Back
2025 Supreme(Online)(ITAT) 786
INCOME TAX APPELLATE TRIBUNAL (PUNE BENCH)
Shri Rama Kanta Panda, CJ, Ms. Astha Chandra, J
GARWARE TECHNICAL FIBRES LIMITED PUNE – Appellant
Versus
DCIT CC-1(3) PUNE – Respondent
ITA 1696/PUN/2024
CA Ritu Kamal Kishore, Shri Amol Khairnar, CIT-DR, Shri Ramnath P Murkunde
The court ruled that unaccounted cash receipts must be taxed based on net profit ratios derived from seized documents, emphasizing the need to consider both receipts and expenditures together.
Headnote:(A) Income Tax Act, 1961 - Sections 35(2AB), 132, 153A, 292C - Assessment years 2013-2014 to 2020-2021 - Addition of Rs.4,20,44,000/- made on account of undisclosed cash receipts based on seized documents - CIT(A) restricted addition to 85% of cash receipts, allowing for unaccounted cash payments - The court emphasized that both receipts and expenditures in seized documents must be considered together, directing the Assessing Officer to apply net profit ratios for taxation. (Paras 11, 12, 54, 68)
(B) Evidence - Electronic records - The absence of a certificate under section 65B(4) of the Indian Evidence Act was contested, but the court found that the certificate was duly provided and upheld the reliance on electronic evidence. (Paras 22, 25, 26)
(C) Deductions - The court upheld the disallowance of certain deductions under section 35(2AB) due to lack of required documentation, while allowing deductions for capital expenditure as certified by the DSIR. (Paras 60, 62)
| Table of Content |
|---|
| 1. assessee is a public limited company (Para 3) |
| 2. assessing officer's observations (Para 5) |
| 3. assessee argued against additions (Para 8 , 9) |
| 4. court's reasoning on cash receipts (Para 43 , 44 , 45) |
| 5. cit(a) decision on cash receipts (Para 54 , 55) |
ORDER
PER BENCH :
ITA Nos.1696/PUN/2024 to ITA Nos.1703/PUN/2024 filed by the assessee are directed against the common order dated 14.06.2024 of the Ld. CIT(A), Pune-11, relating to the assessment years 2013-2014 to 2020-2021 respectively. ITA No.1831/PUN/2024 filed by the Revenue is directed against the order dated 14.06.2024 of the Ld. CIT(A), Pune-11 for assessment year 2017-18. Since common issues are involved in all these appeals, therefore, these appeals were heard together and are being disposed of by this consolidated order for the sake of brevity and convenience.
2. We are taking ITA .No.1701/PUN./ 2024 for the assessment year 2018- 2019 as the lead appeal since the Ld. CIT(A) has considered assessment year 2018-2019 as the “lead” appeal before him.
3. Facts of the case, in brief, are that the assessee is a Public Limited Company and provides solutions in aquaculture cage nets, fishing nets, sports nets, safety nets, agricultural nets, coated fabrics, polymer ropes and geo-synthetics etc. The key products manufactured by the assessee viz., Garware Technical Fibres Ltd [in short “GTFL”] include ropes, trawling nets, gill nets, doe nets, nursery cages, predator cages, fitness ropes, reinforced soil structures, gabion gravity retaining walls and others etc. It has filed its original return of income under section 139 of the Income-tax Act, 1961 [in short “the Act”] on 31.10.2018 declaring total income of Rs.124,08,48,810/- for the impugned assessment year.
4. A search and seizure action u/s.132 of the Act was conducted in the assessee's case on 14.11.2019. In response to notice u/sec.153A of the Act issued on 04.01.2021, the assessee filed the return of income on 18.01.2021 declaring total income of Rs.124,08,48,810/-, which was the income originally returned. Statutory notice u/s.143(2) and 142(1) of the I.T. Act were issued and served upon the assessee, in response to which, the learned Authorised Representative of the Assessee appeared before the Assessing Officer from time to time and filed the requisite details.
5. The Assessing Officer observed that during the course of search action in the case of the assessee at its head office at Plot- no. 11, Block-D-1, MIDC, Chinchwad, Pune on 14.11.2019, a pen drive was found from the cabin of the Head-Cashier Shri Shrikant S Dalvi. In the pen drive, various data including excel sheets were found wherein certain unaccounted transactions in the form of cash receipts and cash payments were mentioned. The print outs of these excel sheets found in the computer and the pen drive of Shri S.S. Dalvi were taken and subsequently seized as per Bundle nos. 2 to Bundle no.9 of Anneuxre A to the Panchanama. The Assessing Officer further observed that Shri Shrikant S Dalvi, on being confronted by the authorized officer during the course of the search, had in his statement recorded u/sec.131 of the Act had accepted that the sales appearing in bundle nos.2 to 9 contain the year-wise summary of sales made in cash by GTFL and payments made in cash by GTFL. He had further stated that these cash receipts are on account of sale of scrap materials and the payments made in cash are on account of GEO Project BD [Business Development] payments, sales incentive payments, miscellaneous payments for official work and the same are unaccounted.
6. The Assessing Officer reproduced the scanned copy of the statement of the same in the assessment order. He further noted that on being confronted by the Authorised Officer, it was admitted that these transactions are not recorded in the books of account. On the basis of the above facts and admission of the Head-Cashier Shri Shrikant S. Dalvi, the Assessing Officer computed the unrecorded cash transaction
