DCIT CC 1 4 KOLKATA, KOLKATA vs. GREYFORCE INDUSTRIES LIMITED, KOLKATA

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ITA 2497/KOL/2025Status: DisposedITAT Kolkata20 January 2026AY 2023-248 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, finding that freight payments were made to individual truck drivers within the prescribed limit and that the cash payment for machinery was based on unverified messages without corroborative evidence. The AO failed to conduct proper inquiries or reject the assessee's books of account.

What were the facts?

The Revenue appealed against the deletion of additions made by the Assessing Officer (AO) regarding freight payments exceeding Rs. 35,000 to a single transporter in a day and an unexplained cash payment for machinery. The Commissioner of Income-tax (Appeals) had deleted both additions.

What were the issues?

Whether cash payments for freight exceeding Rs. 35,000 to a single transporter in a day violated Section 40A(3), and whether an unexplained cash payment for machinery constituted unexplained expenditure under Section 69C.

Which sections of the Income-tax Act were involved?

Section 40A(3),Section 69C,Section 133A,Section 131,Section 145(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Soumitra Choudhry &
For Respondent: Shri Sandeep Kumar Mehta, DR
Hearing: 06.01.2026Pronounced: 20.01.2026

This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals), Kolkata 20, (hereinafter referred to as the “Ld. CIT(A)”] dated 10.07.2025 for the AY 2023- 24.

2.

At the outset, we observe from the appeal folder that there is a delay of 31 days in filing the appeal by the department in support of which a condonation petition was filed by the Revenue. It was stated in the condonation petition that the delay has occurred due to obtaining of administrative approvals from the competent authorities, which took quite a long time and accordingly, the delay

3.

The first issue raised by the Revenue is against the deletion of addition of ₹3,83,34,071/- by the ld. CIT (A) as made by the ld. AO on account of freight payment exceeding to ₹35,000/- to a single transporter in a single day in violation of Section 40A(3) of the Income-tax Act, 1961 (the Act).

3.1. The facts in brief are that during the course of assessment proceedings, the ld. AO noted that the assessee is a cement manufacturing flagship company of Srijan Group. Pertinent to state that survey was conducted on the assessee u/s 133A of the Act on 16.03.2023, during the course of which it was found that assessee has made payments in violation of Section 40A(3) of the Act exceeding to ₹35,000/- per transporter in a single day amounting to ₹3,85,65,679/-. Accordingly, the case of the assessee was selected for scrutiny and disallowance was made of ₹3,83,35,071/- by holding that the same was in violation of Section 40A(3) of the Act.

3.2. In the appellate proceedings, the ld. CIT (A) deleted the addition after taking into consideration the reply and submission of the assessee along with the evidences produced by observing and holding as under:-

“5.1 I have duly considered the fact of the case, assessment order and the submissions filed by the appellant. A survey operation u/s 133A of the Act was conducted in case of the appellant company on 10.03.2023. The appellant-company is a manufacture of cement. The assessee is in business of procurement of raw materials such as clinker, gypsum and slag which are the raw material to

4.

The second issue raised by the Revenue is against the deletion of addition of ₹10 lacs by the ld. CIT (A) as made by the ld. AO on the basis of messages retrieved from the mobile phone of the directors for which corresponding entries were not made in the books of account.

4.1. The facts in brief are that during the course of survey, the survey team retrieved the WhatsApp Chats from personal iPhone 12 Pro Max, Model belonging to Shri Anil Agarwal, who received the cash transactions which were not recorded in the books of account. In the statement recorded of Shri Anil Agarwal, during the course of survey confirmed in the statement recorded u/s 131 of the Act that 4.2. In the appellate proceedings, the ld. CIT (A) deleted the addition after taking into account the submission and contention of the assessee by observing and holding as under:-

5.4 Similarly, the addition of ₹10,00,000/- u/s 69C on account of allege cash payment for pasta machinery is based solely on an unverified and unauthenticated social media message, without any independent inquiry, confirmation, invoice, or seized document from the assessee's premises. The AO has failed to discharge the burden of proof and has instead resorted to presumptive addition based on hearsay, which is impermissible under law, as held in C/T v. Durga Prasad More (82 ITR 540) and Teena Bethala (70 taxmann.com 379). In addition, the books of accounts were neither rejected under Section 145(3) nor were any defects pointed out by the AO. I find that the addition made by Assessing Officer of Rs.10,00,000/- is not sustainable in the eyes of law. Therefore, Assessing Officer is directed to delete the addition of Rs. 10,00,000/-.

4.3. After hearing the rival contentions and perusing the materials available on record, we find that the survey team though retrieved some WhatsApp messages which referred to payment of cash which was mentioned by the assessee in the statement recorded u/s 131 of the Act and was stated to have been made for the installation of Pasta Machine. On the second occasion the Anil Agarwal again

5.

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open court on 20.01.2026.

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