NANDVAN MEGA FOOD PARK PRIVATE LIMITED ,MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 6(2), MUMBAI

ITA 3691/MUM/2025

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The case involves Nandvan Mega Food Park Private Limited appealing against an order by the Commissioner of Income Tax (Appeals) - 54, Mumbai, which confirmed a disallowance of Rs. 5,43,926 under section 40A(3) of the Income Tax Act, 1961. The disallowance was initially made by the Assessing Officer following a search and seizure action under section 132 of the Act in the case of M/s. Overseas Infrastructure Alliance (India) Pvt. Ltd. The Tribunal noted that the cash payments were made on behalf of M/s. SVC Industries Ltd. and were not directly debited by the assessee in its books, leading to the decision to allow the appeal and delete the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783312 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Appeal Filed On: 26-05-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Keywords: Search and seizure
• Section: 147; 148; 143(3); 142(1); 132; 40A(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.3691/MUM/2025 (Assessment Year 2021-22) Nandvan Mega Food Park Private Limited, 301, Shubham Centre-1, 49 1, Cardinal Gracious Road, Andheri, Mumbai – 400099 PAN: AAFCN9192E ............... Appellant v/s Assistant Commissioner of Income Tax, Central Circle - 6(2), Kautilya Bhavan, 4th Floor, C-41 to C-43, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400051 ……………… Respondent Assessee by : None Revenue by : Shri Leyaqat Ali Aafaqui, Sr. AR Date of Hearing – 03/11/2025 Date of Order - 07/11/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 29.03.2025, passed under section 250 of the Income Tax Act, 1961 (\"the Act\") by the learned Commissioner of Income Tax (Appeals) - 54, Mumbai [“learned CIT(A)”], for the assessment year 2021-22. 2. When the present appeal was called for hearing, no one appeared on behalf of the assessee, nor was any application seeking adjournment filed. From the perusal of the record, we find that the notice of hearing sent to the assessee through registered post was also returned unserved. Accordingly, Printed from counselvise.com ITA No.3691/Mum/2025 (A.Y. 2021-22) 2 we proceed to decide the present appeal on the basis of the material available on record and after hearing the learned Departmental Representative (“learned DR”). 3. In this appeal, the assessee has raised the following grounds: – “On being aggrieved by the order dated 29.03.2025 passed by the learned Commissioner of Income Tax (Appeals) -54 [hereinafter referred to as the learned CIT(A)] under section 250 of the Income-tax Act, 1961 ('the Act'), the present appeal is being preferred on the following grounds which, it is prayed, may be considered without prejudice to one another. 1) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance made by the AO under section 40A(3) of Rs 5,43,926/-; 2) The Ld. CIT(A) erred in confirming the disallowance under section 40A(3) of the Act of Rs. 5,43,926/- without appreciating that the provisions of section 40A(3) are not applicable in the case of the Appellant since the expenses were not incurred by the Appellant. 3) The Ld. CIT(A) failed to appreciate that cash transactions were belonging to AY 2021-22 which was COVID period, at that time banking visits were completely restricted from safety and security point of view. 4) The Appellant therefore prays that the disallowance made by the Ld. AO and confirmed by the Ld. CIT(A) under section 40A(3) of the Act is without considering the explanations furnished by the Appellant and hence are liable to be deleted.” 4. The solitary grievance of the assessee is against the disallowance of expenditure made under section 40A(3) of the Act. 5. The brief facts of the case pertaining to this issue are that the assessee is a company engaged in the business of manufacturing, trading, and deemed manufacturing, including processing of agro-based products, including packing or non-packing. Pursuant to the search and seizure action under section 132 of the Act conducted in the case of M/s. Overseas Infrastructure Alliance (India) Pvt. Ltd., notice under section 148 of the Act was issued to Printed from counselvise.com ITA No.3691/Mum/2025 (A.Y. 2021-22) 3 the assessee on 09.03.2023. In response to the aforesaid notice, the assessee filed its return of income on 05.05.2023 declaring a loss of Rs.45,65,949/-. Subsequently, statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. On the basis of the details available on record, it was observed from the ledger of the assessee in the books of M/s. SVC Industries Ltd. that during the year under consideration the assessee made cash payments of more than Rs.10,000/- per day. Accordingly, the assessee was asked to show cause as to why the total payment amounting to Rs.5,43,926/- should not be disallowed under section 40A(3) of the Act. The Assessing Officer (“AO”) vide order passed under section 143(3) read with section 147 of the Act disagreed with the submissions of the assessee and made an addition of Rs.5,43,926/- under section 40A(3) of the Act. 6. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee in the absence of supporting documentary evidence, and upheld the addition made under section 40A(3) of the Act. Being aggrieved, the assessee is in appeal before us. 7. We have considered the submissions of the learned DR and perused the material available on record. It is evident from the record that during the appellate proceedings before the learned CIT(A), the assessee submitted that it had made certain cash payments on behalf of M/s. SVC Industries Ltd. and none of the expenditure disallowed under section 40A(3) of the Act was debited by the assessee in its books of account. From the perusal of the details of expenditure, as noted on pages 3-5 of the impugned order, which is Printed from counselvise.com ITA No.3691/Mum/2025 (A.Y. 2021-22) 4 reproduced hereunder for ready reference, it is evident that all the expenses were incurred on behalf of M/s. SVC Industries Ltd.: - Sr. No. Date of Payment Amount Remarks 1. 25.06.2020 67,499 Cash payment for salary to employees of SVC Industries. The payment to a single employee does not exceed Rs. 10,000. Details of the same are enclosed as Annexure 1. 2. 25.06.2020 11,500 Salary of Mr. Sanjay Agrawal, employee of SVC Industries. Details of the same are enclosed as Annexure 2. 3. 25.06.2020 10,000 Cash Paid to Megha Travels for SVC Industries. Details of the same are enclosed as Annexure 3. 4. 25.06.2020 10,000 Cash paid to Shri Bankey Bihari for SVC Industries. Details of the same are enclosed as Annexure 4. 5. 06.07.2020 15,000 Cash paid to DPS work for various work to be done of SVC Industries. Details of the same are enclosed as Annexure 5. 6. 21.08.2020 2,00,000 Transfer to SVC Industries for various operation work. The cash would be paid by SVC to different persons for operational purpose. The amount of cash paid to one person would not exceed Rs. 10,000/- 7. 24.08.2020 39,401 Cash payment for salary to employees of SVC Industries. The payment to a single employee does not exceed Rs. 10,000. Details of the same are enclosed as Annexure 6. 8. 24.08.2020 86,000 Transfer to SVC Industries for various operation work. The cash would be paid by SVC to different persons for operational purpose. The amount of cash paid to one person would not exceed Rs. 10,000/- 9. 25.08.2020 5,372 Cash payment for PPF ol employees of SVC Industries. Details of the same are enclosed as Annexure 7. 10. 25.08.2020 13,720 Cash Paid to Megha Travels for SVC Industries. Cash voucher enclosed in Annexure 7 11. 25.08.2020 10,000 Cash Paid to Megha Travels for SVC Industries. Cash voucher enclosed as Annexure 8 12. 02.12.2020 75,434 Cash payment for salary to employees of SVC Industries. The payment to a single employee does not exceed Rs. 10,000. Details of the same are enclosed as Annexure 9. 8. Merely on the basis that the assessee could not furnish any evidence that expenses were incurred on behalf of SVC Industries Ltd. and the same Printed from counselvise.com ITA No.3691/Mum/2025 (A.Y. 2021-22) 5 were reimbursed by M/s. SVC Industries Ltd., we find that the learned CIT(A) upheld the addition made under section 40A(3) of the Act. 9. In the present case, it is pertinent to note that the AO made the entire addition on the basis of the ledger account of the assessee in the books of M/s. SVC Industries Ltd. Further, no material has been brought on record contrary to the claim of the assessee that the payment in cash was made on behalf of M/s. SVC Industries Ltd. It is also evident from the record that the said payment was also not claimed as an expenditure by the assessee in its books of account. Thus, such being the facts, we are of the considered view that no addition under section 40A(3) can be made in the hands of the assessee as the expenditure, if any, is in the hands of M/s. SVC Industries Ltd. and not the assessee. Therefore, the addition of Rs. 5,43,926/- made under section 40A(3) of the Act is deleted, and the grounds raised by the assessee are allowed. 10. In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 07/11/2025 Sd/- Sd/- VIKRAM SINGH YADAV ACCOUNTANT MEMBER S Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 07/11/2025 Prabhat Printed from counselvise.com ITA No.3691/Mum/2025 (A.Y. 2021-22) 6 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai Printed from counselvise.com "