ITAT Raipur Remands Cash Purchase Disallowance for Rule 46A Breach; Late TDS Interest Held Disallowable

DCIT Vs Bharat Agro Industries (ITAT Raipur)

Rule 46A Violation Cash Purchase Disallowance Remanded – Interest on Late TDS Held Disallowable – ITAT Raipur

The ITAT Raipur partly allowed the Revenue’s appeal and held that the CIT(A) violated Rule 46A by admitting additional evidence relating to certain cash purchases without granting the AO an opportunity of examination. The Tribunal set aside findings regarding purchases of ₹52.96 lakh and ₹22,184 and remanded the matter to CIT(A) for fresh adjudication. It further held that the CIT(A) wrongly relied on preponderance of probability to accept miscellaneous purchases of ₹1.47 crore without proper verification, and remanded that issue as well for de novo decision.

On the issue of interest on late deposit of TDS, the Tribunal reversed CIT(A)’s relief and held that interest u/s 201(1A) takes the colour of income tax liability and is not purely compensatory; therefore, disallowance of ₹74,291 was restored. However, ad-hoc disallowance of certain expenses deleted by CIT(A) was upheld due to lack of contrary material from the Revenue.

Accordingly, the Revenue’s appeal was partly allowed, with purchase-related issues remanded for fresh adjudication and TDS interest disallowance restored.

FULL TEXT OF THE ORDER OF ITAT RAIPUR

This appeal for Assessment Year (‘AY’) 2015-16 filed by the Revenue is directed against the order dated 18.06.2025 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [‘CIT(A)’] passed under section 250 of the Income Tax Act, 1961 (‘Act’).