RISA INTERNATIONAL LIMITED ,MUMBAI V. DCIT CENTRAL CIRCLE 2(1), PUNE , PUNE

ITSSA 34/PUN/2025

AI Insights

Risa International Limited appealed against the orders of the CIT(A) for the assessment years 2014-15 to 2017-18, which involved disallowances of business expenses and adjustments of brought forward losses. The primary contention was the validity of the assessments made under section 153A of the Income Tax Act, 1961, following a search operation. The Tribunal examined whether the approvals under section 153D were granted in a mechanical manner and whether the disallowances made were justified. The Tribunal found that the JCIT's approval was not mechanical and that the disallowance of 10% of expenses was a fair resolution considering the circumstances.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840055 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-02-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 15-10-2025
• Other Referred Cases: Pr. CIT v. Abhisar Buildwell P. Ltd., ACIT, Circle-1(2), Bhubaneswar vs. M/s. Serajuddin & Co, Kolkata, PCIT vs. Citron Infraprojects Limited
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMIT BOBDE
• Assessee Lawyers: SUCHEK ANCHALIYA; PRINTED FROM COUNSELVISE.COM
• Keywords: Set aside; Business income; Opportunity of being heard; Business expenditure; Principle of natural justice; Assessment record; Validity of assessment; Bogus
• Section: 143(3); 142(1); 132; 153A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER IT(SS)A Nos.33 to 36/PUN/2025 Assessment years : 2014-15 to 2017-18 Risa International Limited Office No.7/A, Plot 27/33, Beaumon Chambers, Hutatma Chowk, Fort, Mumbai – 400001 Vs. DCIT, Central Circle 2(1), Pune PAN: AAACG1312Q (Appellant) (Respondent) Assessee by : Shri Suchek Anchaliya Department by : Shri Amit Bobde, CIT Date of hearing : 22-01-2026 Date of pronouncement : 24-02-2026 O R D E R PER BENCH: The above four appeals filed by the assessee are directed against the separate orders dated 14.08.2025 of the Ld. CIT(A), Pune -12 relating to assessment years 2014-15 to 2017-18 respectively. Since identical grounds have been raised in the above 4 appeals, therefore, for the sake of convenience, these were heard together and are being disposed of by this common order. Printed from counselvise.com 2 IT(SS)A Nos.33 to 36/PUN/2025 IT(SS)A No.33/PUN/2025 (A.Y. 2014-15) 2. Facts of the case, in brief, are that the assessee is a company engaged in the business of textiles, garments and steel export. It filed its return of income on 30.03.2016 declaring total income of Rs.5,34,44,950/-. The case was selected for scrutiny under CASS on account of delay in payments of taxes and filing of return, large value of securities transaction, mismatch in sales turnover reported in Audit report and ITR and payments to related persons mismatch. Due to search action in the case of Ranka group, the case of the assessee was also covered and the proceedings u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) were abated. The Assessing Officer issued notice u/s 153A of the Act on 14.09.2018 which was duly served on the assessee. Thereafter, the assessee filed a Writ Petition (1322 of 2018) before the Hon’ble High Court against the order of centralization u/s 127(1) of the Act which was dismissed and thereafter proceedings were resumed. The assessee again filed a Writ Petition (1713 of 2019) before the Hon’ble High Court due to which the proceedings were kept in abeyance. This petition of the assessee was again dismissed by the Hon’ble High Court. Thereafter, the proceedings were resumed and notice u/s 142(1) of the Act was issued for filing of the return. The assessee submitted that the option for filing return on E-filing portal was blocked, therefore, the assessee requested that the return filed u/s 139(4) of the Act should be accepted as return u/s 153A of the Act. Accordingly, the Assessing Officer treated the return filed u/s 139(4) of the Act as return in response to the notice u/s 153A of the Act. Printed from counselvise.com 3 IT(SS)A Nos.33 to 36/PUN/2025 3. The Assessing Officer during the course of assessment proceedings, apart from other things, noted that the assessee has claimed that it is engaged in the business of textiles, garmets and steel export business. However, during the course of search, no stock was found at the office premises and that the company was having no warehouse, sales office and manufacturing office. There were only 2-3 enrolled employees who were looking after the entire operation of the so-called business. Although the assessee was showing stock in trade of Rs.3,19,69,628.69, however, no physical stock was found. The director of the company Shri Abhinandan Jain also could not produce any of the delivery challans of goods. He, therefore, disallowed expenses claimed of Rs.61,22,149/- u/s 37 of the Act on the ground that the assessee company is a paper company and having no actual business of trading in any of the commodities. The Assessing Officer also did not allow the claim of carry forward loss and determined the total income of the assessee at Rs.6,09,42,340/-. 4. Before the Ld. CIT(A) the assessee, apart from challenging the additions on merit, challenged the validity of the assessment in absence of any incriminating material. However, the Ld. CIT(A) was not satisfied with the arguments advanced by the assessee. So far as the grounds challenging the validity of the assessment in absence of incriminating material is concerned, the Ld. CIT(A) dismissed the same by observing as under: Printed from counselvise.com 4 IT(SS)A Nos.33 to 36/PUN/2025 5. So far as the disallowance of various expenses and adjustment of brought forward loss of Rs.13,75,241/- are concerned, he dismissed the grounds raised by the assessee by observing as under: Printed from counselvise.com 5 IT(SS)A Nos.33 to 36/PUN/2025 Printed from counselvise.com 6 IT(SS)A Nos.33 to 36/PUN/2025 6. Aggrieved with such order of the Ld. CIT(A) the assessee is in appeal before the Tribunal by raising the following grounds: 1. On the facts and in the circumstances of the case, and in law, the order passed by the Ld CIT(A) is bad in law on various counts, and the same should be annulled or set aside. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in passing an ex parte order without providing the appellant a sufficient opportunity to be heard and without considering the fact that the appellant had filed an adjournment against the hearing notice, and consequently, dismissing the appeal violates the principles of natural justice. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding the assessment order passed by the Assessing Officer u/s 153A r.w.s. 143(3) of the Act as valid without appreciating the fact that the assessment made by the Ld. AO u/s 153A of the Act was beyond jurisdiction as no incriminating material was found during the course of search u/s 132 of the Act with respect to the addition made by the Ld. AO, which is in contradiction to the honble Supreme Court decision in case of Pr. CIT v. Abhisar Buildwell P. Ltd. (2023) 149 taxman.com 399. 4. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in dismissing the appeal of the assessee without appreciating the fact that the Assessment order passed by the Ld. Assessing Officer is void ab initio since it does not bear any Document Identification Number (DIN) on its assessment order body as mandated by the Circular No. 19/2019 issued by the CBDT. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding the assessment order passed by the Assessing Officer u/s 153A r.w.s. 143(3) of the Act as valid without appreciating the fact that approval granted under section 153D of the Act by JCIT Range 2, Pune was in a mechanical manner without any application of mind and without looking at the assessment order. 6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the disallowance of Brought Forward Losses amounting to Rs.13,75,241/- as bogus expenses without appreciating the fact that the expenses incurred in previous year cannot be disallowed in the current financial year. 7. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the disallowance of business expenses amounting to Rs.61,22,149/- as bogus expenses without appreciating the fact that Ld. AO had not conducted any verification and formed the conclusion merely on the basis of the search proceeding and Investigation wing report Printed from counselvise.com 7 IT(SS)A Nos.33 to 36/PUN/2025 8. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the disallowance of business expenses and brought forward losses without invoking the provision of section 145(3) of the Act and without rejecting the books of accounts, without conducting cross examination or inquiry from purchasers, which is bad in law and against the provision of law. 9. The appellant craves to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider each of the above grounds without prejudice to one another. 7. The Ld. Counsel for the assessee at the outset did not press ground of appeal No.4 relating to DIN issue for which the Ld. DR has no objection. Accordingly, the same is dismissed as ‘not pressed’. 8. So far as the remaining grounds of appeal are concerned, the Ld. Counsel for the assessee submitted that the order passed by the Assessing Officer u/s 143(3) r.w.s. 153A of the Act is invalid since the approval has been granted by the JCIT in a mechanical manner and without any application of mind and without looking at the assessment order. 9. Referring to the decision of Hon’ble Orissa High Court in the case of ACIT, Circle-1(2), Bhubaneswar vs. M/s. Serajuddin & Co, Kolkata vide ITA Nos.39 to 45 of 2022, order dated 15.03.2023, he submitted that the Hon’ble High Court in the said decision has upheld the decision of the Tribunal quashing the assessments on the ground that the approval has been granted by the Addl.CIT u/s 153D of the Act in a mechanical manner without application of mind. He submitted that when the Revenue challenged the decision of Hon’ble Orissa High Court, the Hon’ble Printed from counselvise.com 8 IT(SS)A Nos.33 to 36/PUN/2025 Supreme Court dismissed the SLP in ACIT vs. Serajuddin and Co. reported in (2024) 163 taxmamn.com 118 (SC). 10. Referring to the decision of Hon’ble Bombay High Court in the case of PCIT vs. Citron Infraprojects Limited along with batch of connected appeals vide order dated 26.11.2025, he submitted that the Hon’ble High Court here also has upheld the decision of the Tribunal on the ground that the approval u/s 153D of the Act has been granted by the Addl.CIT in a mechanical manner. He accordingly submitted that since in the instant case also the JCIT has given the approval in a mechanical manner without going through the records, therefore, such approval being not in accordance with law, the assessment order should be quashed being invalid. 11. So far as the merit of the case is concerned, he submitted that the assessee is a listed entity on the Bombay Stock Exchange and engaged in the business of textiles, garments and steel export. During the course of assessment proceedings the assessee has furnished various submissions and documents from time to time. However, the Assessing Officer passed the order rejecting the explanations given by the assessee and made addition of Rs.61,22,149/- by disallowing the expenses. 12. Referring to the copy of the assessment order he submitted that the Assessing Officer in the initial paragraphs of the assessment order alleged that the assessee company’s shares were utilized for generating bogus long term capital Printed from counselvise.com 9 IT(SS)A Nos.33 to 36/PUN/2025 gain. However, in the concluding paragraphs, the Assessing Officer proceeded to disallow the routine and legitimate business expenses such as interest, stamping charges, franking charges, stationery, electricity bills, telephone bills, director’s remuneration, SEBI fees and other similar items treating them as non-genuine or inadmissible. He sumitted that this approach is wholly unsustainable and contrary to the law. Further, no defect has been pointed out by the Assessing Officer in the return filed u/s 153A of the Act. He submitted that the assessee has maintained accounts which were duly audited and the Assessing Officer has not rejected the same by invoking the provisions of section 145(3) of the Act. He submitted that in absence of rejection of books of account, no addition can be made by assuming that the assessee has made unaccounted receipts in the year under consideration. He accordingly submitted that since the Assessing Officer in the instant case has not rejected the book results and has accepted the business income of Rs.5,34,44,950/-, therefore, no disallowance of the expenses should be made. 13. The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A). Referring to the copy of approval of the draft assessment order u/s 153D of the Act, copy of which is filed by the Revenue, he drew the attention of the Bench to the same and submitted that the JCIT has not only approved the assessment order but has also gone through the assessment record before doing that. It is neither a conditional approval nor without application of mind, therefore, the argument of the Ld. Counsel for the assessee that the approval granted u/s 153D of the Act is a mechanical one is not correct and therefore the various decisions relied on by the Printed from counselvise.com 10 IT(SS)A Nos.33 to 36/PUN/2025 Ld. Counsel for the assessee are distinguishable and are not applicable to the facts of the present case. 14. So far as the merit of the case is concerned, the Ld. DR drew the attention of the Bench to the orders of the Assessing Officer and the Ld. CIT(A) and submitted that the assessee was not engaged in any genuine business activity. There was no physical stock available despite huge stock in trade reflected in the books at over Rs.3.19 crores. The existence of any warehouse was not proved and no manufacturing or sales office was found. There were only two or three employees found at the time of search to handle turnover running into billions which is not possible. Further, the assessee was unable to produce a single delivery challan or corroborative purchase / sale documentation. Thus, the Ld. CIT(A) was fully justified in sustaining the disallowance made by the Assessing Officer of the entire expenses of Rs.61,22,149/-. He accordingly submitted that the order of the Ld. CIT(A) be upheld and the grounds raised by the assessee be dismissed. 15. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case disallowed the expenses of Rs.61,22,149/- on the ground that during the course of search no stock was found at the office premises and that the company was having no warehouse, sales office or manufacturing office. There were only 2-3 enrolled employees who were Printed from counselvise.com 11 IT(SS)A Nos.33 to 36/PUN/2025 looking after the entire operation of the so-called business. Further, no physical stock was found at the time of search although the assessee was showing stock in trade of Rs.3.19 crores. The director of the assessee could not produce any of the delivery challans of the goods. He, therefore, disallowed the entire expenses which has been upheld by the Ld. CIT(A). 16. It is the submission of the Ld. Counsel for the assessee that the assessment order has to be quashed since the approval has been granted in a mechanical manner and without due application of mind. Further, it is also his argument that the disallowance of entire expenses is not justified especially when the books of account are audited and the Assessing Officer has not pointed out any defect and without rejecting the book results by invoking the provisions of section 145(3) of the Act, the Assessing Officer could not have disallowed the entire expenses. 17. So far as the first plank of argument of the Ld. Counsel for the assessee that the approval is given in a mechanical manner and without due application of mind is concerned, we have perused the copy of the approval granted by the JCIT. As per the said approval, it is seen that the JCIT has given approval for each year separately after going through the assessment record and after going through the proposed draft assessment order to be passed u/s 143(3) r.w.s. 153A of the Act. Therefore, once the JCIT has verified the assessment records, has given year-wise specific approval after due application of mind, the same cannot be treated as given in a mechanical manner and without due application of mind. Therefore, the Printed from counselvise.com 12 IT(SS)A Nos.33 to 36/PUN/2025 various decisions relied on by the Ld. Counsel for the assessee are distinguishable and are not applicable to the facts of the present case. Thus, the first issue raised by the assessee challenging the validity of assessment in absence of proper approval u/s 153D of the Act is dismissed. 18. So far as the addition of Rs.61,22,149/- u/s 37 of the Act is concerned, we find it is an admitted fact that during the course of search, no stock was found at the office premises and that that the company was having no warehouse, sales office and manufacturing office. It is also an admitted fact that the director could not produce any of the delivery challan of the goods. At the same time, it is also an admitted fact that during the course of search two or three employees who were looking after the entire operation were available as mentioned by the Assessing Officer and confirmed by the Ld. CIT(A). Further, the assessee in the instant case has declared its business income of Rs.5,34,44,950/- which has been accepted by the Assessing Officer. The submission of the Ld. Counsel for the assessee that the accounts of the assessee are duly audited and no defect has been pointed out by the Assessing Officer and the Assessing Officer has not rejected the book results by invoking the provisions of section 145(3) of the Act also could not be controverted by the Ld. DR. Further, we find the Assessing Officer in the instant case has disallowed the routine and legitimate business expenses such as interest, stamping charges, franking charges, stationery, electricity bills, telephone bills, director’s remuneration, SEBI fees and other similar items treating them as non-genuine or inadmissible. Since the Assessing Officer in the instant case has accepted the Printed from counselvise.com 13 IT(SS)A Nos.33 to 36/PUN/2025 business income declared by the assessee and has not treated the same as income from other sources or unexplained income, therefore, the disallowance of various statutory expenses and routine expenses by the Assessing Officer, in our opinion, is not correct. Considering the totality of the facts of the case and in the interest of justice, we are of the considered opinion that disallowance of 10% of the expenses under the facts and circumstances of the case will meet ends of justice. We, therefore, set aside the order of the Ld. CIT(A) and direct the Assessing Officer to restrict the disallowance to 10% of Rs.61,22,149/-. The grounds raised by the assessee are accordingly partly allowed. IT(SS)A Nos.34 to 36/PUN/2025 (A.Ys. 2015-16 to 2017-18) 19. So far as the remaining 3 years are concerned, in these year also, identical grounds have been raised by the assessee. 20. After hearing both sides, we find the Assessing Officer in the assessment year 2015-16 has disallowed the entire expenses claimed by the assessee at Rs.1,16,52,485/-. Similarly, for assessment year 2016-17 he disallowed the expenses claimed by the assessee at Rs.86,07,772/- and for assessment year 2017- 18 he disallowed the expenses claimed by the assessee at Rs.162,32,080/-. It is an admitted fact that despite number of opportunities the assessee did not make any submission before the Ld. CIT(A) for which he upheld the action of the Assessing Officer in making the disallowance. Since while deciding the appeal for Printed from counselvise.com 14 IT(SS)A Nos.33 to 36/PUN/2025 assessment year 2015-16 we have restricted the disallowance to 10% of the expenses and since the facts of the instant 3 appeals are identical to the facts of the case for assessment year 2015-16, therefore, following the reasons given there, we set aside the order of the Ld. CIT(A) and direct the Assessing Officer to restrict the disallowance to 10% of the expenses. The grounds raised by the assessee are accordingly partly allowed. 21. In the result, all the four appeals filed by the assessee are partly allowed. Order pronounced in the open Court on 24th February, 2026. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 24th February, 2026 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘B’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Printed from counselvise.com 15 IT(SS)A Nos.33 to 36/PUN/2025 S.No. Details Date Initials Designation 1 Draft dictated on 11.02.2026 Sr. PS/PS 2 Draft placed before author 12.02.2026 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Office Superintendent 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "