KWALITY ANIMAL FEEDS PRIVATE LIMITED,BELGAUM vs. ACIT CIRCLE 1 BELGAUM, BELGAUM
Facts
The assessee, engaged in poultry/animal feed business, made cash deposits totaling Rs. 1,19,45,000 in bank accounts during the demonetization period (FY 2016-17). The Assessing Officer made an addition of Rs. 1,07,90,500 under Section 68 for unexplained cash credits, which was subsequently confirmed by the CIT(A) despite the assessee providing explanations regarding opening cash balance, customer deposits, and cash sales.
Held
The Tribunal observed that the CIT(A) confirmed the addition under Section 68 without properly considering the assessee's submissions and providing adequate opportunity. Therefore, the Tribunal restored the matter to the file of the CIT(A) for fresh adjudication on merits, directing that the assessee be given a proper opportunity to be heard.
Key Issues
Whether the CIT(A) was justified in sustaining the addition under Section 68 for cash deposits without providing proper opportunity and considering the assessee's explanations regarding the source of funds.
Sections Cited
143(3), 250, 68, 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PANAJI BENCH
Before: SHRI PAVAN KUMAR GADALE & SHRI G D PADMAHSHALI
IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH PANAJI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER & SHRI G D PADMAHSHALI ACCOUNTANT MEMBER I T A. Nos. 217/PAN/2023 (A.Y. 2017-18) Kwality Animal Feeds Pvt Ltd, Vs ACIT-Circle 1, 12, Kwality House, Civil Hospital Road, . Machhe Industrial Area, Belagavi-590001. Machhe, Karnataka. Belgaum-590014, Karnataka. PAN .No. AABCK0589J (अपीलाथ�/Appellant) (��यथ�/Respondent)
Appellant by Shri.Pramod Vaidhya.AR Respondent by Shri.Ravindra Hattalli.Sr.DR
सुनवाई क� तार�ख/Date of Hearing 18.03.2025 घोषणा क� तार�ख/Date of Pronouncement 25.03.2025 ORDER PER PAVAN KUMAR GADALE, JM: The appeal is filed by the assesse against the order of NFAC/ CIT(A)passed u/sec 143(3) and u/sec 250 of the Act. The assessee has raised the grounds of appeal challenging the order of the CIT(A) sustaining the addition under section 68 of the Act made by the Assessing Officer. 2. The brief facts of the case are that, the assesse company is engaged in the business of manufacturing of poultry/animal feeds and running poultry farms. The
2 ITA. No..217/PAN/2023 Kwality Animal Feeds Pvt Ltd. assessee has filed the return of income on 27-10-2017 disclosing a total income of Rs.67,06,060/- The Assessing Officer (AO) based on the information from ITBA data, found that the assesse has made cash deposits in the bank accounts during the demonetization period and the case was selected for scrutiny under the CASS. Further the notice u/sec143(2) and u/sec 142(1) of the Act along with questionnaire are issued and the assesse has complied the notice. Whereas the A.O found that the assesse has made the cash deposits aggregating to Rs.1,19,45,000/-in the different branches of HDFC Bank Ltd and Bank Of India in the F.Y.2016-17 and explanations were called to substantiate the deposits. And the assessee has filed the explanations mentioning the availability of opening balance of cash, direct deposits by the customers in the bank accounts and cash sales reflected in the financial statements. Whereas as the AO has considered the information and was not satisfied with the explanations and dealt on the provisions of the Act and finally made an addition u/sec68 of the Act of Rs.1,07,90,500/- and assessed the total income of Rs.1,74,96,560/- and passed the order u/sec 143(3) of the Act dated 28.12.2019
Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts and findings of the AO and has issued notices of hearing and the assessee has filed the submissions. But the CIT(A) has confirmed
3 ITA. No..217/PAN/2023 Kwality Animal Feeds Pvt Ltd. the action of the A.O and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon'ble Tribunal.
At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the action of the Assessing officer overlooking the information of the assessment proceedings. The Ld.AR mentioned that the CIT(A) has not dealt on the details and evidences to substantiate the sources of cash deposits in the bank accounts and the Ld.AR substantiated the submissions with the paper book I&II and judicial decisions and prayed for allowing the appeal. Per Contra, the Ld.DR supported the order of the CIT(A).
5.We heard the rival submissions and perused the material on record. The sole crux of the disputed issues envisaged by the Ld.AR that the CIT(A) has erred in sustaining the addition u/s 68 of the Act without providing proper opportunity and overlooking the facts and material evidences. The assesse has filed all the details before the lower authorities and the CIT(A) has not considered the facts of availability of cash balance with the assessee. Prima-facie the CIT(A) has dealt on the findings of the AO and has not considered the submissions of the assessee dealt at Para 5.6 of the order. The Ld.AR demonstrated the division wise cash book summary at various branches and availability of cash balances in the paper book-II and opening cash balance and highlighted
4 ITA. No..217/PAN/2023 Kwality Animal Feeds Pvt Ltd. on VAT reconciliation statement and copies of confirmations of customers at Page 95 to Page 231 of the Paper book-I.Therefore, we considering the overall facts, circumstances and principles of natural justice shall provide with one more opportunity of hearing and accordingly restore the disputed issue to the file of the CIT(A) for afresh adjudication on merits and the CIT(A) shall provide adequate opportunity of being heard to the assessee and the assessee should also cooperate in submitting the information for early disposal of the appeal and the grounds of appeal of the assessee are allowed for statistical purpose.
In the result, the appeal filed by assessee is allowed for statistical purposes.
Order pronounced in the open court on 25.03.2025.
Sd/- Sd/- (GD PADMAHSHALI) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Panaji Dated: 25/03/2025 Copy of the Order forwarded to: 1. The Appellant, 2. The Respondent 3. The CIT(A)- 4. CIT 5. DR, ITAT, 6. Guard file. //True Copy/ BY ORDER,
5 ITA. No..217/PAN/2023 Kwality Animal Feeds Pvt Ltd. (Asstt. Registrar)ITAT, Panaji
Initial Date 1. Draft dictated on PS 2. Draft placed before author PS
Draft proposed & placed before 3. PS the second member 4. Draft discussed/approved by PS Second Member. 5. Approved Draft comes to the PS Sr.PS/PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Dictation Pad is enclosed
