to be incurred for earning profit and ated no separate addition can be ma mission u/s.69 of the Act. The Ld. CIT (A elevant facts has rightly held that AO is err s cash credits u/s 68 of the Act and 69C of the Act, when the books of ac
(3) of the Act.”
easons, we do not agree with th he foregoing, we do not see any i in deleting these separate addition had been estimated upon rejection o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
D of the Act are ch an estimate.
sion of Hon’ble structions Vs.
“The undersigned relate to income
Profession”
by adjudicating the rejected the book profits that can b business or profe turnover by relyin i) The Hon'ble H
Contractor 19 DT profit by applying rejecting assesse section 14(3), no credit u/s.68, eve of proof in explain ii) The Hon'ble H
Aggarwal Engg. C issue and held th on account of un books can be m receipts of an ass iii) The Hon'ble H
Banshidhar, (199
where income is assessee u/s.14
u/s.40A(3) of the iv) The Hon'ble
3187/M/2010 in t
37 ITR 369 has h estimates the inc relying on the rej v) The Hon'ble IT No. 3091/CHNY/2
books of account by applying cert
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::38 ::

ntenance the followings findings re ate order :- d is of the view that the above addition /
e declared under the head “Income from the appellant company.
The unders issue relating to the bogus purchase of ol ks of accounts u/s 145(3) of the Act and de be attributable as income under the head “
ession” by estimating the income @ 10%
ng upon the various judicial decisions viz..
High Court of Rajasthan in the case of TR 305 (Raj) hasheld that "AO having e g a higher net profit rate to total contract ee's books of account by invoking the p o separate addition can be made on acc en though the assessee has failed to disch ning the amount shown in the books of acc igh Court of Punjab and Haryana, in the ca
Co., (2008) 302 ITR 0246 had considered hat "no separate addition on account of cas nexplained payments for purchases made made once the net profit rate is applied sessee for estimating his income from contr igh Court of Allahabad in the case of CIT v
98) 229 ITR 0229 had taken a similar view s assessed at G.P. rate by rejecting t
45(3), no disallowance can be made e Act".
2019) had also taken a similar view and t of the assessee are rejected and income tain profit rate, it would take care of o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
endered by the disallowance
Business or signed while d bottles has etermined the “Income from of the gross estimated the t receipt after provisions of count of cash arge its onus count"
ase of CIT vs.
d an identical sh credit and e outside the d on contract ract work"
vs. Banwarilal and held that the books of e separately of ITA No.
IT reported in f account and can be made oorthy, (ITAT held that "If is estimated all expenses necessarily to be estimated no se commission u/s.6
relevant facts ha towards cash cre
69C of the Act, w the Act
The Hon’ble ITAT
M.H. Builders) , view that when t income of the as addition can be rejected books of On the basis of concluded that o books of account addition(s) conte head “ Income fr
Accordingly, the Issue No. 2 & iss vide order(s) u/s the AO is directe upon the Issue N
17. For the above rea
CIT(A) and dismiss thes
18. The last issue contributions.
Accordi
Rs.4,00,00,000/- made therefore he disallowed
Aggrieved, the assessee
CIT(A) after analyzing t assessee, firstly held th
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::39 ::

e incurred for earning profit and hence, w eparate addition can be made towards
69 of the Act. The Ld. CIT (Appeal) after co as rightly held that AO is erred in mak dits u/s 68 of the Act and unexplained com when the books of accounts were rejected u
(ITA No. 3187/Mum/2010 ) has also tak the books of accounts are rejected by the ssessee is determined on estimated basis made to the income so estimated by re f account.
the above judicial decisions relied upo nce the business income is estimated by ts u/s 145(3) of the Act, the other disal emplated by the AO relating to the incom rom Business or Profession” will no longe grounds raised upon the above issues sue No. 3 for the AY(s) 2020-21, 2021-2
s 143(3) of the Act are hereby treated as ed to delete all the additions and disallo o. 2 & issue No. 3 identified asunder.”
asons, we accordingly uphold the o se grounds of the Revenue.
for consideration is the disallow ing to the AO, the CSR e by the assessee in AY 2021-22 w d and added back the same to the e carried the matter in appeal. On he seized material and the details fu hat, the disallowance of the donat o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
when profit is unexplained onsidering the king addition mmission u/s u/s 145(3) of . Shah (Prop.
ken a similar e AO and the s, no further elying on the n, it can be rejecting the llowance(s) /
me under the er hold good.
identified as 2 & 2022-23
s allowed and owance made order of the Ld.
wance of CSR donations of was bogus and e total income.
appeal the Ld.
urnished by the tions as bogus, without further investig unjustified. The Ld. CIT of Rs.4,00,00,000/- had A/c nor had been clai therefore when the as impugned expenditure unwarranted. The releva follows:-
“6.4.9
Further disputed sum of account and ther
The undersigned principles and ta account or claime taxable income. S deduction in the for taxation purp amount that was therefore legally of fairness in tax income that is pr the disputed CSR claimed for tax p tax.
19. The Ld. CIT, DR a the above findings rend computation of income concur with the Ld.
deduction for the CSR
ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::40 ::

ation into the nature of the charitab
T(A) further noted that, the impugn d neither been debited by the asses med as deduction in the return ssessee itself had not claimed ded e, the disallowance made by ant findings of the Ld. CIT(A) in this r, the appellant has consistently emphasi
Rs. 4,00,00,000/- was not debited to the refore should not be treated as part of tax is aligned with this contention. According t ax laws, only amounts debited to the P ed as expenses can be included in the co
Since the appellant did not claim the dispu
Profit & Loss account, it cannot be treate poses. The addition made by the AO, b s never actually claimed as a deductible untenable. The undersigned accentuates xation, which ensures that taxpayers are t roperly accounted for and reported. In thi
R donations were neither debited to the purposes, it would be inequitable to bring appearing for the Revenue was una dered by the Ld. CIT(A). Having go e and the income-tax return for AY
CIT(A) that, the assessee had expenditure of Rs.4,00,00,000/- in o 1819/Chny/2025 &
to 1552 /Chny/2025
2020-21 to 2022-23) e Industries Pvt. Ltd.
ble entities was ed contribution ssee in the P&L of income and duction for the the AO was s regard, are as ized that the Profit & Loss xable income.
to accounting
Profit & Loss omputation of ted sum as a ed as income based on an e expense, is the principle axed only on s case, since accounts nor g the sum to able to dislodge ne through the Y 2021-22, we never claimed n the return of income and therefore t factually unsustainable
Revenue.
20. In the result, bo assessee are dismissed.

Order pronounced (एबी टी. वक
)
(ABY T. VARKEY
"याियकसद$य/JUDICIAL
चे"नई/Chennai,
'दनांक/Dated: 21st Novem
TLN
आदेश क ितिल)प अ*े)षत/Co
1. अपीलाथ/Appellant
2.  थ/Respondent
3. आयकरआयु /CIT, Chenn
4. िवभागीयितिनिध/DR
5. गाड%फाईल/GF

ITA Nos.1817 to ITA Nos.1550
(AYs 2
M/s.Southern Agrifurane
::41 ::

the impugned disallowance made b e. We accordingly dismiss this g oth the appeals filed by the Rev
.
d on the 21st day of November, 202
Y)
MEMBER (अिमताभ श
(AMITABH
लेखासद$य/ACCOUN ber, 2025. opy to:
nai / Madurai / Salem / Coimbatore.

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