HARSIL GANGOTRI FRUITS PROCESSING AND MARKETING PRIVATE LIMITED,RISHIKESH vs. CIT(A)-3, NOIDA, CIT(A) NOIDA AND ITO RISHIKESH

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ITA 31/DDN/2024Status: DisposedITAT Dehradun12 January 2026AY 2017-18Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI MANISH AGARWAL (Accountant Member)5 pages

AI SummaryPartly Allowed

Facts

Two assessees, engaged in fruit processing and marketing, filed appeals against disallowances of unexplained purchases, treatment of cash deposits during demonetization as unexplained, and an addition under Section 115JB. The Assessing Officer had already held them eligible for Section 80-IB(11A) deduction.

Held

The tribunal reversed the disallowance of business expenditure, citing a CBDT circular that such disallowances are not sustainable when the assessee is eligible for Chapter II deduction. For cash deposits, it estimated a 5% GP, acknowledging the nature of the business, and directed assessment under normal provisions, not Section 115BBE, as the provision applies from 01.04.2017. The Section 115JB adjustment was remanded for fresh adjudication.

Key Issues

The key legal issues were the sustainability of disallowing business expenditure for assessees eligible for Section 80-IB(11A) deduction, the treatment of cash deposits during demonetization, and the applicability of Section 115BBE and Section 115JB adjustments.

Sections Cited

Section 143(3), Section 80-IB(11A), Section 68, Section 69A, Section 115BBE, Section 115JB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DEHRADUN “SMC” BENCH, DEHRADUN

Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL

Hearing: 12.01.2026Pronounced: 12.01.2026

ORDER PER SATBEER SINGH GODARA, JM: These twin assessee’s ‘M/s. Harsil Gangotri Fruits Processing and Marketing Pvt. Ltd.’ and ‘M/s. Taknor Jhala Fruits Collection and Processing Pvt. Ltd.’ have filed their instant as many appeals & 32/DDN/2024 for assessment year 2017-18 against the Commissioner of Income Tax (Appeals)-3 [in short, the “CIT(A)”], Noida’s orders, both dated 10.01.2024, passed in case nos. CIT(Appeal) Dehradun/10726/2019-20 and 10728/2019-20 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively. Case called twice. None appears at the assessees’ behest. They are accordingly proceeded ex-parte.

The Revenue vehemently argues that both the lower authorities’ respective findings have rightly disallowed these twin assessees’ respective unexplained purchases, treated their cash deposits during demonetization as unexplained followed by section 115JB addition of Rs.4,92,326/- representing subsidy reserve credited in profit and loss account; in the twin assessment years which deserve to be upheld.

We have given our thoughtful consideration to these assessees’ and the Revenue’s respective pleadings all along. We make it clear first of all that even the learned Assessing Officer’s twin assessments; framed on 23.12.2019 and 28.12.2019, have already held the assessee as eligible for section 80-IB(11A) deduction since engaged in collection, procurement, sorting, grading of apple produce. We accordingly are of the considered view that in light of CBDT’s recent Circular No.37/2016 that once the assessees/appellants are eligible for foregoing Chapter II deduction (supra), no such disallowance of business expenditure is sustainable in their hands in very terms since enhancing their business income eligible for the very deduction. We thus reverse both the learned lower authorities’ respective findings holding these assessees’ corresponding purchases claim as unexplained in light of CBDT’s circular (supra).