SPECIALITY PAPERS LIMITED,MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX 4(3)(1), MUMBAI

ITA 4917/MUM/2025

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The case involves Speciality Papers Ltd., the appellant, contesting an order from the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, for the assessment year 2017-18. The primary issues in the appeal were the disallowance of expenditure on account of change in inventories amounting to Rs. 8,53,84,479 and the addition of cash deposits made during the demonetization period amounting to Rs. 12,88,221 under section 69A read with section 115BBE of the Income Tax Act. The appellant argued that the disallowance was unjustified as all requisite details for inventory valuation were submitted, and the method used was in accordance with established accounting principles. Regarding the cash deposits, the appellant contended that these were from sales made in earlier years and thus should not be considered unexplained income. However, the tribunal dismissed the appeal as a duplicate of another pending appeal with the same issues.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773467 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2017-2018
• Appeal Filed On: 04-08-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAVITHA KAUSHIK
• Keywords: Business expenditure; Onus to prove

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 4917/MUM/2025 Assessment Year: 2017-18 Speciality Papers Ltd., Ground Floor, 93 Dadiseth, Agairy Lane, Mumbai-400002. Vs. DCIT-4(3)(1), Aayakar Bhavan, Mumbai-400020. PAN NO. AAECS 0861 Q Appellant Respondent Assessee by : None Revenue by : Ms. Kavitha Kaushik, Sr. DR Date of Hearing : 18/09/2025 Date of pronouncement : 22/09/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 06.06.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds: Ground No. 1 - Disallowance of expenditure on account of change in inventories: Rs. 8,53,84,479/- Printed from counselvise.com 1.1 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in upholding disallowance of expenditure on account of change in inventories on the alleged ground of lack of satisfactory justification inasmuch all the requisite details pertaining to the inventory valuation was duly submitted and thus 1.2 The learned CIT(A) failed to appreciate and ought to have that method of inventory valuation was based on settled principles of accounting, i.e. Accounting Standard Institute of Chartered Accountants of India ('ICAI') and is duly accepted by law and thus, any change in inventory valuation as per AS-2 is allowable as business expenditure. 1.3 Without prejudice to the above, the learned CIT(A) ought to have appreciated that if the d respect to closing stock value is upheld then the opening stock of immediate subsequent year, i.e. AY 2018 increase Ground No. 2 of cash deposits made ou 2.1 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the learned AO in making addition of cash deposited during demonetization period pertaining to the sa has duly discharged its onus to prove that the cash deposited were out of sales made in earlier years and thus, the entire addition of unexplained made on surmises and conjectures ought to be deleted; 2.2 The CIT(A) failed to appreciate and ought to have held that provisions of section 69A of the Act could be invoked in case of violation of cumulative conditions, viz. failure to record money in books of accounts and offer no explanation/ unsatisfactory explanation inasmuch as since the fact that appellant has recorded money in books of accounts, the provisions of section 69A of the Act is not applicable and entire unlawful addition made u/s. 69A of the Act is liable to be deleted; 2.3 The CIT(A) failed to appre sales are recognized in a particular year as per the audited books of account and offered to tax in respective year then the action of making addition of the said sales again in the year in which cash is received and in the hands of appellant which is legally invalid and liable to be ITA No. 4917/MUM/2025 1.1 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the learned AO in disallowance of expenditure on account of change in inventories on the alleged ground of lack of satisfactory justification inasmuch all the requisite details pertaining to the inventory valuation was duly submitted and thus, the entire disallowance ought to be deleted; 1.2 The learned CIT(A) failed to appreciate and ought to have that method of inventory valuation was based on settled principles of accounting, i.e. Accounting Standard - 2 ('AS-2') issued by the Chartered Accountants of India ('ICAI') and is duly accepted by law and thus, any change in inventory valuation as per 2 is allowable as business expenditure. 1.3 Without prejudice to the above, the learned CIT(A) ought to have appreciated that if the disallowance made by the learned AO with respect to closing stock value is upheld then the opening stock of immediate subsequent year, i.e. AY 2018-19 will consequently increase Ground No. 2 – Addition u/s, 69A rws 115BBE of the Act of cash deposits made out of earlier year sales: Rs. 12,88,221/ 2.1 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the learned AO in making addition of cash deposited during demonetization period pertaining to the sales made in earlier years inasmuch as appellant has duly discharged its onus to prove that the cash deposited were out of sales made in earlier years and thus, the entire addition of unexplained made on surmises and conjectures ought to be deleted; CIT(A) failed to appreciate and ought to have held that provisions of section 69A of the Act could be invoked in case of violation of cumulative conditions, viz. failure to record money in books of accounts and offer no explanation/ unsatisfactory tion inasmuch as since the fact that appellant has recorded money in books of accounts, the provisions of section 69A of the Act is not applicable and entire unlawful addition made u/s. 69A of the Act is liable to be deleted; 2.3 The CIT(A) failed to appreciate and ought to have held that once sales are recognized in a particular year as per the audited books of account and offered to tax in respective year then the action of making addition of the said sales again in the year in which cash is received and deposited in bank account amounts to double taxation in the hands of appellant which is legally invalid and deleted. Speciality Papers Ltd 2 ITA No. 4917/MUM/2025 1.1 On the facts and in circumstances of the case and in law, the the action of the learned AO in disallowance of expenditure on account of change in inventories on the alleged ground of lack of satisfactory justification inasmuch all the requisite details pertaining to the inventory valuation was duly , the entire disallowance ought to be deleted; 1.2 The learned CIT(A) failed to appreciate and ought to have that method of inventory valuation was based on settled principles of 2') issued by the Chartered Accountants of India ('ICAI') and is duly accepted by law and thus, any change in inventory valuation as per 1.3 Without prejudice to the above, the learned CIT(A) ought to have isallowance made by the learned AO with respect to closing stock value is upheld then the opening stock of 19 will consequently Addition u/s, 69A rws 115BBE of the Act t of earlier year sales: Rs. 12,88,221/- 2.1 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the learned AO in making addition of cash deposited during demonetization period les made in earlier years inasmuch as appellant has duly discharged its onus to prove that the cash deposited were out of sales made in earlier years and thus, the entire addition of unexplained made on surmises and conjectures ought to be deleted; CIT(A) failed to appreciate and ought to have held that provisions of section 69A of the Act could be invoked in case of violation of cumulative conditions, viz. failure to record money in books of accounts and offer no explanation/ unsatisfactory tion inasmuch as since the fact that appellant has recorded money in books of accounts, the provisions of section 69A of the Act is not applicable and entire unlawful addition made u/s. 69A of the ciate and ought to have held that once sales are recognized in a particular year as per the audited books of account and offered to tax in respective year then the action of making addition of the said sales again in the year in which cash is deposited in bank account amounts to double taxation in the hands of appellant which is legally invalid and Printed from counselvise.com 2. Despite due service of notice, none appeared on behalf of the assessee at the time of hearing, nor was any application seek adjournment placed on record. 3. The learned Departmental Representative (DR) brought to our notice that another appeal arising from the very same impugned order of the learned CIT(A), involving identical grounds, has already been registered as ITA No. that the said appeal was listed for hearing on 17.09.2025 and, upon request of the assessee, has been adjourned to 29.10.2025. The learned DR submitted that the present appeal, being a duplicate appeal against the same or adjudication. 4. Having considered the factual position brought to our notice, we are of the view that the present appeal is indeed a duplicate of ITA No. 4897/Mum/2025. Accordingly, the present appeal is rendered infructuous and is dismissed as such. 5. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on Sd/- (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 22/09/2025 Rahul Sharma, Sr. P.S. ITA No. 4917/MUM/2025 Despite due service of notice, none appeared on behalf of the assessee at the time of hearing, nor was any application seek adjournment placed on record. The learned Departmental Representative (DR) brought to our notice that another appeal arising from the very same impugned order of the learned CIT(A), involving identical grounds, has already been registered as ITA No. 4897/Mum/2025. It was pointed out that the said appeal was listed for hearing on 17.09.2025 and, upon request of the assessee, has been adjourned to 29.10.2025. The learned DR submitted that the present appeal, being a duplicate appeal against the same order, does not call for separate Having considered the factual position brought to our notice, we are of the view that the present appeal is indeed a duplicate of ITA No. 4897/Mum/2025. Accordingly, the present appeal is s and is dismissed as such. In the result, the appeal of the assessee is dismissed. ounced in the open Court on 22/09/2025. - Sd/ (RAJ KUMAR CHAUHAN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Speciality Papers Ltd 3 ITA No. 4917/MUM/2025 Despite due service of notice, none appeared on behalf of the assessee at the time of hearing, nor was any application seeking The learned Departmental Representative (DR) brought to our notice that another appeal arising from the very same impugned order of the learned CIT(A), involving identical grounds, has already 4897/Mum/2025. It was pointed out that the said appeal was listed for hearing on 17.09.2025 and, upon request of the assessee, has been adjourned to 29.10.2025. The learned DR submitted that the present appeal, being a duplicate der, does not call for separate Having considered the factual position brought to our notice, we are of the view that the present appeal is indeed a duplicate of ITA No. 4897/Mum/2025. Accordingly, the present appeal is In the result, the appeal of the assessee is dismissed. /09/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// ITA No. 4917/MUM/2025 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Speciality Papers Ltd 4 ITA No. 4917/MUM/2025 BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "